January 5, 2011
Despite recent economic troubles, affluent consumers are still likely to buy high-end goods whether it is for a one-time indulgence or if they are purchasing for a loved one or family member.
A study by Ipsos Mendelsohn revealed that consumers focus on the values that the brands put out, and are more likely buy goods to self-indulge and to treat family members. This study accounted for the top 21 percent of wealthy Americans.
Ipsos Mendelsohn is a research center focusing on how affluent consumers react to the luxury industry with a series of surveys, the results of which are revealed monthly. Its 34-year tracking survey polls about 13,000 respondents from around the United States with a household income of at least $100,000 per year.
Luxury Daily’s Rachel Lamb interviewed Bob Shullman, president at Ipsos Mendelsohn, New York and Steve Kraus, chief research insights officer at Mendelsohn. Here is what they said:
What are the implications of these findings for luxury marketers?
SK: There are three key findings in hinting at how brands can market themselves to consumers: emphasizing notion of value, occasional indulgence and family.
The first is recognizing value orientation among affluent consumers. With the economy over the past few years, consumers have become a little more value-oriented.
For wealthy consumers who have created their own wealth, they tend to have a middle-class mindset and value orientation that persists and has actually been made stronger by the slowdown of the economy.
I would suggest to a luxury marketer to express on utilitarian grounds the brand’s worth. Whether it’s uncompromising workmanship, quality of the material or items or the work source that make a brand valuable, they have to prove it to the consumer.
Positioning of value has to be consistent with authentication of the brand.
Louis Vuitton or Hermès, for example, are two of the luxury brands that have come through the last several years very well even though the two have never discounted any materials.
Even in the 2008 holiday season, they didn’t cut their prices and still came in well in the short term and long term. This is because even in the plight of the recession, they did not cut their worth and therefore did not make their customers question the value of the brand.
A second tip for luxury marketing is becoming aware of the fact that consumers will occasionally self-indulge.
In one of our surveys, 70 percent say that good value is more valuable than price, 80 percent say that the quality consumers get is what they pay for and only 15 percent buy based on price and not quality.
For example, consumers will realize that not only is a luxury car great to have for the time being, but it will also need less repairs in the future.
We also noticed that the affluent tend to shop in a particular influence - they have precise interests they are willing to still indulge on.
That concept speaks to the value-oriented mindset that persists even as consumers evaluate a luxury purchase.
This holiday season was a surprisingly strong season and an occasional-indulgence mindset played into that.
In the past, luxury consumers did not want to spend extra money on themselves. However, this holiday season luxury consumers thought, "If I wait to splurge, I’m going to be waiting forever."
The third part, and kind of in the same category, was that family ranked one of the most important things to a luxury consumer.
Therefore, if consumers are willing to splurge, it will probably be on a loved one or on their families, like taking a family vacation.
What are some of the most surprising finds in the study?
SK: The adoption of the affluent to new technology, that is iPads and smartphones, is remarkable. It is starting to change how the affluent are consuming media in significant means.
BS: It is changing how they do everything. The definition of convenience is changing -- what was convenient five years ago has changed now that you can see and buy almost anything on an iPad.
This will undoubtedly impact brands like Hermès and how they distribute and market goods in the future. In our survey, half of the iPad owners are affluent consumers and 100 percent of the affluent are online.
Affluent consumers want to be the first to know everything – they want to be literally wired in to new trends.
What are marketing channels that the affluent react to most?
BS: In a world where 100 percent of affluent consumers are online, they are actually more interested in the three most traditional types of advertising: print, television and radio.
Everyone assumed that it was the new technology that they would want, but it was the traditional.
SK: The affluent have affinity for print and the written word but the adoption of technology and print will become more important.
New media will allow brands to position themselves well across all channels that the affluent may access.
So many believed that an increasingly digital world would be the death of print media, but it’s actually the opposite.
There is still such discrepancy in whether or not consumers can believe everything that they read on the Web. And with more information on the Web, there is more hunger for content in print because it comes from a trusted source from a trusted platform.
What was the key finding from the study?
SK: Consumers are constantly changing, and luxury brands need to change their marketing strategies to keep up with them.
Economic circumstances are unprecedented and affluent circumstances have changed as well.
BS: Our survey used to run a few times a year. Then as we noticed change, we moved it to quarterly. And then we got clients complaining because that still was not enough to accurately track changes in consumer behavior.
The major change is volatility where there used to be a lot of consistency. Things change more rapidly, and this is most likely because of technology.
Brands need to keep their finger on the economic pulse because it’s going up and down, and they need to keep up with their changing consumer base that’s moving along with it.
We live in a rapidly changing world. The consumer is totally wired in with technology, and they have it because they want to see what’s going on now.
Final take
Ipsos stresses the affluents' use of technology
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