Economic orientation

Time for part two of the addition to this post. In the meantime, Joke has already talked about the economic impact of technology on the elderly, from their point of view. In this post, I’ll represent the producer and how they experience the senior citizens as a marketplace segment. This post will be loosely based upon a study performed by James R. Lumpkin (1), with some of my own assumptions added to the mix.

Producers are still struggling to economically segment the elderly population in a suitable way. There are multiple types of personalities (the early adapter, the cautious consumer, …), yet most of the senior citizens differ from their younger counterparts. I’ll focus on these general differences rather then lose myself in an avalanche of terms and semantics, but be aware that people of a respectable age aren’t as easy to group together as it appears.
In general, Lumpkin concludes that there’s one big macro-economic divide between elderly and youth. Most products are developed and marketed to satisfy a need that wasn’t there before the product appeared. The easiest example of this is electricity. Before it was commercialized, people got around just fine. Nowadays, if you live without it, you’re considered to be below the minimal economic limit (as in: poverty). The elderly however don’t respond very well to this type of economic thinking. In other words, they (mostly) respond to a need they already had beforehand. This rigidity has a few possible causes, which I’ll discuss below.
A) Senior citizens are proud of their independence. They survived just fine before, they don’t need new technology now.
B) They’re insecure and posses a natural fear of change. This is most prevalent in concurrent products, where marketing studies observe a remarkable brand-loyalty in older citizens.
C) They just don’t know about the product as they’re not as acute to news and commercials as they used to be.
D) Elderly don’t recognize the ‘value’ of new products and thus ignore them.
The loyal reader of this blog will recognize a lot of themes that have been discussed before. It’s hard to encourage people of a respectable age to try out new things. Insecurity and fear are often the demotivators, however sometimes the elderly just have a strong sense of independence (and the fear of losing it). These emotions cause a social and economic divide between age categories, as well as impact other regions of society. For instance, older employees are often more rigid and less prone to change.
This cautiousness is however not necessarily a bad thing. When you think about it, who’s the irrational person? The one who refuses to buy a new product or the one that believes this new development is something he/she has been sorely lacking (even though it often isn’t the case)?

References:
(1) J. R. Lumpkin, Shopping orientation segmentation of the elderly consumer , Journal of the Academy of Marketing Science, Volume 13, Numbers 1-2, p. 271-289

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4 Responses to Economic orientation

  1. jokewellens says:

    Maybe it’s already obvious, but for me the elderly are not at all the irrational persons. The consumer market where we grown up with has clearly influenced us. For instance with the rise of the electronic market. I’ve got my first mobile phone when I was fourteen, because I had to take a private school bus in my neighbor town. My parents picked me up in that neighbor town, but if there was a problem or they would be to late they can give me a call so that I didn’t had to worry. So the reason that I had a cell phone at such an age was because of safety. So every parent gives his child a cell phone because of safety. In fact this is not so strange, because you hear a lot about violation and rapings on the news. But was it really safer when our grandparents, and parents where young? Maybe it was quite the same but there was less media attention, and therefore the parents now are much more careful. Anyway I’ve now my 3the cell phone, in 14 years and his still working so why would I replace it? Maybe there are newer models, who are easier in use, with more applications. And it’s not that I’m against this constantly innovating consumer market. But I really understand the thoughts of elderly. They didn’t grow up in this period of continuously renewing products. How could a two year old cell phone be old if they have a telephone who is still working after 8 years, and a car that is 16 years old.
    And I think there’s a new generation after us where the problem is even bigger. They are born with a cell phone in their one hand and a pc in the other hand, and a lot of gameconsoles on their back in a matter of speech. I already noticed it in the youth movement, there are already a lot of children who have a cell phone, pc , game boy DSI, Wii, play station at an adge of 8-12 years. And for them it’s very normal, because all their friends have it too. This is often the reason why people didn’t stop buying new stuff, because they influence each other. They want to fit in the group, be accepted by the others.

    • karelvanderelst says:

      I never implied the senior consumer to be irrational. I merely stated their economic behaviour differs from that of a younger person and tried to think of a few reasons that could cause this. It’s true that very young citizens are even more influenced by hypes and marketing, but that doesn’t change the rigidity of the elderly towards new products. This in no way means this behaviour is exclusive to people of a respectable age, as you prove yourself by citing your expenditure towards mobile phones, however it’s impossible to account for every individual when making general claims like I tried to do in the post above.

  2. jokewellens says:

    I know that you never implied the senior consumer to be irrational. It was not my intention to say that, because I agree with all your general claims. What I mean is that elderly in this case are indeed less irrational then younger people. And I think it’s not the fault of the younger people they are just more influenced by this constantly innovating consumer market. So I agree with the things you said, I just picked in on the topic of the changing consumer market. Because this is the cause that there is a difference between the elderly and the younger people, or I’m I wrong?

    • karelvanderelst says:

      There’s no right or wrong here, as most of the original post is based on suspicions rather than facts.
      The consumer market has changed over the years to accommodate a more hype-based expenditure. However, created needs where none existed before has been a basic pillar of modern capitalism for some time. Even in the 60’s when the Adam Smith theorem was fully prevalent, these trends were already visible.
      This however doesn’t change the fact that, as in most domains, the elderly are rigid to change when it comes to economy and expenditure. Whether this can be considered rational or not is for each individual to decide on his/her own.

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