Age-friendly business: Opportunity vs affordability
By Carol Yip
Saturday Jan 22, 2011
WE are moving towards an ageing society. There will be more ageing consumers. And companies are taking notice. While older consumers have spoken with their wallets, they don't want products that identify them by age.
According to Kim Walker, chief executive officer of Silver Group Asia, the greatest opportunity for businesses today lies in adapting existing products and services to meet the changing needs of an ageing customer.
Today's ageing customer is active they still eat out, travel, entertain, educate and grow'. So the key is to understand what must be done to keep products and services relevant to consumers as they age.
By understanding these needs and integrating them seamlessly into their offerings, companies can make their product and services both attractive and age-friendly. Astute consumer marketers now see this as an important business imperative. The physiological effects of ageing are both relentless and universal, albeit affecting different folks at different ages.
Aging is a sensitive issue. So how can companies meet the needs of older consumers without making them “feel” older? Corporate and social researchers believe that an understanding of individual attitudes and behaviour is the key.
Older but not old
In SilverPoll, conducted by Silver Group Asia, amongst 170,000 50+ consumers across the Asia Pacific region in 2009, when asked: “How do you think and feel relative to your actual age?” 39% of respondents said they felt 5 to 10 years younger than their age. Furthermore 23% were annoyed at being perceived by others as being older than they felt themselves. They are indeed older, but not old'.
Walker makes it clear when he states, “Many people make the short-sighted assumption that the business potential of the 50+ group is restricted to products and services for older people'. While such opportunities certainly exist in this area, it's a niche!”
He goes on to elaborate, “The greatest opportunity for business lies in adapting existing, everyday products and services to meet the changing needs of an ageing customer. The key is to understand what must be done to keep products and services relevant to consumers as they age both physically and emotionally.”
Companies should rethink their entire customer experience with an understanding of the physiological effects of ageing to make the experience age-friendly', not age-defining'. Understanding the effects of ageing and their impact at different stages of the entire customer journey is the fundamental starting point to create an age-friendly experience, and the key to unlocking the huge potential of the 50+ market. Importantly, if done right, this strategy can even increase relevance and avoid alienation with younger market segments.
The lessons learned while extending products to older ages can even be redirected towards targeting the younger markets.
While the physiological aspects of ageing are global, relentless and incredibly influential over customer preferences for mature buyers, this doesn't diminish the importance of other psychological and behavioural traits and also the financial affordability aspects of older consumers.
Ageing is also influenced by culture, environment and location in other ways.
Older consumers may be sandwiched' between their children and their own aged parents. While they may have the financial means to spend now for their children, their spending capabilities and affordability can be strongly influenced by the features and benefits of the products and services available for themselves and their parents.
Older consumers are more price-sensitive
Based on Jim Gilmart's article “10 behavioural distinctions of older customers”, with respect to discretionary-purchase decisions, older customers tend to:
Have a decreased sensitivity to price;
Increased sensitivity to affordability; and
Sharply increased sensitivity to value.
As they age, older customers may develop higher economic “literacy” and skillfully apply it to get the best price. Years of experience buying products and services equips them with better knowledge and superior negotiating skills. They become more intelligent purchasers.
When purchasing “need” items, experienced buyers tend to be more bargain-minded, whereas when purchasing “desire” items, older customers tend to be more value-minded in a holistic sense. Without a generous income stream, these buyers are keenly aware of their limited retirement savings, the cost of old age care, medical and healthcare and have seen enough to know the dangers of debt burdens.
This suggests that for a product to sell to today's broad demographics, it must be both age-friendly and affordably priced. Only then will the item be purchased, leading to a win-win situation companies get to increase their market share while older consumers get to spend their money on goods and services that suit their needs and wants; within their affordability.
Broad access to age-friendly services
Going beyond age-friendly consumer products, we can apply age-friendliness to transportation, housing, buildings and shopping centres. In practical terms, an age-friendly environment adapts its structures and services to be accessible to and inclusive of all people with varying needs and capacities.
Beyond community services, senior citizen clubs and recreational services focused to serve the aged population, we all have to be age-friendly to our older customers. Though certain places like hospitals cater to older patients for obvious reasons, there are many areas where we can improve age-friendly services in our retail environment.
When we achieve an age-friendly living environment, with a range of opportunities, services and recreation options available at age-friendly prices and discounts offered to promote social participation and entertainment, we will have fewer older people being isolated.
The social cost of widespread loneliness and depression amongst older people can be counteracted by a spirit of inclusiveness in the community.
In a nutshell, there are many benefits in both the economic and social sense if we start to look at age-friendly business and service opportunities and promote financial affordability for older consumers. After all, age and money are sensitive topics for all of us!
Yip is a personal financial coach and also founder and CEO of Abacus for Money