Grandparents: The Forgotten Market Segment

It’s a known fact that Grandparents buy gifts—and for a variety of occasions. However, too many marketers are missing their fair share of this large and growing market due to some popular misconceptions.

Primary among these misconceptions is that grandparents buy whatever the child demands or the parent requests. Unfortunately, few marketers have committed time or budget to ask grandparents about who makes the buying decisions, and how or when these decisions are made—for what kinds of products and for what occasions.

To pinpoint the importance of this, let’s take a brief look at some relevant demography:
• Between 1980 and 2000, the median income of households headed by people aged 65+ increased 22% in real terms, compared with a 6% gain for households in general.
• Nearly half of all grandparents are age 60±, one-third are younger than 55, and about 20% are age 70+. Interestingly, approximately half of those over age 65 are great–grandparents.
• Four out of ten grandparents have had at least some college.
• The median income of households headed by persons over the age of 65 is $18,100. But, 12% of t them earn better than $50,000—and grandparent headed households earn an average of $30,000.
• The average grandparent has four grandchildren. And, better than 10% of grandchildren have more than four grandparents or step–grandparents
• Importantly, Grandmothers outnumber grandfathers in the population by a factor of almost three to one.

Finally, grandparents today tend to live longer on the average than in the past.
• In 1970, 13% of households were headed by people 65 or older. This figure was 16% in 1980, 20% in 1990, 22% in 1995 and 25% in 2000. And, as the Boomer age, these averages will increase dramatically.

So, even a surface analysis of this simple demography suggests that today’s grandparents are relatively well educated, have a fair amount of discretionary income—and chances are they will remain a vital force in the lives of their grandchildren for an increasingly longer period of time. They will also remain a market of high potential for a significant portion of that period.

We also know something about what they buy, when they buy it and approximately how much they spend.
• While nearly 25% of all spending on toys in the U.S. was by grandparents, computers and sporting goods are today’s favorite grandparent gifts. Other favorites include investments (such as stocks, mutual funds and zero coupon bonds), travel, summer camp—and clothing.
• Holidays, graduations and birthdays are the primary gift giving time, but many grandparents buy gifts on the spur of the moment—e.g., when something strikes them as uniquely appropriate for their grandchild, or when they might be going for a visit.
• Interestingly, grandparents do tend to spend more on gifts for major holidays and graduations than they do for birthdays.

Unfortunately (for themselves) many marketers choose to ignore or downplay this potentially lucrative niche. As a result, for the most part grandparents buy gifts for their grandchildren without being specifically targeted by interested marketers of today’s relevant products and services.

It makes little sense.