Grey market Concept in UK

Many people associate the term 'grey market' with the sale of products by
unauthorized distributors or cross-border trading. Sometimes it is used as another
term for 'baby boomers' or pensioners. The definition I prefer is all consumers over
the age of fifty; a group that equates to about 20 million people in the UK.

This is a huge single market category that spans 30-40 years of a person's life as a
consumer. It is a category that covers all the variants of wealth, health, education,
marital status and geography, not to mention the male, female split. Clearly it is a
complex market group that subdivides into many sectors. Unfortunately it is too often
seen as a homogeneous group that lumps together the fit, wealthy fifty-something
with the ill, cash-poor, 75-year old.

"Too often marketers lump together the fit, wealthy fifty-

something with the ill, cash-poor 75-year old"

There are some common characteristics that span all the 'grey market' sectors. Ageing
does affect cognitive, vision and psychomotor abilities. Put more bluntly, the decline
in short-term memory, failing eyesight and problems with manual dexterity. It marks a
period of life where the financial and time demands of the family decrease, allowing
the individual to pursue their personal interests. Other than these two factors the
segments have little in common.

Let's retain the simple definition of the grey market being the 'over 50s' but remember
the breadth of consumer types it includes

Is it important?

Not only is the 'grey market' important it is becoming more so. Firstly, the size of the
group is increasing. People aged over 60 now account for 20% of the population
compared with 12% in 1950. By 2020, over 40% of the population in Western Europe
will be over 50.

Secondly, these consumers will remain economically active for longer. On average we
can now look forward to 20 years of post-retirement life expectancy. In 1950 the
figure was half this value.

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With many years of active life remaining, retirement is now perceived as the beginning
of the new phase of living (and spending), unencumbered by work and family
commitments, rather than a slow decline to the nursing home.

Undoubtedly the most important reason this age group is so important concerns their
economic power and how this is increasing. The over-50s own three-quarters of all
financial assets and control half of consumer discretionary spending. The over 45's
spend their way through a staggering £145 Billion of disposable income a year.

It is this age group's buying power that should convince marketers of their
importance. They dominate the market for top of the range cars; buy 50% of face care
cosmetics and 35% of all travel. And, remember their relative importance will increase
for at least the next two decades.

The relentless rise of importance of this age group is mirrored by a decline in the
economic influence of their sons, daughters and grandchildren. The income of the 20-
something now has to fund education loans, pension contributions and huge
mortgages. The trend towards contract work, rather than traditional paid employment,
means that many of the younger generation have little employment protection and are
locked into irregular and low-income jobs.

For all of these reasons the economic centre of gravity of many markets is moving
towards the over 50s.

Why the age group is largely ignored?

Do you need convincing that marketers largely ignore the over-fifties? A recent report
from Help the Aged showed that just five per cent of advertising targets the over 50s.
This is an age group that represents nearly half of peak time TV audiences and
dominates radio listening figures.

The comment of Mike Waterson, the Chairman of the World Advertising Research
Centre, says it all 'Advertisers and marketers are astonishingly neglectful of older
audiences even for products primarily sold to older people.'

"Marketing myths, rather than facts, explain the lack of focus

on the over 50s"

Why should this mismatch of marketing effort to marketing potential exist?

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There is one main and several subsidiary reasons that explain this situation. At the
core of the explanation is the view that older people are less receptive to new ideas
and new products. Once you accept this premise then the other the arguments make
perfect marketing sense. Older people are less likely to try new brands. It is harder to
change their behavior using advertising. They are less likely to use new channels, like
the Web.

These arguments do have a 'ring of truth' but cannot justify the derisory amount of
marketing spend the age group attracts. Maybe this rationale was correct, a couple of
decades ago, but the over 50s of today are very different from their parents. Marketers
are guilty of using a stereotype of the older consumer that has radically changed.

There are two more explanations. Around half of advertising agency staff are under
30 and in the interactive media industry the average age is even less. So maybe it is not
surprising that there is such a focus on the peer group of those at the centre of the
marketing industry.

The second explanation concerns how demographic and economic changes evolve
over decades while most marketing decisions get made annually. Let me explain. In
any one year the 50+ age group's importance will change by a small amount and it is
easy to avoid making a major decision to realign the marketing spend to account for
its importance. Over a period of ten years, far longer than most marketing directors
will be in place, its impact is significant.

No single reason explains this marketing anomaly. Rather it is their cumulative effect
that accounts for this crazy situation.

Do you understand it?

Every marketer needs to decide if the 'grey market' is a threat, opportunity or an

irrelevance. Not knowing or caring is not an acceptable option.

This is a short test to understand how well you understand the issues.

What would be your reaction to this scenario?

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• How we segment our 50+ age group market

• How our marketing plan exploits the changing demographic and economic
power profile
• How we ensure our interactive media is 50+ friendly
• Our research processes to understand the changing requirements of the 50+
consumer
• Why our marketing communications strategy is appropriate for the 50+
consumer?

GREY MARKET IN UK                                                                                            Bright Ways Seminars