Have you read or listened to a book that haunted your thoughts long after you finished it? Recently, I listened to the audio version of The Age Curve: How to Profit from the Coming Demographic Storm by Kenneth Gronbach, and I can’t get some of the things he said out of my head.
From a marketing standpoint, this book clearly states the issues that are underlying the economic slump and encouraging the focus on the future.
First Haunting Thought: “Gen X is 11% smaller than the Baby Boomer generation, which is 9 million less consumers.” Most of the growth in retail financial services in the last 20 years came from the Boomers using credit to fund homes, cars, second homes, college educations, and more. But, subprime mortgages may have been just a hint at an underlying problem – less consumers meant slowed growth and more pressure to widen the acceptance for credit.
Second Haunting Thought: “The American Dream of home ownership is changing.” Boomers now becoming empty nesters and wanting to sell their McMansions to downsize will not find buyers very easily. Gen X and Gen Y will not be buying them because Gen X doesn’t have enough consumers to absorb the Boomer real estate. And, Gen Y won’t be old enough and prosperous enough to afford them for another 20-30 years. The rental market, however, will boom with Gen Y. Remember, big apartment complexes flew up to accommodate the influx of Baby Boomers in the 70’s and early 80’s? But it also means getting more innovative in mortgage lending rather than revisiting the subprime fiasco.
Third Haunting Thought: “Gen Y is larger than the Boomer generation, however, they are too young to buy the products and services that right now sell best to ages 29-46 (Gen X).”
The Boomers have moved into the slow-down in consuming after being the major push for spending for the last 20-25 years. As a marketer, battling for fewer consumers means romancing the customers/members that you have now to keep them and steal market share as often as possible! Trimming margins is necessary for most companies to offer the best possible prices, rates, and products to compete for business with fewer buyers. Key is to make it through the next 10 years.
What to do? Battle today but focus on the future by reinventing the marketing line-up to be attractive to the upcoming wave of Gen Y.