With a retirement age of 60 for men and 55 for women, Chinese pensioners are among the youngest in the world. For mass-market companies in industries such as leisure, health, banking and insurance, this population of people, aged 60 or more, is a very attractive target. Not only are they younger than previous generations, but they enjoy more free time than the active population. They are also experiencing a growth in purchase power and account for around 10 million more people every year. In 2050, seniors are estimated to be around 500 million in China, up from the current 220 million today. Thus marketers are working on adapting their products towards this new and high potential market. However, targeting Chinese seniors is not as easy as it seems.
Great opportunities ahead on the senior market
First of all, the purchasing power of Chinese seniors remains largely under-exploited by companies. According to Wang Jiyong, vice-chairman of the Chinese Senior Industry Association (CSIA), “the senior market is worth more than 170 billion renminbi (around 28 billion dollars in 2015), but the products that are addressing this market today are only worth 120 billion”, which represented, in 2015, an untapped opportunity of around 8 billion dollars.
Some studies, such as one by the National Committee on Aging, estimate the senior market at 594 billion euros, which represents 8% of China’s GDP. This estimation is far above the CSIA’s, but the findings remain the same: companies have still not been able to fully take advantage of this senior market.
The elderly feel neglected by advertisers
Seniors are the first to feel it. In 2013, the wide majority of the 3.600 Chinese people older than 60 who were asked to share their thoughts on this subject revealed that they felt ignored by marketers. Only 8% of the seniors thought that marketing and advertising were addressed to them in a relevant way, the Wall Street Journal reported.
Another study realised through qualitative interviews by the group HKTDC, proved even more so how the absence of marketing specifically targeting seniors generates a feeling of marginalisation. According to respondents, if there were products designed for seniors, especially in the apparel sector, those items would be highlighted, neither through advertising nor regarding distribution since they can only be found in second-tier malls.
What marketing strategy could be adopted?
However, the Chinese elderly don’t expect marketing that would directly target seniors, because it would be another form of marginalisation. Regarding the apparel industry, where the offer for seniors consists essentially of low-quality products, the elderly interviewed by HKTDC prefer to see middle-aged models in ads for quality products addressed to the mass market.
Volkswagen is one of the few Western brands that was able to efficiently target seniors with a commercial for its Beetle, showing elderlies imitating teenagers. Moreover, marketers should not hesitate to use the Internet and social networks to engage with the older generations, since these days, they are more and more connected.
Targeting Chinese seniors: Carefully analysis of the market is crucial
Finally, in order to understand the specific needs of seniors in China, it is crucial to deeply study their consumption habits, recommended Kunal Sinha, principal at Ogilvy & Mather China, when interviewed by the Wall Street Journal. For instance, only 7% of the budget of urban people aged 55 to 65 is dedicated to garments, while most expenses are related to food.
Deeply analysing this kind of data appears to have been one of the keys to success for brands that were able to thrive in the senior market. For instance, Pinetree Senior Care Services, a company providing home-based care for elderly people, spent three years observing consumption habits and expectations of Chinese seniors before understanding that they disliked the model of nursing homes. The study clearly benefited the company as it has grown by 55% (year-on-year) since 2012.
Thus, the Singaporean company was able to bypass one of the main obstacles that numerous local and international groups are confronted with regarding the nursing home market: the price of the service. For Joseph Christian, a member of the Harvard Kennedy School interviewed by CKGSB Knowledge, the current financial resources of a majority of retired Chinese people are still too low to pay the price wanted by nursing homes. If there were any advice to give to marketing teams that are interested in the senior markets, it is, to begin with, a careful analysis of elderly peoples’ main expenditures.
Daxue Consulting & the senior market: Expertise and Experience
Having previously done research and analysis for a variety of clients targeting the Chinese elderly market, Daxue is committed to providing quality reports and data for those aiming to get into this unique market. Previous work for clients included a thorough assessment and localization of nursing homes within China, as well as conducting a survey to gain information regarding the use of the internet for online purchases by Chinese seniors. Daxue is no stranger to China’s older population and with our ever-expanding research, using both qualitative and quantitative processes, we look forward to providing you with the information you need to succeed in China.
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