Survey On Consumers Of Luxury Goods

Furniture World News

In order for a product to be called ‘luxury’ there are three primary product attributes that must be apparent to the consumer, according to a new survey among 700 luxury consumers (average income $133,000) conducted by Unity Marketing. When asked to rank nine different attributes of luxury, consumers say first and foremost a luxury product must exhibit superior quality. Then the luxury good must deliver distinctive style and design and it must have the right price/value relationship. Superior quality is of primary importance to luxury consumers “With the recent emphasis in the luxury market towards experience, we sometimes lose sight of the fact that product quality does count,” says Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes. “Luxury consumers are primarily drawn to trade up to luxury because they expect better quality, finer details, superior workmanship and materials. Nearly 90 percent of luxury consumers agreed with the statement, ‘When you buy a luxury item, you expect it to be a cut above the average.’” Luxury consumers also expect style and design But luxury marketers must go beyond offering the ‘best of the best’ quality and also deliver intangibles like outstanding style and design that luxury consumers rate almost as highly as quality. Danziger explains, “In addition to their expectation of superior quality, luxury consumers are highly attuned to style and design that are more a reflection of personal taste and experience. For the uninitiated it may be easier to distinguish product quality than to recognize outstanding style and design. Luxury consumers have discerning tastes and an appreciation for superior style.” Luxury consumers want a favorable price/value relationship It’s these expectations of higher quality and superior style and design that makes luxury consumers willing to dig a little deeper into their pocketbooks or wallets to buy the more luxurious item. But while luxury consumers appreciate superior luxury quality and design, they also get an experiential thrill of paying less for the best. Over 80 percent of luxury consumers agreed with the statement, “I enjoy the feeling of buying luxuries on sale and usually search out the lowest price or the best value.” Thus luxury consumers carefully evaluate the value of the luxury attributes offered against the asking price. For luxury goods that come up short in the value proposition, shoppers are less likely to pay the full asking price. Luxflation means continually inflating the luxury value delivered to the consumer “What is luxury today becomes the norm tomorrow. Luxury is constantly devolving as luxury is translated from the ‘classes’ down to the ‘masses.’ What once was extraordinary ultimately becomes ordinary,” Danziger concludes. “Therefore luxury goods marketers must fight against the inevitable downward gravitational pull toward the common and everyday by continually inflating the luxury value of their product offerings. This strategy for marketers to pump up the luxury value of their products is called luxflation.” “Luxury marketers must begin by offering the ‘best of the best’ quality, superior style and design and the right value/price equation, but they also must go beyond to deliver not just a great thing, but a wonderful experience to the customer. Thus the bar is raised and luxury marketers must work harder to enhance the luxury value of their goods in order to maintain their luxury products’ allure and appeal.” About Unity Marketing’s Luxury Tracking Study Unity Marketing’s Luxury Tracking Study is a semi-custom research study that reports purchase, spending and branding information from a sample of over 700 upper-income households throughout the United States. Study sponsors add key product categories and brands to the survey. The luxury consumer panel, with household incomes over $85,000 (about one-third $150,000 or more) represents one of the largest longitudinal studies of high-end luxury consumption of goods and service! s. Panelists report purchases of luxury goods and services over the past three months, as well as attitudinal and expectation data about luxury brands and categories, their households and the health of the economy in general. Eight Things That Every Marketer Needs to Know about the New Luxury Market By Pam Danziger, President Unity Marketing and author Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes Today’s luxury market represents every marketers’ and retailers’ ‘sweet spot.’ The top 25 percent of U.S. households (incomes of $75,000 and higher) have incomes two-and-one-half times larger than the nation’s average and they spend about two-times more than the average on most categories of consumer goods. In effect, the luxury consumer buys more of everything and they spend more everytime they shop. But today the luxury market is undergoing dramatic changes as a new generation of luxury consumers, the baby boom generation, becomes the ‘new luxury’ generation. Because consumer insight is the ultimate competitive weapon, here are eight essential things that EVERY luxury marketer needs to know about today’s luxury consumer. Luxury Lesson #1 — ‘Old luxury’ is at an end; ‘New luxury’ is here! Back in the ‘go-go’ 90s, luxury was defined by the attributes, qualities and features of the product itself, like price, materials, brand, and much of its appeal was derived from status and prestige. Shopping was a competitive sport and the one who acquired the most luxury ‘toys’ was declared the winner. This ‘old luxury’ ideal is best embodied by the television show ‘The Lives of the Rich and Famous with Robin Leach’ and such ‘old luxury’ icons as Donald Trump and Martha Stewart. But ‘old luxury’ is dying out. ‘Old luxury’ doesn’t resonate with the new luxury generation, the baby boomers, who have always been a generation that challenged authority, rejected the status quo, and went their own way. ‘New luxury’ is luxury defined consumer-centrically, totally from the point-of- view of the consumer. Today’s new luxury consumers focus on the experience of luxury embodied in the goods and services they buy, not in ownership or possession itself. So ‘new luxury’ is about the experience of luxury from the consumers’ perspective, while ‘old luxury’ remains focused on the attributes and qualities of the product and the traditional status and prestige ideal of luxury. Luxury Lesson #2 — Luxury consumer is driven experientially; it’s not about the money The luxury consumer primarily interprets and participates in the luxury market experientially. Luxury just isn’t about the thing anymore; it is about the special experience people feel in buying and using or enjoying that thing. For these consumers, luxury is about achieving a comfortable lifestyle in the material realm, having those things that make life easier, more pleasant and more satisfying. But the real meaning in the luxury life comes through family, friends, experiences that deepen one’s understanding and appreciation of life. In other words, the luxury lifestyle is not necessarily about money; it’s about the experiences and feelings that having enough money can bring. Luxury transcends the physical and material. It is interpreted personally and experientially, and not about what one has or owns. As a result, it transforms the individual, enhances their appreciation of life. Almost 90 percent of luxury consumers agree with the statement “Luxury doesn’t have to the most expensive thing or be the most exclusive brand.” Luxury Lesson #3 — Luxury consumers are democratic in their approach to luxury; Americans value individuality over exclusivity While much is made in the luxury goods industry about maintaining exclusivity of their goods, usually through high price and limited distribution, the luxury consumers don’t particular ‘buy’ the idea that luxury is better when it is something exclusive to me or those in my social set. Rather they have a very democratic view of luxury, as 77 percent of luxury consumers agreed with the statement, “Luxury is for everyone and different for everyone.” Since luxury is not really about money, it is something that everyone from the highest to the lowest income can, and surely do, participate in. It’s about the feeling, not the thing. Exclusivity, in and of itself, brings very little luxury value to today’s democratically-attuned luxury consumer. That said, the luxury consumer also yearns for more ‘specialness’ in their experience of luxury. Exclusivity for the sake of exclusivity is not what American luxury consumers value, rather it’s exclusivity derived from one’s ability to express a personal point of view, an attitude and one’s uniqueness. So the challenge for luxury marketers in the American luxury market is to deliver greater exclusivity by making the luxury consumer feel special and unique, but never let it morph into class snobbishness or arrogance. It is a delicate balance that is very hard to pull off successfully, but those marketers that do it will achieve great rewards. Luxury Lesson # 4 — Luxury goods are better; Quality counts When we draw luxury consumers back to discuss the thing, they share a widely held view that items called ‘luxury’ are noticeably a cut above the average. They have an expectation of better quality, finer details, superior workmanship and materials that goes along with the purchase. Nearly 90 percent of luxury consumers agree with the statement, “When you buy a luxury item, you expect it to be a cut above the average.” It’s this expectation of higher quality that makes luxury consumers willing to dig a little deeper into their pocketbooks or wallets to buy that extra feeling of confidence. But that extra quality doesn’t always have to cost more. Luxury Lesson #5 — Luxury consumers are bargain shoppers always looking for a good deal While these luxury consumers appreciate superior luxury quality, they also get an experiential thrill out of paying less for the best. Over 80 percent of luxury consumers agree with the statement, “I enjoy the feeling of buying luxuries on sale and usually search out the lowest price or the best value.” The irony of this finding is that these luxury consumers who can afford to pay full price in every category that they participate in are unwilling to do so. They get a kick out of buying on sale, getting a bargain, winning at the shopping game. The luxury shoppers are ready, eager and always willing to search out the best price. They don’t feel compelled to pay the highest price or shop at the full-price, full-service store, when they know they can get the same thing somewhere else cheaper. They are savvy shoppers and know how to find a bargain and get a good price. Luxury Lesson #6 — Luxury consumers are highly invested in their lifestyle; They put little at risk One characteristic of luxury is clear: luxury is always evolving, changing and moving. Once consumers achieve a certain level of luxury, that luxury becomes the ‘ordinary,’ and they seek out some new higher plane of luxury. Thus what was once the extraordinary becomes the ordinary, and they seek out a new luxury fulfillment. Luxury is something that consumers strive for. It also is something that luxury consumers are heavily invested in maintaining and keeping. For luxury consumers once you have experienced luxury, you can’t go back. It’s a divide that a consumer crosses that says, “I have made it.” Because luxury is tied up with creature comforts and feelings of comfort, consumers who achieve a luxury lifestyle are not likely to make do with less or give up continued luxury. Luxury consumers buy and continue to buy luxury because they can afford to and appreciate the enhanced experience of luxury, but they are not buying luxury to impart status or social advancement or willing to go out on a limb financially to acquire something they clearly can’t afford. Luxury Lesson #7 — Luxury consumers don’t buy because of the brand; Brand justifies the purchase The brand is not the arbiter of whether or not a specific product is a luxury. Neither does it play the deciding role in whether or not to buy. Rather the brand becomes a justifier for the purchase. It assures the luxury consumer of the superior quality of the item and that it will last for years. The brand and its reputation encourage the consumer to dig a little deeper into their pocketbooks to buy. It’s the “Good Housekeeping Seal of Approval” that confirms the product is worth the extra investment, so it plays a critical role in the buying decision. The brand transmits the value and quality messages so important for consumers who participate in the luxury lifestyle. Luxury Lesson #8 — Luxury consumers exhibit differences of degree, not of kind The differences we find within the luxury market are primarily behavioral, not motivational. Behaviorally, different luxury consumers might buy more or less of a certain type of luxury product, for example the more affluent buy more luxuries and spend more when they do simply because they can. But as far as the motivations for buying luxury goes, the differences are minor because all luxury consumers up and down the income scale gain their greatest luxury thrills from experiences. Sidebar — Luxury marketers need to strategize for ‘Luxflation’ to counteract the downward gravitational pull of luxury from the classes to the masses The natural evolution of all luxury concepts is first to be introduced to the ‘classes,’ then to be translated down to the ‘masses.’ Inevitably all luxury concepts are reinterpreted for the masses, and while in the past this evolutionary progression may have occurred at a glacial pace, today the transformation of luxury from the 'classes’ to the ‘masses’ happens in a flash. Any number of factors are in play in the rapid progression of products from indulgent luxuries to basic 21st century necessities. Think color televisions, DVDs, VCRs, cell phones, home computers, air conditioners, dishwashers, jet travel, all of which started their product lifecycle as a luxury available to a few, only to be transformed over time into a standard of living basic for most Americans. Propelling the rapid transformation from luxury to lifestyle necessity is the wealth effect. More and more Americans are enjoying greater disposable income, as the cost of the basic necessities of life take a smaller and smaller share of the family paycheck and personal income tax levels continue to decline. Along with increased affluence and an ability to spend more on desire-based purchases, the rise of mass media, 24/7 cable news channels and the internet have brought new awareness to the masses of how the rich and famous live. Thus as the masses are exposed to what the rich have and how they live, it has given people everywhere a growing appetite for the good life and the feeling that it is within one’s grasp. Luxury is a constantly moving target. Consumers become familiar with one standard of luxury once it is achieved, so what was once extraordinary becomes ordinary and the luxury feeling of specialness is lost. As luxury moves down-market to the masses, luxury marketers must continually reach up and extend the bar of luxury higher and higher to bring freshness, newness, and something altogether extraordinary to the ever aspiring luxury consumer. It’s this trend toward luxflation ─ the need to deliver greater and great luxury value to the consumers ─ that is the ultimate marketing challenge for all luxury marketers. Luxury marketers and service provides must continually strive to refine, define, enhance, and enrich the luxury value proposition that they offer their customers. And today they have to make this transformation happen at a faster and faster pace. This need to keep upping the ante on luxury becomes the mirror image of the “trading up” phenomenon, where the luxury market devolves into the masses, resulting in virtually no distinction between mass or class, luxury or ordinary. Devolving from class to mass represents a real and present danger for individual luxury brands. Fifty years ago Revlon was a luxury brand of cosmetics. Today it is relegated to blister packs in the super markets and drug stores. The lesson for luxury brand managers is they must be vigilant in maintaining luxury allure of their products by continually pumping up the luxury value of their brand to reverse the inevitable downward pull of gravity toward the common and everyday. For more information: This article was adapted from Pam Danziger’s latest book, Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes (Chicago, IL: Dearborn Trade Publishing, January 2005) which deals extensively with the psychology and purchase behavior of the luxury consumer © Unity Marketing, 2005 About Pam Danziger and Unity Marketing Pamela N. Danziger is a nationally recognized expert specializing in consumer insights for luxury marketers, whether they sell luxury to the masses or the ‘classes.’ She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Advising such clients as Lenox, Cartier, Herend, Crystal Cruises, Spring Air, Sears, The World Gold Council, The Conference Board and American Express, Danziger taps consumer psychology to help clients navigate and master the changing luxury marketplace. Her latest book, Let Them Eat Cake: Marketing Luxury to the Masses—as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) is in book stores now. She is the author of the recent book, Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004). She has appeared on CNN's In the Money, NBC's Today Show, CNBC, CNN International, CNNfn, CBS News Sunday Morning, Fox News’ Your World with Neil Cavuto, ABC News Now, NPR’s Marketplace and is frequently called upon by the Wall Street Journal, New York Times, American Demographics, Women’s Wear Daily, Forbes, USA Today, Associated Press, Los Angeles Times, Chicago Tribune for commentary and insight. Unity Marketing publishes market research and consumer insight studies on the luxury market, jewelry, garden, pet accessories, home furnishings, gifts and collectibles, greeting card and stationery, tabletop, art and wall décor markets, as well as the Luxury Business newsletter.