It’s A Numbers Game: An Inteview with Ken Gronbach

By Doug Stephens

“…there’s a parade moving through our marketplace.  But instead of marching, the parade is aging.  Those at the front – the oldest – are already disbanding, while the youngest in the back of the parade are just now forming at the fairgrounds.  The parade has a pace of its own and we can’t slow it down, speed it up or change the order of each section.

The generational sections vary dramatically in size.  This fact makes their consumption habits very predictable.”

–          From The Age Curve:  How to Profit From the Coming Demographic Storm

There has been endless speculation over the last decade about the aging consumer and the profound impact they will have on almost every aspect of the economy.  More recently, attention has turned to their heirs to the throne of consumerism, Generation Y and the game-changing influence they’ll have on all categories of goods and services.

The Age Curve author, Ken Gronbach

Despite all the conversation, do marketers really get it? Are they truly paying attention to these profound and largely mathematical realities?  Are they aptly identifying key differences between generations? If they are what are some of the common pitfalls and misconceptions they risk running up against in putting demographics into practice in their marketing approach?

I had a chance this week to interview Ken Gronbach, author of The Age Curve and ask his opinion on some of these questions.

Retail Prophet: What do you feel is the greatest misconception surrounding the use of demographic information by marketers?

K.G.: The major problem marketers have with demographics is comparing apples and oranges. A generation is twenty years long, roughly the time between birth and regeneration.   Most marketers get the Boomer generation (born 1945 to 1964) right but then carve up the subsequent generations into small subjective psychographic age designations that have nothing to do with demographics. In demography the comparative size of the generation/population passing through time is the major consideration.  Incidentally, in my books I added five years on to Generation Y for what I considered good objective reasons but was persuaded to bring them into parity by my research partners.

Retail Prophet: The first chapter of your book is entitled The Parade of Generations.  Here you ask the question, “Why aren’t marketers paying attention?”  Are there any specific of retailers or brands that you can point to that you feel are clearly ignoring demographic trends and conversely, are there any in your view doing a good job of incorporating generational insights into their strategies?

K.G.: Detroit’ big three thought the Baby Boomers would buy the SUV forever without any ostensible consideration that the Boomer aged out of their peak car buying years. Steve Jobs and Apple have a solid understanding of Generations X and Y and anticipate their demand.

Retail Prophet: In your opinion what is the single most important demographic shift(s) that retailers and marketers in general should be paying attention to over the next 20 years?

K.G.: It’s like the three “L’s” of real estate. Generation Y, Generation Y, Generation Y. Generation Y will redefine retail. So forget what you think you know.

Retail Prophet: For years we’ve anticipated the phenomenon of “the aging consumer”.   Are there any pitfalls that you see for marketers who are attempting to address this?  Any common mistakes to watch out for?

K.G.: The U.S. Bureau of Labor Statistics has reams of research that shows that consumption drops like a stone after fifty years of age. The peak of the Boomers was born in 1957. They will still buy tons of age appropriate products but they will not drive consumer spending. Generation Y will. That being said, The Baby Boomers are forty-five to sixty-four years old. They are not elderly yet and won’t be for fifteen to twenty years.

Retail Prophet: Generations are becoming longer as people take longer to have children.  Does this pose new problems for marketers?

K.G.: No, this does not pose a problem. It is not important when you have kids as long as you have them. What does pose a problem is smaller and smaller families. Do the math. The world is in a precipitous fertility decline. We have for the first time in the history of the world lost sight of the fact that it is necessary to breed if we want to continue. The United States is the only industrialized nation with above replacement level fertility owing to the disproportionate contribution of our Latino contingent.  This is a very serious issue that concerns all marketers.

Ken Gronbach is the President of Age Curve Consulting and author of The Age Curve: How to Profit from the Coming Demographic Storm