Magazine article Marketing

Age of Reason

Magazine article Marketing

Age of Reason

Article excerpt

AGE OF REASON

Look at the pictures on this page and you will soon understand why UK marketers have found the so-called "grey" market so elusive. The one thing these people have in common is that they will be at least 50 before the turn of the century. They are the "grey" market of the 90s, but somehow when we talk about "grey", we don't think of people like these.

For over a year now marketers have been talking about the great opportunities represented by the greys - and recent events, such as the rise of interest rates, have added a new sense of urgency. After all, the marketer's job is to find and exploit new opportunites for profitable growth and this is one area, among a dwindling few, that really seems to hold out high hopes.

The raw figures explain a lot. The over 50s account for over 40% of the electorate, they tend to be the outright owner of their own homes and account for 70% of the nation's savings. These are the people who are doing well out of the current economic crisis, as rising interest rates pile on the credits on savings accounts.

The grey market, however, is not one but many different markets. Not only is it, as usual, divided by social class, region, and household (whether single household or not) it is also divided by generation, with around 16% of the UK population in the 50-64 category and another 16% - many of them the first group's parents - in the over-64 age group.

It is perhaps a sign of the increasing desperation of the marketing profession that over-50s are not only now included in the definition of "grey" but becoming the centre of marketing attention. As a recent report by Professor Nick Bosanquet of the University of London shows, Britain's pensioners, most of them over 65, are not going to be the gold-mine they've been made out to be. Not until around 2025, when the current baby boom generation starts retiring on full pensions, will there be such a golden age for the golden oldies. In fact over the next ten years the pensioners' lot is going to worsen considerably - and ten years is quite long enough for most marketers to worry about.

Bosanquet points out that among the over-65s only 20% could be regarded as being well-off. These are the households with an income of twice the state benefit or more. The other 80% are divided; one half who are almost entirely dependent on the State for their income; the other half who are what he calls "the property-rich income poor" - people who may be living in a valuable asset (their home) but can't get their hands on the cash without an unacceptable amount of personal hassle.

British pensioners, he concludes, will become the poor relations of Europe over the next decade. For most, things will worsen. State pensions are falling behind earnings (they are indexed to prices rather than average salaries - not so in places like France), occupational pensions are not fully indexed even for inflation, and many of these occupational pensions are less than satisfactory because many recipients are the victims of the redundancies and early retirements of the 80s.

Bosanquet goes on to throw cold water on the idea that large numbers of this age group will re-enter the labour market. The only areas where this seems likely are, geographically, in desperate labour-shortage areas like the Thames Valley, and industry-wise in areas like retail where the difficulty of attracting a dwindling over-16 population is most acute. But this is not enough to counteract the overall trend towards earlier retirement and withdrawal from the labour market before retirement.

Nor should marketers place too much hope on home equity withdrawal schemes thought up by crafty finance companies. The attractiveness of such schemes peaked with the ending of the house price inflationary boom of 1988, says Bosanquet. The chances are that areas like Mrs Thatcher's Finchley will become ghettoes of the property-rich income-poor - with house prices too high for a new, younger population to move in, but not high enough to prompt a significant number of pensioners to move. …

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