15 Jun How the ageing demographic impacts industrial marketing
The ageing demographic is a constant topic of conversation in the mainstream media. From the impact the growing number of elderly people is having on NHS budgets to the pensions time-bomb, the media, politicians and policy makers are all rightly obsessed with how to deal with the challenge of a rapidly ageing population.
Yet one area where the ageing demographic receives little attention is the industrial sector.
The EngineeringUK 2017 report notes that the average age of the engineering workforce between 2004 and 2015 has steadily grown older. In 2015 the average age of an engineer was 41.75 years, with 41% of the workforce being 45 or older; over 15% were over 55 years old.
It’s a stark fact that in the next 10 to 15 years around half of all engineers will reach retirement age. It’s also true that we’re simply not attracting sufficient numbers of new engineers into the profession. According to EngineeringUK, there is an annual shortfall of 69,000 trained engineers and technicians, required to cope with changing demands, sector growth and the inevitable loss of engineers through retirement.
The ageing demographic raises a host of issues: not least, a potential loss of skills and experience, along with years of market knowledge. One factor that is frequently overlooked is that most engineers in established positions have allegiances to major industrial brands. These relationships have been built up over many years and are based on a high level of trust between individuals – including specifiers, buyers, sales and technical support – on each side of the customer/supplier divide. As people retire, this bond is often weakened or broken.
This can present a challenge for all industrial companies, as the generation of younger engineers in the workplace and those that we need to attract in future are used to handling communications in different ways.
Traditionally, brand visibility has been the preserve of large organisations that have the resources to buy acres of advertising space, largescale sponsorship of industry events, or expansive floor space at exhibitions. Relationships have then been forged through the work of often sizeable sales and customer support teams, backed by other high profile marketing communications programmes. All too often, however, these programmes have focussed on traditional media, working on the assumption that the older generation does not widely use the proliferation of digital and social media channels.
The emergence of the Millennial generation has disrupted this approach.
For example, a survey carried out by Forbes a year or so ago found that Millennials are not influenced by advertising; only 1% said that compelling advertising would make them trust a brand. In addition, 33% rely on blogs rather than traditional news channels or other media before making a purchase, with 43% expecting authenticity from any material they consumed – for authenticity you can read ‘honesty, balance and insight’.
Interestingly, there have been a number of consumer surveys showing that Millennials demonstrate higher levels of brand loyalty than other generations, but that loyalty is driven largely by the consumption of news, views, information and insight tailored to their specific interests and delivered via digital and social media channels. It is rarely driven by the levels of personal interaction typically found between older generations.
Today, we are in an environment where long-standing relationships are fracturing as the principal contacts on one or both sides of the customer/supplier partnership retire. At the same time the tried and tested forms of marketing and communications have less and less traction.
Industrial brand owners need to consider the impact that the ageing demographic is already having on their target markets. They need to become far more attuned to the fast-changing needs of their audiences, of all ages and across all sectors, and to adapt their methods of communication, choice of channels, devices and messages accordingly, to ensure that long term brand values and reputation are maintained.
However, it is perhaps most acutely felt by the bigger brands. This is especially true of those companies that have remained wedded to more traditional forms of brand building, such as high profile advertising and attendance at major trade shows, where significant investment has often been made over a number of years. Much of this activity, however, has been focussed around the promotion of product features and benefits with, at best, only limited use being made of the wide range of new media and digital channels that are now available.
These channels are most widely used by a younger demographic, brought up in the Internet age and comfortable with using multiple channels and devices to access new information and experiences. This makes them harder to reach and influence. Additionally, the almost egalitarian nature of the digital space, where everybody with a compelling story to tell and the wherewithal to tell it has an equal opportunity to win attention, makes it difficult for major brands to stand out simply by throwing money at the problem.
In the past, well-funded brands could simply buy large advertising or exhibition space to stand out. Today, it is the quality and nature of the story – the content – that drives search engine rankings and engagement through the digital channels where increasingly the target audiences are to be found.
Larger brands – certainly large organisations – also tend to be less agile and slower to respond to changes in market conditions and customer needs. This allows smaller suppliers, which can be better placed to react quickly to new developments, to deliver ideas, insight and innovation that naturally attract an audience seeking fresh inspiration, and which again undermines the conventional values sought by the bigger players.
The point about insight is important. As mentioned above, the traditional approach to marketing and sales has been to focus on product features and benefits; often, these benefits were perceived by the supplier, but not necessarily by the target audience.
This model is quickly being superseded by the need to provide customers with information that helps them meet technical and commercial challenges; which helps them perform their job better, and which makes them look and feel good in front of their peers, customers and stakeholders.
This requires a far more open and consultative approach, involving greater two-way transparency and communication between suppliers and customers. Although many companies, together with engineers from all generations, are good at creating this type of relationship it has still to become the norm.
Finally, a considerable quantity of customer materials produced by companies start from a highly technical position – the assumption being that the audience already knows all about the subject in question. This may frequently be the case, but it should not be forgotten that new entrants into an industry, even graduates, often lack the base level knowledge about specialised products or technologies, and therefore need to be brought up to speed as part of the relationship building, or customer engagement, process.