Figuring Out the Aging Consumer
New research explores the implications that changing consumer habits could have on businesses, product design, and marketing.
ANN ARBOR, Mich. — By the year 2020, one out of every six Americans will be 65 or older. And as the population ages, so do its preferences and habits. Yet how and why preferences change is a poorly understood phenomenon. Professors Norbert Schwarz and Carolyn Yoon, looking to inject more rigor into this area of consumer behavior, have compiled the latest and best research into their new book, The Aging Consumer: Perspectives from Psychology and Economics (Routledge). Schwarz and Yoon edited the book with Aimee Drolet, a marketing professor at UCLA Anderson School of Management.
In this discussion, Schwarz and Yoon delve into the practical and theoretical findings that lie at the fascinating intersection of psychology and consumer research. Product design and marketing could well come into play as this aging population grows and its buying power increases, say the authors. They share some unexpected findings that emerge in the book, as well as topics that clearly need more study.
Many chapters in the book mention the dearth of research on the subject of the aging consumer. Given the obvious trend toward an older population, why is that the case?
Schwarz: You would expect more research on how consumer behavior changes with age, but we didn't find it. If you look at the aging literature, it's fair to say it's interestingly scattered.
Yoon: I think everyone recognizes the need for a broader perspective. There are a few studies that are more qualitative, like case studies. But there are not enough and there is a lack of systematic theory-driven research. We don't have a critical mass of academic researchers who focus on aging consumers.
Given the size of that population, is this a missed opportunity?
Schwarz: Definitely. If preferences change and the way people do product selection changes, not thinking ahead could become a real issue for marketers.
The research you compiled in this book indicates those things do change as we age.
Yoon: Yes, but it's hard to separate the influence of aging, per se, from cohort effects. So to what extent are observed differences between age groups due to only aging, as opposed to other things that are happening at the same time?
Schwarz: For example, if you observe in the market that the behavior of 60-year-old consumers differs from 20-year-old consumers, some of the difference may be due to age, per se, and some to different historical experiences. We need more longitudinal studies that follow groups of people over time. I cannot tell if an aging consumer acts a certain way because of changes in memory and cognitive function or because his/her age group all the way through life was different from other groups. Which differences are due to historical experience and which are due to aging? To determine that, we need what we have in other domains — longitudinal studies. Many of those are publicly funded. It's not something private industry would fund because there's no payoff in the short run and no company wants to fund something for 30 years to learn how people change.
Even given those limitations, there are some revelations in the book. For instance, spending patterns are more nuanced than previously thought.
Yoon: True. And those findings come from longitudinal research that has been conducted as part of publicly funded investigations into health and retirement.
Schwarz: Much of this work is conducted at U-M's Institute for Social Research.
What are some immediate takeaways from this research that marketers and companies can act upon?
Schwarz: A few things. One is the psychological research into cognitive functioning. That's actionable at the level of how you would present products, what product information should look like, and what your advertising should look like. For instance, you wouldn't want an advertisement where the guy talks really fast. You want information to be easily understood and easily read. If you look at the advertisements for medicines geared toward older people, you will find things so full of fine print that the customers who most need to read it might not be able to. There are a lot of products that are not designed in a way appropriate for the age groups being targeted.
Yoon: I think there is more sensitivity to those issues now than in the past with boomers turning 60.
Schwarz: Another important aspect from a company's perspective is that older consumers are enormously satisfied. It's slightly mysterious why that is. It's a very robust finding that we see across most product and service domains, but we don't have a good explanation for it. In a sense, it's an incentive for companies not to invest much money in learning about older consumers. For the most part, if you have an older customer he or she will like what you do.
Could it be because older consumers are less likely to try an unproven product, which avoids some of the big disappointments?
Schwarz: It could be. They're not disappointed with the new one because they won't try it, and they're not disappointed with the old one because they never tried the new one. It cuts both ways. Once you stick with what you have, you're likely to be satisfied because you're not getting comparisons. The phenomenon probably has many causes. But the dominant image of older consumers is that they're cranky or nostalgic and they think everything used to be better, but they're actually very satisfied.
Your book highlights this intersection between neuroscience psychology and marketing. Is that a new area of study, bringing them together?
Yoon: It's relatively new. People have been studying the cognitive neuroscience of aging longer, but looking at the social contexts is something that's emerged in the last five years. I think it is a nice way to think about the aging process: that it is a combination of the biological changes as well as what is happening in the environment that affects an individual. Some of the headlines are that the aging brain is associated with greater plasticity than previously thought, and that older adults are able to regulate their emotions better than younger adults by differentially attending to positive information (termed a positivity bias). Another important finding is that with aging, people have greater difficulty inhibiting irrelevant or distracting information. The ability to suppress or inhibit irrelevant information is central to the efficient functioning of attention and memory processes. The consumer environment, in which there is an ever-increasing volume of information competing for our attention, is a particularly difficult environment for people as they age.
The last chapter talked about designing products for older consumers, right down to testing and design. Are companies actually doing this?
Schwarz: It's hard to tell how widespread it is. There clearly are companies that have product lines for older consumers that are designed with these factors in mind. I think the majority of companies aren't there yet. Most products are not designed with older consumers in mind, even though we're usually talking about features young people would appreciate as well. Of course, there are exceptions, such as cell phones, which young people prefer smaller than older people.
Yoon: There is a belief among marketers that brands associated with older consumers (e.g., Oldsmobile) suffer from a dilution in perceived value. What companies like Samsung have done is create a separate line, such as the Jitterbug phones with features that are clearly meant for older consumers. But there are a lot of older consumers who explicitly don't want products that are associated with the elderly. We see a great deal of denial about aging among older consumers. Hence some researchers and marketers have called for simple and universal designs that appeal to everyone.
How will business react to the fact that this population is getting bigger and eventually will be making more buying decisions?
Yoon: Well, the baby boomers are quite different. They haven't quite reconciled the fact that they're getting older and they're not like the older consumers who came before them. There is a chapter in the book that talks about the brands that cater to age branding, like Botox, that are more self-improvement products. Those tend to do well among this group.
Schwarz: When you ask people how old they feel, they usually say 20 years younger than they are. At the very least, they don't feel old enough to want a product for older people. So you'll have to manage a product that has sleek, modern design but is easy to handle for older hands and poorer eyes. It will be interesting to see.
Yoon: We're still at the awareness-generation stage and this book is part of an effort to try to get more academic researchers to conduct studies on the aging consumer. Many marketers are concerned about what the aging consumer means for their businesses and how their product designs have to change. But as of yet, academic research on this topic is surprisingly sparse.
For more information, contact:
Terry Kosdrosky, (734) 936-2502, firstname.lastname@example.org