What’s the best way for your business to target older consumers?

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How your business can target older consumers June 2010

Opportunity knocks for businesses engaging with our ageing society. But how should products be targeted at increasingly savvy older consumers?

When the main political parties campaigned for votes in the general election, one group they could not afford to ignore was Britain’s over-60s, they were sure to target older consumers. As Age UK—the new charity combining Age Concern and Help the Aged-declared in its own manifesto: “Our power is our number, there are now more than 14 million people in the UK aged over 60—and we vote. The prize for those who successfully engage with us will be huge.”

The parties were obviously listening. But now the new government faces a huge challenge. “Alongside climate change, population ageing is the greatest global transition we will face this century,” says Michelle Mitchell, director of Age UK. Figures from the Office for National Statistics (ONS) show the number of people aged 60 and over will double to 29 million by 2033. Yet, says Mitchell, this group continues to face age discrimination in employment, medical treatment and financial services, and later life is ignored when it comes to building communities and providing services.

It’s not only ministers who must act. Many businesses are yet to face up to an ageing society, explains Mark Gettinby, group product development manager at Age UK. He says: “Many older people feel disenfranchised by what businesses offer in terms of products and services.”

An ICM Research survey published in March last year found that 55 per cent of over-50s feel that businesses have little interest in their consumer needs. ONS says this group had about £97bn to spend in 2008. Age UK reckons the figure is now likely to have passed £100bn.

Gettinby believes there is still a lot of prejudice among businesses towards older people. “They [businesses] don’t regard them as being particularly wealthy and therefore not a lucrative market, which is completely misleading.”

He says the huge focus on young people has diverted attention away from where society is heading. “The pursuit of youth has been the be-all and end-all, they are often regarded as a better bet,” he argues.

Yet research by advertising agency AdMob shows that for Apple’s iPhone the over-55 market is more lucrative than the 16 to 24 group. “They [the over-55s] have the money and the inclination, and they know what they like. They want good-quality, reliable products and they are prepared to pay for them,” says Gettinby.

Melanie Haslam, founder of Wise Branding, a consultancy that advises on marketing to older people, agrees a significant amount of marketing spending is targeted at under-50s. “And the profile of the people doing the marketing tends to be younger as well. There is nothing wrong with that, but they just have to be aware that there is a bridge to cross in terms of understanding older audiences,” she says.

But Jeremy Myerson, director of the Helen Hamlyn Centre at the Royal College of Art, says this is part of the problem. “Product development and marketing are very youth-oriented. If organisations don’t have a representative sample they have a skewed view of this issue and tend to fall back on the old stereotypical solution,” he says.

Myerson believes too many companies are still designing products and services with younger people in mind. “It’s astonishing that after all the success of Apple, which has a very user-friendly interface, too many companies make the mistake of having what I call an engineering-led approach where you get young male engineers just adding feature upon feature,” he says.

Haslam reckons there is huge reluctance to face issues around ageing. “People put barriers up about ageing and stereotyping is another way of putting a barrier up,” she says. “One of the stereotypes is assuming older people are all the same, but the older population is more complex than the younger population.”

Julian Healey, managing director at Springtide Marketing, agrees. “When you talk about the over-50s or over-60s, this is a huge age range. Many people in their fifties don’t feel anything like that old and they have a much younger outlook on life,” he says.

And Sue Hewer, lead consultant on health and inclusive design at the Design Council, believes there needs to be a shift in public attitude towards older people. “We need to start valuing them for their contribution to society. There are people in their sixties who are working, looking after their grandchildren and maybe juggling with caring for a parent as well,” she says.

Haslam believes there is a growing understanding of the older market because of the political agenda (including the huge welfare costs of an ageing society) and the recent recession. “When businesses are struggling they look for other opportunities,” she says.

Anecdotal evidence, Gettinby says, suggests the older market has fared better than other sectors in the downturn. One financial advice firm told him this demographic group had helped it through tough times. Older people still had money and wanted to ensure a proper return.

The finance industry has long provided products for older customers—from pension plans to medical insurance. “Financial services companies have recognised that much UK wealth is owned by people who are well over 50. So targeting this market is nothing new but, as the demographic bulge continues, it becomes more important,” Gettinby explains.

On the other hand, research by Age UK published in January shows age discrimination in the insurance industry remains rife. Half of motor insurers and a third of travel insurers exclude people aged over 80 irrespective of their health. “Bear in mind this is the generation that invented the concept of package holidays and now find themselves unable to go on one because they can’t get travel insurance,” says Gettinby.

Then there are companies such as Saga that recognise older people claim less, says Springtide’s Healey, who was head of marketing at Saga in the early 1990s. “Saga recognised that, in general, older people are more careful with their possessions. They grew up in a generation that wasn’t such a throwaway society,” he explains.

Hewer believes the wide variety of people within the older market presents immense opportunities for companies. From the “young old”, who are happy to “ditch everything and go travelling” to the other end of the scale where people are more likely to be staying at home and the assisted-technology products associated with that lifestyle. But, she says, these products need to be made much more appealing.

Myerson agrees. “You’ve got to design stuff that incorporates the frailties of ageing while looking fantastic. In the past, older people were given rubbish design—aids and appliances looked like bits of hospital kit. People won’t have that now. This new generation of older people were the first rock and roll teenagers. They are very demanding, savvy consumers,” he says.

Myerson reckons many people in the past have gone into institutional care because of bad design—their kitchens and bathrooms meant they weren’t able to cook and bathe properly. “The potential welfare costs of an ageing population is a huge issue,” he says.

This is why the government is driving inclusive design through the Design Council. Hewer is working on a project about independent living for older people, looking for gaps in services or areas where design-led solutions can make a difference. One successful product is the BT Big Button phone. “That’s a fantastic, inclusively designed product. It’s great for people who need more help with eyesight and hearing, and it’s also a big winner for the mainstream consumer,” says Hewer.

Another success story is Oxo Good Grips, a range of easy-to-use kitchen utensils developed by Sam Farber. Although his wife’s arthritis gave him the idea for the range, Farber was convinced the products should have mass-market appeal. “Why shouldn’t everyone who cooks have access to comfortable, attractive tools?” he asks.

Some car companies, too, are clever in the way they address the ageing population, says Myerson. Ferrari—whose average buyer is in their fifties—has been looking at how older people get in and out of a low-slung sports car. Others are making dashboard information bigger and easier to read.

Last year, Age UK launched the Age OK accreditation mark for “age-friendly” products and services. The first product to gain the accreditation was a Sky remote control that was designed for better grip—a big problem among older people.

Gettinby says: “Companies are keen to get Age OK on their products and communicate that it is an inclusive product. Classic design lasts for a long time. But it’s not just about designing a product for older people, it’s getting the design ethos to be more inclusive. If you design for all you’ve a much better market opportunity.”

Hewer thinks it is vital that businesses involve older people in the design of products and services. “The user is at the heart of everything. Older people are very willing to help,” she says.

Gettinby agrees. In 2007, Help the Aged set up the Engage Business Network to advise companies on adapting and designing products for older customers in an ageing society. “We knew there were problems out there and companies who were interested in doing something about it,” he says.

The network has worked with many household names including BT, British Gas, Comet, Sky, Microsoft and Marks & Spencer to give them a better understanding of the issues older people can face—such as macular degeneration, glaucoma and cataracts. “It’s obvious you should not and cannot take for granted that people can read,” says Gettinby. “Packaging can be a big issue, being able to read it and being able to get into it.”

Another area for improvement is the retail experience. “Location is a problem for people who don’t have access to transport and who can’t drive a car so consider where you are in relation to things like bus routes,” says Gettinby. “These are simple, straightforward things, but if you want to address a particular market then you’ve got to take such considerations into account.”

Older consumers: two case studies

Company Pegasus Retirement Homes
Sector Housing
Peter Askew, chief executive of Pegasus Retirement Homes, knows his company has an enormous market. His difficulty is finding the sites to support the product. “It’s about finding somewhere people can walk to the shops, where crime is low and it’s a desirable place to be,” he says.

The average age of a Pegasus owner is 78. They are the downsizing, private-pensioned, active retired, looking to maintain an independent lifestyle. “These are not nursing homes,” says Askew.

Pegasus homes offer safety and security, and little maintenance. The average apartment costs £250,000, but prices differ depending on location. Every development has a communal owners’ lounge, lifts and wide doors so that those with mobility problems can manoeuvre a wheelchair.

In 2007, turnover of £40m resulted in profit of £6.6m. But since January 2008 business has been slow. “The difficulty has been our client base being able to sell their homes,” says Askew. With a growing market, Pegasus is waiting for the property market to recover.

Company B&Q
Sector Retail DIY
Every Wednesday, shoppers over 60 visit their local B&Q store to make the most of one of the retailer’s most popular customer days—Diamond Day. The DIY group’s Diamond Card membership is free for anyone over 60 and offers 10 per cent discount on products.

Last year, 2.2 million Diamond cardholders took advantage of the discount, with 25,000 new members joining each month. As the “improve don’t move” trend continues, the company has high hopes this year for further membership growth. Research carried out by B&Q last year found that the average grandparent is more skilled at many basic DIY jobs, such as tiling walls and bleeding radiators, compared to someone half their age.

pegasuslife.co.uk
B&Q

By Sarah Hanson

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