13 July 2015
Targetting China's Seniors: Consumer Preferences
China's Increasingly Aged Population
China is becoming an increasingly aged society. As of 2014, nearly 140 million people in China were aged 65 or older. As a percentage of the nation's total population, this demographic increased from 7.7% in 2005 to 10.1% last year. The United Nations predicts that China's over-65 population will, on average, increase by about seven million annually over the next two decades, accounting for nearly 20% of China's total population by 2035. As the elderly population expands in number, their particular consumer requirements will also grow. The value of this "silver" market is expected to increase from Rmb4 trillion in 2014 to about Rmb106 trillion in 2050.
In April 2015, in order to better understand the consumer attitudes and preferences of elderly middle-class consumers with regard to senior-specific products and services, HKTDC commissioned focus group discussions in four major cities on the Chinese mainland. The survey found that these older middle-class consumers are not spending averse and don’t only opt for cheap items. It also noted that elderly people often select and pay for their own products and services. It was also seen that free trials and attentive service are important means of winning older consumers' trust in new products.
China’s Elderly: 10 Consumer Characteristics
Older consumers are choosing and paying for their own purchases
Many people may think that the elderly are rather passive when it comes to spending, often letting their children or other young people buy or pay for their daily necessities (such as clothing and shoes) or healthcare products. In this survey, although many said they often bought items for their parents or paid for these purchases, many respondents in the senior group said that they chose what they like and paid for most of their own purchases. The reasons may be summed up as follows: (1) Older consumers have the ability to pay; and (2) most of the products bought are either recommended by close relatives and friends or have been tried out by the respondents themselves. It is understood that some elderly people on the mainland, especially those who used to work in government offices or public institutions, receive a handsome pension each month and have considerable spending power.
Doctors' views and word-of-mouth: Key purchaser determinants
There are actually plenty of products, especially healthcare items, targetted directly at elderly consumers on the mainland. Advertisements for senior-specific products, such as healthcare goods and medical devices, abound in the media, including on TV and in newspapers. Despite this, the older consumers surveyed indicated that doctors' recommendations and word-of-mouth are the crucial factors influencing their purchases, largely because they are concerned and cautious about the outcome (curative effect). They feel most confident when buying things recommended by relatives and friends after use or if doctors have told them that something is good for them.
High and low brand loyalty
Older people tend to be loyal to a particular brand once they have established their trust in it. "Results-oriented" is an important factor in the purchase of healthcare products and medical and rehabilitation devices. However, it is also precisely because of this "results-oriented" obsession that the older consumers are liable to switch their loyalty on the recommendation of doctors or other people they trust. During the focus groups, it was not uncommon for senior respondents to give different evaluations for the same type of healthcare or rehabilitation product. As the products are not standardised, a minor additional feature or modification may produce very different results. The desire of older people to constantly look for new product features that better meet their needs leaves considerable scope for new market entrants.
Free trials and attentive service
When trying new products, older people are most concerned about whether or not they will produce "actual results". They remain skeptical no matter how well product specifications are written. This is because elderly people have seen many unsubstantiated claims in the past and tend to be more cautious.
During the workshops, many respondents said they purchased large physiotherapy units after repeated free trials. Although many elderly people are interested in buying rehabilitation devices, they are inclined to try things out many times prior to purchase, although they can usually be persuaded to ultimately commit. In the course of trialing such products, a caring approach and attentive service on the part of sales attendants are of crucial importance in wooing older consumers into making purchases.
Not spending averse
Many think that elderly people are quite unwilling to spend. This is indeed the case for those who had gone through difficult times earlier in their lives. During the course of the focus groups, however, it became apparent that older consumers were more than willing to invest in products that can improve their health, such as frequency spectrum saunas and trainers, even if they had a price tag of more than Rmb800. Although senior citizens of this generation do not generally pursue famous brands, this does not mean they are reluctant to buy quality products that, although relatively expensive, are of benefit to them.
Daily necessities with medium and medium-high prices have greater market potential
During the workshops, the older respondents also expressed the hope of seeing improvements to certain types of products, reflecting their desire to have more stylish products with a higher technology content. They also appeared willing to pay a higher price for such items. With regard to clothing, for instance, the elderly hoped to find items made of better cotton or other new materials that are lighter and more comfortable to wear, while being cool in summer and warm in winter. They also hoped to have a greater choice of stylish clothing. Both the elderly and their children expressed the hope of seeing more human and intelligent healthcare and rehabilitation devices on the market.
No blind faith in healthcare products
Elderly people understand that getting old is inevitable, but have a particular desire for healthcare products could slow down or even reverse the onset of senility. Although they try to improve their health by taking healthcare products, they do not have blind faith in such treatments.
Most elderly people have a limited demand for nutritional and non-staple food. The favoured varieties are milk powder, oatmeal and healthcare products. When it comes to healthcare products, these are typically divided into traditional herbal diet therapies and western health supplements. The former includes American ginseng, dendrobium and sea cucumber, while the latter comprises deep-sea fish oil, protein powder, lecithin and vitamins. There are numerous brands of healthcare products to choose from in the mainland market.
Intelligent products and equipment that can monitor a patient’s condition and make analyses and suggest treatment options, dementia support systems, intelligent reminders (such as for taking medicine and turning off gas supplies), automatic flush toilets, and robotic assistance aid are all set to become increasingly popular among the older population. These types of intelligent products are also the areas that the children of the elderly people who participated in the workshops are most willing to invest in. However, elderly people find devices with too many buttons a nuisance, even though they are attracted by their multiple functions.
Infrequent online shoppers
Older people prefer to buy what they need in physical shops, partly because they have plenty of time to browse. This also saves them the trouble of having to return purchases they find unsuitable. Older consumers in Shanghai, however, seem to be different to their peers in other cities. Oriental TV Shopping, the city’s local shopping channel, for instance, is extremely popular with older consumers. Tellingly, a number of respondents agreed that it is cheaper to buy things on the official website of Oriental TV Shopping. This partly explains why elderly people in Shanghai are inclined to shop online, unlike their counterparts in other cities. Their penchant for online shopping has gradually spread to other platforms, such as Taobao.com and JD.com, although these ‘silver surfers’ tend only to buy from online shops recommended by relatives and friends.
The market positioning of nursing homes and elderly care services
Senior care is rather unsophisticated on the mainland at present and there is considerable variation in service standards, resulting in a rather negative overall public perception of the sector. Market demand, though, remains considerable, largely because many people are worried about leaving their elderly parents at home unattended or prefer not to entrust them to ‘senior nannies’. Based on the findings of the focus groups as well as market analysis, the senior care market needs effective segmentation and more accurate market positioning when it comes to targeting segmented demand. Infirmaries for elderly people with disability or major illness, for example, should best be located in cities in the vicinity of hospitals. By contrast, nursing homes for those elderly people who are healthy and demand a good living environment may be set up in suburbs and offer shuttle bus services to take them back to their children in the city on weekends. Clear positioning will help senior care establishments foster competitive advantages and boost their professional image.
 China Report on the Development of the Silver Hair Industry 2014.
 The focus group discussions were held in Beijing, Shanghai, Guangzhou and Wuhan in early April 2015, with two workshops being held in each city (eight workshops in total). The target respondents were older adults aged 65 or above (men and women in equal proportions) and adults who were carers of people 65 years of age or older either at home or in nursing homes. The adult respondents had a monthly household income of Rmb12,000 or more in Beijing, Shanghai and Guangdong, and Rmb8,000 or more in Wuhan. The average monthly spending level of the over-65 respondents was Rmb3,300 or more, and all the respondents had bought senior-specific products or services in the last six months. The main product types covered in the survey include: daily necessities (clothing, shoes and home appliances that can help older adults perform self-care tasks at home); food (supplements and healthcare products); and healthcare and rehabilitation supplies. The services mainly covered nursing home service, domestic service, and culture and recreation services (including tourism).