Baby Boomers

Restaurants face their demographic dilemmas.

Phillip Nones Business, Demographics, Economics, Sales, Social Commentary , , , , , , , ,

There’s no question that the U.S. economy has been on a roll the past two years. And yet, we’re not seeing similar momentum in the restaurant industry.

What gives?

As it turns out, the challenges that restaurants face are due to forces and factors that are a lot more fundamental than the shape of the economy.

It’s about demographics.  More specifically, two things are happening: Baby boomers are hitting retirement age … and millennials are having children.  Both of these developments impact restaurants in consequential ways.

Baby boomers – the generation born between 1946 and 1964 – total nearly 75 million people. They’ve been the engine driving the consumer economy in this country for decades.  But this big group is eating out less as they age.

The difference in behavior is significant. Broadly speaking, Americans spend ~44% of their food dollar away from home.  But for people under the age of 25 the percentage is ~50% spent away from home, whereas for older Americans it’s just 38%.

Moreover, seniors spend less money on food than younger people. According to 2017 data compiled by the federal government, people between the age of 35 and 44 spend more than $4,200 each year in restaurants, on average.  For people age 65 and older, the average is just $2,500 (~40% less).

Why the difference? The generally smaller appetites of people who are older may explain some of it, but I suspect it’s also due to lower disposable income.

For a myriad of reasons, significant numbers of seniors haven’t planned well financially for their retirement.  Far too many have saved exactly $0, and another ~25% enter retirement with less than $50,000 in personal savings.  Social security payments alone were never going to support a robust regime of eating out, and for these people in particular, what dollars they have in reserve amount to precious little.

Bottom line, restaurateurs who think they can rely on seniors to generate sufficient revenues and profits for their operations are kidding themselves.

As for the millennial generation – the 75 million+ people born between 1981 and 1996 – this group just barely outpaces Boomers as the biggest one of all. But having come of age during the Great Recession, it’s also a relatively poorer group.

In fact, the poverty rate among millennials is higher than for any other generation. They’re majorly in debt — to the tune of ~$42,000 per person on average (mostly not from student loans, either).  In many places they’ve had to face crushingly high real estate prices – whether buying or renting their residence.

Millennials are now at the prime age to have children, too, which means that more of their disposable income is being spent on things other than going out to eat.

If there is a silver lining, it’s that the oldest members of the millennial generation are now in their upper 30s – approaching the age when they’ll again start spending more on dining out.  But for most restaurants, that won’t supplant the lost revenues resulting from the baby boom population hitting retirement age.

What’s in a name? When it comes to senior living communities – plenty.

Phillip Nones Advertising, Branding, Demographics, Marketing Communications, Marketing Research, Social Commentary , , , , , , , , , , ,

BrooksideFor those of us “of a certain age,” it seems hard to believe that within five years, most of the Baby Boomer generation will be of retirement age.

… This also means that millions of people will be thinking about downsizing, right-sizing, or whatever the applicable term may be.

All sorts of considerations come into play when making such a decision; climate, social, cultural and recreation opportunities, plus proximity to relatives are some of the most common.

But when the dust settles, most people will actually end up “aging in place.”

That’s one key finding from a recent survey of ~4,000 American Baby Boomer households that was conducted by the Demand Institute Housing & Community.

Not only do nearly two-thirds of the respondents plan to stay in their current homes, the majority of them feel that their homes are well-suited for aging – even if they’re multi-story, don’t offer accessibility features, or aren’t particularly low-maintenance structures.

But the survey suggests another interesting dynamic that may also be at work:  the notion that senior living communities are primarily places for people who have serious health issues or who can’t take care of themselves on their own.

Let’s face it.  Baby Boomers don’t consider themselves part of that cohort at all, which they equate with people who are substantially more elderly than themselves.

When you think about it, so many of the terms used to describe senior living facilities convey exactly the wrong thing to Baby Boomers.  The names may well be accurate descriptions of the properties in question, but they fairly scream “geriatrics.”

community

I’ve run across quite a few descriptors.  A good number of them reside in the same wheelhouse – which is to say, distinctly unattractive.  Meanwhile, other alternative names are often too narrowly descriptive as well, because one important aspect of senior living is to access to continuing care if and when that becomes necessary.

Either way, those charged with marketing these properties clearly prefer the word “community” over the word “center” or “home.”  But you can be the judge of how successful these names really are:

  • 55+ communities
  • Active adult communities
  • Age-restricted communities
  • Continuing care retirement communities
  • Elder cohousing communities
  • Independent living communities
  • Leisure communities
  • Mature living communities
  • Senior housing communities
  • Senior living communities

The bottom line on this is pretty fundamental:  Few people – regardless of how old they are – wish to be reminded of the limitations of life on a downward curve.  It’s just not compatible with the positive attributes that are so much a part of human nature.  Anything we can do to avoid being reminded of our mortality, we’ll do.

Obviously, that reluctance to face the reality of aging is of concern to property developers in the housing industry as well.  One of the actions coming out of field research such as the Diamond study is a new initiative to establish an alternative “umbrella descriptor” that works across the entire spectrum of senior living facilities.

It will be interesting to see where that exercise will end up.  As for me, I’m guessing it’ll still telegraph “geriatric.”  But perhaps we’ll end up being surprised.

Are young marketers now the “smartest people in the room”?

Phillip Nones Business, Marketing, Marketing Communications , , , , , , , , , , ,
Deanie Elsner
Deanie Elsner

Recently I read about some interesting remarks made by Deanie Elsner, who is the former executive vice president and chief marketing officer of Kraft Foods.

Ms. Elsner made them as the keynote speaker at the Tapad Unify Tech 2015 cross-screen technology conference held in mid-June.  The gist of her argument was that senior-level marketers and heads of companies are most often the ones who are the “ball and chain” in a company when it comes to following effective marketing practices.

The way Elsner sees it, too few of these officials understand digital marketing as an integrated program that commingles data with a coordinated brand strategy:

“When you ask marketers to define digital strategy, they will give you ‘random acts of digital’ rather than an holistic strategy informed by data, with KPSs and data points that prove success.”

It doesn’t help that most upper-level managers are part of the Baby Boomer generation or just slightly younger, whereas most of the big developments in marketing technology and the communications landscape are being driven by Millennials.

[An aside:  recently we learned that Millennials, at 87 million strong, are now this country’s largest age cohort — ~14% larger than Baby Boomers.  And they’ll only grow more important in the coming decade or two as the Boomer generation passes into retirement and then into history.]

Millennials-vs-Boomers

In Elsner’s view, Millennial employees understand something that their older counterparts generally don’t see, which is that the “one-way communications” perspective on advertising and promotion is no longer so important — or even relevant.

I can see her point.  Consumers today are the ones determining the conversation and the agenda.  It’s up to marketers to figure out the best ways to follow that agenda and to use the best tools to make it happen.

But then Elsner makes this bold statement that I’m not sure is totally accurate:

“Your smartest person is your most junior talent.  The most dangerous, potentially, is the current CEO, because what they know doesn’t exist anymore.”

I don’t disagree that junior talent “gets” the modern communications environment more inherently than older employees.  However … younger talent is prone to the opposite extreme:  making assumptions based the latest trends for the youngest audiences.

When that happens, people can misread how industry changes affect consumers of all age levels, other demographics and psychographics.

In fact, in my work with numerous corporate clients, often the “smartest person in the room” is the one who’s over the age of 65.  And why not?  The reality is that irrespective of the seismic changes in marketing, there’s a lot to be said for 20 or 30 years of life experience to truly understand what makes human beings “tick” … why people are often so different … and what makes them choose to do the things that they do.

So the bottom line is actually this:  Both younger and older marketers are important and can bring a lot to the table, and there’s more than enough respect to go around.

Boomers and Millennials: Destined always to be different … or on the same trajectory?

Phillip Nones Advertising, Business, Demographics, Social Commentary, Uncategorized , , , , , , , , , , , , ,

NeuroWhen it comes to advertising, it turns out that the Baby Boomer generation sees things quite a bit differently than the Millennial generation.

In fact, based on neuromarketing research conducted last year by Nielsen NeuroFocus, generational differences account for some interesting neurological contrasts between Boomer and Millennial brains.

The research results also point to how companies might find it wise to tweak the design and presentation of their advertising based on the age levels of their audiences.

Consider these distinct differences found by Nielsen NeuroFocus in its research:

Brain Function: The Boomer Brain likes repetition. Boomers also tend to believe that information that is “familiar” is true. On the other hand, the Millennial brain is more stimulated by dynamic elements such as rich media, animation, and lighting that cuts through their “perception threshold.”

Distractions: Boomer brains are more easily distracted, whereas Millennials are adept at dealing with “bleeding-over” communications such as those found in dynamic banner ads and in contemporary magazine layouts.

Attention Spans: Boomers have a broader attention span and are open to processing more information, whereas Millennials prefer at-the-ready, multi-sensory communications. (And “impatience” is their middle name.)

Colors: In advertising, contrasts gain the attention of Boomers in advertising. With Millennials, it’s more the intensity of the color palette overall rather than contrasts within it that does the trick.

Humor: The Boomer generation prefers lighthearted, clever humor in advertising messages – positive and not mean-spirited. Boomers also like relatable characters that aren’t much younger than themselves. Millennials tend to prefer offbeat, sarcastic or slapstick humor – basically, the kind of humor that many Boomers find offputting or even offensive. Making special effects and other visual hi-jinks part of the shtick attracts the attention and interest of Millennials, too.

It turns out, there’s some real science behind these findings, too. Nielsen NeuroFocus reports that when people are in their mid-50s, distraction suppression mechanisms tend to weaken. Even as early as the mid-40s there are dramatic declines in neurotransmitter levels – particularly serotonin and dopamine.

How does that manifest itself in situations where we see “Boomers behaving badly?” Dopamine declines can lead to thrill-seeking behaviors to compensate. And a drop in serotonin levels can lead to the feeling that “something is missing” – thereby leading to classic midlife crisis behaviors affecting a person’s professional life and personal relationships.

… And as we know, that often doesn’t end up particularly well.

But here’s the more central takeaway from the research: Boomer-Millennial differences don’t turn out to be so much a function of differing world views; it’s more a function of the aging process itself.

So look for the Millennials to begin responding more like Boomers in the coming years.

Boston Consulting Group predicts “the end of consumer marketing as we have long known it.”

Phillip Nones Advertising, Branding, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , , , , , ,

Boston Consulting Group recently conducted a survey of American consumers to see how their spending habits and approach to brands differs by age group.

Millennials GenXers Baby BoomersThe results give us a quantifiable measure of the differences in outlook between three major age groups:  Millennials (age 18 to 34), Gen-Xers (age 35 to 49), and Baby Boomers and older consumers (age 50 and up).

The survey findings led BCG researchers to declare that Millennials’ perspectives are characterized by a “reciprocity principle.”  By this, they mean that these younger consumers expect “mutual relationships” with companies and their brands.

This isn’t so very surprising considering the ability of the Internet and social media platforms to provide an easy platform for airing their opinions.

A positive brand experience may prompt consumers to take favorable “public” action on behalf of the brand.

A disappointing experience most assuredly will prompt vocal criticism via product or service reviews, social media, blog posts, and leaving comments.

digital-multitaskingAnd the juicier the commentary, the more likely it is to go viral.

The BCG survey found that younger consumers are far more prone to participate in the world of “reciprocity.”

The differences were pretty dramatic when asking respondents in the different age groups whether they agreed with certain statements:

“Brands identify who I am, and my values.”

  • Millennials:  ~44% agree
  • Gen-Xers:  ~38%
  • Boomers and older:  ~33%

“People seek me for knowledge and brand opinion.”

  • Millennials:  ~51% agree
  • Gen-Xers:  ~42%
  • Boomers and older:  ~34%

“I’m willing to share my brand preferences online or on social media.”

  • Millennials:  ~55% agree
  • Gen-Xers:  ~43%
  • Boomers and older:  ~28%

Evaluating the survey findings, the BCG report posits that Millennials are “the leading indicators of large-scale changes in consumer behavior.”

Rather dramatically, BCG also concludes that this particular generational transition is “ushering in the end of consumer marketing as we have long known it,” and that the linear framework companies have used for decades to manage brand image and engagement is headed out the window.

“… Marketers must embrace the reality that marketing is an ecosystem of multidirectional engagement rather than a process that is controlled and pushed by the company,” the BCG report states.

My personal view is that the Boston Consulting Group’s conclusions are probably on-target … but the question is the degree.

I don’t think many major brands are going to simply cede control of their marketing and messaging to the cyberspace or the social cloud.  They’ve worked too long and too hard on their brand image and identity to give up that easily.

For more on the survey findings and conclusions, here’s BCG’s summary article.

Adult Children Today: Dependency Redefined

Phillip Nones Uncategorized , , , , , , , , , ,

Adult kids financially dependent on their parentsThose of us with children who are recent college graduates might wonder if we’re the only ones continuing to support them financially in a big way.

It turns out, we’re far from alone. In fact, a recent consumer survey by Vibrant Nation, an online community focusing on Baby Boomer women, finds that parents are supporting their adult kids (defined as up to age 30) in all sorts of ways:

 Paying for cellphone service: ~60% of parents are supporting
 Paying for insurance: ~53%
 Paying for rent: ~39%
 Paying for non-school related trips and travel: ~38%
 Paying for clothing: ~36%
 Paying for cars and computers: ~33%

Looking down this list, it’s no wonder so many “empty nesters” feel like their child-raising years are far from over!

[But thank goodness for small favors: At least it’s only a minority of parents who are buying their adult kids automobiles and computers.]

Thinking back ~35 years ago when I finished my college studies, there wasn’t one thing on the list above that my parents covered for me (although they were helpful when it came to loaning me money for the down payment on my first home purchase — barely three years out of school).

So at first blush, it’s quite startling to see these numbers. Then again, considering the ugly employment situation for today’s recent college graduates, perhaps it’s not so surprising after all.

And there’s another interesting twist to the “new dependency” as well. In the past, once adult children left home – financially as well as physically – it was much easier for them to break the ties of parental influence and control. I don’t recall asking my folks for their opinion about much of anything in those years following school.

Today, with kids so financially dependent on their parents for pretty much anything of consequence, it’s much easier for parents to exert that influence.

Let’s just say, our opinions carry a lot more weight.

How about you? In what ways are you continuing to support your adult kids? And is there a downside?

The “age-old, old-age” disconnect in advertising.

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Here’s an interesting statistic: Consulting firm McKinsey & Co. projects that by 2010, half of all consumer spending in the United States will be generated by people age 50 or older.

It’s a reminder of just how important the Baby Boom generation has been to the U.S. economy over the past three or four decades. And now, just when you might think that power has shifted to younger generations, the McKinsey statistic helps us realize that Baby Boomers aren’t ready to leave the stage just yet.

In fact, they’re not even ready to leave center stage yet.

Here’s another interesting stat: The average age of creative personnel at ad agencies and related communications firms is … 28 years old. And the number of personnel over the age of 50? Fewer than 5%.

And therein lies the age-old, old-age disconnect.

Perhaps it isn’t surprising that ad agencies are stuffed with creative types who are mostly between the ages of 20 and 35. After all, that’s traditionally the demographic group most likely to buy and spend … and so the vast bulk of marketing dollars – traditional and emerging – are devoted to this segment (as true in the 1970s as it is today).

And of course, having a bunch of twenty-somethings spending time developing marketing pitches to other twenty-somethings makes perfect sense. It’s just that the 18-34 target is no longer where the bulk of the buying power is happening. That’s still happening with the Boomer group, whose average age as of 2009 happens to be 53.

Just how significant are “the oldsters” today? McKinsey’s statistics are telling. They include the finding that the over-50 population in the United States brings home nearly 2.5 times what the 18-34 group earns. Which makes it no surprise that the over-50 group represents more than 40% of all disposable income in the U.S.

And when you look at spending, the over-50 segment — which makes up only about 30% of total U.S. population — accounts for well over half of all packaged goods sales and three-fourths of all vacation dollar expenditures. These spendthrifts buy more than 50% of all the automobiles. They even spend significantly more than the average online shopper during the holidays – 3.5 times more, to be precise.

These are strong financial figures.

Now, consider for a moment to what degree ad creative personnel who are 20 years younger are going to really understand older consumers. Sure, they’re well-versed on the ever-growing interactive and social marketing tactics that are available today. But how likely is it that they’re actually able to craft compelling advertising and marketing messages to older consumers?

Undoubtedly, many will scoff at the very question. For one thing, these creatives grew up with Boomer parents.

But when you consider how many common, worn-out clichés one sees in the advertising that’s aimed at the over-50 set — online as well as off — it does make you wonder if the communications firms are putting their creative emphasis in the right hands!