Longevity and falling birth rates will bring new challenges and opportunities for societies and companies all over the world. While the lifespan will rise and the share of older age cohort will increase, societies and companies must take actions to prepare for these changes to be able to survive with the increasing liabilities caused by older employees. Companies must also scrutinize their marketing strategies, so that they will be ready for the new powerful consumer generation, the seniors.
The changing demographics will have a major impact on the consumption patterns as the world`s population ages. For example, the age cohort people older than 65 will double to 1 billion over the next 20 years (United Nations Population Division 2010). It is estimated that one in four of Western Europeans will be a senior, as will one in five of North Americans by 2030. The share of elderly people will also rise recklessly in China and India, as it will almost double by 2030 in both of the countries.
Outdated human resource policies threaten the companies intellectual capital as the amount of employees retires on a fastening pace. It is also known fact that the social costs of retirement are going to skyrocket and there are only structural measures which can compensate or at least mitigate the costs. Working later into old age, accelerating productivity growth and initiating mentorship programs can compensate the effects of aging. The negative effects are real, but so are the opportunities as well. The wealth and income is going to accumulate to the older population, and the willingness of consume is greater than in the generations before them. For majority of industries the shift to older customer can be seen as a huge possibility, if the needs and desires of older consumers will be identified.
On this report I will try to identify the main risks the business will face due to the rising lon-gevity, both on business wise and on human resources. I will concentrate on consumer goods industry and specify certain actions that Fiskars Home as a company should execute to be able to mitigate the consequences caused by different factors of the aging population. 2
The aging population and its effect on business
For the companies the key for succeeding in the future is to identify the new target group and to figure out new and innovative products and services for the new older consumer cohort. The new target group must be identified in time; otherwise the competitors will win the battle. Companies must also find new ways how to keep the employees working longer, as it is one main mean of keeping rising healthcare and pension costs in control. Human resources strategy has to take in to account also the transfer of knowledge from retiring to the younger staff. According to the study by The Economist (The Economist Intelligence Unit Limited 2011), alarming amount of companies found their HR strategies not ready for the huge change in demographics. The shift in age pyramid means also that there will be a lot less young people coming to the labor markets and the competition of the best young employees will get tougher.
Rising longevity and its implications on consumer goods industry
As it appears on The Economist report “A silver opportunity” (The Economist Intelligence Unit Limited 2012) only 14 per cent of the respondent of the survey thought that consumer goods industry is expected to benefit the most of the increased longevity. The consumer goods business has however huge potential in the utilization of the shift in the demographics. According to McKinsey & Company report (Georges Desvaux 2012) the business should take into consideration at least three main points when conquering the striking change in demographics caused by greater longevity; marketing, processes and human resources.
Research and development as well as marketing divisions has to take into account the needs and desires of the older...
Bibliography: Georges Desvaux 2010. The economics of aging: How business can position itself to benefit from an older world. http://csi.mckinsey.com/Knowledge_by_region/Global/The_economics_of_aging.
The Economist Intelligence Unit Limited 2011. A silver opportunity? Rising longevity and its implications for business. http://longevity.axa.com/pdf/AVIVA_Axa_Longevity_GB_Web.pdf. 17.5.2012
Ilmarinen, Lähteenmäki, Huuhtanen 2003. Kyvyistä kiinni, Ikäjohtaminen yritysstrategiana. Talentum.
United Nations Population Division 2010.World Population Prospects 2010 revision. http://esa.un.org/wpp/P-WPP/htm/PWPP_Population-Age_65Plus.htm. 19.5.2012
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