I'm RICH! $$$$ Take my money! [Marketing to the Affluent]

[AllenCrawley]

This thread is dedicated to those of us who sell products to the affluent. High end, high quality, luxury products and/or services.

Marketing to the affluent requires a slightly different angle and approach.

I will be sharing some insights and I encourage anyone with experience in this area to do the same.

I'd like to start with a list of books I've recently read that I highly recommend:

• The Republic of Tea
• Wild Company (the story of Banana Republic)
• Peterman Rides Again
• The Barefoot Spirit
• No B.S. Marketing to the Affluent

The first four books all have a common thread. They created a story behind their company and their products and provide exceptional customer service. Each of them knew who their market was, how to reach them and knew the importance of brand identification, storytelling, copywriting and positioning.

I also suggest getting on the catalog mailing list for J.Peterman. I've received the J.Peterman catalog and the copywriting is amazing. You can literally pick up the catalog and read from beginning to end like it's a book. The stories they created for each piece of clothing is retail copywriting at it's best. Dan Kennedy's No B.S. Marketing to the Affluent even addresses J.Peterman's catalog copywriting and the brilliance behind it.

Banana Republic did the same with their catalog before they were bought by The Gap. Here is an online resource for their old catalogs… http://scottcadams.com/bananarepublic/

More to come...

Feel free to list recommended books, resources, experiences, personal insights, marketing strategies, etc.

 

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[AllenCrawley]

MYTH:
All affluent people spend money willingly, sometimes carelessly, on anything and everything because they have the money to do so.

FACT:
Nearly all are extremely frugal about most things and amazingly un-frugal about a few things.

Nearly every affluent person has at least one passion, hobby, interest, recreation, philosophical bias, cause or emotional attachment that they are all about, more than anything else, on which they will spend any sum of money.

Just a few examples: cigars, watches, golf, vacations, shoes, cars, artwork, collectables, bicycling...



People buy experiences and a story.

TIP: every business (not just those targeting the affluent) should be in the experience business.


(the above is from my personal notes and I believe I wrote these down during or after reading No B.S. Marketing to the Affluent.)


Taggin' a few people here I know could benefit and contribute to this thread:
@Jill
@biophase
@PaulRobert
@IceCreamKid

 

[AllenCrawley]

There are different levels of rich and knowing which level your target market resides will help you understand their thinking and how to market to them. For the sake of argument I'll use Dan Kennedy's definitions. Dan subdivides the affluent population into:

• Mass Affluent (modestly rich)
• Affluent
• Ultra Affluent
• Ultra-Ultra Affluent

then a few further segments into the following specialty market groups

• Affluent and Mass Affluent Boomers
• Affluent Gays and Lesbians
• Affluent Entrepreneurs and Business Owners

and then by gender, male and female.


Mass Affluent (modestly rich) - household incomes of $85k to $150k and/or net worth exceeding $250k. This is the fastest growing segment. They are younger and more diverse than any previous affluent population.

Affluent - household incomes of $150k to $250k and/or net worth exceeding $1million.

Ultra-Affluent - household incomes of $250k and up and/or net worth of $3 million to $10 million. This is the wealthiest 10% of US households as defined by net worth (according to a recent Federal Reserve study).

Ultra- Ultra Affluent - household incomes of $1 million and up and/or net worth starting at $10 million but more commonly in the $20 million to $50 million range or more. Private jet owners in this range. Average yearly income of $9 million with a net worth in excess of $50 million. Each year they report spending $30k on wine and alcoholic beverages, $150k at hotels and resorts, $115k on clothes and accessories, $250k on jewelry, $500k on home improvements and furnishings.

 

[Jill]

Thanks, Allen! I'm going to download that book today. I'm in the middle of another right now, The Luxury Strategy. I find the discussion and analysis of this topic fascinating. One can run statistical analyses all day long to derive general conclusions. But the reality is that one has to know his own market and decide how to take his product to that market, in order to be successful. I largely agree with your assessment

"Nearly all are extremely frugal about most things and amazingly un-frugal about a few things."

I see this not only as an observer of my own market (to which I sell a luxury good product), but also as an observer of friends and my own life. The most interesting thing to me, as I read the post above, is that while I statistically fall into the middle of those groups, I don't feel the least bit affluent. I think that's what keeps me behaving frugally in most areas of personal consumption.

From my experience, most who were responsible for their own affluence understand the value of the dollar and what was required to obtain it. Coming from a VERY middle class upbringing, I am quite frugal in many ways. But I also enjoy my few luxuries. I could wax eloquent about my personal experience or I could give you examples of my customers for countless paragraphs. But at the end of the day, every story is different. Every reason for indulgence is motivated by something wholly unique to that individual, as a result of their unique experiences in life.

As a purveyor of goods, my job is to figure out what motivates the majority of them. For some, it is the appearance of a "luxury lifestyle" as referenced above re: Louis Vuitton bags in Japan. Ralph Lauren absolutely mastered this type of "lifestyle marketing". Then there are those who truly value the artisanship of a finely crafted cigar or car or watch or necktie that is the best in the world. It is the difference between intrinsic value and extrinsic value. They oftentimes intersect. e.g. The brand gains extrinsic cache BECAUSE of its intrinsic qualities. But consumers of these products are motivated for different reasons, depending on their needs in life. One would be wise to market to both.

The temptation to capitalize on a brand's public perception (extrinsic)to the detriment of the "one who brung ya to the dance" (quality) has resulted in the demise - or at least dilution - of many great brands. Armani was one of the first to successfully introduce dilution brands (A/X, Mani, etc) to the market in order to reach a broader market. Many others have successfully followed suit, such as Ralph Lauren. They provide a 2nd price tier to a exponentially larger market who wants to associate with the brand, without diluting their primary brand.

Others who have tried it less successfully are those who simply lowered their prices like Perrier, Dior, Burberry, etc. By lowering the price of their core product/brand, the element of exclusivity is diminished and therefore, no longer desirable.

Great topic. Good conversation. Thx for posting it.

 

[Kak]

Just a few examples: cigars, watches, golf, vacations, shoes, cars

Lol you just described me...

 

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[AllenCrawley]

Here I'm going to point to a few Luxury Daily articles worth reading regarding Instagram and Pinterest. These two social media platforms seem to be where a lot of affluent "hang out" online. I'd suggest following some Instagram and Pinterest accounts that not only are your competitors but also any company/brand that markets to the modestly rich to ultra rich.

Brands must radiate emotion through imagery

Swarovski drives holiday retail traffic through pinterest and instagram contests

Instagram registers 15x more engagement than facebook

 

[AllenCrawley]

Seven New Faces of the Global Luxury Consumer [according to Bain & Company]

1. The Omnivore (25% of spending, at an average €2,350 per year): These shoppers are typically new entrants to luxury. On average, they are younger than the other clusters and have a high willingness to experiment with products and brands. They are primarily women. They tend to purchase high-ticket items, focusing on the jewelry and watch categories. They prefer to shop in brands’ own stores. Many of their purchases are made while traveling. They prefer aspirational brands, and while they have high advocacy for luxury brands, their loyalty level is relatively low. These attitudes are common among Chinese consumers from Tier-2 and Tier-3 cities.
2. The Opinionated (20% of spending, at an average €1,750 per year): These are highly educated Generation X and Y shoppers. They favor leather goods and watches, and are highly aware of the differences between brands. They shop often within their hometowns, and are influenced by online information and social networks. They dominate China’s Tier-1 cities and are also prevalent in Western Europe and the United States.
3. The Investor (13% of spending, at an average €1,450 per year): These shoppers pay the greatest attention to the quality and durability of luxury materials. They favor long-lasting leather goods and watches that can be handed down from generation to generation. They carefully evaluate luxury purchases with research and referrals from other consumers. The segment is skewed to shoppers from Japan, the Middle East and mature markets where discretionary spending is more cautiously allocated.
4. The Hedonist (12% of spending, at an average €1,100 per year): These shoppers are infatuated with luxury goods and the luxury shopping experience. They have a high affinity for brand logos and much of their purchasing is within accessories categories. They are most influenced by advertising. Despite their interest in luxury for show, they exhibit the lowest levels of advocacy for brands, often due to cognitive dissonance sometimes following a purchase. This is the only cluster represented across all nationalities and generations.
5. The Conservative (16% of spending, at an average €1,000 per year): These are mature and mainstream shoppers, both men and women. They favor watches and jewelry from big-name brands. They shop in multi-brand stores, and are influenced primarily by what friends and family recommend. They are mainly in mature markets, but also in China.
6. The Disillusioned (9% of spending, at an average €800 per year): These are mostly baby boomer shoppers who suffer from “luxury fatigue.” They purchase leather goods and beauty products. They look for products that last more than one season, but are unswayed by brand messaging or advertising. They tend to shop infrequently and shop online when they can. The segment is dominated by women. They are found in the United States, Europe and Japan.
7. The Wannabe (5% of spending, at an average €500 per year): These predominantly female shoppers look for entry-level items in beauty and shoes, valuing affordability, and are highly likely to mix and match outside of the luxury spectrum. They are impulse shoppers who demonstrate little brand loyalty, primarily influenced by what their friends say and what they see in fashion publications. They come from the global middle class, especially in the United States, Western Europe and new consumers in Eastern Europe.

Source: Luxury Goods Worldwide Market Study Winter 2014

 

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[Young-Gun]

@Young-Gun I would say pick up Dan Kennedy's book on marketing to the affluent. I read your intro post. Care to share some of your experiences selling to the rich?

Thanks AC it's now in my Amazon cart.

Been working for most of the week and then finally a bit of time off to decompress! I'm not one of those that can go like forever without a break, so since it's been about 8 months since I got any real time off I'm glad to have Spring Break. The last couple days have gone day on the motorcycle and walking around my neighborhood in the sun. Not getting anything done just living and listening to music

It's true that there are different "sorts" of wealthy people - all types - let's take a few that I've randomly imagined and do some thought experiments.

1) The self-made anglo entrepreneur father, and his stay-at-home wife and 2.5 kids.
2) The inherited wealthy, 2 families married each other, both second-generation partners started wealthy and only getting wealthier off investments, family business etc - the trust-funders who have never known life another way
3) The "get rich quick," someone who's jumped lifestyle in a short period, often by luck (lottery winner, lawsuit winner, or even a smart, hardworking person - e.g. some goofy, naive software engineer with a hit game that goes from 50k to 15 mil)
4) Immigrant family that has just worked hard. Not hit the motherlode but, well-off for sure.

How do they spend? Just a few thoughts on each:

1) The self-made man probably wants the best for his family, often one of the most basic motivations for building a business. Most often a fairly mature human being, so safe, reliable cars to keep everyone safe, although he may have a sports car for the weekend. Demands great educations for his kids and probably considers them a bit "better" than the neighbor's kids, has a touch of arrogance about them. Needs nice vacations from the stress of work. He wants his kids to excel in their abilities and accomplishments, like he did. But he also wants to see them struggle a bit less than he did. Probably has a couple expensive passions, collections or hobbies - cars, rare wines, owning land, or something. Else, why would he have kept going to build a highly successful business, rather than just a decent business. Or, he may have true passions that earn very little money and thus he has "surpressed" them in his deep focus on business and profit - but bring them out and he'll be like a kid in a candy shop, and willing to spend.
To sell him, 3 easy options:
1) "practical, safe, reliable, smartest choice for the family"
2) "safety and protection of his family"
3) "find his secret boyhood/youth-reminding passions and make luxury versions of them"

2) The young inherited wealthy, never seen life another way - they're used to being part of the elite. They also have a good shot at having a lot of great financial habits that will keep them in the top 10% or 1% for the rest of their lives. The wealth had to come from somewhere, and for it to last even one generation, someone in the family must know what's going on. They probably mostly want to remain in the elite (might have a "bohemian" rebellion phase when younger but ultimately, most will come around and want to enjoy the family wealth). Education a fairly high priority, but not as high - because no one in the family expects their place to slip, "book learning" not as crucial, except as a signifier of elite status and as a door-opener to things like elected office, most prestigious firms etc.
To sell them, you need to be in front of them first:
1) Market where other luxury purchases are made
2) Have the audacity to charge a lot - they like and respect high-ticket prices
3) Make your product the "elite best" and then charge a huge markup since your raw materials, human resource, and other expenses will be luxury-high
4) Image and elitism sell these type, the 2nd-generation inherited wealthy
5) Prepare to occasionally deal with some pretty obnoxious and entitled folks - you need great customer service
6) Oh yeah, they like being around "other elite" - they like it QUITE A BIT - so try to incorporate some schmoozing between your customers

3) Haven't worked with a ton of get-rich-quick types, and I'm having trouble imagining how they could all be grouped together. Not sure they really could. I bet, though, you could dream up a product or service for "lotto winners" etc and then chase those big winners around - "wealth management for lotto winners" or something, lol. If they're really really made it big, I would expect that customized services and one-off solutions become a big deal... having the finest of the fine, since what else are they gonna spend all that money on... and, don't get locked into a long-term contract with them to make your money, because they might blow all that money on someone else before you know it.
To get those sales:
1) Hustle to find these people before all the money is blown on ice cream..
2) Custom, 1-off, "best of the best" solutions that they can brag about
3) Don't get locked in to long-term situation that will ruin you if they go bankrupt or change their mind on a whim

4) Immigrant, self-made family. Hardest to sell on luxury. Always questioning what they're getting for the money. The most canny, the most difficult customers, the least respectful of my time (probably because they're so freaking busy themselves). Sometimes, language barriers make things even tougher. I respect this type the most as people, but dislike them as customers, because they're difficult to satisfy no matter what you're charging. They want real value for every cent, not prestige, not elite status, not image - they just want value on their investments. Real return. Also frustrating - they rarely have provided me with referrals. Not to speculate too much, but maybe: hard to make connections as an American suburban immigrant family? Or, alternately, they're trying to keep the best value finds a secret for themselves? If you give great referral bonuses, though, they may start networking for you, if you increase the value proposition enough that they see the value of spreading your name around.
To sell them - first, ask yourself if you really want to... then:
1) Promise high value/return on investment
2) Need great customer service or they'll make you tear your hair out
3) To get more referrals from them - give a really good referral bonus, and make sure they know about it

I know there are billion issues people could take with this post, so simply take it as some potentially interesting reading, not fact. Just a few thoughts to get me warmed up this morning

 

[AllenCrawley]

Great resource: LuxuryDaily.com

Be sure to subscribe and also check out the industry sectors section http://www.luxurydaily.com/category/sectors/

 

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[AllenCrawley]

What are your thoughts on positioning a new bootstrapped product? Would it make sense to try to reach affluent customers (through fewer, exclusive channels) with a limited budget?

I like what @TedM shared.

I'm bootstrapping my product as well. I am using Instagram and Pinterest to really build up a following within my market. I will also be getting my product in the hands of influencers as Ted described.

Find case studies of how companies bootstrap retail products. I was talking with @bensonj the other day and she shared with me a company called Black Milk and how they grew to a multi-million dollar company with a ZERO marketing budget. They may not be a luxury product marketing to the affluent but lots of lessons can be gleaned from their process.

Here's a link to their case study:

How to Build a Multi-Million Dollar eCommerce Business with 0 Marketing Budget

Their automated embedding of instagram photos by customers with their hashtag into their product pages is absolutely brilliant. Social proof mastery.



@Jill started and built a wildly successful luxury business by building a great reputation on a niche forum and also became great friends with the forum owner. That opened a lot of doors and allowed her to bootstrap her biz. Maybe she'll chime in on this particular topic.


...

 

[JAJT]

Would you say that marketing to the affluent is a little more difficult or just different?

Luxury goods obviously require that your image portray luxury from start to finish.

Sounds simple but it means you can't skate by with "okay" photos and "okay" websites and "okay" customer service. Luxury goods require more customer experience.

If you sell a $5 tie and it's okay - nobody cares. If you sell a $50 tie, and it's okay, expect issues.

Thanks Allen for the resources - I'll check them out. The Peterman catalog's copywriting is of particular interest.

 

[AllenCrawley]

Number of luxury consumers to reach 440 million by 2020.

"Luxury consumption will grow organically over the next 10 years with overall spending growing from approximately $985.5 billion today to almost $1.2 trillion in 2020, according to a new report.

Consumers will be the main driving force of this growth, with the number of luxury consumers rising from 380 million today to 440 million by 2020. This presents an opportunity for luxury brands if they know how to market to core luxury consumers as well as new consumers, since they require diversified strategies.

“The luxury sector will continue growing with an additional $202.5 billion personal luxury growth by 2020,” said Antonio Achille, partner and managing director at Boston Consulting Group, Milan, Italy.

“Two-thirds of the next-decade growth will be organic, with today’s markets and today’s stores,” he said. “This is very different from what happened in the last decade, where sector growth was mostly achieved by opening new stores, being it’s in new emerging geographies, chiefly China, but also Russia and Brazil, or adding stores in traditional luxury markets, such as Europe, the U.S. and Japan."

 

[Mrs. BRKb]

Here's another one, @AllenCrawley : Secrets of High Ticket Selling. The book is ok (4 stars on Amazon), but the title's an A+. Who wouldn't want to know the secrets?


"The escalating costs of making a sale have made direct sales of low-cost items virtually obsolete in today's marketplace. Yet most selling techniques still revolve around concepts developed in the 1930s, when person-to-person sales of low-ticket items were the norm. The Secrets of High Ticket Selling by Hal Slater uses contemporary psychological research to teach you how to understand the behavior of your buyers to improve your unique sales process, leaving you with more control over your sales process and its outcomes.

The Secrets of High Ticket Selling describes advanced negotiating skills, language patterns, and gestures that enhance a buyer's excitement. You will also learn methods for picking up on a prospect's objections and doubts early in the sale and heading them off. This book stresses that the quality of the sale is far more important than the number of prospects you pitch, and that in today's high ticket market you must work smarter, not harder.

If you have a proven sales method, trying to change your process will not bring results. The Secrets of High Ticket Selling instead teaches you to build on your success by studying the dynamics of the sales transaction to discover areas for improvement. Once you have identified the steps in your process to be refined, you will have a better understanding of your own sales psychology and the needs of your target market."

 

[AllenCrawley]

"The survey of 249 luxury brands finds that 93% are currently on Instagram, up from 63% in July of last year. And while it is just one-tenth the size of Facebook (which acquired it back in 2012), it has 15 times the level of user engagement that Facebook does. And Pinterest, about a third of Instagram’s size, has only about a third of the level of engagement that Instagram users do."

"Instagrammers are also highly coveted by luxury marketers -- 90% are 35 or younger; 68% are women; and affluent. (The report says 16% of online adults with income of more than $75,000 are using Instagram.)"

Source: For Luxury Brands, Instagram Blow Away Pinterest

==================

How I rank social platforms for marketing to and engaging the affluent:

1. Instagram
2. Pinterest
3. Facebook

Be sure to check out Instagram for Business Blog.

 

[Young-Gun]

I also wanted to follow up (hope this isn't double-post, it's a different concept than the last):

Welcome to the world of the "Veblen good"
Stuff we all want, but very few of us can afford:
http://en.wikipedia.org/wiki/Veblen_good

Like a Rolls-Royce. If a Rolls was basically the same idea but a cheaper, corner-cutting version, it would be something completely different.

A Veblen good, is a good that's "good" because it's expensive, exclusive, elite.

Jaguar.
Maserati.
Rolex.
First-Class.
5-star (not just supreme service... it's better than all the others... so a truly lavish person can know they're having the best. vacation. ever.)
Covered in gold and diamonds.
Heavy with pearls.
The mink coat.

Finest-Quality Veblen Product + Big Markup + Killer Marketing/Distribution + Elite Customer Service = Luxury Sales Business

 

[TedM]

Can you give us more details on this please.

Thanks.

Well, after having read Dan Kennedy (initially) and having thought about it...i realized that the luxury market cannot be approached half-way. you need to look trustworthy and just "worthy" in general if you are going to be upscale.

otherwise, you really cannot prove anything, since you are showing up at the ball in rags instead of looking like a prince.

actually, if you lived in a place where you could somehow get to your target audience one on one....and speak to people first hand...then, you could wait for a web presence. that way, you could perhaps be OK with a so-so logo and nice business cards.

for me, living in israel and intending to sell to the US - that would never work.

so, i took a very deep breath, and sold my first internet business, and decided i would go all in for this one.

i took the concept and approach i had thought of, and found a design team i could relate to, who i felt could also relate to the product.

now, keep in mind - i'm still the guy who is not yet successful. however, now that i've been getting some media exposure, it's completely clear to me that the investment in branding was powerful.

 

[AllenCrawley]

An incredible article over at Luxury Daily on what content marketing looks like for luxury brands. The article includes some great examples of what a few luxury brands are doing around content creation and delivery.

From Snapchat to Youtube to Long Form Video Series to City Guide Apps to Shopable Videos to Personalized Content.

Do take the 5 minutes to read and brainstorm how you can do the same for your brand.



Why and how content marketing works for luxury

By Tammy Smulders

Content marketing is a buzzword in the marketing world, but what does that actually mean and what is its role for luxury brands?

Content marketing, or branded content, is brand-related content with which consumers, or in our case, luxury consumers, actually choose to engage. It has value for the audience first – whether entertainment, information or other value – and the brand second.

Content can live in marketing and media channels, but is not a channel itself. Content can be a spoke or a hub: it can be distributed through media, or part of a destination.

Importantly, content is a means of engagement with current and prospective customers, and gives the luxury brand its own voice.

For luxury brands, the chief value of content marketing lies in its ability to reel in, persuade and evangelize the most discerning audience in a language and elevated aesthetic that is particular to luxury...

Continue reading the full article at:
http://www.luxurydaily.com/why-and-how-content-marketing-works-for-luxury/

 

[Kak]

This is great stuff. Thank you Allen.

 

[Kak]

This is awesome Allen! Thanks for the info and the recommended books. Would you say that marketing to the affluent is a little more difficult or just different?

I am currently starting a 7-book course on mastering copy-writing but will definitely jump into these books right after.

Looking forward to seeing more

It is more difficult. Marketplaces and the easy money sales portals are set up for cheap junk. The absolute most cutthroat, bottom barrel, junk... With some nicer stuff mixed in. So you are tasked with competing with the junk that gets all of the traffic and reviews.

 

[Bigguns50]

J.Peterman

Wow...amazing creative, artistic flair to the stories in this catalog. I love it !

@Jill, great info...thanks ! I have noticed brands that used to be 'high end' and now can be bought anywhere for what seems an average price. (I always felt like...I thought this was 'exclusive'...now what's so special about it ? ...Now I don't want it. You know...your picture paints you, from my point of view, as affluent. Even lack of jewelry...it's just your 'look'. No girl crush.. I don't know what's in the background, but it appears to possibly be some artwork.??

I could give you examples of my customers for countless paragraphs. But at the end of the day, every story is different.

I find this topic so fascinating. I worked for a hard money lender for four years and had the privilege of meeting dozens of wealthy investors. Each one different and unique, but many had similarities that I admired. I really enjoyed conversations with them.

I actually purchased my home from one gentleman who resides on Marco Island. Interesting, swell gentleman he is. I believe he's about 85 yrs old now. He was actually going to let the City take back the house because he refused to pay the 3 yrs back taxes( never put 'good money to bad money' he'd say)....so....I took care of that problem for him . All our correspondences were via phone or mail (letters he typed on a typewriter). I still have them.

Something I learned on my own many years ago, and is mentioned in another thread, is 'mirroring'. I didn't know what it was called...I just did it. My body language, posture, choice of vocabulary, etc., changes depending on who I'm speaking with. It always seemed to make a nice connection doing that.

It is the difference between intrinsic value and extrinsic value.

Absolutely. One man loved his custom made imported suites from Italy, one woman her full length minks and purse collection (many from Ebay lol) but very few jewelry pieces, one man his skiing trips at his cottage in Vale, one man his pink custom made convertible....something or another lol.

I could go on but great stuff guys, really great. Thanks.

 

[AllenCrawley]

Luxury Brands Need to be Digital

"According to IBM’s Digital Analytics Benchmark report, online sales were up 10.3 percent in fourth-quarter 2013 compared to the year-ago period.

In addition, the report found that mobile accounted for 35 percent of all online shopping traffic, which represents a 40 percent spike from fourth-quarter 2012.

Overall during the 2013 holiday season, mobile sales represented 16.6 percent of all online sales, up more than 46 percent from the comparable quarter in the prior year.

Not surprisingly, the affluent are playing a big role in the overall digital shopping trend.

According to Ipsos’ monthly Affluent Barometer in November, spending among this group was tracking 10 percent to 20 percent ahead of 2012.

Like a majority of seasonal shoppers, retail and electronics topped this group’s holiday wish lists. But strong interest extended across a variety of categories, with comparable figures pointing to high-end luxury items.

According to Affluence Tracking Study #24, 33 percent of the affluent surveyed said they asked for fine jewelry/watches during the past holiday season.

Luxury apparel was not far behind.

Unlike flat screen televisions and the latest toy fads, these big-ticket items did not see huge price reductions, and were not part of any retail stores’ door buster incentives.

These are not the same type of items that the average shopper fought for after they finished their Thanksgiving turkey. These lavish gifts are typically given thoughtful consideration.

Yet, the brands selling these items need to rethink how they reach potential buyers, and going digital is key.

Though luxury shopping is often as much about the shopping experience as it is the purchased item itself, luxury brands should consider the brand experience beyond bricks-and-mortar.

Today’s digital landscape offers luxury brands extraordinary tools to effectively show-off their products.

Innovative ad units such as the IAB Rising Stars afford marketers the opportunity to integrate video and have interactive product tours and relevant content within the ad units, creating an engaging experience that can easily be shared across a consumer’s social network.

Of course, engaging content, not ads, motivates consumers to share with their personal networks.

Brands that create videos which capture our imagination will reap the benefits from the increasing socialization of media. It is not about selling a product. It is about telling a story.

While video is still a relatively new ad model, it appears to be working.

Interestingly, the affluent audience, notorious for being the hardest to reach in traditional channels such as television, finds video to be the most effective form of digital advertising.

According to Ipsos, 41 percent of affluent consumers said they took an action after seeing a video ad. What is more, research shows video ads increase purchase intent five times more than standard banner ads.

Smart call
Deloitte anticipated that mobile and social would play a large role for holiday shoppers across income brackets this past season.

Seven in 10 consumers said that they planned on using their smartphone for a variety of purposes during the holiday shopping season, such as finding store locations (56 percent), researching prices (54 percent) or getting product information (47 percent) than to shopping or browsing products online (45 percent).

Forty-five percent of respondents said they would use social media during their purchase consideration for things such as gift ideas (48 percent), discount research (44 percent), product reviews and recommendations (40 percent), browsing products (37 percent) and checking out what family or friends desired (35 percent).

IBM’s numbers backed this up, revealing that traffic to retail sites from smartphones made up 21.3 percent of all online visits.

In addition, tablets brought in 11.5 percent of all online sales, with transactions on tablets averaging $118.09 per order.

The IBM report also revealed that shoppers referred to retailers by Pinterest spent, on average, $109.93 per order.

Facebook leads saw an average of $60.48 per order, but the online giant managed to convert visits into sales 3.5 times more often than Pinterest did.

This broadening shopping community offers brands the opportunity to reach consumers at all stages of their lifecycle.

Luxury brands, in particular, can capitalize on these channels to extend the VIP in-store customer experience, bolster their exclusive brand identities and offer further incentives for customers splurge.

WHAT ALL OF this tells us is that, despite the significance of the bricks-and-mortar luxury shopping experience, affluent customers are flocking to online commerce, and brands are going to have to catch up to those trends to make the most of their revenue potential this year."

Source

 

[Bigguns50]

@TedM From a consumers point of view I agree with you.

I think depending on our income levels, education we look at B&M and websites and determine if we want to shop there by the look and feel of the store or website, and level of language used. Our perception of quality and price.

ie: My Wife on a whim while we left the movie theater said "Let's eat at that steakhouse. I've wanted to check it out." oh boy.

My visuals/perception:
Beautiful building. Very nice vehicles in the parking lot.
The 2 girls at the reception desk looked and dressed like Hollywood models.
Walk in--ask us for our reservation..."Oh..sorry, no reservation." ... ok, np. (surprised)
Incredible decor w/ wall of water, all beautiful hardwoods. People dressed from casual to formal. hmm.
No prices on the menu..uh oh.
No name tags on the staff..uh oh.
The Manager standing with his hands behind his back over looking an orchestra of workers.

Amazing service...and yep...lot's of $$$.

My perception was this was going to be expensive and SHOULD be incredible....and it was.

 

[AllenCrawley]

Marketing to the affluent can be a great opportunity. However assuming rich people are throwing money around like confetti is an idea we need to get out of our heads.

MYTH:
All affluent people spend money willingly, sometimes carelessly, on anything and everything because they have the money to do so.

FACT:
Nearly all are extremely frugal about most things and amazingly un-frugal about a few things.

 

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[KRothschild]

I disagree with a lot in this thread. From my experiences, if you want to appeal to elite families and the aristocracy, you need to decide whether you appeal to the culturalist or the materialist. If it's high quality and low-key (unidentifiable haute couture, unheard of social networks and clubs, etc) you're going to appeal to the deliberately understated. The real work in the exclusive portion of luxury is regularly weeding out hanger-ons and any glitches in a clean, professional image.

Materialist is what everyone has access to. IIRC 60% of Japanese women own a Louis Vuitton bag. If you look at how they work very hard to come across as culturalist to the lower classes (using astronauts and David Bowie for ad campaigns, suing rappers for making them look tacky, etc) - I think this is the oft-missed point. You need the big logos and cheap perfumes that the poor will buy, but you need to make them think you're classy so they feel classy.

 

[AllenCrawley]

Hair Chain Drybar Finds Niche in Affordable Luxury

Ms. Webb launched a line of hair-care products, including the store's signature yellow hair-dryer called Buttercup, which are sold online, at Drybar locations, on shopping channel QVC and at 140 Sephora stores.

excerpt...

WSJ: Drybar is very involved on Instagram and Twitter. How has that become part of the business?

Ms. Webb: I'm very particular about what we put out there. Even on Twitter, I personally respond to a lot of the tweets that we get. And I think that's impactful. I think I do that as much as I can because I know how it feels. You reach out to a company and you just expect that no one will ever get back to you.

http://online.wsj.com/news/articles/SB10001424052702304607104579209970308197960

 

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[AllenCrawley]

Newspapers, tablets have highest media engagement levels among affluent: report
By Joe McCarthy


Although digital media is usurping more traditional forms, television, newspapers and out-of-home advertising still hold considerable sway, according to a report by the Shullman Research Center.

The “Reaching the Wealthy Consumer” report also looks into the engagement differences between consumers with a net-worth above $1 million and those below. Overall, the monthly pulse suggests that brands should continue to diversify their marketing strategy and continue to invest in traditional platforms.

“We keep hearing about the impending death of traditional media and this [data] suggests that depending on which segments you’re going after, traditional is still vibrant,” said Bob Shullman, founder/CEO of the Shullman Research Center, New York.

“When you look at reach and effectiveness, digital is coming up and the wealthier people are using it, but some of the traditional media are still strong.”

The information found in the “Reaching the Wealthy Consumer” report is based on the Shullman Luxury and Affluence Monthly Pulse Fall 2013 Preview Wave that was conducted online Aug. 20-27 among Unites States adults ages 18 or older.

A total of 1,013 completed interviews were obtained from five sample groups divided among four income brackets: $75,000 to $149,999, $150,000 to $249,999, $250,000 to $499,999 and $500,000 or more.

Reach vs. engagement

Fifty-eight percent of high-net-worth consumers responded that they had seen or heard advertising on television in the past 30 days, which accounted for the highest overall reach of any platform. Web sites, print magazines, mail, print newspapers and emails followed television in terms of reach.

Ralph Lauren ad in April Robb Report

Facebook and Instagram had higher reach potential among consumers with a net-worth under $1 million.

Print newspapers were regarded by higher-net-worth consumers as the most engaging platform for ads, followed by digital newspapers, Twitter and medical offices.

For respondents with a net-worth below $1 million, tablets, digital newspapers, television and printed magazines were the most engaging platforms.

Rolls-Royce tour

Interestingly, shopping malls were regarded as more engaging for the more affluent consumers.

Climbing to the top

A previous report urges marketers to make distinctions between high-income consumers and wealthy consumers.

While not all millionaires have a high annual income, the report argues that they should still be a primary focus for marketers. As the report splits up its survey base, different attitudes emerge that may be useful for marketers (see story).

Also,72 percent of ultra-affluent said that they buy based on quality and less on price, and 64 percent said that they seek out superior service when shopping. This study builds upon the Shullman Research Center’s last study by providing a closer look at Amazon from the consumer’s perspective (see story).

Fifty-nine percent of adults in the United States have made a purchase on Amazon in the past year, according to the survey.

The “Shullman Luxury and Affluence Monthly Pulse” survey suggests that the consumer shift toward Amazon is powered by the engines of competitive pricing and convenience. Although Amazon’s ascent, capabilities and penetration of the luxury market are nothing new, determining the size of jeopardized market share will help luxury brands find a common ground with the online retailer (see story).

“A lot of marketers are experimenting with a lot of different things, looking for the best solution,” Mr. Shullman said. “It depends on who your customers are.”

Source: http://www.luxurydaily.com/newspape...edia-engagement-levels-among-affluent-report/

 

[Lex DeVille]

Still can't touch the product though.

First Touchable Hologram Created in Japan

Give it a few more years.

 

[AllenCrawley]

Facebook top channel for ad recall among millionaires

"Other channels in which the wealthy had a higher portion of recall than all consumers include Pinterest, digital newspapers, Google+, Tumblr, sports stadiums, elevators, office lobbies, inside gyms and on transportation such as airplanes, buses and subway cars."

"According to a study conducted by Facebook, approximately 20 percent of Americans’ time on mobile is spent on Facebook and Instagram, evidencing their marketing potential. For those who use both equally, Facebook satiates desire for empowerment and connection, while Instagram satisfies the want of fun, relaxation and discovery.

Interaction on both platforms is tilted most heavily in favor of close friends and family, but celebrities and brands are higher priorities for Instagram users. However, Facebook is bigger for person-to-person interactions, presenting brands with the conundrum of visibility and engagement on Instagram, but better viral opportunities on Facebook (see story)."

https://www.luxurydaily.com/facebook-top-channel-for-ad-recall-among-millionaires-report/

 

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[The-J]

One of my long term clients is an ecommerce store selling skin care to the affluent (mainly older women). I kind of help run it at this point.

This skin care ranges from $49 to $8,000. The 4 figure stuff doesn't sell every day.

No group of people "likes what they like" more than the people who can afford it. Price to them doesn't matter as much as the experience they get from it. That's why Hermes can sell what they sell for the prices they sell them for. Part of it is buying the brand name, but so much of it is just buying the experience. Not only do you feel good carrying a Hermes bag, you feel good using it. You feel good looking at yourself carrying it. You feel good talking about it. Every part of the experience makes you feel good. As long as you have that bag, there's some sense of pride, enjoyment, utility, and looking good. Same with the skin care my client sells.

Price does matter, but not as much as the experience.

People who can't afford things like this tend to make fun of it. Thing is, them making fun of it rarely matters anyway. If it hits the ears of the affluent, though, they might be curious enough to give it a go (depending on how you sell it).

Another thing about affluent customers is that they seem to put a great deal of trust in a given brand. If you want to market to the affluent, you need to REALLY build that trust. Affluent customers can afford to buy things that WOW them, and will generally tend to choose the best thing they know about (if they value that product category, that is)

This thread is excellent and I hope you keep updating it. These articles are really eye opening.

 

[AllenCrawley]

BTW, abebooks.com is a great place to buy the above books for just a few bucks. (Thanks @Mrs. BRKb for recommending them)

 

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