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Implications of the ageing population on the pharmaceutical and the tourism industry from a marketing point of view

Examples of Germany, the UK, the US and Japan

Essay 2007 22 Seiten

BWL - Marketing, Unternehmenskommunikation, CRM, Marktforschung, Social Media

Leseprobe

Due to the world’s demographic development towards an increasing aging population, various richer economies experience major changes influencing the specific industries. This report will illustrate the implications of these changes, with particular reference to the population over the age of 65, on the pharmaceutical and the tourism industry from a marketing point of view. Examples will be drawn from the US, the UK, Germany and Japan as they are highly affected by the changing demographics.

The main purpose of the report is among others to outline significant impacts on the micro and macro environment, relating to the mentioned industries. Furthermore, the implications on the particular marketing strategies will be evaluated in order to solve potential problems with their implementation. Finally, recommendations will be given on how to overcome these problems and difficulties.

1. Introduction

According to a report of the United Nations (2006), “the world’s population has continued on its remarkable transition path from a state of high birth and death rates to one characterized by low birth and death rates.” The main reason for this development is the intense growth of elderly people, which was never experienced before in history. It is remarkably that women dominate with 55% among the ageing population aged 65 and over and even 65% among the people aged 80 and over. Furthermore, there exist geographic differences among the ageing population as “one out of five Europeans, but one out of twenty Africans, is 60 years or older.

A recent publication from the Euromonitor (Travel and Tourism – World, 2007) illustrates the demographic trends worldwide (see Appendix 1) by saying that while birth rates recovered in the US, the EU shows only a birth rate of 1.5.

According to the ‘Foresight’ (2006), life expectancy has worldwide increased during the past decade, whereas there is a huge diversity among older people as they can not be treated as a homogeneous group because of differences in gender (more women in older age groups), disposable income, culture, socio-economic group or social class.

However, the implications of an ageing society are huge on the macro as well as on the macro environment of every industry and agenda because, due to a statement of the UN (2006) “as older persons have been agents of that change, they must also be its beneficiaries.

The US faces the demographic changes towards an older customer generation. With 298.4 million people, it is the biggest market in the world. (CIA – The World Factbook, 2006) According to recent studies of ‘The mature Market’ (Turkel, 2006), seniors account for 47% of the tourism customers and are in contrast to previous generations more active, healthier, higher educated and wealthier than ever before. Not only that they “control half of the nation’s discretionary income”, they are also “America’s fastest growing age group”. Research of the ‘US Federal Reserve Board’ (cited by Turkel, 2006) reveals that the age group of 50 and over, which equals 35 % of the population, controls about US $ 800 billion, which represent 77% of the countries financial holdings. Forecasts outline, that the number of people over 65, which represented in July 2006 12,5% of the population, are expected to be twice as much in 2030, so that they account for one fifth of the population, representing 72 million people. (CIA – The World Factbook, 2006)

The UK faces similar developments as in 2001 it was measured the first time, that “there were more people aged over 60 than under 16.” ‘According to a report in 2003 by the ‘Committee on Economic Affairs’ it is estimated that in 2051every fourth person will be of the age of 65 or over. Currently the UK has a population of 60.5 million (The Economist, 2006) of which 16% are aged 65 and over. (National Statistics, 2006, see Figure 1) The number of elderly people aged 65 and over increased from 13% to 16% within the last 30 years, whereas the number of people below 16 decreased in this period from 25% to 19%.

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Germany is a country with one of Europe’s most ageing population due to an increase by 10% (over past 25 years) in life expectancy leading back to positive and effective medical treatments in the past. Additionally, working life shifted towards less physical and demanding jobs, so that bodies were not mistreated and in better shape. Furthermore, birth rates decreased from 800,000 in 1990 to 700,000 in 2004 due to more career orientated women. (Euromonitor - OTC Healthcare – Germany, 2006) Even though Germany’s populations is expected to decline over 10 million in the next 50 years, it is also predicted that the shift grows between younger and older people, so that “by 2050, 58 – 63 year- olds will represent the largest age group, compared with 35 – 40 year- olds in 2000.”

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Japan has a population of 127.74 million and is like most developed nations, an ageing nation with a decline rate of 0.5 % annually, whereas other developed countries, except for the US, are expected to decline by 2030. (Shimasawa, 2004) The proportion of elderly people aged 65 and over was 20% in 2006, with 10.7 million male and 14.7 million female inhabitants. (Index Mundi, 2006)

The tourism industry is in its nature very dynamic and constantly changing all over the world. Changes often lead back to external attributes within economies like for instance the fear of terrorism, an unstable political situation, environmental or health and safety issues. Nevertheless, changes are often the result of demographic shifts which can be underlined by a quotation by Rob Franklin, the Executive Director of the European Travel Commission (ETC) saying that “the ageing of the population in key source markets, which has already had – and will continue to have – a major impact on travel and tourism demand”. (K.S., Sep. 2006)

Concerning the pharmaceutical industry it can be said that there exists a growing demand due to the aging population in many developed economies. (The Economist – The World in 2007, p.113)

Both, the micro and the macro environment of these two industries are influenced by the ageing population. The macro environment is often examined with the PEST analysis, which incorporates “the political and economic, social (including legal and cultural) and technological environment.” (Hooley et al, 2004, p.94) Nevertheless, also the micron environmental forces, which consist out of competitors, customers, dealers, suppliers and distributors, are influenced by the changing demographics. (Kotler and Keller, 2006, p. 52) Due to the limitations in length of this report, only the most significant environmental issues will be discussed. The strategic background of an environmental analysis will be explained in appendix 2.

2. The Pharmaceutical Industry

The pharmaceutical industry is highly dynamic and profitable but also “consists of thousands of companies” and the leading ‘Big Pharma’, “a dozen or so multinational firms”, which “account for roughly half of the world’s $55o billion retail drug market.” (El Feki, 2005, p. 3) According to ‘The Economist’ (The World in 2007, p. 113) the sales of pharmaceuticals will increase by 10.4 % in 2007 which represents double the world GDP growth rate. The phenomenon is due to the ageing populations in richer countries, which “are getting older, and many people suffer form chronic conditions.” (El Feki, 2005, p.3) However, it can be assumed that the ongoing developments will encourage governments to put pressure on the pharmaceutical companies to reduce drug prices.

When taking the US as an example, it can be analysed that almost 10 million people suffer from osteoporosis and another 32.9 million from low bone mass which could be a beginning stage of osteoporosis. These facts offer massive opportunities to the pharmaceutical industry as the treatment is extremely costly. In fact, global treatment requirements are expected to double from US $ 5.5 billion in 2001 to over US $ 10 billion in 2008 due to the aging population and the rising awareness of the illness. (Wood, 2006) Considering the micro environment, it is obvious that the demand is increasing constantly through the ageing population. On the other hand, competition is most likely to increase as well, especially in the prescription drug business, as many big drug companies such as Boots International and Bristol-Myers Squibb decided to exit the OTC healthcare market in order to concentrate more on the more profitable prescription drug market. (Euromonitor – OTC Healthcare – USA, 2006)

When looking at the UK, it can be assumed that several environmental issues are caused by the ageing population, such as the increased need for social care. Pressure is put on the government to provide an appropriate social system and to cover the increasing costs for healthcare spending. The percentage of the population over 65 is growing constantly and the power they have can not be underestimated and should be taken very critical by political parties and their decision on political objectives and choices. , As a matter of fact, 75% of the voting population during the General Election in 2005 were people aged 65 and over, which illustrates the political power this generation has as they assumingly prefer to vote for the party which offers the most pension health care and pharmaceutical support. (Age Concern, 2006)

Additionally, the ageing population in the UK contributes to economic growth through the pharmaceutical industry. There can be no doubt that the people of the UK will still need drugs, whether

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Details

Seiten
22
Jahr
2007
ISBN (eBook)
9783640569427
ISBN (Buch)
9783640570218
Dateigröße
497 KB
Sprache
Englisch
Katalognummer
v145656
Institution / Hochschule
University of Sunderland
Note
84% - A
Schlagworte
aging population Influences on pharmaceutical industry Influences on tourism industry US UK Germany Japan Impacts Micro Macro Environment implications on marketing strategy demographic change Euromonitor

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Titel: Implications of the ageing population on the pharmaceutical and the tourism industry from a marketing point of view