(FORTUNE Magazine) – THE ACTRESS on the video screen looks 60-ish, well nourished, and confident. She is portraying a consumer, and she talks like no traditional grandma. ''At 65, my mother had become an old woman . . . But my life has been much different, much better,'' she says, and proudly describes the free-spending, active life she and her husband pursue now that the kids are on their own. ''Our kids . . . did a lot of things I never did. I envied them,'' she declares. ''But you know what? They're the ones who envy us now.'' The videotape, by ad agency Cadwell Davis Partners, is not for public consumption. It is designed to show clients that America's over-50 population has become a far more lucrative market than most of them know. Like Europeans stumbling across the New World, mass marketers are belatedly realizing that ''mature'' households -- the vogue term for households headed by people over 50 -- control a disproportionate share of the nation's buying power and most of its wealth, and are becoming more prone than ever to spend their formidable resources. One-third of the nation, some 82 million consumers, belongs to mature households. The market they form is no homogeneous mass, but a crazy quilt of diverse, often overlapping submarkets: consumers who are rich and poor, not- so-old and older, working and retired, and, sometimes, back at work in second careers. Mass marketers like this mixed bunch because of its mouthwatering wealth and spending traits. The median wealth of U.S. households, measured in housing equity and financial assets, peaks at around $65,000 when the household head is between 55 and 65. Average per capita income peaks in the 55-to-60 age group at $11,600. After years of suffering greater poverty than the rest of the population, the elderly are now less likely to be poor. In 1984 the federal government deemed poor 14.7% of Americans under 65; among those 65 and older, the rate was 12.4%. While that figure indicates many old people are still poor, in the aggregate, households headed by people over 50 are impressively well off. In a joint study, the U.S. Census Bureau and the Conference Board, a New York business research outfit, reckoned that 12 million mature households can afford to live in above-average comfort. They outnumber America's hotly pursued yuppies 4 to 1 and control half the discretionary dollars in the U.S. And even after retirement, consumers are spending like never before. Since 1973 the over-65 population has shifted from saving more than 15% of its income to spending almost all. People over 50 control about $7 trillion of wealth -- nearly 70% of the net worth of U.S. households. Entrepreneurs have moved fast to cultivate the unyoung in industries such as travel, real estate, and health care, and some of the biggest service companies are cautiously probing the mature market. Marriott Corp., for example, is about to market space in two retirement housing complexes; Sears Roebuck runs a discount club for customers over 50. McDonald's is employing old people as hosts and hostesses, which may make its restaurants more appealing to kids and elderly customers, and is casting old people in its commercials -- on both sides of the sales counter. Among the slowest to target the elderly have been big consumer goods companies, but some are coming up with impressive leading-edge approaches. Older customers are attracting the same intense scrutiny by market researchers that the baby boom has long received. Already marketers have made intriguing discoveries about the coveted part of the mature market to which the lady in the videotape belongs, affluent households headed by consumers age 50 to 65, known to some demographers as the ''young old.'' Even though the median age at which Americans retire has dropped to 62, most young-old consumers are still working, near the height of their earning power. With the kids out of college and mortgages paid off, their spending power soars. This preretirement crowd today consists of a uniquely favored generation born in the 1920s and early 1930s. Few in number compared with adjacent generations, they arrived at adulthood just in time to join the postwar economic boom that extended through the 1960s. Of young-old men, 70% are veterans, many of whom were helped by the GI Bill; about half are white-collar workers. The young-old flocked to the suburbs and prospered by serving America as its organization men, its housewives, and the indulgent parents of its baby boom. Now these consumers are nearing retirement laden with government and private pensions and medical insurance. Their ample assets often include homes that past real estate booms have turned into castles of equity.

The young-old are enthusiastic consumers of cushy cars, clothes, and jewelry, and also of goodies more commonly thought of as yuppie fare. They have joined the fitness and nutrition trends, adding fiber, subtracting sugar, and buying more warm-up suits per capita than any other age group. FLORENCE SKELLY, formerly of the Madison Avenue research firm Yankelovitch Skelly & White, believes affluent young-old households have chucked the ethic of hard work and self-denial and adopted some of their children's yen for self-fulfillment and fun. While marketers have long believed that brand loyalty hardens with age, Skelly thinks the young-old might be willing to experiment. To reach them, marketers who aim at the young don't have to change much. The young-old are a prime market for luxuries baby-boomers would buy more of if they were not saddled with young families: exotic travel and foods, designer furniture and clothing, high-tech home entertainment products. ''These people,'' says Skelly, ''are a super market.'' What will happen when this generation reaches retirement? Some expect the baby-boom parents to produce a buying boom. James Gollub of SRI International, a California research organization, has speculated that spending by retirees could soar 80% if baby-boom parents are able to carry their consuming passion with them as they age. Much of that spending could be diverted from leisure goods and services to health care. After a recent survey of consumers age 50 to 64, the American Council of Life Insurance and the Health Insurance Association of America judged the young-old to be approaching retirement unrealistically. Most are salting away funds but underestimating their life expectancies, overestimating Medicare's benefits, and failing to explore the possible costs of long-term health care. Merrill Lynch learned the hard way that such customers aren't eager to pay for financial advice. Four years ago the brokerage house introduced Pathfinder, a financial-planning service aimed at middle-income customers whose retirement is at least a decade away. Merrill Lynch's goal was to help them define long-range financial objectives while time remains to achieve them. But Pathfinder found paths to fewer takers than Merrill Lynch expected. Among those it attracted were 64-year-olds on the brink of retirement. ''By + the time they came to us,'' says S. Randolph Gretz, Merrill Lynch's chief of emerging-investor services, ''it was too late to do anything.'' Merrill Lynch may soon take another crack at middle-income nest eggs with an as yet unnamed service tailored to the procrastinators, according to Gretz. Using a combination of real estate data and financial advice, it will enable consumers to give their retirement dreams a reality test. A 64-year-old Chicago homeowner, say, will be able to find out whether he can really afford to move to Phoenix and continue living in the style he is used to. The 29 million consumers 65 and older are becoming bigger business for more than the traditional brigade of Sunbelt promoters, nursing home companies, and tour bus operators that cater to the elderly. National companies are attracted to people over 65 not only because they control such a large part of the nation's wealth, but also because retirees' spending power has taken a big jump since 1972, when Congress boosted Social Security benefits 20% and indexed them to inflation. Retirement still shrinks incomes, typically about 40%, and households with discretionary income are rarer among the retired than in the general population. But with better Social Security, the spread of private pensions, and the run-up of real estate values, the retired have achieved new affluence. Brandeis University economist James Schulz says, ''The middle class is now maintaining its spending power into retirement.'' MASS MARKETERS' favorite strategy for attracting the retired has long been to unload excess capacity through discounts available only to the elderly. Originally intended to help the elderly poor, discount programs have recently moved into the middle class. Retirees have, for example, joined the national trend toward eating meals away from home, and family-restaurant chains routinely lure retirees during otherwise slack hours with so-called early-bird specials. Nationwide hotel chains, airlines, and car rental companies all have caught on, using discounts to sell excess capacity to the elderly who can afford to travel. With Eastern Air Lines' $1,299 Get Up and Go Passport, for example, a traveler 62 or older can fly domestically, off-peak, for a year; for travelers 65 and above, $999 buys a one-year pass for accommodations at Hilton hotels. Lately Southwestern Bell has been courting older Americans by using other people's discounts. Its Silver Pages phone books have appeared in 49 cities around the country, and Southwestern plans to add about 40 editions this year. The Silver Pages carries advertising from local businesses that offer discounts or special services for old consumers, as well as national advertising and coupons geared to the old. The book loses money, but Southwestern thinks it will give the company a lucrative franchise in the mature market. Southwestern Bell is also a big user of tie-ins to nonprofit agencies, a second important technique for selling to the aged. When the Silver Pages moves into a new city, it gets help from local private and government organizations for the old in exchange for offering a free soapbox. Silver Pages executive Ronald Jennings explains, ''We give them the first 30 to 50 pages of each book for listing emergency numbers and whatever other information they think seniors might need.'' In exchange, the agencies promote the directory and save Southwestern money by collecting names and addresses of mature households for its mailing list. The nonprofit organization many marketers dream about being tied to is the American Association of Retired Persons. For annual dues of $5, members get the bimonthly Modern Maturity magazine and a chance to buy AARP-approved products and services, sometimes at discounts. The organization spent about $200 million last year on community services such as free advice on filling out tax forms and on educating the public about aging. To help raise the money, AARP has built a powerful mail-order marketing machine from its membership list. Access to the valuable list is hard to win. The organization gives it only to companies that will use it to sell products tailored to AARP members and endorsed by AARP. Because a scandal involving overpriced insurance nearly destroyed AARP's image a decade ago, the group is choosy about granting its blessing. Nor is its endorsement cheap. AARP gets a royalty, typically 4%, on revenues collected from members. Marketers still clamor for the group's favor because AARP's marketing successes have been dramatic. Prudential Insurance has built its largest group health plan by signing up AARP members, and a company AARP founded operates the largest private mail-order pharmacy in the U.S. AARP's endorsement helped make Boston-based Grand Circle Travel the No. 1 U.S. provider of tours for travelers over 50. The attitude of companies that don't win AARP's blessing is: If you can't join 'em, fight 'em. But that is not easy. When AARP started promoting ^ automobile and homeowners' insurance underwritten by Hartford Insurance Co. in 1983, Allstate Insurance, a subsidiary of Sears, counterattacked. It created Mature Outlook, a buying club for consumers over 50, which aims to match AARP's services and also offer discounts at such Sears businesses as its retail stores, its Dean Witter Reynolds brokerage subsidiary, and Allstate. Mature Outlook is struggling to win a permanent place in Sears' corporate marketing strategy. Chief William Strauss says he can't afford TV advertising to recruit new members, as AARP can, so he relies on word of mouth and fliers in Sears credit card bills. Mature Outlook's membership is about 450,000, while AARP has signed up 21 million people. SO FAR entrepreneurs have been more adept than big business at selling to the old. Example: Comfortably Yours, a New Jersey catalogue operation. Founder Elaine Adler, 58, devised a chatty new way to promote clothes and household gadgets, mostly for physically impaired elders. Such products can seem lugubrious, but not when described in Adler's upbeat tone. ''My friend Ed, who needs a cane, also has difficulty getting up out of a chair,'' begins her pitch for a cane designed to hook around a chair's leg to provide leverage. Adler keeps her revenues and earnings secret, but Comfortably Yours has swelled in three years from three employees to 80. More aggressive is International Medical Centers, a Miami health care company with estimated 1985 revenues of $375 million. It operates the largest U.S. health maintenance organization for Medicare patients. In the past two years the HMO's Medicare membership has more than quadrupled to 145,000, thanks largely to the salesmanship of Vice President Morton Floch. Short, heavyset, and given to gold jewelry, Floch is a onetime encyclopedia salesman with a Barnum-like flair. He circulates a calendar of social events such as open-air dances on summer evenings in Miami Beach. During intermission at such events, someone from IMC delivers a short pitch and then holds a prize drawing for attendees who fill out name and address slips. Floch gathers the slips and turns them over the following morning to his telephone sales force. IMC pays for its promotions with Medicare funds left over from treating the health plan's members. Medicare reimburses IMC 95% of what it would pay local hospitals and doctors to take care of the same patients. But like many HMOs, IMC keeps its costs far below the competition's. The company spends most , of the extra cash not just on events and ads, but also on such bonuses for members as free prescription drugs, hearing aids, and van rides to the doctor. The most innovative sellers to the old are real estate developers. Mindful of the money that older homeowners have -- about 80% of retiring couples own their own homes, mostly debt-free -- developers are inventing new ways to persuade the old to cash in their bricks and move. Growing affluence may be making retirees more footloose, according to Rand Corp. analyst Kevin McCarthy. The great majority of Americans over 65 have always stayed put, but an increasing number are moving, and to more places. Retirement villages boasting such amenities as golf courses and, lately, aerobic fitness programs are proliferating far from the retirement meccas of Florida and the Southwest, in New Jersey and Illinois, for example. For more infirm customers, developers are racing to build condo and rental complexes with maid service, dining plans, and even nursing care. They aim at consumers, generally 70 or older, who can pay to stay autonomous as age erodes their ability to keep house. The most expensive are ''life care'' communities, which include nursing homes for residents too frail to stay in their apartments. To join such communities, old people pay a large initial ''endowment,'' typically around $50,000, plus monthly fees in exchange for housekeeping, property maintenance, meals, and a lifetime guarantee of whatever nursing they need. AMONG REAL ESTATE developers and health care entrepreneurs, the bundling of housing and personal care has touched off an old rush. Their new industry's trade association, founded in July, already includes members from nearly 300 organizations. At jammed conferences and seminars on retirement housing, tips on how to market to the elderly are in strong demand. Among other things, the trade group's first market research project aims to find which nouns and adjectives old consumers prefer to hear applied to themselves. Some candidates: mature adult, silver, golden, gray, elder, master, retiree, and the group's current choice, senior. Most developers are perfecting what Florida real estate analyst Thomas Powers describes as a high-info, low-promo sell. ''The prospects are 75, so it's not as if they just got off the boat,'' he explains. ''You don't back them into a corner with a vacation time-sharing type of sell'' (read: high pressure). A selling key is to promote the property to the prospects' young-old children. < The biggest new name in life-care communities is Marriott Corp. Its flagship project, a complex near Washington, D.C., will be populated with retired Army officers and their wives. According to Vice President William Eggbeer, military couples typify the tenants Marriott wants in its buildings: middle- class consumers who like to plan ahead, already have a lot in common, and have experience putting down roots after a move. Marriott is betting it can find pockets of such people all over the country. To recruit customers for its second complex, near San Francisco, Marriott has bought land not far from an established retirement village, whose older denizens it will woo. ONE OF THE LAST industries to turn its attention to older consumers may be the consumer products businesses that buy the bulk of television advertising. Rich as older consumers are on the whole, and for all the time they have to watch television, they are a minority audience; appealing specifically to them through network TV and other mass media usually is not efficient advertising. ''We've been looking at older consumers for only two years or so,'' says John Webber, head of market research at General Foods. Madison Avenue is groping for formulas that will increase ads' appeal to buyers over 50 without turning off other viewers. More gray heads have been appearing in commercials, but in a culture still obsessed with youth, marketers fear that too bluntly appealing to age will alienate the young and won't work on the old. Studies show that many of the aged resist seeing themselves as the camera might. A rule of thumb that has made its way around advertising studios states that to reach the over-50 market, cast your commercials with characters who look five to 15 years younger than the intended audience. Says J. Walter Thompson consumer researcher Peter Kim about showing the elderly in ads: ''Kids, dogs, cats -- it's easier to sell with just about any other image.'' Sometimes a marketer should avoid trumpeting that a product is for the old. Two years ago Johnson & Johnson introduced Affinity shampoo, specifically formulated for over-40 heads and promoted that way. Affinity has not cut it with over-40 heads. The company recently changed the ads by purging references to age. One of the few consumer goods companies that seem to have mastered selling to the old is Campbell Soup. Rather than create new products, Campbell has tinkered with existing ones to enhance their appeal to old consumers. The ) company pioneered soups with low sodium (sodium can aggravate high blood pressure) and in single-serving cans (the old are more likely than the young to live alone). It souped up its low-sodium soups with extra spices, since removing sodium generally means removing flavor. The company introduced a line of its Vlasic pickles that contained less sodium than regular varieties, largely to appeal to old consumers. Mass marketers who don't get acquainted now with the mature consumer will regret it. By the turn of the century today's free-spending ''young old'' will be the retirees, and the 50-to-65 crowd, including the oldest baby-boomers, will be a bigger part of the population than ever before. When that happens, the mass market and the mature market will not be much different, and many sellers will be finding their way in a new world. The smart ones are making their mistakes before making them gets too expensive.