Baby Boomers Retiring: Does The Market Understand Their Characteristics?

Consumer behavior is one of the most important factors that marketers spend a lot of time pondering. Demographics, geography, psychographics, among others, all play a vital role in determining how buyers chose what they buy. However, many marketers in the US have underestimated the potential of a particular demographic: baby boomers.

Here are a few facts about baby boomers:

• Born and grew up in the post World War II period between 1946 and 1964
• Raised in a generally thriving economic era before credit became the norm
• Are more flexible with new technology and easily adopt it
• Are arguably the driving force of consumer spending in the US

Influence of the baby boomer demographic

Currently, the aging boomers comprise the biggest population in the US (specifically, more than 60 percent of adults aged 40 and above) – slightly outnumbering ‘echo boomers’, according to US Census Bureau figures. When it comes to consumer spending, baby boomers are immensely crucial; they are more vibrant with their choices; they are the most informed people of all generations; they are nearing their peak spending years.

Over and above their joie de vivre, baby boomers have so much going on at the family level. Most are going through simultaneous life experiences, more than any other generation. This has given them a reason to leverage the power of the internet, unlike any other group, thus offering immense potential for marketers to reach out to them.

How marketers got it wrong

Some marketers had argued that since the boomer generation was aging and therefore ‘on the way out’, numbers would rapidly decline over the years – in contrast to Generation Y who have years of spending ahead of them. As such, they focused their marketing strategies on the younger demographic. Indeed, most marketers and advertisers aligned their branding campaigns ‘with the teenager in mind’ and, for a long time before the recession hit, they seemed to have a point. The fact is they missed the bigger picture.

Latest surveys on spending habits have shown that baby boomers were better equipped to handle the financial shocks of the recent recession, owing to their flexibility, experience, and bigger savings. In contrast, many teenagers (Generation Y’ers) were forced to alter their spending drastically, and for some, a complete halt on buying – in favor of saving for college – was the only option, except for essentials. In addition, various surveys showed that the majority of Generation Yers, especially the younger folk, had no savings at all.

It’s clear that baby boomers’ spending habits weren’t hit by the recession as much as their younger counterparts because they are more rational, they think and act much differently when it comes to money, and most importantly, they are cushioned by years of savings.

In the end, it’s marketers and advertisers who are losing out on this very powerful consumer group. Because advertisers spent a lot of time on younger consumers, they missed the opportunity to transition with baby boomers. There is a general lack of perspective among advertisers needed to appreciate the needs of aging adults. Some market segments have almost equal proportions of all the generations, for instance, the video game market enjoys a considerable number of adults over 40 years (many baby boomers are proud owners of the latest consoles), in addition to its base market – Generation X and Generation Y. A lot of advertisers missed the opportunity to capitalize on this.

Conclusion

Although it’s not easy for advertisers to appeal to all consumer groups, it is much clearer now that baby boomers have a higher spending power than the younger generation of consumers – they control a sizable portion of wealth. So, advertisers ought to make up lost ground and start aligning their brands in a way that offers (or at least appears to offer) solutions to the needs of the aging boomers and make the most of their enormous spending potential.