Should we forget about ‘the older consumer’?
As part of the ILC-UK and Personal Finance Resource Centre (PFRC) partnership project on financial circumstances and wellbeing, funded by ESRC through the Secondary Data Analysis Initiative, a seminar hosted by Brown-Forman in October 2013 to discuss findings around consumer spending. At this seminar, David Hayes from the PFRC presented new research exploring patterns of expenditure among older people. This research was then debated by an expert roundtable, along with broader questions surrounding the ‘older consumer’.
How to market to the older generations is becoming an increasingly important topic as the UK’s population ages. A key issue to be addressed by marketeers is how to avoid the homogenisation of this group, as its diversity is often lost in ageist perceptions of ‘what older people want’. David Hayes’s and Sharon Collard’s research findings combat this one dimensional view of older people by investigating their differing spending habits.
Using data from the Living Costs and Food Survey, and focussing on a sample of households headed by someone aged 50 or over, the report described six spending groups. These groups had been ‘discovered’ by segmenting the households based on their patterns of expenditure and were named ‘Conservative consumers’, ‘Foodies’ ‘Burdened by bills’, ‘Smokers’, ‘Recreation and clothing’, and ‘Socialites’. Each group had a particular spending characteristic that gave them their name, while also sharing a number of other spending habits. For the ‘Smokers’ these characteristics included a high spend on tobacco and alcohol, often being in full-time employment, having low levels of home-ownership and generally being younger.
Several key socio-demographic characteristics were highlighted that underlay the divisions between the 6 groups, the most important of which was home ownership. The highest spending group, the ‘Socialites’ were almost all homeowners compared to only 29% of the ‘Burdened by Bills’. The report also showed that older people’s spending decreased as they aged, while the share of their spending on specific areas of expenditure increased’, most notably food and non-alcoholic drink (from 12% to 19% of expenditure) and housing, fuel and power (12% to 24%).
The roundtable agreed that the report should be applauded for how it highlighted the huge diversity of the older consumer. From a marketing perspective, the clusters were praised for focussing on expenditure rather than age, with several attendees keen to see how these clusters would work on younger groups.
Several of the research findings surprised the roundtable and elicited much debate. The report showed that older people had a relatively low average spend on alcohol, something which did not correlate with people’s knowledge of their own and older friends drinking habits. This discrepancy may be due to alcohol consumption outside the home being mainly incorporated in the ‘restaurants and hotels’ spending category, combined with the availability of cheap alcohol in supermarkets. ‘Foodies’ were also seen as a counter intuitive group as their overall expenditure was fairly low, yet they spent more than most on food.
The debate went on to discuss some of the broader factors affecting the older consumer. Spending patterns amongst older people were thought to be set early in their lives in terms of interests, but the amount they spent on these interests increased. Spending habits were also thought to change out of necessity rather than choice. There was some evidence that older people sometimes misjudged the capital they would need as they aged, as new costs arose that hadn’t been accounted for, such as paying for help around the home.
Discussion on the marketing industry highlighted how the older consumer is often ignored. A TV channel was given as an example where an incredibly detailed analysis had been carried out of viewers in the younger age groups, segmenting them into 25-30 ‘tribes’, while nothing had been done on viewers aged over 50’s. This focus on younger consumers was viewed, in part, as a result of the age make up of the marketing industry itself. The majority of people working in marketing were felt to be in the 25-35 year old age bracket, and in consequence were seen as not having the knowledge or the motivation to market to older people.
Discussion on the marketing approaches aimed at older consumers highlighted that agencies often made the mistake of mentioning a product was for the ‘older person’. In doing this, it was felt that the product became totally unappealing to the target group as older people do not want to be labelled in this way. In contrast, a more subtle form of advertising, where the product was obviously aimed at an older consumer but did not mention the fact, was viewed as being very effective. For example, a Harley Davidson run-around that had a heated seat, ergonomic hand grips and a large comfy saddle.
Should we forget about ‘the older consumer’? PFRC’s research showed that older consumers are just as varied in their spending habits as the younger generations. The debate highlighted that it is the marketing industry itself which needs to change, both in its internal structure and the time it devotes to analysing the older generations. As the UK’s population ages and the spending power of those over 50 increases, businesses will no longer be able to afford to forget about the older consumer.
Jonathan Scrutton
Posted on 26 November 2013
This blog was also posted on the ILC-UK blog
Read the related publications below:
The mortgage debt of older households and the effect of age
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