AARP Wants You (to Buy Its Line of Products)
By CLAUDIA H. DEUTSCH
nytimes.com
October 28, 2005
New York Times
For a 47-year-old advocacy group, AARP is acting a lot like a for-profit corporation these days.
Sure, it has long sold discounted products to its members, and encouraged companies to advertise their elder-friendly wares in AARP magazines. And such sales have long paid for its lobbying efforts on behalf of the needs and wants of older Americans.
But now, more companies are waking up to the fact that the 76 million baby boomers - those born in the United States from 1946 to 1964 - are moving into old age in huge waves. Indeed, some 10,000 boomers turn 50 every day, and they are entering their later years with bulging wallets and a sense of adventure.
For AARP, that means a huge number of rivals for the spending power of its 35 million members. "We've been the voice in the wilderness, crying 'the boomers are coming,' " said William D. Novelli, chief executive of AARP. "In the process, we've created plenty of competition for ourselves."
So, AARP is stepping up its own competitive heat. Look at the products it has in the wings for next year. There is an investment fund aimed at people over 50, the first such product it has developed on its own. There is a consulting service to help companies develop their own products for the 50-plus crowd. There is a "seal of approval" program in which, for a fee, AARP will endorse products it likes.
AARP is also talking to several drugstores about possibly selling AARP-branded items that are now available only by mail. And it is prodding companies to develop new products for older people, not just passively vetting the products that industry comes up with. For example, it is looking for a telecommunications partner to help it devise an elder-friendly cellphone service, and for vendors who will make easy-to-open luggage, better home lighting and other products that AARP can sell.
"We're finally being proactive, instead of waiting for companies to come to us with ideas, " said Dawn Sweeney, president of AARP Services, the for-profit subsidiary that handles product sales.
Indeed, AARP Services just last week formed its own subsidiary, AARP Financial Inc., to create a range of financial products and services for members. And AARP Services has budgeted well over $10 million - "up from pretty much zero in 2002," Ms. Sweeney said - to promote its wares. "As we keep developing more relevant products, we'll keep investing to get the word out," she said.
Corporate America certainly sees boomers as a tasty new market. Pfizer created Viagra for them. Fidelity Investing has new funds for them. Procter & Gamble's Olay group is pushing antiwrinkle treatments at them, and Procter's drug division now has more than 30 products aimed at the 50-plus crowd.
"The sheer size of the baby boom population gives them an obvious importance to us," said David S. McCracken, a Procter spokesman.
Retailers, too, are jumping in. Home Depot just began offering free home improvement clinics for people over 50, and is working with its own vendors to develop products for older customers. And many Home Depot stores will soon have informational kiosks that sport AARP's logo, and that offer information for baby boomers on how best to use space vacated by grown children, or retrofit their aging parents' homes to make them safer.
"This 50-plus age group is going to provide more than 50 percent of the growth in the home improvement market," said Roger Adams, senior vice president for marketing at Home Depot, which last year began paying AARP for both marketing advice and access to its mailing list.
He may well be right. According to John D. Kasarda, professor of entrepreneurship at the Kenan-Flagler Business School of the University of North Carolina, the boomers represent about $1.7 trillion in buying power. "Of course companies will chase this market," he said.
They will find AARP in hot pursuit. "We have to reposition this brand, make it relevant to people younger than 65," said Christine Donohoo, chief communications officer.
Every AARP unit is chasing that goal. AARP's monthly magazine now comes in several versions: one, with articles about fitness or pre-retirement investing, goes to members in their 50's, while another, with articles about managing money and staying fit past retirement, goes to older members. AARP's annual "lifestyle" conferences (the conference this year, originally scheduled for New Orleans, was canceled) now include concerts by artists like Smokey Robinson and Queen Latifah, corporate booths giving away goody bags, even mixers for singles in attendance.
Once a disproportionately white organization, AARP is actively courting blacks and Hispanics, and Mr. Novelli said it would soon pursue East Indian immigrants.
AARP's membership promotions, once somber spots emphasizing AARP's importance as the voice of elders in Washington, are now aimed at funny bones, not fears. In one, a black man says that 50 sounds old, when suddenly his big, sassy "Fairy Godmother" appears and, with lots of attitude, tells him 50 is beautiful. "We've learned to present ourselves with a smile," said John Killpack, director of brand management.
But the most visible change remains in the sheer number of new products AARP is spewing forth for its younger members. It offers motorcycle insurance as well as car insurance, safaris as well as cruises. It will soon offer music CD's, kayaking trips and concerts.
"We're looking at music, entertainment, sports, all kinds of things that might not appeal to a 75-year-old but may be exactly what a 58-year-old would want," Ms. Sweeney said.
In one sense, AARP's newfound competitive push is paradoxical. Its members have come to expect deep discounts on anything they buy, so it must offer rock-bottom prices. Yet it does not manufacture anything itself, so it must persuade companies - often, the same companies that have become its rivals - to create high-quality, low-cost wares.
The sheer potential buying power of its 35 million members often is the AARP's most persuasive tool. It is what persuaded the United Health Group to develop AARP's affordable health insurance policy for ages 50 to 64. It will probably be a low-margin product. But United Health already sells insurance policies through AARP, and manages the organization's pharmaceutical sales program. In fact, Ovations, the United Health unit that deals specifically with the over-50 crowd, will derive more than half its $9 billion in revenue from AARP-related programs this year.
"AARP is our largest customer, so when they say they want a better product, we try hard to develop one," said Lois E. Quam, chief executive of Ovations.
AARP, meanwhile, is still fine-tuning its own approach to its membership. Last year, in recognition that the boomers are a more energetic lot than their ancestors were at that age, AARP lightened up in its approach to aging. "We're going to downplay grief and loss, widowhood, death and dying, and emphasize ways to help people stay productive and age comfortably, in the place of their choice," said Nancy A. LeaMond, group executive officer for social impact.
It is enlisting corporate help in pushing that agenda. For example, Procter is offering discount coupons to AARP members for several products; anyone who redeems $15 worth of the coupons at Walgreens gets a pedometer and a book on walking.
Jerry Florence, AARP's group executive officer for membership, promises many more products and partnerships in the months to come. But in perhaps the most telling sign that AARP has gone corporate, he would not elaborate.
"I can't give away too much," he said. "Why tip off the competition?" |
