David B. Wolfe is an internationally recognized expert in consumer behavior, with a focus on the New Customer Majority—adults over 40. His 1990 book Serving the Ageless Market was the first business book to describe how developmental stages of life play a major role in shaping adults' worldviews, needs, motivations, and overall behavior. Coauthor of Ageless Marketing: Strategies for Reaching the Hearts and Minds of the New Customer Majority, David is a provocative, cutting-edge author and speaker.
tompeters.com asks ...
What problem is your book, Ageless Marketing, addressing?
DW: The fundamental problem I'm addressing in Ageless Marketing is the incongruity between what marketers are doing and saying and what the consumers are experiencing, in terms of their world views, their needs, their motivations, their values, that govern their shopping and buying behavior. Everything we learned in marketing was pretty much learned when youth ruled the markets. Today that is not true. The median adult age is now 45. That means that people in midlife and older are the New Customer Majority, and their world views, needs, values, life aspirations are quite different from those of the people who set the rules before the last decade started. Twenty-five-year-olds and 45- or 55-year-olds are in different places.
But you say that all these marketers learned how to market back when youth ruled, which I guess is somewhere like the mid-fifties up until the seventies. What I don't quite understand, and you make the point over and over, is that marketing remained stuck there. But why is that? Everybody else figures out that things have changed. Why haven't marketers caught on? I think you even say in your book that as a group they've learned how to do less with more.
DW: Yes. You need to look at what's happened in marketing over the last several decades. Let's focus on ad agencies to respond to your question. Ad agencies used to be run by very bright, what I call intuitively competent people like Bill Bernbach, David Ogilvy, and Leo Burnett. The very top brains in these organizations went into client servicing. Went into figuring out the clients' marketing problems. In many cases the heads of these agencies would meet with the heads of P&G or General Motors or Chevrolet divisions or whatever, so that you had people negotiating marketing developments at the very top. You had the very best brains working on marketing.
In the 1980s the whole nature of the advertising business underwent an epochal change. It started with the Saatchi brothers, when they started acquiring agencies. They started growing agencies through acquisition and merger rather than through client development.
This changed the focus of agency leadership toward business development and financial matters. Over time, Martin Sorrell, who was part of that early movement with the Saatchi brothers, bought WPP, a wire baskets manufacturer, and turned it into an advertising behemoth which is now the second largest conglomerate. It's an eight or nine billion dollar a year operation. It owns hundreds of agencies. So the top brains in WPP have not gone into client servicing. They've gone into business development through merger and acquisitions.
This means that, by default, the creative output often falls to the youngest people in the agency. Because the top guys are out there trying to build business, trying to meet the numbers. In fact, someone who does work for WPP told me that throughout the WPP universe in these various companies that have been acquired, the CFO often has more power than the CEO. Because they've got to report back to London. Numbers, numbers, numbers. So creative output takes second place to numbers, and the creative output by default is falling to the younger people.
The average age of account executives, for example, according to an America demographic study [James Surowiecki, "Ageism in Advertising," the New Yorker, 4/11/2002, p.40], is 28. So you've got much less experienced people, people who are much less intuitively competent, than those people who once ran agencies. And what do people relate to most? They relate to their own daily experiences. Now a 28-year-old looking at life doesn't really understand or grasp the differences between him or herself and, say, a 48-year-old.
Your book is called Ageless Marketing. What do you mean exactly by ageless?
DW: Ageless marketing is marketing that is not fundamentally rooted in a target market's age. Rather, it is rooted in the target market's value system. Marketing was largely ageless before the era of television. As you may recall, marketing became very age-sensitive, age-based in the 1960s, when the ABC television network, an also-ran in the television business, began to market its air time on the premise that it had the youngest market. It used the Nielsen figures.
That's what really began to make marketing fundamentally age based. Marketing in Europe is not, never has been, as age-based as here in the States. In fact, television viewership [in Europe] is reported by households rather than by age. Marketing based on age was fundamentally a creation of American broadcast companies originally and spilled over into print, Madison Avenue, and so forth.
But ageless marketing is marketing to people based primarily on their values rather than on their age. Obviously, age comes into play. Let me give you an example. New Balance, which is an exemplar of ageless marketing, is not unmindful of age, but its central message, its brand persona, is ageless. It's what you might call institutional advertising and its marketing is ageless. It's very value-sensitive.
When New Balance gets into media placement or involved with its channel management, then it becomes very age-sensitive. But the whole customer universe doesn't see this. If you go into a Foot Locker, you will see a different inventory of New Balance products than if you go into Nordstrom. That's because patrons of Foot Locker are younger than those of Nordstrom. So New Balance is sensitive to age but its central, overall theming is ageless.
What's an example of that with New Balance?
DW: New Balance really addresses the needs of the inner self, where Nike addresses the needs of the outer directed self. Nike is about winning. New Balance is about being. Nike is about the smell of sweat, whereas New Balance is about the smell of nature.
New Balance has an ad that shows a guy running up the mountainside overlooking this pristine sea. The headline is, "The shortest distance between two points is not the point." It just captures that eternal scene of the sea and the mountains and the sunset. Shortest distance between two points is not the point. With Nike it's the point.
Right. It almost sounds like it is directed at Nike.
DW: Having interviewed [New Balance Chairman and CEO] Jim Davis, I think he's not unmindful of the 800-pound gorilla out there called Nike, but in the late 1980s he started realizing that New Balance's sales to youth had fallen off. Of course a major reason was that youth was shrinking. He picked up on this while Nike, Reebok, and Adidas didn't. People get used to a pattern, and they want to stay in that pattern. Plus, these other companies have to play to Wall Street, where New Balance, being a privately owned company, doesn't have to. So he was able to go into these older markets without any challenging from financial analysts or anybody else. And it turned out to be an extraordinarily winning decision.
But every time I asked Jim what caused him to do this or how he figured out how to be successful with it, he said, "It was an accident. It was dumb luck." You talk to another ageless marketer, Harley-Davidson, and you'll get the same kind of response. "Well, we really didn't know. We just tried something and it worked." This is very common. And because of this trial and error method, these folks who've succeeded are reluctant to talk about how they did it. I was talking to a guy recently who's trying to put together a conference around this idea of ageless marketing. New Balance wouldn't attend. Chico's wouldn't attend.
Now what is Chico's?
DW: Chico's is a publicly traded women's retailer. Same-store sales grew at a rate of 20 percent last year. It's extraordinary. Chico's is nominally aimed at the 30-to-50 demo. But if you go into Chico's, you will see women of all ages, except maybe teens, in there. They don't have teen fashions, or even young twenty-somethings. But you'll see 60-somethings, 70-somethings. And women love Chico's because, first of all, Chico's invented its own size. It's size one, two, three.
DW: It is. And that's another facet of ageless marketing. You blur distinctions. We have been so fixed on market segmentation since Wendell Smith wrote his seminal paper on that and published it in the Journal of Marketing in 1956, that we think segmentation is everything.
Well, segmentation by definition is a process of exclusion. What Chico's does with its new size category, one, two, three ... it includes everybody.
Anthropologie is another story. It's also a women's retailer. Anthropologie is an ageless store. The growth rate has been 40 percent compounded annually since 1994, and they have never run a single ad in a magazine, newspaper, or television.
It's interesting that you mention two women's stores. The real sweet spot of this whole movement, apparently, is boomer women—women with a newfound sense of independence, in many cases with tons of dough, their own money and money from expiring husbands or parents.
DW: Right. But also, we should not forget—and this is something I continuously hammer home—that boomer women are not really materially different from their mothers at the same age in terms of their basic needs. And in terms of their basic behavior. Carl Jung, many decades ago, talked about women entering midlife and becoming more masculine in their behavior. More assertive, more self-confident, higher self-esteem. And that's what boomer women are reflecting. Marketers are used to a much more submissive kind of woman, but that is not in the nature of the people who now occupy the ranks of the New Customer Majority. It never has been true of middle-aged and older women, but since in the past they were in the minority, these behaviors were not as pronounced or as visible as they now are.
DW: That brings up a really important point. There was an article in the New York Times, in the Sunday Style section, titled "Sex Doesn't Sell: Miss Prim Is In." The article talked about how consumers are fed up with the blatant exposure of belly buttons. My wife read this article and then passed it on to me, and said, you know, once again they missed it. There's a change in the cultural ethos that is being driven by the emergence of the New Customer Majority. Older people have tended always to be more conservative in their sexual mores and values than younger people. That's not new.
But now that older people are the majority, it's having an influence on that aspect of the cultural ethos. In Serving the Ageless Market, which I wrote over 16 years ago, I predicted the behaviors that now are defining the marketplace.
I said basically that as the population becomes dominated by older people, we were going to see a shift in consumer behavior from almost exclusively materialistic foundations to experiential foundations. I talked about people buying products, not so much for their functional qualities as for their abilities to serve as gateways to experiences. That was long before Jim Gilmore and Joe Pine wrote their seminal tome, The Experience Economy.
That's a perfect segue into my next question. I think you say that consumer needs are going to be more experience centered now, with this New Customer Majority. Can you talk a little bit more about that?
DW: Sure. Pine and Gilmore's Experience Economy, and every other book now talking about that customer experience reflects no real awareness of the fact that the shift from product features to experiential aspirations is being driven by the aging of the population. Years ago, I predicted this would happen as society aged. Older people simply tend to become less materialistic and more experiential in their aspirations.
Yes. Exactly. That's a very interesting part of this.
DW: The point is that if you have a foundation in human development, you can literally look at markets 10, 15, even 20 years into the future, and know their general outlines. Proof of that is my book, Serving the Ageless Market, written in 1989.
Well. As long as you're paying attention to the census.
DW: That's correct.
You seem to indicate that a lot of people aren't even doing a very basic homework to understand the market shifts ... just in numbers.
DW: Right. And as I say in Chapter Two, reliance on the numbers has really been the Achilles' heel of marketing. The fact that you can get an MBA in marketing without a single course in behavior indicates the extent of the reliance on looking at markets through numbers rather than through behavior.
And that worked better when markets were younger, because younger people tend to move in tandem. If you know what the group is doing or will do, you have a pretty good idea of what the individual will do.
Because you're subject to peer pressure much more so when you're younger than when you get older.
DW: Exactly. And that plays into the shift from the materialistic to the experiential. When you're younger and you must give evidence of who you are, what your accomplishments have been and where you're going, you do that through cars, clothes, very visible, observable behaviors in the marketplace. But when you reach midlife with less need to make social statements in your consumer behavior, you then begin to be more subjective and think more in terms of the experiential quality, which is highly subjective, rather than the material quality, which is highly objective. This is an epochal shift in consumer behavior that Yankelovich and Roper and ASW and others are reporting on. But again without that profound understanding that this is coming from the aging, particularly of the boomer mass.
Which, I guess, raises this other question. You make it seem so clear here and I think if anyone bothers to look at any of the census reports. I mean, we all know about the boomers. Why is it so difficult for marketers to make this shift? Is it just because most marketers are in their late 20s or early 30s, or is there something more profound?
DW: I think it's more profound. It's kind of the ideological equivalent of Newton's basic law of motion. An object at rest tends to stay at rest, and the same is true with ideas. An idea in place tends to stay in place. This really derives from the brain's evolution to regard sameness over change in the interest of giving its owner a cohesive, stabilized picture of the world.
But of course when you cling to the status quo under certain circumstances, beyond some point, then this characteristic of the brain becomes destructive, counterproductive.
So even if marketers think the market has shifted to older, they still convince themselves that they've got to get the market while they're young because they think then they'll have brand loyalty forever, which you show in your book is absolutely proven not to be the case.
DW: Right. People don't like change. What's the old saying? Most people don't change until the pain of staying the same is greater than the pain of changing.
Working here in Tom Peters world and talking about innovation and change management, we see that at the individual level, people want to continue to do what they've always done.
DW: It's important to keep in mind that what we do is part of who we are. What we do reflects on our self-image. Such that when something arises that causes me to change, it causes me to change my image. Like pulling a tooth. It hurts. You're asking me to give up a part of who I've been.
Right. And then you've got to question why were you that person and is one wrong and one right. Is that part of the equation as well?
DW: Yes, that's very profound to pick up, and it's really necessary to understand the fundamentals of my thinking. I do not say that what marketers did in the past was wrong. It fit the times. It's a question of being relevant, and that's not relevant any more.
That's a good point.
DW: I'm a very contrarian kind of person. Not by nature—I don't know, maybe it is by nature—but a typical marketing book wants to point out what's been wrong in the past. And I think we need to respect the past.
Well, as you say, it worked. In a time and a place. And now things have changed. Let's talk about self-actualization. I think you have a whole chapter about that, and it appears regularly in the book. Can you give me a brief overview of what you mean by it and why it's important in the context of ageless marketing?
DW: It's best understood, for openers, by thinking of the first half of life as being strongly focused on social actualization. And in the second half of life we begin to make the shift toward focus on self-actualization. In the first half of life, who we are is shaped, influenced, even compromised, by our need to make social statements, the need to achieve a position in the social groups we are a part of.
In self-actualization we begin to become more who we are fundamentally. Who we are intrinsically, with less influence from the external world, from other people. We become more autonomous. We become more introspective. We become more individuated. This is part of self-actualization. And we become more focused on the real versus the charade. In the second half of life, authenticity becomes more important to us.
Jung talked about how, in the second half of life, we confront our shadow. Our good as well as our potential for not-so-good. And we become more realistic about ourselves and we begin to dissolve the persona that we needed in the first half of life. To get life partners, and jobs and promotions and whatnot, we have this mask on. As we dissolve the persona, we begin to put a higher premium on authenticity, on truth, on integrity, on lack of airs. And this is the subject of the new book that Joe Pine and Jim Gilmore are doing. But this again reflects the maturation of the society. This reflects self-actualization.
And what does that mean for marketers?
DW: It means that the old bombast, the empty or specious claims don't work any more.
And what does?
DW: People want the unvarnished facts. They don't want people to put a spin on reality.
Which we are inundated with every day. But I think somewhat related to this, in the end, brands only survive through collaboration between companies and customers.
Can you talk about what that means?
DW: Sure. That is why Starbucks was able to become the international giant that it became with almost no advertising. Because of the customers and the company collaborating in building the brand and giving it meaning.
How? In what way did we Starbucks customers—I go there every day, more than once a day—collaborate?
DW: By your responses. Starbucks never did any conventional research. They didn't do focus groups, they didn't do quantitative surveys. Which is quite similar to the way Nike developed. Phil Knight hates research. But he, and later his people, went around to athletic meets and they just sort of breathed the air the customers were breathing. And Howard Schultz, Starbucks, did the same thing. So it wasn't that the consumers and Schultz's people sat down around a table and planned; it's that Schultz put himself and his people in proximity with the consumers and observed them, and followed their lead.
Now a negative example of consumers and companies collaborating is the New Coke experience. As I say in my book, once the brand is kicked out of the nest, consumers take ownership and the company simply is a trustee of the brand. And when companies depart from their brand roots, they get into trouble.
But don't they also think that they sort of still control the brand and that the consumer doesn't.
DW: They do. They think that erroneously.
Our friend Steve Yastrow has written this book called Brand Harmony, which is all about the fact that you can't pummel the marketplace with your ideas of what your brand is. It's a matter of making sure everybody in your own company understands your brand and lives your brand to your consumers, whether they're buying a product or talking to customer service, or running into an employee.
DW: Right, and you may remember my story of Wachovia from the book. When they took my ideas and expressed them through the eyes and lives of children, Baker, the Chairman then, and CEO, realized that they were creating an image of Wachovia that they should emulate internally. So he appointed a committee to evaluate how well the company was living the brand internally.
That's clearly very important.
DW: Yeah. We are in a revolution. I know Tom likes revolutions. To say the least.
Well, here, a new popular book out on George Washington. We want to continue to hear about our own American Revolution.
DW: I called my publisher yesterday and said I want to come out to Chicago and do a workshop for the publisher. Not only to get them to understand my book in more depth, but I want to bring Marti Barletta, author of Marketing to Women, with me. I've read maybe three books on marketing cover to cover in my life, because after two or three chapters it's the same old thing regurgitated. Marti's is my fourth and I think it's fabulous. Fabulous in its own right but also because it integrates so beautifully with my book, and vice versa.
And you share a publisher.
DW: Yes. So I'm proposing that we do a workshop. They invite the top leaders in marketing in the Chicago area and we begin to project this revolution in a much more visible fashion. It would really be great if we could put together a framework to approach, say, the New York Times, or New York Times Magazine, or somebody like that, and really spell out the fundamental changes that are taking place in our culture. Rolf Jensen's book The Dream Society does a good job of showing how we are moving from an objective foundation to a subjective foundation.
And there's a book that preceded his, called Collective Intelligence, written by a Frenchman, Pierre Levy. He wrote that in the 21st century the most important product companies would be dealing with would be subjectivity. At the worker level, at the consumer level, at all levels.
I noticed in your foreword you talk about an upcoming book, Share of Heart. And then I noted that Rolf Jensen has written another book, not yet published in English, called Heart Storm. So I think it's interesting that we're seeing this heart thing showing up. We're not speaking to the brain; we're speaking to the heart, which seems to fit in nicely with everything you're saying in your book.
DW: In some writing I've done recently, and in my workshops, I talk about three cultural eras, the first of which began with the founding of this country in 1776, which was, interestingly, the year that Adam Smith's Wealth of Nations was first published. That ushered in what I call the Age of Empowerment. For the first time in human history, the ordinary man was granted the right to be the master of his own destiny as a matter of law. That had never occurred before. And people responded by taking the skills they had acquired and used around the hearth, around the homestead and whatnot, and started building their little shops. And some shops became big companies and so forth. So, throughout the Age of Empowerment, the foundations of the modern consumer society were laid.
Then as the Age of Empowerment came to a close, the Age of Knowledge emerged, and for the first time in human history the findings and discoveries of science were given commercial applications, sometimes almost immediately. The middle class society emerged, and we came through the 20th century with this tapping of science to create a modern materialistic consumer society.
Now we are entering what I call the Age of Transcendence. This is when we move from a materialistic foundation in our culture to a more experiential foundation. That's sort of in a nutshell my view of history over the last 400 years. It's something that [psychologist Abraham] Maslow would relate to quite strongly because of his ideas of self-actualization, when a person moves from a materialistic, more objective foundation to the more subjective foundation that Rolf Jensen talks about.
And this is showing up, by the way, in business, in a very big way. There's a new book out called What Matters Most [by Jeffrey Hollender and Stephen Fenichell]. It talks about how small companies are changing big companies. Adam Smith, interestingly, said that companies had no business concerning themselves with a social agenda. This was reinforced many years later by Milton Friedman, when he said that the company's only business is making profits. Now we're seeing a major shift in the ethos that underlies that thinking.
Well, that was the reason for the whole success of Fast Company magazine, right?
DW: Yes, exactly. So it is a huge revolution that's taking place and, maybe you don't see it because you're thinking of the Enrons, the Tycos, the WorldComs, etc. If I hold my fingers up and look at my fingers, you become a blur, but if I look at you, my fingers become a blur.
In other words, you see what you focus on. You need to look at what's happening in the companies today. For example, one company, Fetzer Vineyards, is changing the whole wine industry. There was an article on them in the December issue of Fast Company.
In 1986, the head winemaker hired a guy to come in and do organic gardening to grow produce for their cafes and tasting rooms. One day, the organic gardener said, you know, while you're having me grow these pure foods, you're out there poisoning the vineyards with pesticides and fertilizers. Why don't you grow your grapes organically? So they tried it. They took a block of grapes and, by golly, the head winemaker was amazed at the quality when he tasted those first grapes from an organic vineyard.
So they embarked upon a plan to convert 100% of their vineyards to organic methods. What they found is that they were not only producing better wines—last year, for example, they took more first prizes than any other wine company, but they're growing them cheaper, because they don't have the labor, the chemical costs, etc. They're even getting cover crops out of this method because they're using crops to control weeds, rather than using herbicides and so forth. You can buy prize-winning wines from Fetzer at Trader Joe's for $5.95, which is forcing Gallo, Mondavi and the others to start looking at doing it organically.
So here you have one vintner that's changing an entire industry. We're seeing more and more of this idea of being socially responsible in the way business is conducted. This is brand new and it's changing the face of capitalism. So it's just another example of this revolution that we're experiencing.
That's a great, very optimistic end point for our discussion. I think this is incredibly important material and it's really important to get it out to a lot of people, as quickly as possible. When I want or need to buy things, I'd like for people to speak to my needs and I don't generally feel that.
DW: Well, you see, in the objective world, your needs were not as important. In a subjective world they're everything.
So, Marketers of the world, listen up! Thank you very much for your time, David.