Listen to your focus group!

Market research is neither an exact science, nor infallible, as many marketing failures will attest. Nonetheless, it is not the best idea to do the exact opposite of what your target market is telling you. On the UK’s TV version of the The Apprentice, two teams of budding entrepreneurs fighting to win a £250,000 prize fund to invest into their own business, were given the task of developing a new ‘free’, premium magazine (‘freemium’). Both teams carried out market research on their chosen demographic – one young and one old, and both promptly chose to ignore their focus group feedback. One of the two competing groups, Team Venture, had decided to target their magazine at the 60 plus audience. Their focus group, hosted at a bowling club, sought the views of the over 60s on the type of magazine they would read and enjoy.

Things started badly when one of the two researchers, Susie, began the conversation with the question: “What do you guys do?”, which received the immediate sarcastic response of, “bowl”. When asked specifically about potential content, the over 60 group said categorically they did not feel old and wanted a magazine that highlighted enjoyable, fun activities such as holidays without kids, skiing and bungee jumping. What they definitely did not want was content that was condescending and stereotypical, such as knitting puzzles and quizzes.

The gulf between the old and young became evident when Team Venture presented a whole range of boring, clichéd and ageist titles for their magazine such as ‘First lady’, ‘Free 60s’, ‘Vitalight’ (“it’s what I feed my cat”, said one of the focus group),’ Joy’, ‘Radiance’ and ‘Eternal’. One suggestion from the focus group itself was the ironic title of ‘Zimmer’, which created a positive response and led to much frivolity.

In response to this desire for the ironic, Team Venture settled on ‘Hip Replacement’, which was not entirely incongruous, if the magazine had retained a humorous and tongue-in-cheek approach. However, instead of a fun and ‘hip’ reflection of the 60 plus demographic, the final magazine degenerated into a stereotypical publication representing the 60 plus generation as boring, inept and totally unaware of modern technology with an appalling cover. One of its columns, ‘It’s your call – love technology’, actually included a guide on how to make a telephone call!

Clearly, there is stereotyping of younger age groups by more mature groups and vice versa. From an education point of view it is important for teachers to challenge inaccurate stereotypes, but from a business point of view it is equally important to challenge incorrect perceptions of the buying behaviour of older age groups, because these represent an increasing percentage of markets by sales volume and sales revenue. In the US, for example, people aged 50 and over now make up 24% of the population and control over 30% of its discretionary income. It’s a market segment that is simply too big to ignore. The latest U.S. Census Bureau brief on data from the 2010 Census shows ‘seniors’ increasing faster than younger populations, raising the nation’s median age from 35.3 in 2000 to 37.2 in 2010, with seven states having a median age of 40 or older.

According to the UN Population Division, 1 in 5 people are expected to be 65 or older by 2035. At present just under 11% of the world’s 6.9 billion people are over 60. By 2050 that will have risen to 22% (of a population of over nine billion), and in developed countries to 33%. In the rich world, nearly one in 10 will be over 80. Over the next four decades, global life expectancy at age 60 is expected to increase from 19.7 years now to 22.4 years in 2045-2050.

Businesses will benefit from recognising the consequences of an ageing society in terms of changing purchasing behaviour and an older workforce and the effects on manpower planning. Governments around the globe are being forced to address increasing pension funding requirements as populations age, with many forcing through measures to increase retirement ages. As a consequence, employees past traditional retirement age will make up a larger and larger share of the pool from which employers draw.

Indeed, no demographic should be more important to advertisers than the over-50s. In the UK, there are more than 21 million in this group controlling around 40% of consumer spending and 80% of the country’s wealth. Within the next decade most elderly people will have been using mobile communications and social media for years and will expect to continue doing so. Meeting their needs presents a significant business opportunity. The ageing of the population, combined with the potential increase in relative spending power of older consumers, will add to demand not just in markets for health products and services, but in communications, recreation and cultural activities.

However, according to some observers, ‘snail-like’ best describes the advertising industry’s progress at communicating with the over-50s, creating a growing disconnect between advertisers and their agencies on one side and a vast and growing ‘grey market’ on the other. As one senior creative closely involved in the over-50s market puts it:

“every year, there’s another conference on the subject and every year, clients turn up to say what terrific opportunities this market represents. Then they just carry on doing what they’ve always been doing”

One senior executive argues this is because advertising is obsessed by its own youthfulness, creating work for those who share that youthfulness while patronising or ignoring those that don’t. The average age of those within the marketing communications business is mostly blamed for its failure to connect with the over 50s according to the latest census of the advertising industry, with 45.2% of agency staff being under 30.

“A 20-year-old can’t think like a 50-year-old because they haven’t been there,” says Kevin Lavery Millennium’s managing director and president of the International Mature Marketing Network.

It should be our role as Business and Management teachers to instil in our students the new realities of the market place, and to challenge wherever possible any stereotyping of different age groups, so that our business graduates can at least appreciate the commercial needs of a 50-year-old, even if they cannot think like a 50-year-old.

 

 

 

 

 

 

Outline student IB Class Activity

Test the attitudes and perceptions of your students to age by asking some, or all, of the following questions:

• which age group has the greatest spending power?
• what products and services would you offer to the over 50s?
• what are the implications of an ageing population?
• what would be the differences in an advertising campaign focused on a 20 year old to that focused on a 50 year old?
• should the retirement age for men and women be increased?

I am sure that there are many variations to these questions.

Extension activity

Recreate the task set in The Apprentice to design a free premium magazine for the over 60s.

IB style written questions

1.   Define the terms:

• Workforce planning
• Demographic change

2.   Explain how magazines can be given away to readers and still survive commercially.

3.   Analyse the advantages and disadvantages of using focus groups as a method of market research.

4.   Discuss the opportunities and threats for firms created by an ageing population.

For those of you can access the BBC’s iPlayer, the link to the Apprentice episode referred to in this blog is:  http://www.bbc.co.uk/iplayer/episode/b0120z17/The_Apprentice_Series_7_Freemium_Magazine_Launch/