Saturday, August 19, 2017

The future of luxury product suppliers is is dependent on Chinese consumers

My good friend Kim Walker is the person who normally writes about what is happening in China.

The reason I am saying something about the country is as much for my benefit as yours.

I need to regularly be reminded of the vast size and importance of the country. It is so easy to get obsessed with local US and European issues to overlook this huge economic entity and its importance to world trade.

McKinsey published a report about the luxury market that contains a few facts that remind us why the country is so important.

The number of Chinese millionaires is expected to surpass that of any other nation by 2018, and by 2021 China is expected to have the most affluent households in the world.

In 2016, we estimate that 7.6 million Chinese households purchased luxury goods—a number larger than the total number of households in Malaysia or in the Netherlands.

Each of these 7.6 million households spends on average twice what French or Italian households are spending.

Chinese luxury consumers account for over $7.4 billion in annual spending, representing almost a third of the global luxury market.

To this list of facts remember that China is one of the world's fast ageing countries. There is a lot of coverage about the tech innovations targeted at old people, especially those in the US. I hope they are keeping a close eye on what is happening in China. Dick Stroud

Four books for your Summer reading

I always have good intentions about reading lots and lots of books over the summer but never manage more than one or two. These are four books for your list that you will probably never read.

The election of President Trump and the vote to exit the EU filled many with shock and horror.  To others, lots of others, it was not such a shock but something they welcomed. All of a sudden one section of society felt like they were living in an alien country and another group thought they had got their country back.

The challenge for marketers is they need to market to both groups. Of course the divisions in society have been there and growing for years but it took these ultra high profile events, an election and a referendum, to reveal the huge differences in beliefs, values and cultures that exist with a single national market.

The 'toothpaste is out of the tube' and it aint going back. Marketers have got to come to terms with these divisions and become belief-neutral. Good luck with that since they haven't made much progress in becoming age neutral.

Your challenge for the rest 2017, 2018 and going forward is to solve the problem rather than treat it as a bad nightmare you wish you could ignore. Reading this book would be a good first thing to do.

For years I have been trying to get marketers and the media to understand that whilst many older people are living the life of riley many are not and as the years pass they will see more of those just about surviving to those doing OK.

This is a concept that most journalists find hard to understand because they need to sum up the state of a generation in a couple of sentences and have no room for caveats and grey areas.

The same happens when you attend conferences. Most of the time you will only hear the message about the high spending power of boomers - good grief I should know, I have given that message more times than I would like to think.

Fifty-five, unemployed and faking normal by Elizabeth White tells the other side of the story.

Marketers love new stuff and talking about concepts and images and brands and segmentation and insights and all the things that fill out countless hours of meeting and brainstorming and rushing around with yellow stickers and having fun.

What marketers don't like and aren't very good at doing is plunging into detail and making their visions a reality. Rarely are the behaviour barriers that have to be overcome understood, let alone solved.

The Last Mile by Dilip Soman is a terrific book that takes the body of knowledge that we have about behaviour economics and explains how it can be applied at the touchpoint level. The nitty gritty detail of making consumers do what you want.

If I had an ounce/gram of modesty I would not recommend a book that I wrote. There you go, I think modesty is over-rated.

This I Know is my final take on the ageing business. I have worked in and around issues to do with ageing for well over a decade and have got to know something about how it works or doesn't.

I wanted to write a book that could be read in a couple of hours but that would give the reader the essentials to understand what the ageing business is all about and how it will develop.

I needed to dispense with the niceties of providing lots of charts and matrices and all the other things that littered my other books.

This I Know is a straight talking conversation between myself and somebody who wants to get up to speed with the business, asap.

I hope you get to read at least one of these books. But if the sun is shining you might feel the need to have another beer or glass of wine, go ahead. The long winter months will soon be with us and you can add them to your Xmas reading list. Dick Stroud

Wednesday, August 16, 2017

Research in the Lancet has good and bad news about life expectancy and the demand for care facilities

First the good news

Between 1991 and 2011, there were significant increases in years lived from age 65 years with low dependency (1·7 years for men and 2·4 years for women) and increases with for men and women with high dependency.

The majority of men's extra years of life were spent independent (36·3%) or with low dependency (36·3%) whereas for women the majority were spent with low dependency (58·0%), and only 4·8% were independent.

Now the bad news

Assuming that the ratio of people requiring a care homes remains constant then as a result of population ageing it means that an extra 70,000 care home places need to be available by 2025.

You can read the full report in the Lancet online. 

As I have explained on numerous occasions, the existing model of care provision is not working (a polite way of putting it). There is not the public funding available to pay for more care facilities and very soon the cross subsidisation coming from private payers will come to an end.

The Lancet figures show that there is going to be a huge demand for care facilities that older people with the necessary wealth with be able to afford. What happens to the others, the majority, I dare to think. Dick Stroud