Studies show that young people do not save, and this behavior follows them into adulthood under the assumption that the government will take care of their needs in old age. People find it difficult to put some money aside because there always seems to be an urgent need for that money. In addition, people are unaware of the importance of saving early in life, and tend to wait till they are old. This problem is further emphasized by the lack of disposable income, due to various family requirements that build up debt. It is difficult to get people interested in saving especially if they have different priorities like clearing debts or meeting urgent needs. Some people think of saving as an over conscious activity, boring, and even impossible for some who have never thought about it. The challenge has been getting young people to start saving.
As a result, various efforts have come up to make saving relevant, feasible, important and interesting, as well as, changing the perception of the youth about trusting the financial institutions and cutting their short-term costs for the long-term goal. Aviva Insurance Company is one of the organizations that have come up with strategies targeting increased savings among the youth. Through the “Saving for the future, a society wide-challenge” advertising campaign, Aviva attempts to rebrand savings by depicting it as a beneficial necessity. This campaign seeks to enact social change in the attitude of young professional towards saving using new technology and platforms to get the message across to the target group, starting with the youth in the United Kingdom.
The Target Marketing Process
A survey conducted between 2004 and 2008 to determine consumer attitudes to saving (CAS) in various countries across Europe, Asia Pacific and North America managed to get the saving trends on the youth aged 18-25 years, who comprised 15% of a sample of 100,000 individuals. The sample population also comprised the age brackets 25-34 and 35-44 who each made 21% of the population, 45-54, who comprised 18%, and above the age of 55, who made 25% of the sample population. 54% of the sample stated that saving was necessary for retirement, through only 43% saved on a regular basis.
Conversely, 61% of the sample was weary that they would not save enough by the age of retirement to afford a high standard of living following retirement. Fifty percent of the sample showed that they would have preferred to start saving earlier, however, only about 33% of the sample stated the same in Western Europe. This study by Aviva identified a disparity between the levels of savings that people were comfortable with depending on the environment. One of the methods identified to increase savings was to educate the people on transforming from short-term saving to long-term saving, through the accumulation of assets and disposal of a broader range of assets (Aviva 2008).
The study reveals an increasing need for retired individuals to seek either full-time or part-time employment to continue receiving payment. This is mainly due to the fear that they will not have enough resources to maintain a comfortable life after retirement. The main challenge faced by financial services companies is increasing the level of savings due to the challenging economic climate. The study by Aviva noted that the economic climate reduces savings due to reduced household income owing to lack of affordability of financial saving schemes, and existing debts and loans. Another significant cause of reduced saving is the risk of losing savings or investments in uncertain global financial markets. Some of the methods identified to overcome this challenge involved the introduction of favorable policies to address each of the barriers in order to increase savings (Aviva 2012). This intervention requires collaboration among various entities including policy makers, financial regulators, and private individuals among others, in order to identify the most appropriate solutions.
Studies show an increasing proportion of old people as a percentage of the population (Aviva 2012). This implies that the government may find it increasingly difficult to meet the retirement needs of the retired workforce. This is partly due to the inability of the economically active age group to meet the requirements. The conventional company pension schemes have also come under pressure, leading the need for individuals to seek alternative sources of income after retirement (Stark 2005). These patterns and uncertainties have led to a lot of anxiety to working individuals, requiring them to save more. However, people are still reluctant about increasing their savings.
Financial services firms like Aviva, as well as, public policy makers have identified the reasons for this tendency including the lack of attractive ad innovative savings formats, and the absence of relevant information. Identification of these needs has led to the emergence of strategies that encourage a change of behavior through enhancing product demand. Additionally, firms are providing consumers with information and tools to help them make rational choices in order to meet their requirements in the long-term. One such strategy is the Aviva “Saving the future: a society-wide challenge” campaign that targets the youth in changing the savings culture (Harrison 2011).
With over 1.5 billion youths in the world aged between 14 and 25 years, there is a need to enhance their economic potential at an early age. One of the most powerful means of reaching this age bracket involves encouraging them to open savings accounts in order to cushion them against economic shocks, build assets and accumulate wealth. This trend can also lead to enhanced social and economic growth. However, changing the mindset of the youth from a passive role that waits for things to fall in place, to an active role in enhancing their long-term financial situation requires a financial service component that is clear, effective and cost-effective (Sebstad and Stack 2005). Tackling this issue requires one to examine various factors including: the demand for savings services among the youth; the products that might meet the demand; the need for financial education to encourage them to take-up the savings package; the key barriers for access and use of savings services; and the nature of costs barriers to providing savings services and how to overcome them (Harrison 2011).
Studies show that young people around the world can and do save. The practice is evident in both developed and developing countries, though it is driven by incentives, promotion and social support. Research shows that the youth seek convenient access to their savings, relative security, liquidity in the event of emergencies, and illiquidity to secure opportunities to grow their savings. The youth in the UK, aged 18 – 25 are either in higher education institutions or the onset of formal employment. Others may also be in informal employment, either on a full-time basis, or part-time in order to cater for their learning requirements. As a result, the saving opportunities available to them need to fit in with their schedules. This implies that some of the key determinants of saving include flexibility of making deposits, convenience of accessing their money, and financial accessibility in terms of easy liquidation of the money in the event of an emergency (Skandia, 2012).
Professionals in the UK urge the youth to make saving for retirement a priority by their mid-twenties since there is a high likelihood that the state will not cater for their retirement needs. Research shows that about 33% of youth in their mid-twenties are willing to seek better employment opportunities in other countries. This was identified as one of the primary ways for the youths to secure their financial and professional success. The youth are also encouraged to enhance their savings by living within their means and discouraging them from getting into debt (Skandia 2012).
Out of the surveys conducted to identify the willingness of the youth to adopt these practices, it was discovered that just over 70% were willing to heed to this advice. The youth were also advised to change their career for better packages, and to start planning for their future early in life. About 60% of the youth agree that they should focus more on saving than spending, while only 29% are keen about making saving for retirement a priority. The studies also revealed that the UK youth need to save more than currently retired individuals in order to live a comfortable life in old age (Meyer, Jamie, and Ray 2008).
Considering the savings requirements for the young people, it is evident that what lacks are proper incentives to motivate them into retaining more of their money. However, there is a demand for savings that can be capitalized on by promotion that is tailored to the market (Harnest & Neilson, 2009). For instance, the design of promotions that draw a connection between the spending of youth on small luxuries and the potential to accumulate small amounts to acquire more expensive and more important items than what they currently purchase. Another vital element is the design of customized products that suit the market segment in terms of minimum amounts and frequency of deposits, and the period of withdrawal. It is easy to reach the youth with educational material in the form of posters or bill-boards that are bright and energetic (Making Cents International 2008).
Studies show that the youth are easily influenced by the tastes and preferences of their peers. As such, camps, seminars, conferences, and workshops that target a sample population for training and educating on the importance of saving at a young age can be an effective strategy in reaching a wider market. The advertisement methods and promotional efforts employed by Aviva involve the distribution of posters through social media. These posters contain information that urges the youth to forego spending on small items, but to instead, save and invest in more important items. The peer effect is obtained through social media like Facebook and Twitter, whereby the youth are encouraged to join various fan pages or groups in order to portray cohesion for the initiative. Mobile applications can also be used to make the saving process easy (McCormick, 2008). Some of the services available through mobile phones include mobile banking, and gaming aimed at cultivating a culture of saving. Images of some these campaigns are shown below.
Aviva 2008, Understanding consumer attitudes to saving 2004 – 2008. Web.
Aviva 2012, The Aviva Family Finances Report. Web.
Harnest, J., & Neilson, E 2009, ‘Microfinance Institutions and The Next Generation‘, Youth-Inclusive Financial Services Case Study Series, pp. 1-10. Web.
Harrison, C 2011, ‘Aviva’s campaign to boost youth savings culture’, CorpComms. Web.
Making Cents International 2008, ‘Youth Microenterprise and Livelihoods: State of the Field’, in the 2007 Youth Microenterprise Conference. Making Cents International, USA. Web.
McCormick, M 2008, The Effectiveness of Youth Financial Education A Review of the Literature, New America Foundation, Washington, DC.
Meyer, J, Jamie, Z, & Ray, B 2008, Child Savings Accounts: Global Trends in Design and Practice, Washington, DC: New America Foundation.
Sebstad, J, Cohen, M & Stack, K 2005, Assessing the Outcomes of Financial Education, Working Paper #3. Web.
Skandia, 2012, UK’s Youth Encouraged To Bolt Britain. Web.
Stark, E, 2005, Microenterprise and Economic Growth: Youth and Microenterprise,. PowerPoint presentation, USAID, Washington, DC.