About AEF | Newsletter | Site Map | Legal | Advanced Search
Print Version

Selling to 45-Plus Generation: That's Where the Money Is

America is aging, and some people suggest that marketers are going to have to change their ways and start trying to appeal to the older set.

"A lot of companies are afraid that if they admit they are appealing to a 45-plus market, they aren't cool or hip any more," said Lori Bitter, a partner at the Mature Market Group, part of J. Walter Thompson Worldwide, in San Francisco.

But, he said, "the 18- to 34-year-old population is shrinking, not growing.

"The 45-plus market is the new customer majority. This isn't anything we are making up. This is real. It's huge."

By 2010, the Census Bureau estimates, roughly half of the nation's population will be older than 40, up from 43.4 percent as of the most recent census. Right now, about four million people a year are turning 50, a trend that will continue for years, as the Baby Boomers - people born between 1946 and 1964 - age. In addition, more than 40 million Americans are already 65 or older.

This big and growing over-45 segment of the population is also the most affluent. Collectively, those 46 and older control more than half of the nation's discretionary income, according to Mature Marketing and Research, a Boston-based firm, and they own more than three-quarters of the nation's financial wealth.

Carol M. Morgan and Doran J. Levy whose book "Marketing to the Mindset of Boomers and Their Elders," was published last year by Attitudebase, say that households headed by someone 40 or older hold 91 percent of America's net worth.

"The mature market," they say, "is the dominant market in the U.S. economy, making the majority of expenditures in virtually every category."

And so how do older Americans spend their money?

Almost two-thirds of spending by people 45 and older is tied to three basic categories - housing, transportation and food - according to the results of a 2002 survey conducted by Scarborough Consumer Behavior Research published earlier this year by AARP. The remaining third is carved into a variety of slices, including buying financial products like insurance and investments, health care, entertainment and clothes.

In a survey conducted in July by CNW Marketing/Research of Bandon, Ore., that explored the top 10 spending intentions by Americans 45 and older for the following six months, making a personal investment and taking a long vacation in the United States were the top choices. Those aged 45 to 54 listed investing first. The top pick of those 55 to 64 and those 65 and above was a long vacation in the United States.

In addition, a large percentage in each of the three age groups said they intended to buy various electronic products, including home theaters and home computers. Buying a new car was one of the top five purchase choices in each of the age groups.

Unlike the younger groups, which did not mention traveling abroad, 7.3 percent of those over 65 said they intended to take a long foreign trip, a typical leisure plan for the retired.

Among those interested in buying a car, Ford brands were the most popular in the over-45 age group, according to CNW. But those prospective purchasers are difficult to pigeonhole about which models they buy.

"They don't have one brand preference per se," said Jan Valentic, vice president for global marketing at the Ford Motor Company. "They are looking for product segments that turn them on."

But with greater significance for the retailing industry, Americans 50 and older are increasingly using the Internet to shop.

According to figures in "A Nation Online," a Commerce Department study released in February 2002, more than 33 million, or 43 percent, of Americans age 50 and older have been online. Of those, eMarketer.com, a New York-based Internet research firm, recently noted that 54 percent of those under the age of 55 had bought online, while 42 percent of those over 55 had done so.

"Clearly, as the Internet has begun to reach saturation in the U.S., more users have learned to trust online purchasing," the report said. Several studies project that as the population ages, online shopping by older Americans will increase. However, there are no truly reliable estimates on how much money those over 45 spend online.

In total, eMarketer.com estimates that last year business-to-consumer e-commerce sales were $70.3 billion. That number is expected to rise to $86.9 billion this year. By 2005, eMarketer.com projects that consumers will spend more than $133 billion online.

Whether online or in stores, Americans are spending quite liberally on their grandchildren - $26 billion, in fact, last year, according to estimates from the NPD Group, a market information company in Port Washington, N.Y. That was up 1.7 percent from such spending in 2001. That includes spending on presents, toys, video games, books and cash, although it does not include estate-planning gifts to education-oriented savings plans.

"Some of the things they are giving are things they are interested in,'' said Marshal Cohen, chief analyst at the NPD Group. "They are determined not to let their interests die with them, whether it is cooking, sewing or cricket. But it could be anything."

Even as grandparents are spending money on their grandchildren, a growing segment of people over 45 are spending money, or forgoing income, to take care of their parents.

According to Peter Uhlenberg, a gerontologist at the University of North Carolina, Chapel Hill, in 1900, only 4 percent of 50-year-old adults could say that both parents were still alive. But by 2000, 27 percent could make the same claim. In 2000, Dr. Uhlenberg said, 44 percent of 60-year-old Americans had at least one parent who was still alive.

In an online survey conducted earlier this year of nearly 1,400 employees at three large industrial companies who personally care for a parent or in-law, MetLife's Mature Market Institute found that almost half the men and women surveyed reported they contributed nearly $3,300 a year to cover expenses for giving such care.

The results of a poll conducted earlier this year by AARP on work patterns provide an indication that the younger members of the so-called elderly population have no intention of slowing down.

In the nationwide survey of just over 2,000 people ages 50 to 70 who are either working full time or part time, nearly 70 percent said they planned to work into their retirement years or never retire. Almost half said they envisioned working into their 70's, or beyond.

"We are all beginning to realize that because we are living longer, old age may not begin until 75 or 80,'' said Ken Dychtwald, founder of AgeWave, a San Francisco-based consulting group that focuses on the baby boom and mature-adult segments of the population.

Posted on December 4, 2003


Kenneth Gilpin, New York Times. December 1, 2003

Copyright © 2003 The New York Times Company. All rights reserved.