Boomer price value relationships: a lifetime of adaptability
It’s been said before: to know where you are going, you must know where you came from.
OK, we know some readers are already in eye-roll overdrive … “OMG who cares about people stuck in the stone age with Fred and Wilma?”
Well, how about this for a reason to care; the 110 million Americans aged 50-plus control over 85% of the U.S family net worth (Federal Reserve.) Yabba dabba doo!
That old adage still applies to understanding Baby Boomer brand value perceptions; to know what these are today, marketers must know where they came from – how they evolved over a lifetime of changing prices and income levels.
Because, since the days of the cavemen, nothing has proven more effective to help folks doze off than market research statistics.
But we’ll just have to take the risk, and explain a simple statistical concept: how to adjust dollars of past years into their equivalent today.
The BLS Inflation Calculator: easy and fun to use – yes, really, it’s fun
However, Americans over 50 experienced much greater price increases during their lives – Boomer dollars shrank more drastically than those of younger generations.
For starters, we remember 35¢ gasoline.
The U.S. Bureau of Labor Statistics (BLS) tracks inflation via the Consumer Price Index (CPI) and provides a handy inflation calculator to help us keep score. It’s fun, easy to use – trust us – and illustrates how Boomers constantly adapted to keep pace with a shrinking dollar.
The CPI is based on the price of a market basket of consumer goods and services – one that covers over 200 categories of consumer expenditure. The calculator lets us look back 100 years and convert what things cost in the current dollars of any given year to their equivalent in any other year.
The charts below show 1955-2013 changes in prices and 1955-2012 changes in U.S. family income. We are looking at current dollars – actual figures from each year.
The youngest Boomers celebrated their 1st birthday in 1965, so that’s a good year to start assessing price/value adaptability.
- In 1965 we paid about $13.50 in current dollars for a basket of goods and services costing $100 in 2013. So, 2013 prices were 740% of the 1965 level.
- From 1965 to 2012, U.S. family median income in current dollars rose from $6,960 to $62,240 – almost 900% of the 1965 figure.
Good news: incomes rose more than prices since 1965 – 900% versus 740%.
Even more good news: today’s average basket of goods and services contains a vast array of personal electronics and other modern marvels not even dreamed of back when Sonny and Cher rocked our 8-track world.
Bottom line: half a century of rising income helped American families adapt to “higher” prices and still enjoy life more. More money in our pockets and more – and niftier – stuff in our baskets. Gnarly!
Boomers: a thriving world of opportunity for marketers with curiosity
Many old school advertisers preach that mainstream brands shouldn’t “waste” budgets on Boomers because our adaptability starts to power down as we turn 50.
As we leave the 18-49 demo, American consumers are seen as rigidly locked into last century brand loyalties and buying habits.
Frankly, that’s nutty.
We adapted to decades of changing brands, products, social attitudes as well as price/value relationships. Whatever life’s challenges, it’s way too late for us to stop now.
Within the 50+ American consumer space, the largest single group is the Boomer-Plus Generation™, born 1940-1964. At 89 million strong, if it were a nation it would be the world’s 3rd largest economy.
This huge generation owns over two-thirds of U.S. household net worth – a bigger, more affluent market than Germany or France or the UK or Canada and Australia combined.
It shouldn’t take a Fred Flintstone to figure out how to profit from a market this big. In fact, some young disruptives are beginning to reject stone age thinking about Americans over 50 by calling on us to help.
It’s worth repeating: advertising to Boomers – yabba dabba doo!
Originally published as a Boomer-Plus Consulting Group post; in September, 2017, we up-branded as Boomer / neXt to welcome the 4 million Gen Xers who join the Boomers in the 50+ space each year.