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SpirE-Journal 2010 Q2

Surfing for “Silverware” : How Seniors are increasingly shopping and networking Online

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Surfing for “Silverware” : How Seniors are increasingly shopping and networking Online

It is well-known that senior citizens and retired people are a segment with clear market potential. In emerging markets, the internet is attracting silver consumers in greater numbers, enabling them to network with one another and to shop for goods and services from the comfort of their homes. And while silver consumers used to be associated with technology illiteracy, this barrier is fast disappearing. Are companies doing enough to reach out to these “Silver Surfers?”

As indicated in the above chart which is based on primary survey data from the PEW research initiative, the majority of internet-using seniors in the Asia Pacific are going online for email and search, E-Commerce, basic online entertainment and to obtain information such as news and healthcare advice.

This tantalizing finding, coupled with the well-known trend towards an aging population in much of Asia, points to serious market potential for selling goods and services to seniors online, as well as using the internet to persuade seniors to buy things off-line.

But what exactly is the scale of the addressable market for these “Silver Surfers?” And how can this potential best be addressed? In this article, Spire takes a closer look at this segment in three emerging economies – Indonesia, Brazil and Russia.

Indonesia

Approximately 8% of Indonesia’s total population of 212 million were seniors in 2000, defined as being 60 years of age and older. This share will rise to 13% of 273 million people by 2025, amounting to around 35 million people.

A study conducted by AWARI (the Indonesian Association of the Internet) indicated that 45% of Indonesia’s internet users in 2009 were aged 45 and above, with 27% aged over 54. While this is dwarfed by the 53% who were aged 44 and below, it is still a sizeable Silver Surfer community.

The study revealed that silver consumers, particularly those aged 55 and above, tend to use the Internet less for socializing and entertainment and more for information searches, e-mails, online shopping and banking. In particular, internet-using seniors tend to go online to evaluate Healthcare Service Providers such as hospitals and clinics.

According to research by a major Indonesian pharmaceutical manufacturer, consumers over 55 who seek healthcare-related information online are most interested in heart disease, the leading cause of death in Indonesia.

Brazil

The population of Brazil was forecast to reach 190 million by 2010 and 219 million by 2025, up from 145 million in 1991. The population is highly urbanized with 78 percent living in cities. Only 8 percent of the population was 60 years old and above in 2000, but this will rise dramatically to 15.2% or 33 million people by 2025.

However, the share of internet users who are over 55 is a mere 4%. 

The evidence suggests that internet use by seniors in Brazil is limited, possibly a function of poor computer & Internet skills. Offline business may be far more interesting than online business in Brazil, at least as far as seniors are concerned.

This perspective is confirmed by a look at visits to Online Classifieds, where the share of people aged 55 and older is much smaller than their share of the population.

General internet shopping is very visible in Brazil. Most product vendors and even distributors and retailers would sell products online. There are also large and organized internet malls, such as the public B2C site Mercadolivre.

However Spire’s work in Brazil suggests that for high-involvement categories and those where users need some training and knowledge, off-line sales are still dominant.

Russia

The population of Russia is approximately 142 million but is forecast to contract to 125 million by 2025 – a staggering statistic in the context of explosive population growth in the rest of the emerging world. Russia’s population is declining at the rate of 3 percent a year – a function of low birth rates (9 births per 1,000 persons in 2000) and very high death rates (13.8 deaths per 1,000 persons per year in 2000). All this implies that a breathtaking 26% of the population or close to 33 million people will be aged 60 and above by 2025.

The declining population is in spite of a net in-flow of migrants, mostly from the 14 countries of the former Union of Soviet Socialist Republics (USSR), now known as the Commonwealth of Independent States (CIS). A rough estimate of 80 percent of Russia’s population is ethnic Russian. The remaining 20 percent is made up of a wide variety of ethnic groups including Tatar, Ukrainian, Belarussian, Moldavian, Kazakh, and many others.

Approximately three-fourths of Russia’s population is urban.

According to the Russian Welfare Association, Russia’s seniors go online mostly to seek information about elder-care facilities.

Targeting the Silver Dollar online – where do companies start?

Research undertaken by Spire across the Asia-Pacific region suggests that over 70 per cent of companies do not have any form of silver segment strategy, let alone one directed at Silver Surfers. The share of companies with some kind of strategy for this segment might drop to 20 percent if one includes the Russia/CIS and Latin American regions, given the larger share of seniors in Asia.

Spire’s work in this field also suggests two major deterrents to firms taking a more aggressive stance towards marketing to seniors:

Concern over the absence of information channels focused on the senior segment, which tends to raise the cost of outreach by forcing firms to use expensive mass market channels such as television and newspapers
Concern that visible marketing programs directed at the silver segment might alienate younger consumers and confuse the positioning of their brands

Using online platforms to market to seniors addresses both these concerns. Outreach efforts such as banner ads, sponsorships, events and PR programs directed at Silver-focused websites, e-tailers and e-communities are likely to be inexpensive due to their relatively small (but growing) user base. Moreover, due to their limited reach, messaging on these platforms is unlikely to affect how the brand is perceived.

Given the strong interest in healthcare-related issues among internet-using seniors, marketing programs with a healthcare theme may be attractive to this segment. Here, the example of Indonesia may prove instructive. Indonesian companies in the healthcare space are already pursuing a variety of engagement strategies directed at Silver Surfers, including:

Health Advice – Some pharmacies and hospitals also provide patients with interactive health consulting via online chat. This method allows the organization to engage patients who are unable or unwilling to physically visit the hospital for consultation.

Online Health Tools – Kalbe, one of Indonesia’s leading pharmacies in Indonesia, provides online “health tools” such as a Body Mass Index calculator and a Creatinine (kidney efficiency) Calculator. These tools attract health-conscious consumers and may help drive demand for supplements and medicines.

Another avenue of interest would be email marketing. As the general “silver industry” matures, it will be increasingly easy to acquire email contacts of senior consumers. Anecdotal evidence from countries like the USA suggests that retired seniors often enjoy reading marketing emails, which are all-too-often deleted by other users as “spam.” While email marketing to the general public nowadays can be counter-productive, a creative and intelligent email marketing campaign directed at seniors would face higher chances of success. Marketers embarking on such a project should consider varying sending times to focus on the times when retired persons check emails – which might be in the afternoon.

This leaves one question – whether there is sufficient scale and spending power among Silver Surfers in the emerging world to justify marketing efforts in the first place.

In Japan, where there is an enormous pool of retirees and people aged over 60, the savings rate among this group is far lower than the national average, and discretionary spending has been booming. This has spawned an entire “Silver Industry” of vendors producing everything from mobile phones, video games, education services and even pornography directed at the elderly. This suggests that the stereotype of Asian seniors being heavy savers who leave large legacies to their children is, and will be, inaccurate.

If Japan’s experience is anything to go by, as emerging countries experience rising incomes and aging societies, the pursuit of the Silver dollar online will be not so much a question of if but when.


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