Emerging Trend of a Consumer Segment - Case Study Example

ENTER the of Case Study: Marketing Requisites From Blue Rinse to the Gray Market Enter 11/6/2008 Introduction In this case study, we discuss a new emerging trend of a consumer segment and how various companies and agencies can successfully explore the market. The main aim in this case study is to learn how this new segment of consumers, precisely the "grey market", is on a rise and are changing from their old patterns of spending and living. While the previous generations befalling the grey population were more likely to relax and laze around, the new emerging generation of the grey population is more outgoing and adventurous. Instead of going for the conventional senior citizen product line, these people are opting for a younger product base. For the same reason, the market, unable yet to recognize the trend, is falling short when it comes to the products aiming at the grey population. We have taken an example of a company, Saga, which specializes in the grey market related products specifically. This company too was running in the same old pattern, taking its clientele to be the conventional waving walking sticks kind. However, with its clientele fast adapting to the new times, the company fell short in appeasing the new generation of "silver surfers" with the kind of products they wanted. To keep up with the times, the company changed its strategy and tried to conform to the latest trends amongst the silver surfers. This was just one company. However, many companies are now waking up to this fact and are trying to turn their attention to the grey market around the world. In this case study, we are to prove how correctly targeting the grey market will help in increasing your clientele, as will your profits be affected. Kindly advance to the next segment of this case study; which we have divided in the form of headers and sub - headers, in order to segment the whole study to increase the understanding of the reader. Does the grey market conform to the criteria for successful segmentation' How' Some people might argue that the grey market does not actually form a substantial part of consumer exploration, however, the argument seems to be getting stale as each day passes by. The truth is, the grey market today consists of many baby-boomers. This has led to a prominent change in the way these elderly think and plan their future. By grey market, we are considering people over fifty. These days, many studies have started referring the oldies as 'Gotys', meaning 'Getting Older, thinking Younger' and nothing was more closer to truth that this euphuism (Gabriel, 2008). The reason for this is that most people, who are in the 'grey' age group, have suddenly started showing more tilt towards the fun element in their lives. Many years of research have conformed the fact that the grey segment happens to be the wealthiest of the lot, holding 80% of the total wealth in UK alone. For the same reason, while most of the financial power is being controlled by the grey segment, aiming for them could not have reaped better results at any other time. Some other statistics might come as shocking too - it is estimated that 49% of the grey population enjoys an active sex life (while more than half amongst those enjoy the marital bed), over 19% might try for online dating, 10% would also consider getting a plastic surgery done and 75% amongst them all have an extremely bright outlook towards life (OMD UK, 2006). While the grey population is estimated to reach 50% by the end of year 2048, most of these people are opting for unconventional lives. Unlike the older times, these silver surfers are more gung ho about adventure trips or the likes of gap years working abroad - hence being termed as the grown-up grappers. More than seventy percent of these people are free of all mortgages, while nine out of ten are in charge of their own home. As shocking as it may sound, these pensioners, silver surfers, elders etc alone make for an accumulative figure of pounds 500 billion. Apart from this, they are in charge of 80% of the total wealth in UK, 60% savings and 40% disposable income. With all these statistics right in front of our eyes, there is only one possible reaction to it all - target the late lifers as probable and probably the strongest marketing segment (Wilson & Gilligan, 2005). What methods of segmentation can be used for the grey holiday market' There are several methods via which we can segment the grey market, however, mentioned below are two of the most actively used methods for the same: Fiona Hought, managing director of Millennium a specialist marketing agency in the grey market - According to her, the market can be divided into four major segments namely thrivers (50- to 60-year-olds), seniors (60 to 70), elders (70 to 80) and survivors (80-plus). She further states the fact that there fall 7.5 million people in the thrivers sections, while other segments have 5.5m seniors, 4.3m elders and 2.5m survivors respectively. The thrivers are bound to reach the retirement age in another two years' time and thus, the need to reinvent the inventory for products appeasing the thrivers becomes of much importance. Moreover, with the life expectancy ever increasing, people are increasingly refusing to act their age the way we have always imagined it. Moreover, their buying patterns have drastically changed. These grey segment people do not like to see themselves as grey, rather they are turning black-haired. A change in outside appearance, may have well set within the psyche of these people as well. While, the grey population is more inclined towards spending, the market is yet to wake up from their own preconceptions of how the grey population should or would behave. Just as Pamela Carvell, chairman of the Hotel Marketing Association confirms, people falling in the grey bracket are no more bent and unmoving. In fact, they hold more memberships to gym than any other segment. These people are deeming themselves fit and want to enjoy their life to the fullest. Mintel the market research agency - According to Mintel marketing agency, the population can be divided into various segments, however, the one making most of its impact felt happens to be the "third age" age group, which covers the range of population from 45 to 64 years old. It is precisely this segment, which holds most of the fortune in their hands and is most likely to spend. According to Angela Hughes, consumer research manager at Mintel, "Those aged 50-plus today are different from when their parents were that age, so there is a gap which needs to be catered for. Most are not interested in the likes of Saga holidays. Today there is a market with an older but more sophisticated and knowledgeable consumer who does care about pensions and at the same time is interested in eating, drinking and clothes." The trick, according to Jenner, managing director of 'Senior Agency International', is to not to fall into the trap of considering the grey market as purely consisting of the senior citizens. A Comment on Sagas problems and how have they tried to Mend The Company "Saga" Before moving on to the problems and solutions that the company faced, let us first try to understand the company profile. The Saga Group is one of the best known companies, whose target audience has majorly been the above 50 year olds. Usually identified with the oldies waving their walking sticks, the company specializes in selling the elders with travel products and financial packages. However, of late, the company has also extended its portfolio to the media field by launching its own Saga Magazine and radio programming stations. In accordance to the past generations of the grey population, the company had successfully associated itself with the image of the wrinkly, old people, having fun. As in the past times, it was this same image that made Saga one of the most trusted companies amongst the aged. The Problem Begins Now here the problem begins. While its brand image was ever strong, the changing times and fast advancing new grey population has rendered the same image as negative. Just as Chris Wood, chairman at branding agency Corporate Edge puts it, the old perception and product line of Saga is finding it hard to appeal the new generation of pensioners and "middle-aged youth" generation. As this new age pensioners are younger in their outlook and more affluent, the company requires to change with the times too. Taking a glimpse at the statistics, a research conducted by Millennium, a specialist mature market agency, most people falling in the age group of 50 years to 60 years find the product line of Saga too old for them. What is more, the percentage of people falling within the age group 60 and above, who would have considered the Saga products, measured up to 40% only (McKay, 2000). With the falling statistics, the company made a move most obvious. It started changing its product line, changing from the resting beaches sorts to the white water rafting ones. The change does not happen over night though. It will take time for people to identify with the Saga Vacations again and choose amongst them. The Solution Follows In the meantime, the other one of the most popular item on the racks of Saga - the financial deals - have barely etched a mark from the changing trends. Some of the financial products offered by Saga house, car, and travel, medical and pet insurance and are still favoured by most of the grey population. The reasons for this are many. While, people find it extremely hard to find financial products like insurance etc cheap when they are over 50 years old, Saga Financial solutions are offering them just that. Just as Isabel Berwick, personal finance writer for Financial Times puts it, "'People buy financial services based on price, and would be much less affected by any possible stigma. Lots of 'silver surfers' search the internet for insurance quotes, for example, and will simply go with the best quote." Again, what Ian Williams, MD in Lansons, claims is also true - "It is extremely difficult for older customers to find (low-cost) travel or car insurance, for example and Saga does not have an upper age range." One of the other reasons owing to the success of Saga products, especially in financial segment, is that Saga is extremely smart when it comes to the database management of its customers. Once a customers buys one of the products from the racks of the company, they market the other products with the customer well. When offering the new age holidays to the new age elders, they count on the "word-of-mouth" publicity, while also raking up better vacation plans for future deals. Besides, the Saga Magazine, with the readership of over 1 million when it comes to the grey segment, helps in spreading the feel good factor for the vacation packages amongst the population. Some other ancillary services by Saga, such as direct-sell car operation, Independent Financial Advisers (IFAs) and online share-dealing service, help further in improving Saga's perception amongst the new age pensioners. Throwing Caution to the Air But all is not how it seems. While Saga is recovering from the initial pangs, the blue days are not over yet. As other companies are waking up to the call of the new age pensioners and their requirements, the competition is getting tough by the day and unless Saga keeps up the tracks, it might lose out in the end. Other concepts which explain their problems and how they have tried to rectify them' Apart from the perception issues cited above, there are a few other factors which need addressing when it comes to marketing by Saga and some problems it has faced and solved in a reciprocal attempt. Competition: With more companies realising the huge potential that the fifty above segment holds for them, the competition in the segment is high on rise. Two of the recent companies rearing their heads in the holiday's arena giving tough competition to Saga vacations happen to be Page & Moy and Travelsphere. Both these specialists, specialising in over-45 holidays, consolidated together in December 2004 and have been a huge success in the market. To top it all, the company is also thinking on venturing out in the financial segment as well, which might become a threat to the Saga Financial Solutions. Thomas Cook is another of the lot that has been reinventing its inventory of products available for the over-50s and has been witnessing quite a success. Some of the other up-market travel agencies like Kuoni explain that the sales for vacation packages for the grey population have increased hugely, with an estimated disposable income of 40 billion pounds being spent by the pensioners on travelling alone! Apart from these, an estimated number of 350 travel agencies have of late entered into the same arena of grey marketing. While the scope of consolidation increases as ever, the above mentioned statistics only makes it obvious how much there is to explore in the grey market. However, the Saga joint chief operating officer Steve Ashton asserts, "We are aware that there is competition, but it's nothing new. As long as we continue to serve customers well and remain highly trusted, we expect to remain in a good place and fend off competition." The Changed Perspective: The changing perception of holidays amongst the pensioners is another threat for the Saga Vacations. The improvement in infrastructure in remote areas has expertly tumbled along with the timing when the over-50s are being more adventurous and ready for long haul vacations. Up until now, the companies specialising in over-50 vacations were offering only short haul vacations, for the elderly were not ready to pay for the long haul flights, while the fitness factor was also a driving force. Philip Grierson of Cox & Kings states, "Long-haul flights used to be mainly taken by backpackers and students. But older people have been inspired by their kids. And there have been a high number of quality hotels built in remote locations." However, there has been a shift in this sense. Long haul vacations, what with reduced air fares and better financial securities for the over-50s, are more in demand. According to an estimate, people are more than willing to spend up to 6,500 pounds on a travel package (The Sunday Telegraph, 2006). The packages being opted now are for places like Chile, Goa, Mexico, while cruise, walking tours, sport tours and adventures are also being bagged (Mintel - Third age holiday UK report 2006). In order to explore the market conditions above, Saga has also launched a new set of products. Saga Holidays now sports of product line ranging from adventure tour, cruises, travelling tours by alternative means to world wide tours including long haul destination such as Africa (wild life tour), Thailand (nature trails), Brazil (rainforest tours). Besides, a new set of vacations has been introduced which feature historical, cultural holidays and volunteering tours as well (PR Week, 24/ 3/ 2006). The concept of adventure tours seems to be sinking in with the Saga management. As the Managing Director, Chris Simmonds puts it, "We now send more people to Borneo than Bournemouth. People are more adventurous and are more willing to go further a field. Cuba and South Africa are on the up for us." Unlocking the Technology: Saga has been extremely dextrous in their marketing techniques and the result for the attempts has been in form of its travel website - Sagatravelshop.com. In an attempt to cover the internet savvy grey population, the company made an excellent move in the direction of rectifying its wrinkly image. According to a report by Mintel, 65% of the people aged between 45 to 54 years old are online, searching for good vacation deals, while 51% of those in the age range of 55 to 64 years are also doing the same. Another report by Oftel claims that over 86% of the over-50 population has access to the internet. Most of these surfers (silver surfers) have visited the travel sites, while 1.5 million have made their booking for travelling afar (Nielson/ NetRatings). Redoing the Image: Apart from covering the internet savvy middle aged people, Saga has also revamped its icons for its Saga Magazine. In an attempt to rope in the youngest of the grey population, the magazine has used glamorous starts for the cover such as Catherine Deneuve. Besides, the kind of features included has also been made more sassy and innovative. Steve Dunn, the MD, expertly opines: "(Being over 50) is a cool age. You have your freedom back and your financial security. You owe it to yourself to enjoy it. There are lots of trendy people in their 50s, such as Mick Jagger and Kim Basinger - the type of people who we want to endorse the brand." Concluding the Above While we have read the case study presented above, the point lies clean in front of us - the Grey market is the one holding the financial reigns and unlocking the potential market awaiting will be the best for all businesses, especially when it comes to tourism. While the over-45 are definitely fitter, image conscious and mentally positively inclined, the market they uphold involves luxury, adventure and spirit, all in one go. Hence, while they are willing to pay for the fun, giving them the exact packages and the kind of products they are seeking for will prove to be extremely gratifying for all businesses. However, Wallace Arnold, sales director Karen Gee, quietly touts, "Every time I go in to a travel agency I am struck by the fact that agents' racks do not address this group." Rectifying our mistakes now and adopting the right marketing techniques (use of internet, feel good packages, adventure inclusive deals etc) will all help in exploring the grey market of its potential. Taking a cue from the Saga roundup, one can easily realise the importance of the grey market and hence, work up the effective marketing techniques. Works Cited Gabriel, H. (2008). Essentials of Marketing: From the Blue Rinse to the Gray Market. McKay, J. (2000). The Magazines Handbook. Routledge. Wilson, R. M., & Gilligan, C. (2005). Strategic Marketing Management: Planning, Implementation and Control. Butterworth-Heinemann. Mintel. (2006). Third age holiday UK report. Mintel Publ. The Sunday Telegraph. (08/5/2006). Spend thrifts'. The Sunday telegraph OMD UK. (2006). The Grey ratings. Read More