Golden Years -- Marketing Surprise: Older Consumers Buy
Stuff, Too --- Sony, Ford Look to Boomers And Beyond,
Challenging Obsession With Youth --- Grandma Films Some Sharks
By Kelly Greene
6 April 2004
The Wall Street Journal
Linda Carter, a
51-year-old hotel manager in Palm
Desert, Calif., was
planning last year to spend a thousand dollars or so on
a new engine for her 1970 Volkswagen Beetle. Then a TV ad for a Sony digital
camcorder caught her eye.
The spot featured a
gray-haired astronaut filming Earth from space with his own camcorder. The
tagline: "When your kids ask where the money went, show them the
tape." Soon after, Ms. Carter walked into a local electronics store and
walked out with a $1,200 Sony camcorder.
Ms. Carter was impressed
by the ad's focus on her age group. "As we got older, we stopped getting
attention," she says. "But we're still spending a lot of money."
The push by Sony Corp.
to hook people such as Ms. Carter is part of a budding revolution in marketing.
After decades of obsessing over people in their twenties, some of the world's
best-known companies are setting their sights on older consumers, an audience
habitually written off as poor, excessively frugal or stuck in a rut of buying
the same brand.
Ford Motor Co. plans to
sell a sedan for empty-nesters with a trunk that holds eight golf bags. Target
Corp. stores are carving out large chunks of space for khaki pants and flowing linen separates aimed at older bodies. Music
retailer Virgin Megastores is redesigning its stores
to appeal to Led Zeppelin and Miles Davis fans.
Driving the shift are
big numbers. The 78 million Americans who were 50 or older as of 2001
controlled 67% of the country's wealth, or $28 trillion, according to data
collected by the U.S. Census and Federal Reserve. What's more, households
headed by someone in the 55-to-64 age group had a median net worth of $112,048
in 2000 -- 15 times the $7,240 reported for the under-35 age group. And within
five years, about a third of the population is going to be at least 50 years
One challenge: How do
you get the attention of older customers while making it clear to younger
people that your brands are still cool? Some companies are discovering that ads
featuring older people can speak to younger people too. Sony found that its
commercials showing a grandmother taking underwater pictures of sharks scored
well with young viewers, who related to the adventure. Other companies continue
to use young models but slip in messages that are likely to resonate with older
audiences -- the approach used by Anheuser-Busch Cos. in its successful
marketing of the low-carb Michelob Ultra beer.
Sony has poured more
than $25 million into advertising to make the company's camcorders, digital
cameras and other high-end gadgets more appealing to people between 50 and 64.
Sony calls them "zoomers" to reflect their
increasingly active lifestyles. The push is successful so far: Camcorder sales
shot up to a "high double-digit growth" rate last year, says Chris Gaebler, market intelligence and strategy director for the
electronics unit. "Ten percent growth is considered good."
Walt Disney Co.'s Walt
Disney World rolled out a program called "Magical Gatherings" last
year. It allows customers to use a Web site to plan trips and is largely aimed
at people over 50 who are organizing outings with golfing buddies, old
schoolmates or their grandchildren.
And Microsoft Corp.
started publicizing software tools in February -- with easier-to-read text,
audio alerts and mouse alternatives -- to help older workers who are developing
vision, hearing and wrist problems.
David Wolfe, a Reston, Va., marketing
consultant who studies the 45-plus population, believes the traditional view of
older consumers started to crack in early 2002. That's when Disney's ABC
television network tried to grab comedian David Letterman and his younger
audience for the 11:30 p.m. time slot held by 64-year-old newscaster Ted
Koppel's "Nightline." Mr. Koppel stuck up for his age group, saying
at the time that "60- and 70-year-old people buy things." Ultimately
he kept his show, and "the imbroglio made it OK for the first time to
really question Madison Avenue's thinking," says Mr. Wolfe.
Recent research has
begun to cast doubt on the conventional wisdom that marketing should mainly be
directed at young people. One argument runs that it's best to "get them young" because older people have already decided
their brand loyalties. But a 2002 study by AARP, the Washington-based advocacy
group for people over 50, and RoperASW found that for
most products the majority of people over 45 aren't loyal to a single brand.
beer maker, attempted to reach the 50-plus age group and wound up creating one
of its top-selling brands. The push was sparked by the realization around 2000
that "another 29 million people would be in [the 50-to-69] age bracket by
2010, and they're living a more active lifestyle," says Bob Lachky, vice president of brand management for
beer unit. "We thought, `There is an opportunity here that nobody else is
capitalizing on.' "
In an attempt to woo
older drinkers back to beer from wine and other less-filling beverages (which
people tend to prefer as they grow older), Anheuser-Busch created a low-carb formula and tagged it "Michelob Ultra." The
name plays off a brand better known to older drinkers than younger ones. In
2001, the company started rolling out the product in three retirement hot spots
in Florida -- Punta Gorda, Naples and Fort Myers --
and then in a few larger markets.
The beer maker initially
hired seven "mature marketers" age 50 and older to talk up the new
brand at golf clubs, retirement communities and veterans' halls. It has since
expanded the team to 36 people. As it turned out, the target audience didn't
want Anheuser-Busch to "talk to my age" or show people with gray hair
in Michelob Ultra ads, says Mr. Lachky. "They
said, `Talk to my lifestyle.' They were more interested in learning about lower
carbs and lower calories." So advertising
shifted to younger models in active pursuits.
The pitch seems to be
working. The Ultra brand, rolled out nationally in September 2002, is now on
the verge of breaking into the top 10 beer brands sold in the U.S. by volume, says Mr. Lachky. The boom in low-carb
foods has helped greatly but Mr. Lachky says,
"You can't lose sight of what got us here. There was a nugget of knowledge
in this 50-plus demographic that spawned this power brand."
Ford is attempting to
solve the riddle facing all auto makers: What will baby boomers, who have
snapped up sport-utility vehicles, start driving as their kids move away from
home? It's a crucial question, since the average American household buys 13 new
cars over the course of a lifetime -- including seven after the head of the
household turns 50, according to CNW Marketing Research Inc., of Bandon, Ore.
About five years ago, as
car buyers started buying more SUVs than cars for the first time, Ford's
marketers started asking them why. "They told us, `We don't feel like
we're in the game when we're driving cars. There's an SUV in front of us and a
big truck behind us, and it doesn't feel safe,' "
recalls Amy Marentic, marketing manager for
the Ford Five Hundred, a car being rolled out this fall to target older
drivers. "We took that information and said, `OK, we know boomers buy SUVs
and some minivans, so let's put these guys back in the game with a car --
because we know deep down they love sedans. Once they're done driving their
kids to soccer games and hockey games, they won't need SUVs.' "
The Five Hundred will
include popular SUV features such as raised seating, all-wheel drive, space to
haul a 10-foot ladder and a roomy trunk for all those golf bags. It's also the
first Ford to be built on a Volvo chassis, in an attempt to appeal to boomers'
affinity for European styling, Ms. Marentic says.
The sedan's marketing
won't mention that the Five Hundred is designed for an aging population because
Ford believes boomers are fighting the idea that they're getting older. The car
would be a good fit for Ms. Marentic's own father,
for example, who commutes 60 miles each way to his job in Michigan. "But I would never say, `Hey,
Dad, this will be easy on your back now that you're 63,' because he still runs
marathons," Ms. Marentic says.
Older music lovers are
an increasingly important audience for retailers at a time when many young
people are downloading music free or at low-cost Web sites. Music sales slipped
to $12.6 billion in 2002 from a peak of $14.6 billion in 1999. Retailers would
like to take a cue from the concert business, where boomers have made $100-plus
ticket prices routine and many of the biggest-grossing acts are boomer
favorites such as the Eagles.
In November, the Virgin
Group's Virgin Megastores revamped its San Francisco store to
include sections that appeal mostly to older listeners. In the jazz section,
Virgin added reproductions of 1930s jazz posters from famous clubs, reference
books and Miles Davis T-shirts. In the new "mind, body and spirit"
zone, there are relaxation CDs, self-help books, personal journals, yoga balls
and DVDs about the Pilates exercise method. Rather than explicitly label the
sections by era or age group, Virgin says they target different "lifestyles."
"There are a lot of
people who want to buy music but aren't quite sure where to start," says
Dave Alder, senior vice president of product and marketing for Virgin
Entertainment Group, North America. (He's 39
and plays guitar in a rock band.) "If you liked Led Zeppelin in the '70s,
there's no reason you wouldn't like the Darkness or Jet." Virgin started
adding kiosks three years ago, with more than two million clips of songs, along
with staff recommendations and reviews, to help older listeners make such links.
Virgin declined to
release sales figures, but Mr. Alder says the experimental store is
outperforming the company's other 21 U.S. locations. Several of those
sites are set to get the same sort of makeover later this year, a spokeswoman
Many companies are just
starting to reach out to older adults. When Procter & Gamble Co. began
research 18 months ago to pinpoint a variety of consumer "segments"
it should target, "it quickly became very clear, due to the sheer number
of people who fall into [the 50-plus] segment, that this is . . . an important
group to focus on in ways that we haven't before," says P&G
spokeswoman Stefani Valkonen.
P&G has started to
shake up stereotypes among its own marketers and managers. One tool: a video
depicting a day in the life of an older consumer. So far, P&G has
pinpointed about 30 existing products -- such as Puffs tissues and Downy fabric
softener -- that it can market more directly to people 50 and older. Work has
begun on advertising plans and on a new partnership with AARP that may include
joint marketing and research.
Marketers at Sony had to
overcome skepticism within the company before targeting older consumers.
"It's very easy to convince executives here that we have to target
generations X and Y, because it's easy to think that if you get that first
purchase, you get set in your brand ways," says Mr. Gaebler,
the market-intelligence director. He used demographic research to show the
significant differences in buying power between generations.
"A hundred dollars
is a lot of money for a 20-year-old, but it's not a lot of money for a lot of
people over the age of 50. You're at the senior end of your earning career, and
you might contemplate buying a $5,000 home-theater system," he says.
featuring older videographers resulted not only in a
sales spurt but even more surprisingly in a boost to younger generations'
"youthful perception of Sony." Mr. Gaebler
thinks the younger crowd could relate to the risky feats played out in the
spots, including the ad in which a grandmother gets into an underwater cage and
takes pictures of sharks attacking.
The results convinced
"executives inside our company that this is a group worth targeting,"
Mr. Gaebler says. "Now, it's almost as if we
don't have a distinct `zoomer' effort. From
executives to engineers, they're thinking about zoomers
when they make decisions."
Gray Means Green
Median net worth for U.S. households by age as of 2000
75 and older
With home equity: $100,100
Excluding home equity: $19,025
With home equity: $120,000
Excluding home equity: $31,400
With home equity: $114,050
Excluding home equity: $27,588
With home equity: $112,048
Excluding home equity: $32,304
With home equity: $83,150
Excluding home equity: $23,525
With home equity: $44,275
Excluding home equity: $13,100
34 and younger
With home equity: $7,240
Excluding home equity: $3,300
Source: U.S. Census