Companies have nothing to lose and everything to gain by becoming more ageless in their marketing. In SAM 1990, I saw a long-term anemic economy on the horizon as a result of population shrinkage in younger age groups, and suggested that the well-being of the entire economy could depend on companies giving more attention to older markets:
Creative action taken today in penetrating older markets will allow for a smoother transition after the heady growth we have enjoyed for nearly a half-century. I firmly believe that older people, within the limits of financial prudence dictated by their individual circumstances, can generally be induced to spend more than past history indicates. To the degree that increased spending occurs, however, it will be brought about by a much better understanding of the psyches of older consumers than currently exists. It is their behavior patterns, not their number or their affluence, that will influence their future contributions to the consumer economy.
It’s a good bet that many older people don’t spend as much as they might because they feel marginalized by Madison Avenue. Try something. Start asking people you run into who are over 40 if they think that the people who make ads think their age group is important enough to be targeted in advertising. Then ask them if they think ad makers understand them. Keep score by age of respondent. It won’t be scientific, but the results might be revealing. Remember as you do this walk-around consumer survey that you will be talking to consumers in an age group that is 45 percent larger than the much-coveted 18-to-34 age group.
Corporate America, as well as society at-large, cannot afford the persistent, pernicious ageism that prevails in marketing. Advertisers, marketing agencies, consumers, and, not the least of all, governments who depend on a healthy consumer economy to generate tax revenues are all suffering, and stand to suffer even more as this decade rolls on. Here is the chilling reason why:
The New Customer Majority is the only adult market with realistic prospects for significant sales growth in dozens of product lines for thousands of companies.
Overall, the population growth among young adults is barely moving the needle. The traditionally all-important 25-to-44-year-old age group, which in the past contributed more to the gross domestic product than any other 20-year age group, is shrinking. It will be smaller by 4.3 million people in 2010 than it was in 2001. This follows population shrinkage in the 18-34-year-old age group that took place during the 1990s, when the number of 18-to-34-year-olds fell by more than 8 million. That triggered the end of sales growth in many youth-oriented industries including music CDs, youth apparel, and athletic footwear. Now, even though the population of the younger half of this much coveted 18-to-34 demo is starting to grow again, it is not enough to offset population shrinkage among 25-to-44-year-olds.
People in the 25-to-44-year-old age group have been crucial to a healthy consumer economy because they tend to highly leverage the purchasing power of their incomes through loans and revolving charge accounts to buy "stuff"—lots of "stuff." People in the 25-to-34-year-old age group lead in vehicle spending, while 35-to-44-year-olds lead in housing and housing-related spending. All told, spending in this age group is projected to decline by $115 billion between 2001 and 2010.
In sharp contrast, the 20-year cohort of 45-to-64-year-olds will grow by 16 million people during this decade. Sales are projected to grow by $329 billion. Taking into account the full range of New Customer Majority spending, by 2010, spending by people 45 and older will be a trillion dollars greater than spending by people between the ages of 18 and 39—$2.6 trillion to $1.6 trillion.
The population count for all adults under age 40 is now about 85 million in contrast to the 45 percent larger New Customer Majority, which numbered a little over 123 million in 2000. By 2010, the number of adults under 40 will have increased only by about 2 million people, while the New Customer Majority market will become 60 percent larger than the younger adult age group by adding more than 13 million new members. In light of these figures, what argument can convincingly demonstrate that Madison Avenue and Corporate America are on sound footing in putting the lion’s share of marketing dollars into young adult markets?
"When an event is not easily explained by what we know, we alter what we know to accommodate the new event." These words from University of Virginia’s Timothy Wilson offer a new perspective on why a turnabout in thinking on middle-age and older markets is moving so slowly. Those who defend their continuing preoccupation with first-half consumers do not understand the event of dramatic changes in customer behavior, so they alter what they already know to accommodate it. The welfare of the consumer economy, indeed of the entire national economy and thousands of companies, is being compromised by an unwillingness to change mind-sets to accommodate the new event of the New Customer Majority’s emergence as the most powerful force in the consumer marketplace today.
This article explains why research and marketing have lost their way from a fresh perspective, from a new consciousness, as it were. Albert Einstein’s famous words "a problem cannot be solved from the same consciousness that created it" describe what is necessary to begin repairing marketing, as well as consumer research. Marketing’s present-day problems have not been generated by customers, or by 9/11, or by war jitters, or by any other externality. They have been generated internally by the persistent existence of a consciousness that occludes the vision necessary to figure out why things are not working so as to be able to move on to problem solving.
No thoughtful reader will agree with everything I say in this article. Some readers may be caustically critical of some things I say. But this I promise to every reader: No one who reads this entire article is likely to ever see customers and the art of marketing quite the same. By the end of this article, I hope every reader who needs to do so will become unstuck from the 1960s, as CBS’s Dave Poltrack would put it. Beyond that, it is my intention to give every reader a sizeable array of new thought tools to better navigate the era of the New Customer Majority.