Wealth with Wisdom
Serving the Aging Customer 
By Cabrini Pak and Ajit Kambil

When 80-year-old Martha Smith wants to boil a cup of water in her microwave, she turns the dial to the popcorn setting and hits ‘start’. Unable to easily adjust the digital timer on the device, she repeats this three times before it is warm enough for a cup of tea. In a similar fashion, Martha has become a master of various microwave recipes, all measured in terms of how many “popcorns” it takes to cook the food.¹ At 80 years of age, Martha is part of the fastest growing sub-segment of the age 50+ population and illustrates how some aging consumers adapt to new products that have not been designed with their needs or preferences in mind.

The global population is both aging and living longer due to improvements in health care and nutrition. Age 50+ consumers are a growing economic force that will transform multiple industries unlike any prior demographic shift in recent history. Yet most companies continue to design for and advertise to the young. To capture value from the age 50+ market, managers will have to master new skills and lead the transformation of products and strategy to adapt to a changing marketplace.

With increasing longevity, there are already over half a billion age 50+ people in the world, and already the United States has more than 9.2 million age 80+ citizens. In Japan and Sweden, the odds for women to live one hundred years were 1 in 50 at the end of the 20th century compared with 1 in 20 million at the end of the 19th.^2,3 The Centre for Aging in London estimates that by 2020 there will be nearly 700 million elderly (age 65+) individuals in the world. As Figure 1 illustrates, there is a dramatic global demographic shift under way. Increased longevity will also see significant growth in the number of centenarians.

Silver Lining
Despite long-term macroeconomic and social challenges, increasing longevity in the near term creates new economic opportunities. In the United States, age 65+ consumers are the most affluent of any age segment, with many having multiple income sources.⁴ With 80 million baby boomers and 75 million “traditionalist” consumers (those born between 1900-1945) in America, the economic power of the age 50+ population is already driving major shifts in product and service consumption across industries: Consumers over 50 account for almost half the total consumer spending in the United States.⁵ Americans aged 50+ also account for nearly half of the market share in personal insurance and pensions, transportation, health, housing and food.

While the numbers are impressive, tapping effectively into the opportunities of emerging age 50+ markets will not be easy. Like other markets, senior markets can vary by country or region, age, income and lifestyle. Age 50+ consumers can be more complex in their preferences than their younger counterparts. Moreover, the widespread use of technology by retiring baby boomers makes it likely that they will exhibit dramatically different technology use and consumption patterns when they turn 80 than Martha and her current peers do.

Aging boomers clearly represent a significant market growth opportunity for today’s age-savvy technology providers. Similarly, Generation X (consumers born 1965-1980) differs from boomers and Generation Y (consumers born 1981-2000), making it difficult to predict the consumption preferences of future age 50+ individuals. Navigating these subtle differences to tap into the potential of emerging senior markets requires a deeper understanding of aging and its impacts on consumers.

Understanding Emerging Age 50+ Markets: A Framework for Analysis
Aging consumers face specific patterns of change along several dimensions. In our Deloitte Research report, Wealth with Wisdom, we introduced a framework for thinking about the changes confronting senior consumers. This general framework (Figure 2) builds on the biological, psychological, economic and social changes confronting age 50+ consumers. Understanding changes along these dimensions can help to inform product and service design and delivery decisions.

Changing Biology
Age 50+ consumers confront numerous biological changes as they age. These changes in mobility, flexibility, elasticity, strength, vision and hearing can have a major impact on how seniors interact with businesses and their products and services.

For businesses, these changes can undermine traditional approaches to promotion and even affect how consumers interact safely with products or services. Certain vision and hearing challenges can be remedied with better and more strategically placed lighting and larger signage or with relatively common technologies such as speaking kiosks, white noise dampeners or multimedia advertising. However, more complex biological changes associated with aging will require more complex adaptations of communications to customers.

Finally, the elasticity and external appearance of the skin of age 50+ individuals can change with time. While hundreds, if not thousands, of products already exist to address this consumer concern, the market for such products and related services is expected to continue to grow. The techniques and strategies used to market these products will need to take into account the preferences and tendencies of the emerging age 50+ consumers, which may vary from those we see today.

Psychological changes
Aging can trigger psychological changes, including cognitive capability or function, attitude formation and change, and even mood and emotion. Two salient aspects of cognitive capability that can change are memory and information processing capabilities. These changes can affect cognitive processes underlying brand awareness, attitude formation, information searches, comparison of alternatives, point of purchase behavior and post-purchase satisfaction.

For example, an information processing challenge faced by age 50+ consumers is a noticeable decline in the ability to ignore “noise,” or irrelevant stimuli, whether it is visual, aural, tactile or language-related. Noisy advertising that works for younger customers may backfire with age 50+ customers.

The rate of learning new information also declines with age, although Spotts and Schewe (1989) found that learning deficiency attributed to aging did not occur when the individual was allowed to self-pace the information.⁶ In light of this, managers need to assess how they inform customers through advertising and promotions as well as how they design products and services that adjust to different styles and slower rates of consumer learning.

Economic changes
As individuals and families age, they are also likely to change their patterns of saving, consumption and investment. As the economics Nobel Laureate Franco Modigliani proposed in his life cycle hypothesis of consumption, people save in early years to have stable consumption opportunities in later life. Although the empirical evidence for this is mixed, especially in the United States, individuals naturally tend to earn less and spend more from their savings as they grow older. The accumulated wealth of age 50+ consumers in the United States provides them with more spending power than any other age group.