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Business - Written by on Wednesday, April 8, 2009 14:54 - 1 Comment

Naumi Haque
Inheritance marketing: A recessionary opportunity?

Even in the current economic climate, there is still a ton of equity out there that few companies have thought to tap into. What the heck am I talking about? Think inheritance. That’s right; despite the financial collapse of 2008, we could still be on the brink of a gargantuan redistribution of wealth from passing GIs to Baby Boomers and eventually from retiring Boomers to their inheritors. According to a Deloitte estimate, the Net Gen is set to eventually inherit $17.8 trillion dollars.

Of course no one really knows how much accumulated wealth there is in the GI and Boomer generations, or how longer life expectancies and inheritance taxes will affect the transfer of wealth, or if the current downturn will eventually empty the Boomers coffers, leaving nothing at all. Still, there seems to be an untapped opportunity in there somewhere.

For companies with Boomer marketing strategies, it could mean it’s time to start thinking about what strategies are needed to ensure that Boomer assets and business stay with the enterprise. At the very least it’s a whole new angle on retention and relationship marketing – call it “inheritance marketing” if you will. I recently came across the term gerentocracy to describe the imbalance of political power between the young and the old. How about geriadvertising for Boomer-inspired advertising?

An interesting article in USA Today talks about how, while Boomers have enjoyed unprecedented levels of wealth; “Households headed by people in their 20s, 30s and 40s have barely kept up with inflation or have fallen behind since 1989. People 35 to 50 actually have lost wealth since 1989 after adjusting for inflation.” This would seem to suggest that targeting Boomers is the way to go.

In the book Workforce Crisis, by Ken Dychtwald, Tammy Erickson, and Robert Morison, the authors discuss the implications of the imbalance of wealth distribution (written in 2006 before the market crash):

“How should companies and governments plan for the shrinking number of young workers, young taxpayers, and young consumers? Most marketing is still youth-oriented (or “youth obsessed”) even though today’s mature adults (those over fifty) control two-thirds of the accumulated wealth in the United States. Boomers will be the most financially powerful generation of mature consumers ever. What happens to marketing and product development when 80 percent of the consumer growth comes from the fifty-plus age group? How will businesses maintain brand loyalty when customers reinvent themselves at forty, sixty, and eighty years old? Will boomers, who have been active spenders in their middle years become more frugal as they mature?”

But, Boomers are moving / have moved out of their key spending years. Tammy Erickson wrote a recent post in Harvard Business, “What Demographics Tell Us About the Economy,” where she talks about how tracking the number of people age 46 to 50 in a given economy can be used as proxy for growth in consumer spending, and how this “big spender” demographic is declining around the world. She says, “This narrower age range, 46-50 year olds, will decline in number in the United States for the next twenty five years, until about 2035, when members of Generation Y will begin to enter this age category.” Looking at this data, targeting Boomer inheritors and Gen X makes sense, but inheritance marketers may have to wait for a while to see the returns.

Regardless of how well- or poorly-informed an inheritance marketing strategy might be, there are definitely Boomer brands out there that are trying to reinvent themselves. Here’s an example from this past year that sparked my thinking on this and made me smile a bit as well. I don’t know if Canadian Club has been thinking about Boomer wealth redistribution, but I have to say the tag line for ad campaign certainly helps make my point. “Damn right your father drank it!” says CC was a cool brand for Boomers, but can still be cool for their Net Gen children. Certainly invokes images of my own dad living out his college years in California in the 60’s.



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Laura Rossman
Apr 9, 2009 4:41

Inheritance marketing is “wish it were so” strategy. Much of the data is pre-financial crisis and seldom took into account the distribution of those dollars — large sums to a few; small dollars to the many. Many of those inheritance dreams have been dashed by the crash of the market and the fact that people are living longer and using up the money they once thought they would hand down to their children. In fact, the trend today is toward “negative inheritance” –baby boomers spening their own money helping support Mom and Dad now with housing, long-term care and living expenses.

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