Sunday, November 23, 2008

Boomer's Wake Rule #2 - Find out what "they" want... and sell it to them!

Boomer’s Wake Rule #2 – Find out what “they” want… and sell it to them!
This is an obvious, but often overlooked rule. As we have discussed, two very large demographic pools are the baby boomers and their kids, the echo boomers. Remember that baby boomers are 48 to 62 years old right now and their kids are around 16 to 26 years old.

So how is this for a strategy? Find the oldest ones in either of the two groups and see what they buy. Isn't it reasonable that if the oldest ones are buying it now, then as the entire group grows older, they could all have similar needs and wants? This knowledge is what I call investing with wind to our backs.

Build boomer/echo boomer friendly businesses
If you are entrepreneurial, how about examining your products or potential products through the demographics filter? Which group does your products relate to most? Are there any simple alterations that can be made to either the product or the marketing message that will excite the boomers or echo boomers? If you are trying to build an expandable business, but find your target market is outside these desired ranges, you may find it a struggle to be successful.

Many examples come to mind. The iPod is a great example of a product that is very echo boomer friendly and had a wonderful tail wind for years as that product evolved. Can you find an echo boomer that doesn't own an iPod now?

Fitness clubs, on the other hand, especially those targeting 25-45 year olds, see that their growth in the past 10 years has been less robust than the prior 10 years. Niche clubs targeting boomers and seniors will likely do well and the industry as a whole will likely start to grow more rapidly as the echo boomers start to join in more freqency.

And how about the boomer friendly business of Viagra? Need I say more?

Not discounting the niche
Of course there is a difference between a niche business and one aimed at the general public. People can be successful selling to 30 and 40 somethings right now, but they just have to be aware that they are running in head winds in the process. Opening up a chain of retail stores targeting 40 year olds may be a bad idea, but a single boutique store in Santa Monica may do great.

Own boomer/echo boomer demanded assets
If the typical age for people to purchase their largest home is around 42-46 years old, when they make the most money and have teenage kids, than it would explain why owning real estate in the suburbs was a great idea in the '90s and early 2000s. The last boomers just passed through that age range. And their kids are going off to college now. Owning expensive, suburban real estate, unless it is in niche communities, may not be the best investment strategy going forward.

However, the older boomers are moving back to the cities right now and grabbing condos in clean and desirable urban centers. Likewise, the echo boomers are just getting their first real jobs and want to rent or buy in the same urban areas as well. Why not start to own real estate that these groups will want?

What other assets are in demand? Figure it out and own them.

But don’t get caught holding assets after the trend is over and the bubble has burst
The flip side of owning what they are buying is not owning what they no longer buying. Owning stock, for example, in SUV manufacturers when the last boomer's kid is going off to college seems like a bad idea. Investing in real estate developers building cookie-cutter, 4 bedroom homes in the 'burbs seems like a bad idea. Starting to build a long term investment strategy developing retirement communities? Now that sounds like a good idea.

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