Assignment for Consumer Behavior.

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The University of Glamorgan

Assignment for Consumer Behavior

Student number: 02074036

Year: 2nd year

Submitted to: Mr. Blythe


Introduction

UK is getting old. Europe is getting old. This is one of the most significant trends shaping future demand, yet many of our clients are confused as to its real significance to their business. Unless there is a sudden dramatic increase in the birth rate, or a surge in immigration, this shift towards a sizeable majority of middle-aged and elderly consumers will continue.

There seems to be great confusion around what constitutes the 'grey market' within many industry sectors. Some still start with the over-55s, others start at 65. Different generations are lumped together uncritically in a way that would be unthinkable with the youth market  as though in these later stage of life we begin to lose our distinguishing characteristics, and blur into a general haze of 'the retired', and then 'the elderly'.

On more than one occasion, I have discussed with my grand father who fined it hard to accept that the over-65s matter: he always says that "I've heard a lot about the grey pound, but I can't see any evidence of it myself - where is it?" The answer, of course, is that it's all around us. The assumption seems to be that he will suddenly see an upsurge in spending on stair lifts, pipes and slippers, tweed skirts and anti-macassers. Yet of recent work in this area indicates that the majority of pensioners are heavy consumers of ready meals, increasingly comfortable with online channels and extremely interested in trying new things. Indeed, with 25% of the over-60s taking three or more holidays a year, a significant part of the 'grey' leisure pound is being spent outside the UK.

I believe that traditional socio-demographics are less and less helpful in predicting current and future consumer needs. As life expectancy increases, and our population ages, people are increasingly refusing to 'act their age'. Sizeable segments of the over-65s, over-75s and indeed over-85s, are much less set in their ways to imagine. Within this age brackets are some increasingly divergent lifestyles, values and purchasing behaviors - so those generalizations based on age alone are increasingly dangerous.

In fact, increasingly life expectancy has in many ways revolutionized the expectations of the older generations. This seismic shift has gone relatively undetected by mainstream marketers, and yet offers great potential. With dramatically longer life expectancy, getting to 70 is no longer a rare achievement. Age is no longer 'How far have I come' but 'How far have I got to go?' This emphasis on future possibilities and potential is a psychology of age that is far closer to that of youth.

While older consumers are interested in their past, and in drawing comparisons with the present some negative, some positive - they are most focused on future possibilities. This makes them open to adoption of new goods and services, despite received wisdom that the older consumer is less likely to switch brands and try new things. All too often, their experiences is of being patronized unnecessarily by customer service and sales staff who assume that physical frailty and chronological age mean that this particular consumer isn’t sophisticated, or looking for new solutions, or open to online channels and so on. Brands that are doing something to address this - B&Q with its policy of recruiting from the over-50s - benefit from positive word of mouth. This new perspective on life means that the 65-70-year-old consumer is very hostile to terminology that suggests that he or she is 'past it'. The term 'retirement' is very strongly rejected by a sizeable majority. With a third of their life to look forward to, they prefer to use language more associated with lifestyle change.

They have roles and responsibilities to fulfill, with many responsible for looking after their grandchildren some or all of the week. Indeed, these parenting grandparents are also frequently the key purchasers of their own children's grocery and other household items.

Consumers over the age of 45 are the products of the post World War 2 `baby boom', and have influenced a large number of relevant markets as they have moved through their various life stages. They are becoming increasingly important to marketers and advertisers due to their sheer weight of numbers, as well as their economic power. Advances in healthcare, the wider availability of education, and general improvements in living standards over the past few decades also mean that this group of over-45 year-olds tends to be much younger in outlook, and to have higher expectations of life, than was the case for previous generations in this age group.

Despite the importance of this group, and their general youthfulness of outlook, the portrayal of older people in the media continues to reflect an old-fashioned image; the advertising industry, too, has been slow to recognize the potential of targeting this group. There are differing views within the industry about how to tackle this phenomenon; although there are niche agencies which have been set up specifically to target the over-50s, another view is that it is a mistake to cluster all of this age group together, since it spans at least two generations, and a youthful 55 year-old may resist being thought of in the same way as an 85 year-old. Proponents of this view refer to the fact that the baby boomer generation at the younger end of the gray spectrum are more youthful and assertive than their parents were, and are just as likely to appreciate TV commercials aimed at a youth market as those tailored specifically for an older audience.

In terms of spending power, households headed by those aged between 50 and 64 have a higher weekly average spend per person than those headed by any other age group. They also spend more than others on motoring, leisure services such as holidays, and personal goods and services such as toiletries, cosmetics and beauty treatments.

Consumer research found that friends and family top the list of spending priorities for the over-45s, followed closely by newspapers and magazines. Nearly two thirds spend money regularly on gardening, and a similar proportion eats and/or drinks out on a regular basis.

A total of 46% of this group are spending money on mortgage or rent, but among owner occupiers fewer than four in ten are doing so. The importance of saving for the future among this group is underlined by the fact that those aged over 45 — and particularly 45 to 54 year-olds — are more likely than average (and, in most cases, more likely than any other age group) to own or contribute to most types of savings and investments. When making purchases, those in the over-45 group are in most cases more likely than average to use cash, and less likely to use retailer credit.

Market Assessment's research showed that nearly four in ten 45 to 54 year-olds — more than in any other age group — use alternative medicines, while vitamins and supplements are most popular among 55 to 64 year-olds, 41% of whom take them. This latter group is one of the key targets for those providing alternative therapies; they are more likely than any others to have used (or considered using) almost all types of alternative practitioners. This age group is also more interested in using, and is more knowledgeable about, organic food and health foods than are younger age groups.

Nearly six in ten over-45 year-olds spend money regularly on books, and 44% buy CDs or tapes on a regular basis. A total of 63% — and three quarters of 45 to 54 year-olds — spend money regularly on eating/drinking out. Gardening is an important leisure activity for this group, with almost two thirds spending regularly on items for their garden; the 55 to 64 year-olds are particularly important to this market.

Holidays in the UK and foreign holidays are almost equally popular among this group as a whole, with just over half spending money regularly on each.

The economic and political power of older consumers is likely to continue to grow over the next few decades. The over-45 population is forecast to increase by nearly 17% between 2000 and 2011, when the over-45s will account for 43.4% of the total population, compared with 38.8% in 2000.

Politicians will increasingly have to take the views of older people into account, not only because of their numerical power, but because they are more likely than younger people to use their vote. Pensions are clearly an important issue for this group, and this issue is likely to become increasingly problematical in the future, as the number of people of pension able age increases. There is likely to be more encouragement in the future for people aged over 50 to stay in employment, rather than taking early retirement, as has been a growing trend over the past decade or so.

Many fortunes have been made by following the "baby boomer" generation - the post-war avalanche of born between 1946 and 1964 - as it matures.

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To quantify this new reality, the number of adults 35 years old or less will decline a total of 8.3 million between 1990 and 2000, while the number of adults older than 50 will grow by 12.2 million. Fully one-third of the U.S. population will be age 50 or older by 2010, up from one-quarter in 1991, presenting abundant opportunities for alert businesses in every sector that can successfully meet the needs, tastes and concerns of this influential and affluent niche.

 If a product is marketed to the 50-plus audience and maintains its market share, it should increase in ...

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