grey market scenario

8/8/2019 Grey Market Scenario

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GREY MARKET IN UK Bright Ways Seminars

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 anotherterm for 'baby boomers' or pensioners. The definition I prefer is all consumers overthe 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 aconsumer. 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 acomplex market group that subdivides into many sectors. Unfortunately it is too oftenseen 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 declinein short-term memory, failing eyesight and problems with manual dexterity. It marks aperiod 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 rememberthe 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 thegroup is increasing. People aged over 60 now account for 20% of the populationcompared 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 wecan now look forward to 20 years of post-retirement life expectancy. In 1950 thefigure 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 theireconomic power and how this is increasing. The over-50s own three-quarters of allfinancial assets and control half of consumer discretionary spending. The over 45'sspend 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 theirimportance. They dominate the market for top of the range cars; buy 50% of face carecosmetics and 35% of all travel. And, remember their relative importance will increasefor at least the next two decades.

The relentless rise of importance of this age group is mirrored by a decline in theeconomic influence of their sons, daughters and grandchildren. The income of the 20-something now has to fund education loans, pension contributions and hugemortgages. The trend towards contract work, rather than traditional paid employment,means that many of the younger generation have little employment protection and arelocked 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 reportfrom 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 anddominates radio listening figures.

The comment of Mike Waterson, the Chairman of the World Advertising ResearchCentre, 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 focuson 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 thecore of the explanation is the view that older people are less receptive to new ideasand new products. Once you accept this premise then the other the arguments makeperfect 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, likethe 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. Marketersare 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 under30 and in the interactive media industry the average age is even less. So maybe it is notsurprising that there is such a focus on the peer group of those at the centre of themarketing industry.

The second explanation concerns how demographic and economic changes evolveover decades while most marketing decisions get made annually. Let me explain. Inany one year the 50+ age group's importance will change by a small amount and it iseasy to avoid making a major decision to realign the marketing spend to account forits 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 effectthat accounts for this crazy situation.

Do you understand it?

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

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