The baby boomer age wave often is characterized as a demographic and societal challenge, but it’s also a huge entrepreneurial business opportunity. The aging of the population is creating market demand for new products and services at an unprecedented pace.
I spoke recently about age wave opportunities with Dick Stroud, co-author with Kim Walker of the new book Marketing to the Ageing Consumer: The Secrets to Building an Age-Friendly Business. Dick is a U.K.-based marketing consultant and author specializing in the 50-plus market. Kim is founder and CEO of Silver, an Asia-Pacific market consulting firm working in the same market.
Q: Your book argues that 25 effects of aging determine the products older people want to purchase and how companies sell and market to the group. How should entrepreneurs think about these effects in terms of possible market opportunities in products or services for the aging market?
A: Age is an important dimension that provides insights for entrepreneurs but it cannot be considered in isolation. Like other age groups, the older demographic is sharply separated by their wealth and income. The U.S., like Europe, is going to have a large group of older people–in my view the majority–who will be forced to make substantial changes to their living standards because they lack the necessary pension and investments to maintain anything like their pre-retirement standard of living.
The opportunities that this ultra-fragmentation creates are products and services aimed at the wealthy and those where price is a dominant factor. Already we can see consumer brands with utility and luxury products in the same product category.
Q: How do those opportunities for entrepreneurial business start-ups break out in terms of categories?
A: There are two types of ways that entrepreneurs and benefit from physiological aging.
Firstly, serving the needs of companies and public service providers who need to adapt to the effects of aging affecting their customers. Companies need to rethink their packaging, signage and customer contact staff awareness. The customer experience industry hasn’t begun to respond to the challenge of increasing numbers of older consumers. Assisting companies to do this presents business opportunities.
Secondly, and by far the largest opportunity, is the demand for products and services that directly result from one or more effect of physiological aging.
The most obvious product demands are already established industries. That doesn’t mean they’re being done effectively — for instance, spectacles and hearing assistance devices. There is a massive opportunity for products and assistance with hearing products. In the U.S., only three percent with mild hearing loss use any form of hearing assistance.
There also are some less well-known opportunities. For example, loss of smell – especially for the people suffering with memory loss. There will be products that generate familiar and reassuring smells. Or, changing way that food tastes – products that recapture how ‘things tasted when I was a kid.’
Sarcopenia, or muscle loss, also presents opportunities. Older people will become increasingly aware of the impact on their life of losing muscle power. Most large food companies have products in development that will help delay this occurring. We expect the wellness industry to increasingly focus on this as the incentive for people to change their behavior.
Dementia is now the most feared condition of older people, replacing cancer. The industry for mind games and puzzles is still in its infancy. Older people will be willing to invest time and money if they believe they can improve (maintain) their cognitive abilities
For much older people the combination of reduced flexibility, mobility and cognitive powers, often combine with health related illnesses, creates the big question – ‘move or stay’.
The ageing-in-place industry is still fragmented and unfocused. In the next decade it will become a major source of business as the more extremes for of physical ageing require today’s boomers to make decisions about where they want to spend the last phase of their life.
Q: Where do you think the best opportunities exist in the U.S. market?
A: If I were starting a business it would be in the area of – wellness, healthiness, fitness and medical self-help.
My guess that this only applies to about 20 percent of the older age group but they will be the most affluent and informed about the issue affecting their bodies. A significant group of older Americans (and Europeans) will be willing to spend large sums of money to delay the effects of ageing on their ability to enjoy their life.
Two other ‘no brainer’ areas will prosper due to aging. One is high value domiciliary care and other at-home services. For instance, in the U.K. the most successful home delivery food business has become a successful franchise operation.
A second is financial services that transform property into income. For most older people the only way of having a half decent retirement will be by releasing the capital value of their property. This is still an emergent business. The fragility of most boomer’s financial preparations for retirement will ensure it succeeds.
Q: Are older people especially well suited to start enterprising serving the aging market?
A: There is nothing like experiencing the physiological conditions of aging and mixing with friends of a similar age, who are experiencing the same or other aging conditions, to translate an abstract concept into a unpleasant reality.
People aged in their 50s and 60s both experience the conditions themselves and have to cope with parents and relatives who might be suffering from extreme levels of physical ageing.
For instance, as somebody who has age-related hearing loss I am particularly conscious of the noise levels in restaurants to the extent that it determines where I eat. Or, the difficulty hearing female voices – they are at higher frequencies and often quieter than men. Or, needing to adjust the volume levels on my mobile and home phone. I would be a ready customer for simple ways of giving me more control on the sound levels of my electronic devices. The list goes on.
The bottom line is if your hearing is deteriorating you really understand how the statement “age related hearing loss” translates into creating difficulties with everyday life.
Q: What are the dangers in using this experience to drive business decisions?
A: The biggest danger is that people generalize the wants and needs of their generation from their own experience.
There is a tendency for some older people to mix the personal and the business issues of ageing. What I mean by this is that because they, or a loved one, suffers from a physical issue they become personally involved in finding a solution and then trying to commercialize the result.
Sometimes this can work well. There is nobody more evangelical about a product or service than when they have a very deep personal involvement. But, this depth of personal attachment to the product can result in them not thinking through the hard commercial issues to see if there really is a profitable business. As Tom Hagen said to Sonny in Godfather – it is “business not personal.”
Most of the ventures that I have seen created because of personal experience have either failed or remained as cottage industries. In all cases the zeal of wanting to change the world replaced the hard work of thinking through the product commercialisation — most importantly not understanding the dynamics of the sales channel.
Of course the ideal situation is a mix of personal commitment and hard-headed business thinking.
In this context, your readers might want to consider the new generation of entrepreneurial ventures that are looking to exploit the older market.
Aging 2.0 is an interesting example. Many, probably most, of these companies involve younger people. There are a couple similar examples of U.K. ventures. These new companies are attracted to the business opportunity of aging because it just that – a business opportunity. They are not trying to change the world.