The Center of Attention

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Courting today's older consumers requires a multi-dimensional strategy.

When banks wanted older consumers to make the switch to electronic banking in the 1980s, they simply jacked up rates for those services that required a teller. In some branches, they eliminated teller service altogether. It worked. As a result, most bank customers use automated teller machines instead of queuing up inside a bank. Effective? Yes, but not the best way to market services to seniors, says Bill Burkhart, chief executive officer of Age Wave IMPACT, an Emeryville, California-based marketing firm that specializes in the over 55 market.

A better approach is giving seniors choices. Take Charles Schwab, the discount broker that pioneered the self-directed brokerage industry. It has lots of channels to make customers comfortable - including broker services via the Internet, telephone, and even in person through its branch offices. Although an Internet trade might go through faster than waiting on the phone for a representative, the company recognizes that not everyone is ready to jump aboard.

If you're targeting older Americans these days, the traditional media outlets are just the starting point. Older consumers are demanding more from those that market to them. And soon, businesses may have no choice but to use the Schwab model. While there are only 35 million Americans aged 65 and over today (that's still more than the number of teenagers), by 2010 the U.S. Census Bureau estimates there will be roughly 50 million, and that number will grow to 70 million in 2030. The sheer numbers are making companies, and the marketers who speak to them, take notice. Businesses are waking up to the fact that reaching older consumers requires targeting them via multiple media channels, and giving them multiple choices.

The reasons are obvious. As George Moschis, director of the Center for Mature Consumer Studies at Georgia State University in Atlanta, puts it: "It's a lot of people with a lot of buying power." Just how much purchasing power? The Federal Interagency Forum on Aging Related Services says that between 1984 and 1999, the median net worth of households headed by those 65 and older increased 69 percent, while the median net worth among households headed by someone age 45 to 54 actually decreased by 23 percent. Put another way, seniors have twice the discretionary income as their children, ages 25 to 44, according to Beacon and Fey, a marketing firm based in Towson, Maryland. All told, Americans over 65 control $7 trillion in wealth, over 70 percent of the country's assets.

Even in an increasingly segmented market, the traditional methods of advertising are still an effective way to reach the older consumer. Older Americans watch more television and spend more time reading the newspaper. According to a study by the National Opinion Research Center, of those who are aged 65 to 74, 71 percent read the newspaper on a daily basis, compared with 42 percent of the total population. The same study notes that 33 percent of those 75 and older watch five or more hours of television on a daily basis - more than any other age group. Seniors are also one of the few target groups that actually take the time to comb through their mountains of direct mail. That's why Evergreen Direct, a direct-mail marketing firm in Middlebury, Vermont, still prefers to use the snail mail route. Seniors spend more time at home, and have the hours to pore over the things, says Suesan Randlett.

But the older segment isn't just stuck on the older media. America's fiftysomethings are embracing the online world with Internet speed. While just 19 percent of those aged 50 and over are online, their usage is growing faster than any other group. And of people over 50 who go online, 92 percent shop and 78 percent make purchases, according to the Greenfield Online Study, "Surfing Seniors." Not surprising, given that chronic conditions among the elderly are on the rise, a study by Dow Pharmaceutical found that 74 percent of seniors use the Internet to find health information and are looking at sites related to chronic conditions. What is surprising is that 43 percent of seniors who shop actually buy computer software and books, compared with around 20 percent of the overall Internet population, the study says.

"It's becoming very viable," says Kathy Curry of the Sandcastle Group, a Minneapolis-based marketing consultant firm geared toward the mature market. Particularly true since those over 60 are a generation of letter writers. Word-of-mouth, even in this high-tech medium, is still an effective method.

American Express is one company that has found the right formula, Curry says. In addition to print and television ads, the credit card and financial services giant conducts informational seminars on financial planning. Rather than try to close a deal that day, the seminars are designed to let people mull over the idea of investing. "The sales process respects the need to think things over," says Curry. "It guarantees what's important to older consumers - that they have an appropriate time frame."

However, some marketers still don't get it right when targeting older consumers, says Burkhart. "Studies show that someone over 60 views themselves as 15 years younger," he explains. "Whereas your typical 30-year-old copywriter, if you ask them to pick a 60-year-old out of a group of seniors, they'll pick out someone who's 75 years old." (See our exclusive survey on attitudes toward the elderly in Toplines, "The Old and the Restless" p. 8)

The problem is that businesses typically don't market to an age group that's 15 years older, but "they're 30 years off," Burkhart adds. Instead, successful marketing focuses on the key events that shaped the generation that came of age in the years after World War II. The 1950s and early 1960s were the first years of the Cold War. That generation was shaped by fear of nuclear war, so marketing that uses scare tactics doesn't work, marketers say. "It tends to cause a spike in response rates, but it doesn't build a long-term relationship," Burkhart says.

In the retirement arena, materials that stress the benefits of retirement do better than messages that make consumers worry about finances. "It's not, `You're not going to have enough money retire,'" Burkhart says. "It's, `You're entering a second career, how are you going to manage this second career?'" That approach has paid off for financial services companies, as older Americans own 40 percent of all mutual funds and constitute a third of all stockholders. They also own 60 percent of all annuities. That's why a firm such as Schwab sees the benefit of opening lots of channels, even if a pure online alternative would cost less, says Burkhart.

Certainly some industries have taken notice of the over-60 crowd because their livelihood depends on it. Pharmaceutical companies, for example, have made a point of targeting the older crowd. But just as the media channels that speak to this group are widening, so are the companies willing to target them - such as leisure travel, specifically cruise ships - notes Moschis of Georgia State. The companies that are most effective never mention age. Instead, the ad campaigns and marketing materials that focus on the positive attributes of the activities, Moschis says.

After all, with today's advances in modern medicine, "old age" is a relative term. Those who live to age 65 can expect to live an average of 18 years more, reports the Federal Interagency for Aging-Related Statistics. For a marketer, that means they'll be customers longer, and building loyalty now; even a consumer over age 60, could pay dividends later on. What's more, the number of people 65 and older with chronic disabilities declined to 21 percent in 1994 from 24 percent in 1982 the same agency reports. So while people are living longer and healthier lives, marketing to them has changed, says Suzeanne Benet, marketing professor at Grand Valley State University in Allendale, Michigan. It's not about placing a few "older people into the ads," she says.

For example, Hasbro recently introduced a larger print version of its board game, Scrabble. The target for the new version is the mature market. But marketing materials didn't say so explicitly, and didn't feature "old people" in ads, Benet says. Instead, the company simply used the picture of a game board and a pair of (not so old) hands to demonstrate the point.

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