Market Focus: Baby Boomers
One Generation, Many Segments
The most defining characteristic of the baby boomer market is that there are few general defining characteristics that apply to this group. Born between 1946 and 1964, boomers comprise the largest population boost in American history.
And while the sheer size of this market—roughly 75.8 million, or one-third of the U.S. population—makes it an attractive target for direct marketers, the nearly 20-year age difference from the oldest to youngest boomers also makes it challenging to effectively penetrate.
The No. 1 mistake companies make with boomers is not recognizing the diversity of this market, says Scott Schroeder, president and CEO of Cohorts, a data segmentation and strategic-marketing firm in Denver.
Too many marketers consider date of birth a key predictor of behavior, he explains, and that’s not targeted enough to get the best results.
But before getting into segmentation strategies, let’s take a look at some of the key statistics and trends that do exist in the boomer market.
Money to Burn
Marketers interested in reaching boomers have two big factors working for them: Boomers have enjoyed the longest period of prosperity known to Americans, and the majority of them have reached their peak earning potential. Translation: They have money, and aren’t afraid to part with it.
According to the U.S. Census Bureau, boomers between the ages of 45 and 54 spent an average of $46,160 in 2000 on overall living expenses—the highest annual expenditure of all age groups.
You can guess what this means for discretionary income spending. According to direct marketing solutions provider Equifax Marketing Services, people ages 45 to 64 (a group comprised mostly of boomers) have per capita an average of $8,000 to spend annually, says Peter Zajonc, senior director of analytics for this Boca Raton, FL, firm.
What Do Boomers Buy?
It’s important to remember that as boomers age, they become older boomers; they do not become their parents, explains Barbara Abudi, an account director at Millard Group, a full-service list marketing firm in Peterborough, NH.
As such, marketers find they can target products to people in their 50s that years ago would have been more appropriate for people in their 40s. She points to anything fitness- or sports-related as a prime example.
Zajonc agrees, adding that boomers realize they will be living longer than prior generations. They want to make the most of these extra years, so they generally respond well to products and services that rejuvenate the mind and body.
The financial security of this market offers continuing opportunities for marketers of travel and luxury products. Eighty percent of luxury travel and 48 percent of all luxury car purchases are made by boomers, reports Zajonc.
The majority of this market has grown up in affluent times, the result of which is a wide variety of products and services at its disposal. Naturally, Zajonc says, boomers are sophisticated buyers who know how to make the most of all the available shopping options.
Boomers collect a good deal of information to support their purchasing decisions, says Abudi. They do not like to be sold on image alone, so marketers need to back up their product claims.
As for channels, Zajonc notes that boomers tend to view direct mail as a starting point in gathering information, and certainly use the Internet as a research tool for shopping. However, they currently are not as comfortable buying online as Generation Y.
Studies conducted by Jupiter Research show that more baby boomers will embrace online shopping in the years to come. By 2007, online buyers age 50 and older will account for one-quarter of all online retail spending; more than half of the boomers will be in this age group.
At present, you are more likely to see female boomers making the majority of online purchases, reports Mature Marketing & Research. Male boomers, this research firm finds, typically use the Internet more for research, especially for information on computers and travel.
You Gotta Segment
Spanning nearly two decades, the boomer market is far too large to be targeted in its entirety.
Agreeing with Schroeder, Abudi notes that age does not convey enough insight into modern society to use alone as a prediction of responsiveness.
For example, she offers, household composition varies greatly in the boomer market. The “sandwich generation” of boomers is caring for both young children and parents, while other boomers have become grandparents.
Another lifestyle-change variable that affects the relevancy of messaging and product offer is the work status of boomers, says Abudi. A portion of this market is changing careers to stay in the work force, but in less demanding positions.
Segmentation and modeling are required to find micro-segments of like boomers, says Schroeder. And it’s extremely likely that companies will find several different groups of boomer cohorts in their current housefiles.
Schroeder advises direct marketers to first profile their customer database to identify similar boomer segments. Use the more predictive data variables to isolate relevant behavior and lifestyle characteristics that will help you tailor your creative and product selection to the right audience. These data variables include disposable income, education level, household composition, previous purchasing history, and any known hobbies/leisure activities.
The more detail you can build into your portrait of these micro-segments, the more certain you can be of the most effective way to serve these groups of boomer cohorts, Schroeder explains. Be careful not to base big decisions on the insight of only a couple data elements, he cautions, adding that conducting your own research can be a great way to collect information particular to your company’s data needs.
When marketing to such a savvy and demanding group, the last thing you want to do is fall prey to the belief that boomers are all the same.