Boomer Wellness and Business Strategy: Executive Summary
MIT AgeLab Business Innovation Observatory’s Industry Roundtable

Cambridge, MA – December 9, 2003

Wellness is a $200 to $400 billion industry that is estimated to reach $1 trillion by 2010 as the baby boomer generation ages and retires. On December 9, 2003, a group of global industry and academic representatives convened at MIT AgeLab's Business Innovation Observatory to discuss Boomer Wellness and Business Strategy. The roundtable included presentations from mutually non-competing companies and in-depth discussions of the issues and business models relevant to the wellness industry.

The Four Facets of Wellness: Physical, Cognitive, Spiritual, Financial

In the past, wellness and aging were seen as health issues. But as medical advancements let people live full lives despite chronic medical conditions like high blood pressure or diabetes, the definition of wellness shifts. The definition broadens from medical health to a more multifaceted definition that expands the opportunity space for businesses. Roundtable participants converged on four interconnected types of wellness. Physical wellness retains the traditional medical definition but adds lifestyle facets such as fitness and nutrition. Cognitive wellness refers to brain health, (an important issue for dementia-fearing boomers) as well as curiosity, lifelong learning and emotional balance. Spiritual wellness means being socially engaged in the world and having a purpose in life, whether it is derived from family, religion, career, or charitable causes. Financial wellness means having the resources to control one's life and ensure the other forms of wellness. Businesses can target one or more of these types of wellness as they pursue opportunities in the wellness industry.

Translating Boomer Characteristics into Business Opportunities

As a group, boomers exhibit certain characteristics. Shaping products and services to suit these characteristics will help companies succeed in the boomer wellness industry.

Control
Boomers have more education and disposable income than previous generations had. This education and income translates to greater personal efficacy. Boomers are self-reliant, self-confident and believe in personal responsibility. Companies can capitalize on boomers' self-reliance by providing them with tools and information to take charge of their lives. For example, Be Well serves self-reliant boomers seeking early detection of health issues that cost-focused managed care does not address. Be Well is a 3-D body scan provider that helps boomers discover if they have any heart, cancer, or other potential medical conditions.

Boomers' self-reliance also suggests that they will be more assertive and proactive than previous generations. The Hartford, a diversified provider of financial services, has noted this shift at its call centers that support insurance products for AARP members, who are 50 and older. But the company also found that boomer self-confidence in managing finances is not necessarily rooted in accurate self-assessments of financial knowledge. Indeed, boomer's financial wellness may be poorer than statistics would suggest. Although boomers have the lion's share of financial resources (boomers control 40% of disposable income and 77% of private assets despite being only 20% of the U.S. population), their high levels of debt and their profligate spending patterns threaten their financial future. Business opportunities exist to help boomers manage their financial wellness. The key strategy, however, is to recognize that boomers like to feel smart and like to have choices. Therefore, the companies most likely to succeed are those that offer boomers information, education and choices.

Convenience
Boomers also like convenience. They are time-pressed and want services wrapped around products -- one system that "does it all." In this arena, Philips, a diversified electronics maker, is planning a comprehensive portfolio of home health monitoring products and information services. Instead of going to doctors' offices for routine health checkups, boomers will be able to do it from their own homes. The telemonitoring service will offer ways to manage chronic conditions from diabetes and asthma to weight management. With low-cost technology and broadband communications, home health monitoring retains the human touch. Philips' communication platform will connect boomers to any medical team, hospital or pharmacy they specify. Thus, the communication platform links boomers to a community that will help reinforce healthy choices and lifestyles.

Contribution
As boomers age, another characteristic that emerges is their concern with leaving a personal legacy, a contribution to society and the future. For businesses, this suggests that cause-based marketing will rise in importance. Reebok, the fitness and shoe manufacturer, formed a cause-oriented marketing partnership with the American Heart Association to raise awareness of both heart disease in women and Reebok's boomer-foot-friendly walking shoes.

Customization
Boomers also seek personalization and customization. They don't like mass-market anything --they prefer nontraditional alternatives. For example, although boomers partake of traditional medicine, they also spend in parallel on alternative health remedies. Canyon Ranch, a resort spa and lifestyle community builder, caters to boomers' desire for customization. Canyon Ranch offers boomers a relaxing vacation with a whole menu of wellness services from which to choose (e.g., from cardiac stress tests to emotional intelligence assessments to aquatic and movement therapy to Chinese herbal medicine).

Fun
Finally, boomers like fun. They'll give preference to products and services that bring an element of fun to wellness. Masterfoods, for example, developed a line of functional foods based on chocolate. The CocoaVia products have a high concentration of the natural flavonols associated with a range of health benefits. Similarly, automaker BMW can leverage its brand image of "joy" with vehicles that give drivers a feeling of youthful vigor. And BMW could combine joy with convenience by offering wellness services through the car.

Crafting a Business Strategy: Define, Design and Deliver

Crafting a business strategy for the boomer wellness industry involves a three-stage approach. The first stage is to define the area of wellness (physical, cognitive, spiritual, financial) which the company will serve. Part of that definition stage involves deciding which wellness impact point to target. Companies can choose from three alternative impact points: 1) prevention of problems that could impact wellness (e.g., functional foods like CocoaVia or Be Well's body scanning), 2) management of conditions to provide wellness despite a problem (e.g., Philips' home health monitoring systems or The Hartford's financial management services), or 3) rejuvenation to correct problems that impact wellness (e.g., Canyon Ranch's spa vacations or night-vision driver-assistance systems in cars).

The second stage of crafting a business strategy involves designing a solution that resonates with boomers' characteristic desires for control, convenience, contribution, customization or fun. The final stage consists of delivery -- delivering the product or service to the boomer.

Partnership and Collaboration
Successfully addressing the boomer wellness market may require more market understanding, design skills, and delivery resources than any single company has in-house. Therefore, companies might partner to provide combinations of products, services, and market reach that no single company can accomplish alone. For example, Mitsui, a Japanese trading company, recently formed a joint venture with Aramark to provide contract food services to hospitals, offices and other customers. Similarly, in the healthcare field, Mitusi partnered with SRL and identified new market niches such as outsourced services for healthcare clinic malls. Likewise, to reach beyond its traditional teenager market, Reebok partnered with Westin Hotels, creating Reebok-branded fitness centers in Westin hotels that cater to the affluent boomer.

Outsourcing, alliances and joint ventures will help companies collaborate to address the complex demands of boomers. The goal of the MIT AgeLab's Business Innovations Observatory is to create a mutual self-help network of researchers and corporations to discuss and capitalize on these crucial business issues.

This document was prepared for Dr. Joseph Coughlin, Director of the AgeLab by Andrea Meyer & Dana Meyer of Working Knowledge, 515 Forest Ave. Boulder, Colorado 80304, meyerwk@workingknowledge.com on 12/17/03