Demographics A Threat to Marketers

By John Riley

Rapidly changing market conditions are nothing new to marketers, but now they are faced with a more ominous challenge: a long term shift in demographics.  The consequences between now and 2020 are that the United States will experience very minor growth in per household spending and after that spending on consumer products is expected to fall through 2050.

 This is the conclusion of the Nielsen Company in a report prepared under the direction of Doug Anderson, Senior Vice President, Research and Development.

 According to Mr. Anderson, “an aging population, a declining birth rate, and growing ethnic diversity will change the face and the spending behavior of consumers. Gaining share among population groups that most marketers do not reach today, older and ethnic consumers, will require shifts in focus, tactics and products.”

 He points out that since the 1970’s birth rates in the United States have been at least 40% lower than at the heights of the baby boom.  When a falling birth rate is combined with a very large generation like the Baby Boom, the effect is a gradual aging of the population. The number of persons who reach retirement age of 66 will increase by over 100,000 each year throughout the Baby Boom retirement years to 2030.

 “Aging populations place stress on an economy in two ways”, Mr. Anderson says.  “First, if the generation is sufficiently large, retirement can lower the size of the labor force lowering overall productivity.  Second, is the cost of caring for a large number of retirees.  Medicare and Medicaid will deplete their trust funds in about ten years and will be the largest component of all U. S. government spending by 2030. Additionally, many privately funded pension plans are underfunded.”

 The report goes on to point out that as the Baby Boomers continue to age, and birth rates remain low, household sizes will decrease. Many aging Boomers will live alone or with one other person while the number of children per family will get smaller. When the most economically disadvantaged market segments are included, pressures on per capital spending will be like nothing the U.S. has experienced in modern times.

 Bottom line for marketers: growth will only come from increasing share against completion.

 The opportunity:  by 2025, over half of all families with children will be multi-cultural, but Marketers who can navigate diverse cultures, tastes and languages will succeed.

Explore posts in the same categories: Market Research, Marketing

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