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

Older Americans control more than half of the consumer economy, but individually they face a variety of obstacles as shoppers or personal financial managers. In a 2004 study the American Association of Retired Persons (AARP) noted:

• Age 45+ consumers often lack knowledge of basic financial and investment terms.
• Only 52 percent of respondents reported knowing that diversification of investments reduces risk.
• Individuals age 65+ are less likely than all other adults to have checked their credit card reports.
• Older persons cite experience, family and friends as key information sources for financial information and money management.
• Other findings from the AARP study note that 30 percent of baby boomers cite “lack of time” as a shortcoming to their financial management capabilities; 11 percent report a lack of information; and 10 percent cite confusion about advice they had received. In addition, approximately 4.4 million households age 50+ try to manage their money without a checking account; many older consumers keep an ongoing balance on their credit cards; and the level of debt and number of bankruptcies among older households rose sharply between 1991 and 2001.⁷
• Despite the economic power of the aging consumer, studies show that many are not effective at managing their wealth. This has motivated the AARP to work with the financial services industry to improve services to the elderly. These include increasing financial literacy, improving the provision of customer information, increasing consumer choices and financial service options, and providing higher-quality advice to older consumers.
  

Changing Social and Kinship Roles
As individuals mature, their social, professional and kinship roles and networks change.
These changes can have profound impacts on the purchase of homes, vacations, gifts, dining, entertainment, retirement, long-term health care and other purchases. Because consumers are not islands of preferences, it is important to understand how they are mutually connected and influence the purchases of others.

The aging of group members and the extended social network can change the consumption of the original family. For example, as grandparents age and choose to live in warmer climates, seasonal family events such as a Christmas holiday family dinner may change venue from a location in the Northeast to a location that is warmer in winter and more accommodating to aging family members.

Similarly, the extended network can influence the consumption of products and services targeted to another generation. The purchase of gifts by grandparents for grandchildren, for example, can drive demand for certain toys, clothing and other products. Alternatively, the purchase of goods or the consumption advice offered by adult children to their aging parents can impact consumption behaviors in a variety of industries ranging from travel and leisure to health care, education, work benefits programs, life insurance, financial services and real estate.

Like family networks, other social and professional networks also influence consumptions. As people age, their networks become increasingly complex and overlap as individuals take on multiple roles. These changes in social and professional roles and networks yield complex and interrelated needs and consumption behaviors in age 50+ markets. Thus consumption is not always an individual action but can become a collective action of consumers, their families or other network participants.

These changes make for a complex age 50+ marketplace. Some of the changes can be modeled, but for others there is much we do not know. Can personal relevance contribute measurably to how, what and where consumers buy? Personal relevance refers to how much a specific issue concerns the customer. It can be influenced by the customer’s relationships, prior beliefs and a variety of other factors.

For example, U.S. baby boomers are said to focus on products, services, and information that reflect their search for healthy lifestyles, diet, exercise, comfort and image. We have seen peaks in sales of bottled water, non-fat foods, diet books, non-stick frying pans, spa services and cosmetics in recent years. Anti-aging is the mantra of many older Americans and serves as a personally relevant handle in packaging and advertising for these consumers. One approach to responding to this group involves reconnecting them to their experiences as young people from music to shared events that shaped their generation.

Aligning Offerings to Aging Consumer Markets
Despite the challenges of modeling complex dimensions of customer intent and behaviors, a number of companies are already beginning to align their products and offerings to changing characteristics of the age 50+ market.

When Ford Motor Company discovered driver fatality rates were higher for drivers over the age of 50, it began to seek ways to increase occupant safety for these drivers, including crash avoidance, crashworthiness and post-crash assistance.⁸ But how could engineers and designers understand and experience the physical limitations that accompany old age?

To address this challenge, Ford engineers created the Third Age Suit, which looks like a cross between a beekeeper’s protective gear and an astronaut suit. Wearing the suit lets engineers simulate mobility, strength and some of the vision limitations of someone nearly 30 years older. The suit adds bulk and restricts movement in key areas of the body such as the knees, elbows, stomach and back. Gloves that lessen the sense of touch and goggles that simulate cataracts also reduce capabilities. Developed in 1994, the Third Age Suit has been used in the design of many Ford vehicles, allowing Ford designers to introduce enhanced design for aging consumers, including ease of entry and exit from vehicles.

Ford continues to use the Third Age Suit in the ergonomics training of program teams, and the suit is now making its way to other firms trying to simulate and design products and services for the senior market. For example, architects from Capita Symonds are using the suit to help them redesign the Derby City General Hospital in the UK.⁹

Boston-based Fidelity Investments, one of the world’s largest mutual fund and investment companies, interacts in key ways with its customers through its website. To improve the interaction, Fidelity’s usability lab has been researching, through unobtrusive observation and a series of “talk-through” sessions, how older users navigate its websites. The results have been fruitful.¹⁰

Older participants tend to read most of the text on a page and to be more cautious in everything they do on the Web, including clicking on links. They prefer larger text; are more likely to click objects that look “clickable,” including bullets and headings, and they have difficulty clicking small text links. Numerous experiential differences contribute to older users’ overall level of confidence and anxiety in using the Web and they often do not understand the terms that younger users consider common knowledge. Fidelity is incorporating these insights into an improved web site design for easier navigation and task accomplishment by aging users.

In 2003, Walt Disney rolled out “Magical Gatherings,” an offering largely aimed at people over 50 who are organizing outings with friends, grandchildren and former schoolmates. The program allows customers to use a website to plan the trip and simplify the creation of a common itinerary. “Magical Gatherings” is highly appealing to grandparents who want to travel with their grandchildren, and Disney’s theme parks continue to be a popular venue for multigenerational family visits.¹¹ This offering cleverly taps into the social and kinship networks of aging consumers, creating a social landscape that includes everyone in the group. From rides, shows and entertainment options to dining and recreational recommendations, the company recommends experiences that can be enjoyed together, without having to separate or split up across generations.¹² Service industries that discover opportunities to tap into the networks of senior consumers have the options to create new offerings and tap new revenues.

Another company entering the age 50+ market is the Saga Group, based in the United Kingdom. Saga is dedicated to serving customers age 50+. Saga, which was originally a direct marketer of vacations to seniors, now offers services ranging from a lifestyle magazine to financial services (investments and insurance), vacation travel, health products and advice, and radio channels targeted to the tastes of age 50+ consumers.

Saga also enables its clientele to better manage and tap into their social networks. Saga.co.uk, the online portal to services for the age 50+ market, has “community” features that allow users to search for old school friends, colleagues who have served previously in the army, etc., and allows for connections among those with common interests.

There are tremendous opportunities and economic imperatives to serve this market better. To profitably seize the opportunities, managers must understand how senior markets evolve and adapt products and service offerings along multiple dimensions to meet the needs of senior consumers.

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