April 30, 2015
Lexus' NX Turbo
NEW YORK – Luxury marketers disregard the broader marketplace at their own peril, according to the founder of the Shullman Research Center at the Luxury Insights Summit 2015 April 29.
The executive warned luxury marketers against focusing exclusively on the ultra-affluent. Indeed, an enormous amount of sales come from mass market consumers who are rarely marketed to.
"The American luxury marketplace is bigger than many luxury marketers currently believe," said Bob Shullman, founder/CEO of the Shullman Research Center, New York.
"[Consumers] pay the bills and ultimately they're the ones who have to be served," he said.
The Luxury Insights Summit 2015 was organized by Luxury Daily.
Beyond the walls
Consumers in the market for luxury goods span the income spectrum. While the ultra-affluent are the ideal consumer, brands generate many sales from lower-income consumers.
In particular, the majority of United States citizens have a household income under $75,000. Of the 140 million Americans who fit this criteria, 20 million have purchased a luxury good in the past 12 months, according to representative Shullman Research Center surveys.
Bob Shullman at Luxury Insight Summit
Conversely, 4 million of the 8 million consumers with a household income above $250,000 have made a similar purchase.
Mr. Shullman suggests that viewing the market in this manner can flip traditional luxury marketing upside down.
While no luxury brand will actively target the mass market over the ultra-affluent, as it goes against the very idea of luxury, recognizing and catering to this segment should be a component of every marketing strategy.
Mercedes-Benz campaign
According to the latest report, the most purchased category is alcohol, followed by fragrance and cosmetics, travel, jewelry, home furnishings, fashion and automotive.
The favored brands across generations may also surprise, according to the report.
For instance, Lexus is the top brand of the gen-X segment, fifth among millennials and 12th among baby boomers.
Changing perspectives
Mr. Shullman encouraged luxury marketers to introduce some tactics for enhancing the overall customer experience.
For instance, labels can set up pop-up shops in highly trafficked areas so that consumers who would not typically enter a brand store get exposure to products.
Also suggested is implementing a broad-based listening program that involves regular customers polls, conversations with retail associates and frequent social media interaction.
Listening to consumers is often thought to be key for brands looking to personalize experiences, but only 25 percent of C-suite executives have a formal listening program, according to a new survey conducted by Shullman Research Center.
This survey highlights the lack of listening programs as well as the benefits a brand may redeem if it had a formal platform. By having an official method of listening, brands can redeem benefit in revenue, efficiency and marketing and develop a deeper connection with their consumers (see story).
Previous reports from the Shullman Research Center aim to remind marketers of overlooked areas.
For instance, online marketplace Amazon is a threat to many luxury brands with its expanding presence and recent ranking as the top store for affluent consumers, according to Shullman Research Center.
Consumers are increasingly turning to mass-market online retailers to shop for the convenience, lower prices and better selection. Competing with retailers that can offer these benefits to consumers is a challenge among luxury labels, but the exclusivity and service options of these brands often win with top consumers looking for the total experience when purchasing a product (see story).
"Luxury brands that have formalized listening do better economically and as far as loyalty goes," Mr. Shullman said.
Final Take
Joe McCarthy, staff reporter on Luxury Daily, New York
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