Keys to Reaching the 50+ Market:
Don’t Let the Past Get in Your Eyes
By William D. Novelli, AARP CEO

Note: The following speech was made at the NOP World Consumer Conference in New York City on May 6, 2004. It is reprinted here with Mr. Novelli’s permission. It may not be reproduced without permission from AARP.

Good morning. I want to begin by thanking Ed Keller and his colleagues at NOP World for the fine work and support they have provided to AARP over the years. It has contributed greatly to our understanding of the changing 50+ population and helped keep us ahead of the curve.

We’re working together now on our 2004 Multicultural Survey as well as on a voice of the member perspective for our magazine. Both these projects are focused on consumer protection. And speaking of our magazine, Steve Slon, the editor of AARP The Magazine, is here today. The Los Angeles Times recently said that Steve has a real feel for the boomer generation, and I agree.

I spent the early days of my career marketing laundry detergent, fabric softener, margarine, kids’ cereals and pet food at Unilever and then Wells, Rich Greene. Most of the time, the target market was housewives 18-39. Occasionally, we’d get creative. Once we targeted younger female heads of households in cat owning households. I guess a good portion of the marketing world still operates this way.

For example, just a few days ago, an article in the Financial Times said, “Recently, AARP has been waging a vigorous campaign in the marketing trade press urging advertisers not to write off the over-50s in their all-too-evident desperation to reach a younger audience. But in a delicious paradox, I noticed one of its “Rethink 50+” ads popping up this week on Advertising Age magazine’s website, alongside a story claiming Gillette was on the verge of signing up 28-year-old football star David Beckham in one of the world’s biggest celebrity endorsement deals. If agreed, the deal will sum up just about everything that AARP and its members find so frustrating about advertising’s obsession with youth. As the baby-boomers grow older and live longer, the over-50s are accounting for an ever greater proportion of the population and consumer spending; yet to advertisers, it is as though they barely exist.”

It reminds me of a story from the Peanuts comic strip. Charlie Brown’s team is beginning another baseball season. Lucy, the existential right fielder, told Charlie Brown that this year things would be different. She was going to be a better player.

Well, the game was tied, and the last opposing batter was at the plate. He hit a fly ball. Lucy positioned herself to make the catch. But, as the ball came down, it hit her on top of the head and rolled out toward the fence. All the runners scored, and Charlie Brown’s team once again snatched defeat from the jaws of victory. After the game, Lucy walked up to apologize to Charlie Brown, "Sorry I missed that fly ball, manager—I thought I had it, but suddenly I remembered all the others I've missed. The past got in my eyes!"

This happens to a lot of people. My message, of course, is that to be successful in reaching the growing 50+ market, we can’t let the past get in our eyes. We have to think of today’s 50+ population differently. So put aside the old, negative stereotypes, cast aside previous assumptions and begin to look at this population through a new lens.

Our society is changing. The signs of it are all around us, even though sometimes we don’t even notice them. Pick up the newspaper or listen the news on any given day, and we see the evidence of it. Just last Thursday I found these three news items:

1. The last Oldsmobile rolled off the General Motors assembly line in Detroit, headed not for someone’s garage, but for the GM museum. The once great Oldsmobile brand has now gone the way of the dinosaur.
2. The World War II Memorial opened on the mall in Washington, DC. The official opening is scheduled for Memorial Day, but they wanted to open it sooner because the members of this “Greatest Generation” are dying at a rate of about 1,000 per day.
3. In England, researchers believe they have unlocked the genetic code that will allow people, using their own DNA, to grow new teeth.

These are all signs of our new, and changing world…all signs that our future will be much different than our past. And, if we let the past get in our eyes, we, too, could end up like the Oldsmobile.

One of the realities of our new future is that more people are living longer and better than ever before. The growth of the older population and increased longevity—and the opportunities and challenges they present to society—are truly dramatic.

There is a whole new paradigm for life after 50 in America, and it is impacting American and global business in very profound ways— most notably, the marketplace and the workplace.

The 50+ population will more than double over the next 35 years. This is changing the fundamental age distribution in our population. In 1900, only 13 percent of the population was age 50 or over. In 2000, it was over 27 percent. And, by 2020, it will be over 35 percent.

I am focusing today on the United States, but the rest of the industrialized world is aging even faster than we are. Global aging is a huge trend.

A person turns 50 today in the U.S. every 7½ seconds, and then has half their adult lives ahead of them. That’s a lot of time to buy products, use services, eat in restaurants, go to movies, stay in hotels, work out, travel, build new homes (and renovate existing ones), rent cars, go back to school and experience new adventures.

Marketers have traditionally thought of the period of life after 50 as one of diminishment—empty nests, retirement, solitary survivors. But that’s clearly not the case. In fact, research conducted by NOP World for AARP The Magazine shows that people experience more life transition events in their fifties than in any other decade. And they are at the peak of their earning years.

While mature Americans make up 35% of the population, they have 77% of the countries’ financial assets and 57% of the discretionary income. Boomers—indeed, America—will experience the greatest transfer of wealth in world history.

These boomers—born between 1946 and 1964—focus not so much on age as on lifestyle. To them, growing older is not simply a matter of just getting by, it’s about being vital and enjoying the lifestyles they choose. Moreover, boomers want things their way, they want them now, and they want to be involved in the experience. For example, they don’t just want to buy a car, they want “the total driving experience.”

Boomers like to have fun. And one of the precepts that guides their quest for fun is that they prefer spending money on experiences. They are looking for the new experience, and they want to create their own, because they are often bored, and searching for novelty.

It’s important to think about the different social roles that people experience as they go through life at 50+—roles that often influence their behaviors as consumers. For example, there are 60 million grandparents in the United States—72% of everybody over 50 in this country is a grandparent. Do you know the average age of first time grandparents in the U.S.? It’s 47.

Grandparents spend time and money with their grandchildren—over $30 billion in annual spending. Research shows that grandparents are taking their grandkids places in greater numbers than ever before, and our own research shows that eating in, going out to a restaurant, and watching television together are the activities grandparents and grandkids do most.

So called “grandtravel”—grandparents and their grandchildren going on vacations together without mom and dad along, is a growing trend. I know Disney certainly cares about it.

So, not only are the baby boomers leading a demographic revolution that is changing the way we think about aging; they are also leading a consumer revolution that is changing the way we do business. And the two are connected: demographics and consumerism.

As Richard Hobbs, of the American Institute of Architects, observed, “The impact of the aging population on markets, employers, and culture cannot be overstated. Just as the baby boom flooded maternity wards, ignited school construction, and made ‘youth’ the cultural icon of the 1950s, ‘60s, and 70s, the ‘senior boom’ of this century will shape the 2010s, ‘20s, and ‘30s.”

Now, if you let the past get in your eyes, you might be thinking, “Ok, this population may be growing, but they’re just buying more of the same products. We all know that as people get older they remain loyal to the products and brands they have always bought.”

But that’s not true of today’s or tomorrow’s older segment. As people age, they don’t necessarily become increasingly loyal. They do not get hardening of the consumer arteries and continue to buy the brands they have always bought. They will buy products that they had never bought before.

If we look at people 45+, we see that a large majority, 87%, say that they are brand loyal for some things, but not at all for other products or services. Contrary to some widely held beliefs, older consumers are not typically more loyal than younger consumers. In fact, brand loyalty seems more a function of the product or service than of age. For example:

• Loyalty to banks is around 60% — for all age groups.
• Loyalty to airlines and athletic wear is under 25% — for all age groups.

People of all ages tend to be reasonably loyal to health and beauty products, like soap and cosmetics. But we found that about 58% of consumers 45+ would switch to, and even spend a little more for a competitor’s product if it somehow meets their needs in a better way. Examples of such reasons for switching include a better reputation for quality, or if the new brand is familiar because the consumer already buys other products from the same company, or a believable product claim about a proven advantage over the previous brand. And more than half of these consumers 45 and older said they would switch products if they are similar, but priced a lot lower or sometimes even a little lower.

We found the same is true in other product categories — in electronics and computers, in financial services, insurance, and travel services, among others. Cars proved a little different — at least at first. About 46% of older consumers claimed to be loyal to a specific manufacturer — and here their loyalty increases slightly with age. But for vehicles other than cars — SUVs, minivans, pickups — the reverse is true and loyalty declines with age.

But like the products and services I mentioned before, older consumers will switch to another car, and for similar reasons: a better reputation for quality, familiarity with the company’s other products, or a new innovation or technology.

So older consumers will change the brand of car they buy for the same reasons they will change their soap or their insurance company. And isn’t it interesting that a consumer segment thought to be stuck in its ways is attracted to innovation and new technology?

As Sony learned, ads that caught the imagination of older people pushed camcorder sales into “high double-digit growth,” according to a recent account in the Wall Street Journal. The Sony marketing staff refer to people between 50 and 64 as “zoomers,” aging consumers who are active and want to try new things. In this case, camcorders. By putting aside a stereotype, that only younger people buy camcorders, Sony expanded its market. Or you could say, they created a new market. Many of these buyers had not bought Sony products before.

Now, if Sony had let the past get in their eyes, they might think that older people are afraid of new technology and innovation. But that’s clearly not the case.

And if we were invited into the homes of these older consumers, we would probably see many more $5,000 home entertainment centers than we would find in the homes of younger people. Why not? People between 45 and 65 are in their peak earning years, and have the highest median household net worth. In many cases they have lots of equity in their homes, against which they can borrow these days at low rates.

The median net worth of households headed by someone between 55 and 64 was $112,000 in the year 2000, but only a little over $7,000 for households headed by someone under 35. This is not to say that all older consumers are rich — far from it. But most are not poor. By and large, they are in solid financial health.

So put buying power together with willingness to buy and try new products and services and we begin to get a true image of the older American consumer. Not all that different from younger consumers, but usually with more money and quite often with more leisure.

P&G and Anheuser-Busch are two companies that are partnering with us as they reach for older consumers. P&G is targeting older women who once were the 18-39 year old housewives I mentioned earlier. And Anheuser-Busch sees the older market as a place to build volume.

How do we reach these consumers, these “zoomers?” How do we persuade those 78 million Americans 50+ who control two-thirds of the nation’s wealth?

To understand more about brand affinity, AARP and NOP World started asking older consumers about their likes and dislikes in several product categories. What we came away with was, well, kind of romantic.

People fall in love with brands — develop an affinity that leads to loyalty — perhaps something like the way they fall for other people. Our respondents were looking for seven primary qualities in a product.

• It must be a consumer’s “type.”
• It must be “a winner.”
• It must have integrity.
• It must be smart.
• It must “feel right.”
• It must help consumers express their individuality and style.
• It must be good with money.

This sounds like the response to a questionnaire from a dating service. And, like dating, things can go right, or not. The affinity has to be expressed well. Older prospects want the brand to be something they aspire to own or use, it must meet their needs, it must be a company or a brand they trust, and it must be for people “like me.” Again, sounds like looking for a significant other.

But making a product or service significant is not always easy. We found that our respondents are divided equally on advertising that’s aimed at older people. Half thought such advertising was sensitive to their needs and the needs and feelings of their age group. Another half thought such advertising tended to be insulting or condescending.

Some industries did well with older consumers and some did poorly. Among the most successful were automobile, home electronics, and computer and tech companies. Among the less successful with older consumers were insurance companies, financial services firms, and women’s apparel makers.

We might wonder if all this has less to do with the industries or products in question and more to do with how these companies are approaching older consumers. Think of the seven basic components of affinity I mentioned, starting with “has to be my type.” Older consumers seem to be looking for something they can stay with for a long time. Maybe even more than with younger market segments, anyone trying to reach the older consumer needs to find ways to establish an affinity and keep it.

Talking to older consumers must start with an appreciation of who they are — human beings, not stereotypes. They are men and women in the marketplace, with money to spend, whims, changes of taste, and so forth. We don’t want to forget that we are addressing older people. But we don’t have to rub it in. People know how old they are. But a 70 year old man doesn’t have to watch a 70 year old actor or model on TV or in print to be tempted to try a low-carb Michelob Ultra or a titanium driver or a stationary bike. It’s the product — “it’s my type” — that will do that.

There are different ways to think about this. Many marketers who are aiming at older consumers can be found in AARP the Magazine. Their ads for financial services, pharmaceuticals, cars, vacation destinations, cosmetics and other goods and services tend to be pretty good at building affinity.

On the other hand, the CEO of a major cosmetics company told me that he aims at older women, but doesn’t want them to think he knows they are older. So he avoids AARP the Magazine in favor of other publications, like Town & Country, that skew older but try not to say so.

As I said, this is not easy and may require a pretty substantial makeover, not just of an organization’s marketing, but of its fundamental thinking. To illustrate what I mean, let me talk about what we have been doing at AARP.

We’ve been around for a long time and we are pretty well known— for our advocacy on Social Security and Medicare and other issues. And of course we’re known for our discounts. We were in the thick of the legislative battle to add a prescription-drug benefit to Medicare last fall. We got it done, and now we’re working to build on this foundation and to continue to address the high cost of prescription drugs. That’s part of what we do, but it’s not all we do — and not where all our resources are focused.

We think of our organization as resting on two-complimentary pillars—social impact and member value.

Our research shows that our members believe that social impact—that is, positive social change—is member value. Yes, they want the discounts. Yes, they want our magazine and our monthly newspaper, and our Spanish language publication, Sequnda Juventud. And they want the insurance products and other services we market through our business partners, including the Hartford, New York Life, Met Life and United Health Group. In a nod to our boomer members, we’re even marketing motorcycle insurance.

But our members also value our advocacy, such as fighting age discrimination and working on long-term care and Social Security and affordable and accessible prescription drugs.

We are doing a lot of advertising, using the theme, “if one person could do it alone, the world wouldn’t need AARP.” The tag line is: “AARP—The Power To Make It Better.”

Working with GSD&M, our ad agency, and Fleishman Hillard, our PR partner, and other agency partners, we have strengthened our brand.

We have undertaken change, because we want to stay relevant to men and women 50+. We want to speak for them in Congress and in state legislatures. And to do that, we must speak to them in a language they appreciate. We must be “their type.” Our image of aging, therefore, tries to be honest, but positive.

There was a time not many years ago, when it was said that nobody ever got sick or died in our magazine. That has changed. Now we discuss disability, but not less than we discuss fitness.

Perhaps the most significant alteration in our outlook has been to focus more on the baby boomers. About a quarter of them are old enough to join AARP now. And they are, at about the same rate their parents joined AARP. The oldest of the boomers will reach 65—the traditional retirement age, in 2011 — and many will retire earlier, or at least start getting Social Security, in 2008. These are not distant dates.

But many will work into their so-called retirement years, some because they want to and some because they have to. A short time ago we began a partnership with The Home Depot. The first thing we are doing together is to have AARP recruit and train older workers for employment at the Home Depot. Almost immediately, other major companies wanted to talk about meeting their own needs for older employees.

The proliferation of older workers is a powerful, growing trend in America. Older people who want to work can benefit themselves. They also benefit employers, since fewer young workers are coming into the pipeline. And they benefit the taxpayer, by putting less pressure or Social Security, Medicare and Medicaid.

We believe that we need to engage our members — not just on issues being debated on Capitol Hill and in state capitols, but in their communities. So we are expanding our volunteer programs. We want to help them to be engaged in every community in this country.

When I began as the CEO at AARP in mid-2001, I said that there are three great goals for our organization to aspire to.

1. To be the most successful organization in America for positive social change.
2. To help each and every member to have choices, reach their goals and dreams, and make the most of life after 50.
3. To be a world leader in global aging.

We are working away at our three great goals and our resulting social impact and member value agendas. And it’s paying off.

Ninety percent of our members like AARP, and 86% would recommend it as an organization to join. We have engaged our members, even challenged them. We have paid much more attention to our younger members — the boomers.

We have seen that the nature of aging has changed radically in recent years. And, consequently, we have come to understand that older people themselves have changed. They want engagement as much as they want security. They want to zoom as much as they want to take it easy.

I have thought about how we have been able to recruit the boomers and appeal to them, while remaining relevant to our older members. Our research suggests the answer.

In terms of what people want, boomers are different from older generations. They use information and media differently. They are much more focused on instant gratification. And they tend not to be as socially engaged as their elders.

But when it comes to needs, there is more similarity across the generations. People 50 and older tend to have two overarching needs: health and health care, and financial security. These are constants.

And at an even deeper level—that of values, I think the generations are truly alike. They don’t necessarily use the word, but a common value is a sense of legacy. They care about their children, their grandchildren, and about leaving America a better place than they found it.

This is something to remember in approaching these people—as human beings, who have lived, worked, had success, suffered loss — and we try to acknowledge all those things. And given the number who approve of what we are doing and would recommend that their friends join AARP, I think we are doing pretty well. There is always more to do—loyalty has to be kept and earned over and over.

We’re trying to stretch ourselves and to learn and practice new things. We know we can’t let the past get in our eyes. We now have nearly 36 million members, and a boomer joins our organization every 11 seconds.

But, we know that we have to continue working hard to keep our members’ trust, to continuing earning their loyalty and to keep delivering value to them. And, that’s a valuable lesson for all of us.

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