South African business could be ignoring the moneyed over-40's market at their peril, says Director of the UCT Unilever Institute for Strategic Marketing, Professor John Simpson.
With a combined income of R300-billion, the 1.9-million South Africans who are older than 40-years and classified as being between living standards measure (LSM) 7 and 10 are an economic force to be reckoned with, according to a ground-breaking research project recently conducted by the UCT Unilever Institute and their research partner Synovate.
Entitled Prime Time, the research project shows that despite the current economic downturn, this golden seam of South Africa's biggest spenders are more recession-resistant than their counterparts under-40 years.
The statistics also show startling growth in recent years - growth that is destined to continue for many years. Since 2004 the number of Black South Africans in the mature market has increased by over 30 percent and is expected to continue growing at 10 percent per annum in the foreseeable future. Professor Simpson explains that there are several drivers of growth in this market including the phenomenon of the baby boomer generation as seen elsewhere in the world, as well as the increasing number of Black Diamonds who are entering the mature market as they age.
One of the factors that contribute to this market's prosperity is that many Prime Timers are not as burdened by debt as their younger counterparts, explains Professor Simpson. He adds that approximately 70% of all Prime Time respondents state they have managed to settle most of their debt, while half of those who are older than 50 years maintain they are debt free.
FNB Brand Director, Derek Carstens, believes the lessons from this research are clear and invaluable to local marketers. “If you are looking for an immediate return on your marketing investment, you have got to be in this market. Not only is it an important market right now, it's going to be even more important in the future. It's a no-brainer basically!” says Carstens.
Simpson believes the recent research could be a godsend to many South African businesses during the current economic downturn. “Since this market is much bigger and faster-growing than generally perceived, it presents golden opportunities to effectively engage with them. This market is also destined to continue booming thanks to the corresponding growth of Black Diamonds.
The study shows the far-reaching socio-economic impact that Prime Timers wield, despite making up only 6 percent of SA's adult population. They own 28 percent of all cars and 30 percent of Prime Timers invest on the stock exchange, while they also account for just under a third of all university degree holders in the country.
The table below indicates the proportion of Prime Timers in the SA population and their impact on the country's socio-economic landscape.
Prime Timers as a percentage of SA population
Percentage of adults in SA
6%
Percentage of SA car owners
28%
Percentage of SA who invest on stock exchange
30%
Percentage of SA who are on medical aid
25%
Percentage of SA university degrees
28%
Despite the economic clout that their financial freedom gives them, many in the Prime Time research report feeling overlooked and under-valued by retailers, product developers and service providers. “Our study reveals many South Africans over-40 believe that most marketing messages are aimed at those in their 20s and 30s and feel alienated by marketing communication, overlooked by product developers and dissatisfied with customer service,” explains Simpson.
Simpson explains, ‘Traditionally marketers have focused their marketing communication on the under 40 market. The reality is that the majority of this market has less disposable income than Prime Timers. While international marketing counterparts are aggressively targeting the over 40's, South African marketers have been slow in recognizing this segment's economic significance.'
“Older consumers who are financially in their prime feel alienated by advertisers' and marketers' obsession with youth. This provides a tremendous opportunity for savvy businesses and marketers to tailor-make products and services that cater for a more discerning and financially secure mature market, and to put more thought into how to communicate with them.”
An opinion often voiced by Prime Time respondents was that companies do nothing to reward brand loyalty. “Thus more mature markets are not as brand loyal as popularly assumed by marketers and are conscious that very little is being done to address issues of consumer retention,” says Simpson. “This is regrettable as it leads to the attrition of businesses most valuable customer base.”
While popular opinion tends to stereotype 40-plussers as staid, rigid in their ways, technophobic and over-the-hill, this image differs radically to the Prime Time findings. Most participants indicated they were living full and satisfying lives with interests that included travel, food and fashion. Many stated they felt more confident than they had felt in young adulthood, while most expressed an increased awareness about issues relating to health and wellness.
Many were not technophobes and incorporated technology into their daily lives even if it meant having to find more out about technology from a variety of sources, such as younger family members.
Respondents also reported that they were more discerning than ever before and that quality was an attribute that they sought in both products and services. The vast majority of those interviewed said that nutrition and wellness had become a priority in their lives. 78% of respondents say they are more health conscious now than when they were younger and the majority of respondents stated they preferred buying organic or fresh ingredients. An interviewee in her 50's captured the zeitgeist of her peers with the statement: ‘We will be living longer and will be healthier than other generations. While another summed up the mature markets growing awareness about nutrition by saying: ‘I'm now eating healthily. I have become more and more conscious of what I put into my body.”
80% of Prime Time respondents say that they are willing to pay more for quality products. Yet despite having the money to spend, the general perception among most of those interviewed was that finding appropriate and appealing products and services aimed at their age-group is often challenging. Clothing, in particular, was singled out with regard to both sizing and styling. Many participants complained that despite having the money to spend on clothing, they found it increasingly difficult to find clothing that fitted them, but was also still fashionable.
Prime Time marks the first time that a South African general consumer research study of this magnitude has been conducted on the mature market. Professor Simpson says that while the international marketing fraternity has long recognised the importance of the mature market, South Africa was only now beginning to realise its significance.
“Understanding the different nuances between the segments of this market will enable marketers to more effectively engage with these discerning and moneyed consumers,” he adds.
He said many local business people and entrepreneurs could learn invaluable marketing lessons from the Prime Time findings which will be disseminated during nationwide seminars in late July and early August.
Visit our PRESS OFFICE: The UCT Unilever Institute of Strategic Marketing (established 1999) is a non-profit organisation based at the University of Cape Town, School of Management Studies. The Institute is largely funded by the Unilever Foundation for Education and Development.- more....
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