September 2007 - Boom Times

With annual spending power of more than $1 trillion and a propensity to spend, baby boomers are an attractive market. But the demographic is complex and elusive. Old assumptions can lead a marketer astray.

By David Lustig

If success in the real estate business is underscored by “location, location, location,” for DR marketing it should be “homework, homework, homework.” If you don’t do your homework, you may find yourself marketing denture adhesive cream to teenagers and automotive performance accessories to octogenarians. In short, it’s imperative that you know your target market intimately.

For our purposes, that target market is the baby boomer generation, which includes anyone born between 1946 (right after World War II) and 1964. More baby boomers went on to college after graduating high school than previous generations and more strove to enter white-collar career fields. According to many experts, baby boomers tend to be more materialistic than prior generations. Boomers represent a high-water mark in the birth rate in the United States after World War II, and remain a potent financial force today.

So, which marketing medium is most effective when targeting baby boomers?

“Boomers were brought up consuming traditional offline media such as TV, radio and print,” says Peter Koeppel, founder and president of Koeppel Direct of Dallas, “so we have successfully utilized all these mediums in targeting boomers.

“However, we have found television to be the most effective form of media for reaching boomers. Over the last five to seven years, online has also become an effective medium, as their usage of the Internet continues to grow.”

John McNamara, CEO of Halogen Response Media, with offices in New York, Chicago and Toronto, Ontario, agrees that television is very effective.

“We’re talking about a demographic that’s known as ‘The TV Generation’; they grew up with television and trust it,” he says. “They’re also used to making purchases off it and are receptive to direct response marketing, such as infomercials.”

“Baby boomers like to spend money,” says Melissa Safer, a marriage and family therapist in Woodland Hills, Calif. At 54, she is in the first part of the boomer generation. “We’re the generation that was first exposed to television, computers and billboards, advertising to us items that in some cases we didn’t even know we needed!

“That marketing is working, too. We’re a generation that is interested in impressing ourselves and others,” Safer adds. While admitting that she hates much of current advertising and dismisses it as an irritant, those spots that are most effective in communicating the benefits of their products hold her attention and keep her away from the remote.

“Anything that people can identify with a human emotion is a winner,” she says. Safer cites the current Target television advertising campaign as an example.

“It’s effective advertising. They change them frequently, they are intelligently done and they force you to watch. Their advertising people have figured out a way to expose the public for just enough time to absorb the visual images. I never change the channel on them.”

“The biggest misconception about this generation is that they are not Internet savvy,” says McNamara.

“But the fact of the matter is that they certainly are. We’re talking about a group that uses the Internet constantly for information on finances, medical issues and travel planning, to name just a few categories. They’re just as well-wired as everyone else. What this means is that, as boomers move forward and become seniors, everyone following them will also be Internet savvy. I think thatopens up a lot of opportunities for the future of Internet marketing.”

Says Koeppel, “Many marketers focus almost exclusively on the 18 to 49 audience segment. However, this is often a mistake, since the spending power of the boomers is considerable.

“There are 78 million boomers and they have a combined spending power of more than $1 trillion a year. And boomers don’t view themselves as being old. They have a youthful outlook on life. Many of them may be in their 50s, but they feel like they are in their 30s. And they are anything but a homogeneous group: Some may be retiring, some starting a new career or hobby, some may have remarried and are starting new families.”

Baby boomer Mike Martin, vice president of corporate communications for an international producer and marketer of beverage alcohol headquartered in New York, agrees.

“Television is an excellent way to reach boomers,” he says, “but the market is now fragmented all over the place. Twenty to 30 years ago, the most effective marketing dollars were spent on a few broadcast television networks.

“But with cable programming and satellite programming, while audience numbers for hit shows can still be large in number, they are not as concentrated as they used to be. We’re on the Internet; we’re everywhere,” he continues. “Marketers really have to do their homework because many of us are quite savvy to the Internet. Not only that it’s there, but how to use it to our advantage. People are going for information more and more, and with boomers, they have more disposable income than previous generations, with a large percentage picking up their buying habits from television and the Internet.”

If boomers are regularly using the Internet, social networking and mobile marketing should apply to them, too, right? Perhaps surprisingly, most agree the answer is no.

“Social networking and mobile marketing are primarily targeted at a younger audience right now,” explains Koeppel, “so I would not recommend utilizing these venues-at least at this time-for reaching baby boomers.”

“Only 20 percent of people 55 and over express interest in using current social networking sites,” says McNamara, citing a 2006 survey by JupiterResearch, “compared with 75 percent of 18- to 24-year-olds.”

“It’s a huge market with significant buying power,” says Koeppel, “so it’s definitely an audience that smart marketers need to continue pursuing. However, it’s important to understand boomers prior to trying to market to them.

“For example, boomers aren’t obsessed with looking young, so ads targeting them don’t need to feature people in their 20s,” Koeppel explains. “They are comfortable with aging, but they still want to look and be healthy. If marketers trying to appeal to boomers don’t understand their mindset, then they likely will not be successful at penetrating this market and building a business within this niche.”

McNamara contends, “With $1.1 trillion in spending power, this is definitely a market with lots of discretionary income. They have a high annual household income and spend money on their kids.” He adds that the group spends 11 percent more than average on pets, toys and other goods for their children.”

Safer considers her generation to be somewhat impulsive, one that likes to spend money, especially on high-end items. “Our generation seems to have more outdoor kitchens, telephones all over the house and wide-slice toasters,” she says. “I have a toaster oven and a bagel toaster! And we all seemed to be convinced that we need gigantic refrigerators. Previous generations managed to get along with much smaller refrigerators and without the latest gadgets and somehow, they managed to survive.”

Martin says boomers, in comparison to other generations, tend to exhibit less brand loyalty.

“Our parents tended to stick to their Chevy and never touched a Ford, or vice versa,” he says. “Now, baby boomers are also driving Toyotas and Hondas-and cannot be counted on to automatically stay with that brand.”

If the baby boomer demographic is so complex and fragmented, is it worth the effort to chase this market? The statistics speak for themselves.

“It’s important to know that baby boomers represent more than 27 percent of the U.S. population and make up 46 million households,” says Koeppel. “Boomers were born between 1946 and 1964, and half are 50 or over. Many started turning 60 this year. Since the average life expectancy is now 77, many boomers look at 50 as a time to restart their lives.”

Which then begs the question: What categories are the most successful for targeting boomers?

“With younger boomers, you’ll find they’re looking more at investments for things like their children’s tuition,” says McNamara. “In fact, younger boomers don’t seem as concerned with the future, and spend about 10 percent less than average on life and other personal insurance.

“With the older boomers, categories like health care, insurance, financial services and travel are really going to appeal to them. They’ve got all this disposable income and as they age, health and finances become more of a concern. They rely on these services to feel a sense of security for themselves and their families.”

“They also like to keep up with latest advances in electronics, so they will buy products like the iPhone to stay on the cutting edge,” adds Koeppel. “However, they don’t always have the technological background that their kids have, since they didn’t grow up with computers. Businesses need to be aware of this and consider providing services to tailor to the baby boomer’s technological needs.”

David Lustig is a contributing writer to Electronic Retailer magazine.


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