The Silver Market Phenomenon

In this chapter we discuss the relationship between changes in a country’s age structure and its economic growth and productivity. We summarize the recent literature on the impact of a country’s age structure on economic growth and relate the results to our own empirical findings. Our results indicate a positive impact of the age group 50–64 on economic growth. Moreover, a high proportion of people in the age group 15–29 facilitate technology absorption. The use of matched employer–employee data sets allows us to estimate age-productivity profiles at the firm level. Considering all firms in the data set reveals a negative productivity effect of the share of older workers (50+). Considering only large firms reveals no impact of the age structure in the mining and manufacturing industries and a negative impact of the share of younger workers for the non-manufacturing sector.

The three core variables of demographic change: a population’s fertility behaviour, structures of migration and people’s life expectancy, translate into policy fields as family, replacement and old-age policies. The study at hand shows how Japan (one of the most rapidly ageing and shrinking nations) is addressing this demographic change through various policy measures. It will be argued that Japan is putting much effort into old-age policy, thereby addressing the present needs of a growing elderly population. Japan, however, only hesitantly takes upon issues of family and replacement policy. Historical and ideological taboos prove to be too persistent to allow for radical policy changes. These, however, are necessary in order to comprehensively deal with the future challenges of demographic change.

As the aging of Japan’s population is rapidly proceeding, the market for the elderly is growing too. The health care service industry is one of the most promising because the customers are increasing and it is still underdeveloped, with various regulations impeding new entries. If these obstacles are removed, the potential demand for health care services would be stimulated, and the productivity level could be improved. Major issues here are revision of the rules on banning the mixing of public and private health insurance, and financing for profit hospitals. Demand for nursing care services are also expanding, and nursery schools for children become more important as more Japanese women start to work full-time under tightening labor market conditions. Both are affected by the changes in Japan’s family structure with the continuously declining share of three-generation households, and both are also under heavy government intervention. Thus, regulatory reform is a key to developing these silver industries in Japan.

There are several paradigms concerning the general aim of extending the average human life expectancy without extending suffering. The most challenging one is “active ageing”, put forward by the World Health Organization. Active ageing in this context refers to a continuous participation in social, economic, cultural, spiritual and civic affairs, not just the ability to be physically active or part of the labour force. Active ageing views elderly people as active participants in an ageintegrated society. An interesting way to advance policy concepts to match supply and demand can be derived from focusing on promising fields of application for future technologies that generate age-based innovations. This contribution to the book argues that future technologies for active ageing provide a new and promising policy concept to tackle the challenges of ageing societies, to transform them into opportunities and to use as many as possible of the opportunities presented by ageing societies by matching demand and supply.

This chapter examines three types of aging anxiety among baby-boomers in the United States and discusses their implications for the silver market of older consumers. We use data from a national sample of 473 baby-boomers to examine the structure and predictors of aging anxiety. We find that three dimensions adequately describe the apprehensions that this generation has about growing old: anxiety over the loss of autonomy emerged as the most powerful factor, followed by uneasiness over the physical manifestations of aging, and optimism/pessimism with regard to expecting continuity and contentment in old age. A variety of factors are associated with these dimensions, including gender, marital status, income, knowledge about aging, and exposure to older adults. We discuss how an appreciation of the sources of aging anxiety among baby-boomers can help marketers and advertisers better understand the pre-elderly consumer market, and suggest ways of addressing baby-boomers’ fears with positive images of growing old.

The “aging problem” should not be viewed as an economic encumbrance. It is better viewed in the context of the robustness of the economy. Expansion of the carrying capacity of the active labor force as well as active aging among older adults will decrease the burden on society. This chapter draws out social and cultural implications of demographic changes in the context of Japan’s transformation from a Fordist to post-Fordist economy. The distinction shifts attention to the social organization of technology-based service industries. The growing number of older persons and senior households means immense business opportunities for developing new solutions, products, and services. Older adults are potent consumers, willing and economically able to secure independent living and a high quality of life. This chapter discusses a number of emerging silver industries, including housing and real estate, food, pets, robotics, senior care appliances, and the funeral market.

It is important to understand user needs when developing new products. User-centered design provides tools for learning about the user needs in question, but studying only the target market customers may result in constricted need data because of the functional fixedness of these customers. Lead user approach, on the contrary, aims to learn from the lead users of a certain target group in order to find better solutions for the needs in the target market. In this chapter, I show through a study on mobile phones, how disabled persons can be seen as lead users when developing products for silver market customers. I also present methods for exploring the needs and solutions that disabled users possess.

With demographic change looming in the background there has been an ever greater need for products and aids for the growing target group of elderly people. Previous methods and ideas in the areas of product development and design have not proven to be satisfactory enough to develop attractive and helpful solutions that meet the wishes and needs of this age group.

New approaches and product concepts have been developed in the

sentha

research project,

sentha

stands for Everyday Technology for Senior Households. Working in this interdisciplinary research project are designers from the Berlin University of the Arts in cooperation with the Technical Universities of Berlin and Cottbus, as well as the Berlin Institute for Social Research.

The goal was to develop products and services for an increasingly aging society so that seniors can maintain their independence in daily life as long as possible.

At the Institute for Product and Process Design (Prof. Achim Heine) of the Berlin University of the Arts, designers Karin Schmidt-Ruhland and Mathias Knigge have been working on the development and positioning of senior-friendly products and services. In their projects they have focused on specific wishes and needs of elderly people without limiting themselves in form and function solely to this one target group. The article elucidates the specific design approach as regards this user group, the methods for integrating elderly people, and shows a selection of designs that have been realized in the

sentha

project (Table 8.1).

Demographics require companies to abandon the concept of solely targeting young customers. They need to create new products that are attractive to both younger and older customers. The key to success is Universal Design. Products that follow the principles of Universal Design don’t separate but integrate customer groups, and they substantially increase a company’s target markets. This chapter not only highlights the economic potential of Universal Design, it also shows how Universal Design can be implemented within any corporation. A successful implementation needs: (a) to define a suitable Universal Design strategy, (b) to establish adequate processes within the firm, (c) to design the products right, and (d) to market the products appropriately to customers. The chapter concludes by illustrating attractive areas for universally designed innovations.

Time and circumstances reshape one’s expectations and priorities. Responding to his past research and the realities of the aging process, the author describes why and how he designed and built the first fully accessible house aimed directly at Baby Boomers and beyond. The project offers a vehicle for broadening consumer awareness of, and increasing the demand for, “transgenerational” housing and household products. This uniquely innovative design neutralizes many restrictive effects of aging, accidents, illness or chronic conditions. It also demonstrates that attractive transgenerational houses can be designed to promote, provide, and extend independent living, remove barriers, offer wider options, supply greater choices, and enhance the quality of life for all – the young, the old, the able, the disabled – without penalty to any group.

The aging of industrialized countries, led by Japan, requires firms to fundamentally rethink their business models. Firms active in Japan have to reconsider how to deal with unprecedented demographic change, which alters the resources available, to satisfy the shifting demand. Throughout the supply chain, aging of human talent and retirement requires firms to anticipate and prevent the negative effects of losing knowledge and skills. Adjusting the supply chain, developing new products, and/or augmenting products with services to target the silver market may offer short-term benefits but are not enough to sustain success. Firms need to develop and implement new business models leveraging service innovation to meet the needs in aging societies. Examples of service innovations and the case study of Seven-Eleven Japan and Yamato Transports’ shared business model innovation illustrate how companies can seize the opportunities to create and capture more value in aging societies.

In view of the current demographic transformation, the retail trade faces a clear challenge to reconsider its existing concepts, and to include older target groups in its marketing planning to an increased degree. In the present paper, we will look first at the factor of location, one of the central success factors in the retail trade. Next, we will examine the preferences of German best-agers for certain types of businesses, such as shops close to home rather than out-of-town malls. We then proceed to discuss the effects of changed customer needs on the design of the assortments and of packaging because of the customer’s decreasing physical capabilities. We will present examples from the daily practice of the trade. In conclusion, we will provide a brief overview of foreseeable trends in the retail trade.

At first glance, the silver market provides a highly lucrative opportunity for businesses willing and able to meet the needs of Japan’s senior generation. International and domestic players have been pursuing the new opportunities in the last few years. Thoroughly understanding the needs of the silver generation is a key to capitalizing on it. However, this is just one side of the value coin. A need is not the same as demand, and demand is not the same as profitable business. To turn a profit, you have to balance value delivery and value extraction. Value delivery is relatively easy: it requires market research, appropriate products and services, and an effective distribution system. Value extraction is difficult: you need to set and implement the right prices across products, regions, and channels. A business strategy based solely on demographic and socioeconomic data, customer needs and buying power is simplistic, misleading, and in some cases dangerous. Capitalizing on the silver market requires a systematic approach to developing and profitably selling products and services tailored to the older generation. It takes a solid understanding of customer requirements, value-to-customer, ability and willingness to pay, price elasticities, and revenue and profit functions. The best way to achieve this is by means of a professional pricing process covering and connecting pricing strategy, price setting, and price implementation.

The purpose of this study is to clarify the driving factors in the changing structure of consumption at the macro-level caused by an aging society in Japan. To describe the macroscopic, dynamic, and structural bases of consumption, the authors used cohort analysis, which is a method of separating age, period, and cohort effects from time-series household accounts data, classified by age and period. Many items of expenditure are susceptible to the age factor. The effect of changes in the number of household members due to changing life stages and the effect of changing expenses due to aging of consumers can also be seen. Other expenditure items are susceptible to plural factors. For example, fish & shellfish, vegetables & seaweed, and fruit are all susceptible to both age and cohort factors. Eating out, private transportation, communication, and books & other reading material are susceptible to all three factors at different levels of effectiveness. Observing the profile pattern on the cohort analysis result graph, we can consider how market aging and the alternation of generations, which are viewed from a population theory perspective, affect the consumption structure.

Japan has been the most aged society in the world since the early 1990s. Retailers in Japan now face various changes in the business environment, including demographic change, economic globalization, development of information technology, and changes in consumer’s values and behavior. The consumer values and behavior in Japan reflect a characteristic transition in the retail sector, in which department stores have been a major force. The Keio Department Store in Shinjuku has been gearing its business toward seniors since the mid-1990s. The purpose of this chapter is to examine how an organization adapts to a changing business environment by exploring Keio Department Store Shinjuku as a case of a senior-focused retailer, extracting factors that are important in tailoring business practices.

This chapter explores the increasing importance of “grey power” in the labour market and the marketplace. To fully understand grey market potential, companies need to develop an understanding of individual older customers and their broader social contexts in terms of both their varying immediate household compositions, and their intergenerational relationships. In this chapter we first challenge stereotypes and then introduce a model of older-person segmentation. The frame of analysis is then extended beyond the individual older customer in order to assess the range of “future households” in which the old will increasingly play a key role when purchasing decisions are being made. We provide a wealth/health segmentation for firms seeking to develop older customer strategies, and supplement this with a categorization of future households and the issues raised by intergenerational dynamics. This is then used to challenge false assumptions about older household compositions in the twenty-first century. In turn, this provides a segmentation of the old as workers and as customers in a variety of social contexts, which we hope offers some useful tools for companies seeking to capitalize on grey power now and into the future.

Older consumers have distinct customer service preferences that can constitute a source of competitive advantage for forward-thinking marketers who seek to attract this large and relatively affluent segment. This chapter focuses on the supermarket, financial planning, and healthcare industries to demonstrate the importance of providing personalized attention to allow for the older person’s deteriorating physical and cognitive abilities and shrinking social networks. In particular, emphasis is placed on the need to allow older customers to form meaningful relationships with service staff. This strategy has implications for the recruitment, training, and retention of staff members who are able to demonstrate genuine concern for the welfare of the older consumer.

About 10% of Japanese commercials show elderly people. They advertise a relatively small range of product categories, such as pharmaceuticals/health products, financial/insurance plans, and food. Elderly people are the main target group, especially for the first two product categories, and often are the only age group that appears in the ads. In contrast, for products targeted at more age groups or for which elderly people are not the explicit targets, elderly people either do not appear at all, appear in a family setting, or in a more general way as a representative of one generation, e.g., in commercials showing that all generations use the product. This leads to the situation in which only about 20% of commercials with elderly people advertise products that are explicitly for elderly people. The representation and function of elderly people in commercials is not only connected with the age groups they are appearing with, but there also are differences within the representation of elderly people. This is especially the case of male versus female representations, in which the latter are clearly underrepresented. On the whole, most of the findings of this study confirmed previous research results from other parts of the world.

Today’s advertising industry needs a minor revolution. Talented men and women in their 40s, 50s, and 60s must to be brought into the fold if you want to target the Silver Market. This includes copywriters, graphic artists, producers, video directors, and creative directors. If you plan on implementing a marketing strategy that includes Baby Boomers as a primary, secondary, or tertiary market, and you turn it over to only people in their 20s and 30s, you will forfeit the natural sensibilities required to generate vital campaigns.

What is the importance of Web 2.0 for older people? This paper answers this question and provides suggestions for how organizations can use Web 2.0 to improve their online interactions with the older market. The chapter analyses the differences between the historical way that Web sites have been created and used and the opportunities and dangers of using Web 2.0 technologies. Social networking and Web video are the two best known applications of Web 2.0 and are discussed in detail. The author shows that whilst both these applications are associated with young people they are intrinsically “age-neutral” and are equally appropriate to older Web users. The chapter describes how social networking and Web video are likely to develop and the resulting implications upon the channel strategy of organizations targeting the older Web user.

In Japan, in the last few years, an increasing number of enterprises have been focusing on developing new products and services for older adults or for the Baby Boomer generation. In most cases, these efforts failed. One of the reasons for this is that their visions are too narrow. Many enterprises consider the older adult market or the Boomer market as a single homogeneous iceberg. However, in a modern economy, it is not sufficient to say that the Boomers represent a large part of the market just by sheer numbers. The reason is that the nature of today’s market is different from that of the past. This chapter gives readers the essence to correctly view the Baby Boomer market or Senior Market and insights to success in serving such markets in other countries.

In Germany, a paradigm shift is emerging regarding the

silver economy

and is resulting in an increasing focus on the economic potential and the economic power of the elderly. Given the much increased buying power of the elderly, the increased heterogeneity of consumption wishes and needs corresponding to the differentiation of old age, as well as the empirical evidence for an age-specific change in consumption requirements, it stands to reason to look for inherent impulses for economic growth and employment by dint of new “age-sensitive” product ranges and services and to promote their development and expansion. Today, in fact, the silver economy comprises products and services in very diverse and by no means only “social” market segments. In addition to the health economy, the silver economy affects such diverse sectors as mobility and IT. The following contribution provides an insight into the development of the silver economy in Germany and its future prospects.

India is in the middle of its demographic transition. The 60+ age group is projected to treble by 2050 while the 0–14 group remains stagnant. India’s population structure and distribution would then closely resemble that of nations like Russia and the UK, as seen now. Their high aging index indicates that the 60+ age group is larger than the 0–14 group. Such changes in the size, structure, and distribution of the population will have implications for public policy as well as business. The Government has launched a slew of initiatives to meet this challenge. On the business front, many products and services have been launched that specifically target the elderly. However, there are many other products and services used by all age groups. These may have to be repositioned if the motivations of the different age groups are not similar. Both from the angle of public policy and business, decision makers in India should closely examine the experience of nations with a high aging index and respond to the challenges of demographic transition.

In the developed countries, the dominant factor in the next society will be something to which most people are only just beginning to pay attention: the rapid growth in the older population and the rapid shrinking of the younger generation [10].

Demographic change will pose distinct challenges for companies. The ratio of people over 65 years of age will rise in all triad countries. At the same time, the number of younger people, and thus recruits in all education levels, will drastically decline in Japan and Germany. In the USA, a shortage of highly skilled and educated workers is expected. The employment rate of aged people will therefore rise. Companies can react on many different levels. On the one hand, they can make it a business opportunity by developing and selling products and services that support older people. On the other hand, companies will have to cope with fewer younger workers. We discuss several ways to do this: (i) to prevent loss of skills from retirement, (ii) to accommodate older workers, and (iii) to survive with fewer workers. These could lead to B2B products and services that can help companies to solve the issues involved. We look at these possibilities in turn and find that they each lead to ideas that have one or more of the following properties: (i) they are actually B2C products, (ii) they are management or organizational solutions or services, or (iii) their benefits are not specific to older workers but benefit all employees. Thus, we are led to the conclusion that the technical products best suited for the B2Industry silver market will not be “silver-specific” products, but products “designed for all” with an emphasis on usability and problem solving.

Japanese society has many problems regarding the aging population. This paper discusses safety changes in personal transportation for older adults. According to the statistics, the risk of traffic accidents among older adults is extremely high. In order to achieve traffic safety, it is important to address declining sensory and cognitive functions. We discuss three business chances aimed at reducing traffic accidents among elderly pedestrians: inspection technology, training technology, and assistive devices that compensate for cognitive functions. From the human factor study using virtual reality technology, the detailed situations of pedestrian traffic accidents become clear. Effective assistive technology can be developed based on risk factors for traffic accidents.

The car is rapidly changing. In addition to its traditional driving-related functions it is becoming a platform for various services and devices. Some of these are involved in the driving task and can improve its ease, comfort, and safety. Others are unrelated to driving and allow the driver to engage in various activities while driving. The aging of the driving population and the tendency of older people in many parts of the world to continue driving for as long as possible pose major challenges regarding the design of such devices and their deployment in cars. Some advantages, as well as some limitations these devices may have for older drivers are pointed out. Design of future in-vehicle telematic systems will have to consider these issues in order to provide maximum benefits for the older driver.

Any company faces the challenge of adapting to demographic change. In this chapter, we focus on adversarial change. What if a new customer segment emerges but has a very different set of needs? What if the growing customer segment brings subtle shortcomings in your offerings to the surface? Such is often the case with the silver market segment. These changes bring with them great opportunities for the company to innovate itself. The question is how? The distance of the organizational units and the leaders who are in charge of both the new and old businesses is critical. Also, when a company starts a new business, it has to carefully manage these three processes, namely: borrowing, forgetting, and learning. Focusing on organizational distance and the three processes, we have conducted comparative case studies of Toyota’s adaptation to demographic changes in the USA, which has led to an insight about how organizational distance has contributed to innovation.

The unprecedented aging of Japan’s population presents costs and opportunities for its future as a society and as a major economic power. Japan’s seniors already control the largest portion of the nation’s wealth,

1

but in the very near future they will also consume the lion’s share of the social expense for care and living as they age and their proportion in the total population increases. In this chapter we examine two areas which promise major commercial opportunities because of such a vast socio-demographic change linked to a huge pool of liquid assets.

2

Those areas are, firstly, catering to the financial needs of the country’s senior citizens and, secondly, responding to their particular preferences and requirements for housing. In Japan’s generally sluggish market for housing and financial services, the “silver market” provides one of the richest segments available, but successfully offering such services to this population requires skill, sensitivity and an understanding of the evolving consumer mindset in Japan.

Japan is undertaking medical system reforms in order to suppress the ballooning national medical expenses of the aging society. Medical computerization is one of the focal issues for this. The government has stated a plan to mandate the online billing of medical service fees for all medical institutions. The prevalence of electronic medical records (EMR), which has been delayed due to unsophisticated information technology (IT) and the limited IT literacy of elderly medical staff in general, should be promoted. Without the prevalence of EMR, several social innovations, the regional coordinated medical service, and the future National Health Record service etc., will not become reality. The author advocates inducing newcomers to innovate business models by means of deregulations, so as to promote more investment in the medical information market from the business sector, and to accelerate the build-up of regional medical information networks based on networked EMR systems.

The Baby Boom generation – the largest in US history – grew up with mass media and is by far the largest constituency for newspapers, television, and magazines. But, as audiences age and fragment, the economic foundation of these traditional media are challenged. The pain is especially sharp in the newspaper industry, giving rise to worries about the future of American journalism.

By means of a case study, this chapter argues what the material innovation process in the Japanese silver market should be like. Material suppliers are continuously attempting to contribute to an aging society through material innovation. Although they are not always successful in their intentions to meet the needs of users, they at times discover the actual needs of the users, which are slightly different from the perceived needs.Subsequently, these suppliers work on improving the new materials so as to meet the actual needs of users by developing a close contact with them. The case of superabsorbent polymer (SAP), studied in this chapter, is a typical example of this. We term this material innovation process an emergent process. The SAP “AQUALIC CA” launched on the market by Nippon Shokubai Co., Ltd., in 1983 is a raw material that facilitated the popularity of disposable diapers in the Japanese market. It also currently holds a large share in the American and European markets. However, it was not originally designed for use in disposable diapers, and the process it underwent from development to marketing was not linear. This case study describes how after failure in its technological development and supply agreements, success was finally achieved. Further, it indicates the effectiveness of developing evaluation technologies in the process through an end-user oriented approach. As a result, this study should prove to be a valuable aid in helping material suppliers in understanding effective innovation management.

The use of information and communication technologies (ICT) including safety alarm technologies is increasing. Its influence on service personnel in elderly care has implications on the possibilities of rooting technological innovations into care work. Human impact assessment methodologies have been employed to assess competence related to technology use, needs for orientation into technology use, and well-being of care personnel. Safety alarms are considered useful both for actual care work and for the administrative part of the care organization. Care personnel appeared not to be fully informed as to technical characteristics and the resulting organizational changes. At individual and work community levels regular human impact assessment of new technologies may stimulate their adoption by the professional carers. This chapter is based on empirical research in a large research and development project in Finland. The research focused on safety telephones and high-tech well-being wristbands.

Most industrialized countries are currently facing a shrinking and aging of the population. Germany’s population is expected to fall from about 82.4 million people to between 69 and 74 million people in 2050. Simultaneously, the average age of the population is increasing. In particular, the coming years in Eastern Germany will be characterized by a strong decline in the number of young people and a significant increase in the number of elderly. However, demographic change does not automatically imply negative consequences but also creates room for opportunities. In this chapter, we explore opportunities to enlarge the purpose of the educational silver market by an economic component due to two developments: (i) current and upcoming generations of seniors increasingly spend their spare time studying intellectual and cultural subjects, and (ii) traditional universities suffer from a low number of students. We make considerations regarding incentives to include more people aged 65 and over in educational issues, and thus to create a win-win situation for third agers and institutions of higher education.

After two prefaces, one introduction, 33 full chapters and one afterword to come after this concluding chapter, we would like to keep this chapter short and concise. Nevertheless, we don’t want to fail to mention that, despite this vast amount of valuable information, insights and analyses, there still remain many questions unanswered and a great deal of work to be done. But, as we explained in the Introduction, we did not – and could not – aim for completeness but rather for variety and to highlight the differences between distinct industries and countries. Thus, we could only present a first fraction of the global silver market phenomena and some of the industries working on ways of catering for the needs of elderly people. The need for further research, as well as practice, is obvious.