From November 27, 2013 – Engage: Affluent – Wealthy Consumers Won’t Buy Just Anything
Despite their wealth, affluent consumers aren’t as quick to dish out big bucks as one might think. In an October survey, Unity Marketing found that the top 20% of American consumers are being cautious about fourth-quarter spending this year. Despite reports that the economy is improving, factors such as unstable governmental policies have some wealthy would-be shoppers thinking twice about their holiday shopping. In a question about future spending, only 20% of those surveyed said they plan on spending more on luxury goods this year than last.
This brings up an interesting question: What exactly do the affluent value if they can afford it all anyway? Ron Kurtz, president of the American Affluence Research Center in Atlanta, highlights the fact that 80% of millionaires are self-made. What does this mean? It means that they know the value of a dollar. During a time in which many are still skeptical about the health of the economy, luxury brands have to take their marketing strategy to the next level, focusing on significance and performance, if they truly want to see movement. Brand recognition alone is often not going to suffice. As a matter of fact, it can hurt brand perception in some cases.
A study conducted by the aforementioned center found that brands such as Louis Vuitton, Gucci and Prada, all of which heavily rely on factors such as familiarity and recognition for sales, are also considered a few of the most overrated brands by wealthy consumers. While these brands don’t need our sympathy (don’t worry, they’re going to be just fine), it should make luxury brands think twice about their strategy. Maybe it’s time to steer away from logos and shift towards the experience their brand delivers.
Ford’s Lincoln Motor Company is a brand that is trying to exercise this theory. The company’s image has certainly taken a hit over the past decade, with consumers struggling to get past its town car persona. However, its most recent campaign for the Lincoln MKZ hybrid alludes to the fact that its features make it a more desirable product, pitting it up against other luxury models such as the Lexus ES hybrid. Whether the campaign has an effect on Lincoln’s sales remains to be seen, as the television ads premiered at the beginning of the fourth quarter. Still, the strategy speaks to the notion that quality matters.
The Amazon Kindle Fire gets it. As the product continues to gain on Apple’s iPad in sales, it has specifically highlighted concepts such as price, family and convenience in its marketing. An 8 GB version of the newest Kindle Fire goes for a manageable $139 online, meanwhile its Kindle FreeTime feature limits the amount of time that children use the template to play games. In addition, Amazon’s willingness to deliver on Sunday gives it another advantage during the competitive holiday shopping season and shows that consumer time matters to the company.
While winning over affluent consumers may seem simple based on their income, this isn’t always the case. Successful luxury brands should concentrate on forging a perfect balance of brand recognition, product performance and perceived value. The wealthy may have a lot to spend, but it doesn’t mean they are willing to purchase anything put in front of them.
NOTE: This article can also be found on MediaPost.com at: http://www.mediapost.com/publications/article/214334/consumers-wont-buy-just-anything.html