Success in the luxury market begins with understanding the needs and desires of customers who can afford luxury. Stop focusing on the aspirational customers and pay strict attention to those affluents with money to spend and a willingness to indulge.
Stevens, PA (PRWEB) March 05, 2015
As Bob Dylan sang, 'The times they are a changin.' Today, conspicuous consumption is not part of the game plan. Unity Marketing's latest Affluent Consumer Tracking Study, which surveyed n=1,200 affluent luxury consumers (avg. income $266.9k) reveals that bragging rights no longer come with buying designer brands, but from shopping smart.
While it is true that affluent and high-net-worth individuals are feeling wealthier these days, in this post-recession era that does not necessarily translate into higher earning for luxury brands. The 'wealth effect' is going in reverse. Positive changes in affluents' perceived wealth is only making them hold tighter to their gains, rather than spend freely on goods and services.
"Austerity is the order of the day and luxury marketers are going to have to get use to the resulting drought in the U.S. luxury market," Pam Danziger, president of Unity Marketing says.
Marketing in New Luxury Style
"Back in 2011 in my book Putting the Luxe Back in Luxury, I wrote 'This is the 'luxury drought,' a dry period following the boom of the last decade. The luxury drought is characterized by affluents sharply reducing their spending on luxury, as they reevaluate, reprioritize and reassess their lifestyles," Danziger explains.
Today, affluents are seven-years older than when the recession first hit, and an aging population of affluents is not favorable for luxury goods purchases. Young affluents (24-44 years) are far more inclined to indulge in the material expression of wealth, but there simply aren't enough young people with affluent levels of income ($100k+) to make up for the aging out of Baby Boomers and the leading edge of GenXers (who reach 50 this year) from the prime target market for luxury goods.
"Not until 2026-2029 will the demographics of the affluent consumer market shift toward a younger affluent generation. This may bring the next luxury boom, or it may go bust for brands that don't understand the new style of luxury that Millennials are creating," Danziger states.
'Luxury' Has Lost its Luxe
For many affluents in today's market, 'luxury' stands for overrated: a word marketers use to sell you something overpriced. The research shows that although affluents define luxury in many different ways, in the current environment the word luxury has become tarnished. It's a one-size-fits-all description that doesn't convey the right meaning any longer.
So how do marketers reach today's affluent consumer and get them to open their sizable wallets?
"Success in the luxury market begins with understanding the needs and desires of customers who can afford the luxuries you sell. My advice: Stop focusing on the aspirational customers and pay strict attention to those affluents with money to spend and a willingness to indulge," Danziger advises. "Plus brands must be looking to the future with a clear understanding of the next generation on the road to affluence and what luxury means to them."
"High-end brands like Shinola, James Avery, Frye Company, Ghurka, and The Row know something about the new style of luxury marketing that traditional luxury brands may not. I invite brands to join the ranks of those who are prospering in the new style of luxury, by tapping Unity Marketing's vast library of market research information about today's affluent luxury customer and tomorrow's next generation of consumers on the road to affluence," Danziger concludes.
On March 11 at noon eastern, Danziger will host a webinar to announce the results of the latest Affluent Consumer Tracking Study. In the webinar Danziger will reveal:
- What luxuries affluents consumers spend their money on?
- What trends are there in affluent consumption? What they are buying now and where are they buying from?
- What luxury brands affluent consumers are purchasing today and which brands are falling out of favor (and why)?
- How can you communicate effectively with today's value-driven affluent customer?
With a subscription to the webinar, attendees will also receive an executive summary report. Should one be unable to attend the webinar live, the presentation will be recorded to listen in any time within a month from the original broadcast.
About Pam Danziger and Unity Marketing
Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992 and author of Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011)
Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar. She was named to Luxury Daily's Luxury Women to Watch in 2013. She is a member of Jim Blasingame: The Small Business Advocate’s Brain Trust and a contributing columnist to The Robin Report.