Q: We need help developing a marketing program to target affluent prospects. Can you give us some input on what motivates them?
A: There has never been a better time to market a luxury product or service. Despite the current economic slowdown, the number of high-income households is expected to grow at a faster rate than others. By 2005, roughly 16 percent of U.S. households will have annual incomes exceeding $100,000 (TowerGroup, "Demystifying Wealth Management").
When creating a program to reach affluent customers, it's important to understand that there are all levels of wealth--from those who are "comfortable" to the ultra rich of this world. So it's vital to gain a clear picture of who your unique affluent prospects are and how they think.
The affluent market now represents more women and minorities than ever before. According to information compiled by the Magazine Publishers of America, including data from the U.S. Bureau of Census and Sales and Marketing Management's Survey of Buying Power, from 1991 to 2000 there was a nearly 200 percent rise in females, a more than 150 percent increase in African Americans and a 126 percent increase in Hispanics among the affluent population.
When RoperASW studied the affluent market in 2002 in conjunction with Money magazine, they focused on the 24 percent of Americans with household incomes of $75,000 per year or more. They found that the majority of affluent financial decision-makers are between 35 and 54 years old, married, with an average age of 47 and a median household income of $121,000. Nearly 80 percent of affluent couples live in two-income households, and nearly three-quarters have a net worth of at least $250,000. Close to 20 percent of those surveyed were millionaires, and another 25 percent enjoyed a net worth between $500,000 and $1 million.
Right now, there are about 5 million millionaires and 267 billionaires in the United States. And a number of studies report that as many as two-thirds of today's current millionaires are self-employed. In fact, a study of 1,000 millionaires found that 80 percent are first-generation wealthy. The average small-business owner (with fewer than 100 employees) has a household income of approximately $135,000 and assets exceeding $1 million.
Motivate Wealthy Prospects
So what does all this data tell us as marketers? We know that the average affluent consumers are largely self-made and can't identify with being rich. Instead, they generally describe themselves as "comfortable." When shopping, affluent consumers find price highly important--they didn't get wealthy by wasting money--and while most will pay extra for convenience and to get what they want, eight out of 10 told RoperASW they enjoy their purchases more if they get a bargain.
Many affluent consumers are early adopters of luxury products--from flat-panel TVs and home theaters to digital cameras and professional kitchen appliances. Their favorite splurges are travel and redecorating. In a Mendelsohn Media Research Affluent Audience Lifestyle Study, approximately 88 percent of respondents said, "I believe in treating myself to life's pleasures."
Affluent consumers find word-of-mouth and referrals from friends and colleagues extremely important when making buying decisions. Direct marketing can be a cost-efficient method to reach highly affluent individuals, and, according to MRI 2002 data, affluent adults are also heavy magazine readers.
As a group, they are very well informed and are often influenced by brand along with the reputation of a product and its seller. And affluent consumers like to be acknowledged as special (smarter, more sophisticated and so on), and they respond well to the notion of exclusivity. So whether you're a retailer with a good reputation offering a great price on Cartier watches or a vacation travel company marketing an exclusive photographic safari package, you should have great success motivating affluent consumers.