The Silver Market Phenomenon: Business Opportunities and Challenges in Context of an Ageing Population
The current shift in demographics – aging and shrinking populations – in many countries around the world presents a major challenge to governments, companies, and societies alike. As a matter of fact, this is true for both a number of industrialized nations as well as certain emerging economies. According to the Human Mortality Database, in Germany, the share of population aged 65 or older is expected to increase from 20% (16.7 million) in 2008, to 32% (23 million) in 2050. In Japan – the most severely affected country –, this share is predicted to increase to 40% (38 million) in 2050. Since the 1990s, aging and shrinking populations have attracted the attention of scholars, politicians, and business leaders, who have called for research and recommendations on the implications of these demographic changes (Coulmas, 2007; Fent, Mahlberg, & Prskawetz, 2008; Gilleard & Higgs, 2010; Tuljapurkar, Ogawa, & Gauthier, 2010; Walker & Naegele, 1999). Although research from various disciplines was brought forward, many questions remain unanswered. Notably, research in business administration and management still needs to study the multifaceted and complex impact that aging populations will have on markets, technologies, and societies (Kohlbacher & Herstatt, 2011).
The Silver Market Phenomenon
One particularly essential implication is the emergence and constant growth of the so-called “silver market”, the market segment more or less broadly defined as those people aged 55 and older. Increasing in number and share of the total population while at the same time often being relatively well-off, this market segment can be seen as very attractive and promising, although still very underdeveloped in terms of product and service offerings. Note that this is both true for the B2C as well as the B2B sector as the workforce of organizations is also aging. However, in addition to these wealthy elderly consumers, there might in the future be a growing share of older people whose financial and health situation is less favorable. This adds the question of corporate responsibility while offering additional potential for companies to serve the so-called "bottom of the pyramid" (Kohlbacher & Hang, 2007; Prahalad, 2006). Within this Silver Market phenomenon four main streams of research are lead markets, innovation diffusion, and integration of elderly lead users.
The role of Japan and Germany as potential lead markets
Japan is the most severely affected country by the demographic shift and it is the most advanced in terms of product development and innovation with very affluent, free-spending but also demanding aged customers. Japanese companies were among the first to react to the challenge of the demographic change and are constantly coming up with product as well as service innovations. Building upon our research in Japan (in cooperation with Tokyo Tech) the validity of findings from the Japanese market and their application to Germany are analyzed. Also, with German demographics similarly affected by the aging trend and its leading role in global innovation, we aim to assess the applicability of the lead market theory (Beise, 2001) to the cases of both Germany and Japan in the specific context of the aging population in order to understand which factors cultivate and which factors inhibit their lead market potentials.
Innovation diffusion and technology acceptance of older users
Furthermore our research focuses on the diffusion of product innovations from the customer and the company perspective. Due to changes in perception and physical as well as cognitive abilities, elderly customers value products and especially technological innovations differently than younger customers. Frameworks to measure and improve technology acceptance like the Technology Acceptance Model (TAM), first introduced by Davis (Davis, 1989), or the Unified Theory of Acceptance and Use of Technology (UTAUT) (Venkatesh, et al., 2003) need to be evaluated and might need to be refined in light of the specific needs and capabilities of aged users.
Integration of elderly lead users into the innovation process
An often discussed opportunity is the inclusion of elderly lead users in the innovation process. Although the concept of Lead Users as defined by von Hippel (von Hippel, 1986) has been proven and tested in several studies (Herstatt & von Hippel, 1992; Nagel, 1993; Lüthje, 2000; Helminen, 2008) its applicability, as well as criteria for a successful selection and execution of elderly lead users, is still in its infancy.
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