Real-World Education for Modern Marketers

Join Over 600,000 Marketing Professionals

Start here!
Text:  A A

Boomers Change MO from Consuming to Saving

by Ted Mininni  |  
January 27, 2009

A well-researched article in Adweek, Noreen O'Leary's "Boomers Caught in Squeeze Play," ought to make marketers everywhere sit up and take notice.

The gist: Consumer reaction to the painful reversals in the economy... particularly that of baby boomers, "who account for more than half of U.S. spending and who traditionally have grown more affluent with age." Due to the meltdown of the financial sector in recent months, coupled with losses in the stock market and home equity, consumers, especially boomers, are reversing their spending habits and stashing their cash into savings. That could only lead to further contraction of the economy, as consumers change course.
"In one of the most dramatic reversals in post-World War II history, Americans–who in recent years have had negative savings rate–are expected to flip those patterns, with Goldman Sachs now saying the U.S. savings rate could be as high as 6 percent to 10 percent this year."
"This is a tectonic, structural shift, a global realignment," according to Havas Media Lab's Umair Haque, quoted in the article. Dennis Jacobe, Gallup chief economist noted in the article that "a fundamental change is taking place."
"The last cataclysmic event was 9/11... It was patriotic to get out and shop," according to global client services director, JWT New York's Alison Burns. "This downfall is of our own making–greed, mismanagement and all sorts of things much closer to home. Now it's not patriotic to go shopping. It's all about being prudent, back to basics, valuing the things we have more highly."
Question is, will this shift be of long duration or not? And what does it mean for consumer product companies? When spending is cut, so is production, new product roll-outs and potential product innovations.
As boomers who are closer to retirement cut back on their spending, perhaps for good, will younger demographic groups who are accustomed to being "ever more acquisitive in a world of instant gratification and easy credit" as the article aptly states–change their spending habits? And if they don't, will their spending be enough to offset boomer cut-backs in the larger economy? These are very important questions.
Companies and marketers who perhaps expect a deeper and longer recession than usual, may think they can ride this out. But the new consumer mood may dictate a change in their thinking. New strategies may be necessary to survive in this new environment.
If not permanent, many expect this current trend to be long lasting. Consumers have to spend to buy necessities, of course, but expect them to be wiser and more deliberate about everything they purchase. It's time for companies to deliver real value–rather than hype or perceived value--to a consumer that will demand and expect to get it. But what does that really mean? Lower prices or something more?
What are your plans as a consumer? To spend more of your discretionary income when the economy settles down a bit or to accelerate your rate of savings?
What do you think companies can do to show consumers real vs perceived value in their products or services now?
What kinds of values merge with your own views at present?
What companies have demonstrated clear value to you to induce you to spend your hard-earned money right now?
I'd love to hear from you.

Sign up for free to read the full article.Read the Full Article

Membership is required to access the full version of this how-to marketing article ... don't worry though, it's FREE!


We will never sell or rent your email address to anyone. We value your privacy. (We hate spam as much as you do.) See our privacy policy.

Sign in with one of your preferred accounts below:

Ted Mininni is president of Design Force, Inc. (, a leading brand-design consultancy to consumer product companies (phone: 856-810-2277). Ted is also a regular contributor to the MarketingProfs blog, the Daily Fix.

Rate this  

Overall rating

  • Not rated yet.

Add a Comment


  • by Paul Tue Jan 27, 2009 via blog

    Ted, it's a great time for highlighting more value as you pointed out, and a "more for less" message could be the right approach for many companies. A customer considering two types of laundry detergent will probably go with the "now 10% more" size vs. a competitior who cannot quickly respond to a product packaging/fulfillment/distribution shift. A "more for less" strategy could work while innovation is humming in the background on the next generation of products/services.

  • by Ted Mininni Tue Jan 27, 2009 via blog

    Good point, Paul, and thank you for adding your thoughts to my post. I think you're right. It's probably time for companies to deliver real vs perceived (manufactured) value to their products and services. As customers get back to basics, demand more for their hard-earned money and purchase more discriminately, the "value strategy" will likely be here to stay.

  • by Zach Heller Tue Jan 27, 2009 via blog

    Great post. It is important now more than ever for businesses to differentiate. Being different means that you can stand out, even in the roughest of economies. One way to stand out in a bad economy is to show real value. Cater to your customers. Show them you care. Offer them added benefits, more personalization, discounts, etc. If the customer sees that you care about their well-being, you have a better chance of holding on to them in the long run.

  • by Ted Mininni Tue Jan 27, 2009 via blog

    Exactly, Zach. Real value is important now. And how about real customer service? How about being transparent? How about being trustworthy? How many large businesses have broken trust with consumers just in the past few months? Those brands that offer authenticity, transparency, real value and consistent customer service will win with consumers for the long haul. You'd be surprised to see how CMOs really don't get it when it comes to customer service. I urge DF readers to take a look at this Media Post article: "CMOs Don't Get Customer Service, (CMO)Council Finds" This will be an eye opener. Thanks for weighing in, Zach.

  • by Lewis Green Tue Jan 27, 2009 via blog

    Ted, As a 62-year-old Boomer, I am not spending a dime on anything except the necessities in my life, one or two nights out a month, and business development for my consultancy. I believe I am typical in my generation of those who thought they were nearing retirement, and have since since a 60% decline in the value of our investments. Will I return to being a consumer again? Probably in travel and entertainment, nowhere else except necessities. If I don't need it or it isn't fun, I'm not buying it.

  • by Ted Mininni Tue Jan 27, 2009 via blog

    Lewis, Thank you for summing up the thoughts of most boomers, so concisely and articulately. I believe you're right: even with things return to normal (and as Paul Barsch says "whatever that means now"), I doubt we'll see the over-consumption from the 1990's until the meltdown this past fall. A large number of consumers who have been shocked by huge drops in their net worth are saying the same thing: "If I don't need it, I'm not buying it."

  • by Adam Schorr Tue Feb 17, 2009 via blog

    I am very suspicious of any claim about how X will fundamentally change people's behavior. I don't believe it. I think people will spend a lot less because the economy sucks, there portfolio is worth a lot less, they are worried about losing their job... But the economy will get better. Portfolios will rise on value and people will start reading articles about how wonderful things are. And then they will spend again. Now if this recession lasts a long time (at least 10 years) then I think it might rewire behavior. But most people don't think it will last nearly this long. All this talk of fundamental change to human behavior really flies in the face of history. In the end, people are people and they do the things that people do.

  • by Neil Anuskiewicz Wed Feb 18, 2009 via blog

    Adam, good points all. I think spending will be more cautious by everyone even when we come out of this recession. This is a severe recession and we will come out of it. It is strange how people think. When times were good people make proclamations. I remember in the 1990s there were those predicting that this was the end of the business cycle and that only good times ahead. When gas prices were at rock bottom, people bought vehicles as though that could never change even though we had experienced oil shocks in the past. The U.S. auto industry also had a short memory. Now, we are in a severe recession and financial crisis and I hear all sorts of predictions. This is a recession and a very painful one but the business cycle will keep moving and we will go on the upswing again. It may not be a vigorous recovery but slow one. The one thing that will change is the easy availability of credit. Things are going to be permanently tighter and more regulated, too. This sort of meltdown is a lesson learned and nobody wants this to happen again. It is too bad we could not have learned this lesson the easier way but it had to be the hard way. All people of all generations are going to have to be more cautious with credit and save more. The consumer spending part of the economy probably will be muted for some time to come but it will bounce back. It won't be driven to the same lofty heights driven by credit. That is over. It will bounce back slowly but it will grow again. As time goes by we will insist on fairer trade conditions with countries like China. We cannot continue this imbalance created by their tight control of their currency. It is not fair to us and our exporting businesses (and the untapped potential there) and it is not fair to the Chinese people, either. The Chinese should consume more and we have to save more. I do hope that this recession does not cause people of the world to close their markets as that could well bring on a depression. We need free trade but it also must be a fair game not rigged.

  • by Ted Mininni Wed Feb 18, 2009 via blog

    Interesting conversation, Adam and Neil. I'd just like to add something to it if I may. Adam, in the past when we've been on the down side of economic cycles, consumers have tightened their belts for a while and when finances have improved, they've gone back to spending. I'm not so sure this is going to happen again soon; this recession may be here for a while. When things do turn around, I don't think consumers are going to go back to spending the way they did before the meltdown of September 2008. Here's why: consumers were encouraged by the government to overspend. How? Money was cheap to borrow due to low interest rates and many consumers got in over their heads making large ticket purchases they really could not afford. When the housing bubble burst and home values plummeted, people did not have the cushion of all the equity they thought they had. Add to that, the average consumer is carrying over $10,000 worth of credit card debt, two car payments, etc, and it's safe to say overconsumption is over. It is going to take years, if not decades, for many people to fix their finances. This perfect storm has forced consumers to begin to pay down debt now, and to begin saving again. Human nature or not, these circumstances are going to change the behavior of many--permanently. Neil, you've summed it all up perfectly: "All people of all generations are going to have to be more cautious with credit and save more. The consumer spending part of the economy probably will be muted for some time to come but it will bounce back. It won't be driven to the same lofty heights driven by credit. That is over. It will bounce back slowly but it will grow again." Thanks to both of you for adding substance to this conversation. I appreciate it.

MarketingProfs uses single
sign-on with Facebook, Twitter, Google and others to make subscribing and signing in easier for you. That's it, and nothing more! Rest assured that MarketingProfs: Your data is secure with MarketingProfs SocialSafe!