The Future of Marketing & Advertising

Don't say you weren't warned. From MarketingCharts.com (click on the charts to make them BIGGER):

Nielsen: Marketing ‘Gravy Train’ to Derail by 2020

A graying population, slowing birth rate and increasing ethnic diversity will change the face and buying patterns of consumers in the US and will require that marketers of the future reach a shrinking pie of older and multi-cultural demographics in more effective ways, according to an analysis from The Nielsen Company.

Though the current economic downturn is already straining marketers and retailers, Nielsen expects discretionary spending to return to moderate levels in the short term. However, the analysis shows that both the US and the developed world can expect rough times in coming years because of the way the population is changing.

Key insights from the analysis:

• Baby Boomers Will Become a Burden: Though Baby Boomers are currently a boon to the US economy, they will become more of a burden as they continue to age, retire, lose spending power and tax the social systems intended to support them. A corresponding decline in the number of new births that began in the 1970s means there won’t be enough younger consumers to balance the Boomers out.
• Disadvantaged Segments Will Grow: At the same time as the Baby Boom generation ages, birth rates remain low and household sizes decrease, the most economically-disadvantaged market segments are expected to grow, putting unprecedented pressure on per-capita spending. Nielsen estimates that between now and 2020, the US will experience very minor growth in per-household spending. After that, spending on consumer products will continue to fall through 2020 in constant dollars:

• Older Consumers Will Need Different Products: Though older consumers will lose some of their spending power, they will still be a viable segment for companies willing, able and savvy enough to market to them. In terms of demographics, by 2037, nearly one in three households will be headed by someone age 65+. Of them, nearly three-quarters will be non-Hispanic white, nearly half will be single, and the majority will be women.
• Multiculturalism Will Explode: Though households of the future are projected to be smaller, their ethnic and racial makeup will differ dramatically from today. By 2025, more than half of all families with children will be multi-cultural and less than half will be native-born non-Hispanic white. Though Hispanics will be the largest group, Asians, African and Caribbean Blacks, among others, will make up significant shares. Reaching these demographics will require marketers to develop campaigns that embrace and understand this diversity.

Competition for Shrinking Pie

Overall, an aging population, decreased spending, higher demand for products that target older and ethnic consumers and a fragmenting mass media landscape will present a multitude of challenges for marketers, especially in terms of redefining the concept of market share and competing for a piece of a much smaller pie.

“Marketers in the US and throughout the world are not accustomed to a shrinking pie, but rather are used to thriving marketplaces with robust spending growth,” said Doug Anderson, Nielsen SVP, research & development, who wrote the analysis.

“In the near future - and for decades to come - this growth gravy train will be off the tracks, Anderson said. “Growth will only come from increasing share against competition. The new consumer marketplace of the US will bring new relevance to the phrase ’share wars’.”

Sphere: Related Content