Market Focus: Chasing The Affluents
Chasing the truly affluent consumer may just be an advertiser's biggest challenge. Truth is, it's very difficult to reach them by traditional means. For one thing, there is very little reliable research on the ultra wealthy -- those whose incomes and net worth fall within the top five percent of the total population. These people don't fill out surveys.
Ron Kurtz, co-founder and director of The American Affluence Research Center in Pinecrest, Fla., defines the "truly affluent" consumer as having an annual income in excess of $200,000, and a net worth of at least $3 million. About two percent of U.S. households, slightly over 2 million, meet the criteria.
Kurtz continued, "Their numbers are very small, and nobody really has a vested interest in publishing the survey data."
What makes reaching this market segment truly difficult is the fact that its members simply don't act like the rest of us do. They don't watch a lot of television, don't spend a huge amount of time online and don't read the same publications. So, how does an astute marketer deliver a message to the elite of the elite? As it turns out, branding is pretty important. Research conducted by Unity Marketing, Inc. in Stevens, Pa., concluded that the purchasing decisions of "the affluent" were most influenced by the brand and reputation of the product (82 percent), followed closely by the brand and reputation of the retailer (79 percent).
"This super-affluent market tends to be comprised of people in the information field, or perhaps corporate executives. These are people who are able to deal with vast amounts of information, so they are very well-informed," said Pam Danziger, Unity's president.
They may be well-informed, but they're not necessarily getting that information from advertising. Ads don't appear to play a major role in influencing purchase decisions of the wealthiest segment of consumers, at least not directly. Only 44 percent of those studied in the United Marketing survey said that "they were influenced by Internet advertising." Traditional advertising delivery mechanisms fared even worse: newspaper (31 percent), television (28 percent), and magazine (24 percent).
"Word of mouth works with the wealthy. They tend to take recommendations from friends and colleagues very seriously," Danziger also said.
Direct marketing may provide the most cost-efficient method to reach very high net-worth individuals. That's the primary method Ron Kurtz used to generate business for "The World of ResidenSEA," an ultra-luxury cruise ship that sells onboard condominiums starting at $2 million. "We were really looking at the very top of the pyramid, those with a net worth of $25 million plus. We just could not find any media to reach these people efficiently," Kurtz said.
While upper-crust consumers are not big television watchers, there are a few cable channels that do attract a higher proportion of wealthy viewers. Programmers like CNBC, CNN, E! Entertainment Network, Bravo and the new Fine Living Network draw a larger share of these consumers than do other channels. One budding success story is Fine Living's Monday night program The Genuine Article, which helps educate the nouveau riche on the essence of quality.
"It's all about the hallmark of quality: who makes the best automobile, the best suit. We help people understand what goes into the fine craftsmanship of a luxury product," said Robyn Miller, senior vice president of marketing for Fine Living, the E.W. Scripps cable channel.
Because a fair share of America's wealthy are "new money" individuals with less experience, they seem to appreciate editorial content and programming that might be considered educational in nature. The Robb Report, for example, targets readers with an average income of $1.2 million, and carries ads for elite brands such as Cartier, Bentley and Cessna Citation business jets. "We highlight products and services strictly for affluent people's passions," said William Gibbons, director of marketing at Robb Report.
The key element that convinces wealthy consumers to buy certain products is that of exclusivity. BMW found great interest among high-income buyers for the initial limited production of its 7-Series automobile line. "But when the series gets into general production, and there are 50,000 of them out there, the wealthy lose interest, because the car doesn't say anything about them anymore," Gibbons added.
If advertising alone can't make the consumer connection, look for companies to employ strategic partnerships to leverage brand image. American Express and Four Seasons Hotels might partner, for example, on a dual promotion directed toward wealthy consumers.
The Leading Hotels of the World, Ltd., an upscale lodging group, has combined forces with other luxury travel brands, including Silversea Cruises, Abercrombie & Kent, and Orient-Express Trains & Cruises in a marketing partnership known as "The Luxury Alliance" to promote a variety of lavish travel packages.
One other indirect route into the wealthy consumer's wallet comes courtesy of his or her executive assistant. The higher the wealth factor, the more likely the individual is to rely on others for assistance. "These people depend on their assistant for everything to the point that he or she becomes a part of the family," Gibbons said.
Above all, Kurtz admonishes, "Marketers trying to reach the truly affluent, need to stay on top of their game, and be ready to change tactics on a moment's notice. Other than the fact that the affluent have a lot of discretionary income, there is not a lot of homogeneity within this narrowest of market segments.
"There are segments that are brand loyal, and other segments that only want what's new and trendy and stylish. Unless a company can really keep its products fresh and contemporary, they are in danger of losing this business," Kurtz said.