Marketing innovations to old-age consumers: A dynamic Bass model for different life stages

Abstract

To identify context-dependent opportunities to market innovations to the elderly, this study empirically analyzes the most prevalent pathways through advanced age, demonstrating which circumstances in the old-age life course provide the strongest potential for specific targeting strategies. First, using a latent Markov model and longitudinal survey data spanning 15 years, we produce a dynamic life course model with transitions over time. Second, we link a modified Bass diffusion model — using both static and dynamic parameters — to our model, augmenting it with a second cross-sectional consumer behavior data set. The results show comparatively strong consumption spending, high media interaction, but diminishing social inclusion in old age, though all factors exhibit heterogeneity among old-age clusters. Employing dynamic diffusion models, we find that a static view of the elderly market that ignores life course transitions generally overestimates their spending power. Forecasts of cluster-specific adoption dynamics draw a differentiated picture of individual clusters' attractiveness. Our analysis underscores the influence of life events on individual behavior and shows that a dynamic view of elderly markets yields a more nuanced and accurate assessment of their potential and attractiveness. It also confirms that social status and income strongly affect consumer behavior and spending, though we identify several exceptions.