Research: What Wealthy Consumers Look for in Luxury Brands

Posted by Barry Silverstein on January 18, 2012 01:36 PM

Luxury brands aren't the only segment targeting the "1 percent," the uber-rich slice of the population that has been taking a lot of heat from the so-called 99 percenters. It is these wealthiest consumers, occupying rarefied air, who vote with their checkbooks, so their preferences are closely considered and carry a lot of clout.

So what is the high net worth consumer looking for? First and foremost, superior quality, according to "Luxury Branding and Marketing: A Global Comparison of Wealthy Consumers in Top Markets," a study just released by Luxury Institute. The survey analyzed wealthy consumers with a minimum annual income of $150,000 or the local currency equivalent in China, France, Germany, Italy, Japan, the United States, and the United Kingdom.

A broad majority (73 percent) of wealthy consumers think superior quality is the most important attribute that defines a luxury brand, followed by craftsmanship (65 percent) and design (54 percent). But increasingly, customer service is becoming a key consideration (47 percent). Customer service is even more important to Chinese consumers, who say that service has improved (63 percent).

On the negative side, however, twice as many wealth U.S. shoppers as last year (34 percent vs. 17 percent) believe that customer service and product quality have deteriorated in recent years. German, Japanese and U.K. consumers think craftsmanship has declined.

Luxury brands that rise to the top are well aware of the discriminating taste and customer service demands of their target audience. Coach, for example, is renowned for providing a positive experience and remaining relevant to the contemporary consumer, using such techniques as a website that allows customers to create their own animations. According to the Luxury Institute, Coach has achieved an unprecedented position with affluent women in the United States with its average 73 percent brand familiarity — the highest by far of any brand in the category.

Similarly, Ralph Lauren has been ahead of the curve when it comes to engaging wealthy consumers. Speaking at the annual NRF National Retail Federation conference this week, David Lauren, Ralph Lauren's EVP of advertising, commented that the overarching goal is to blend "merchandising and entertainment" to keep the iconic brand relevant. "Most people are used to seeing Ralph Lauren as a classic brand," David Lauren said. "We wanted to change that perception and get people comfortable with the idea that luxury items are also available online."

In fact, Ralph Lauren was one of the first major luxury brands to launch an e-commerce website eleven years ago. Today, the company uses everything from 3-D webpage takeovers and iPhone apps to a unique program that engages customers in designing, buying and sharing rugby shirts by beaming them to a store window screen. It's all designed to "unite the retail experience with the Web experience," said David Lauren. "We try to make the Internet feel more personal. We never want a flat screen to scare you away from feeling connected to a brand that's personal to you."

Clearly, it is those luxury brands that can successfully combine their long-standing reputation for quality and service with modern modes of interactive marketing that will make the greatest gains with the 1 percenters.

[Image via Luxury Institute]

More about: Research, Luxury, Coach, Ralph Lauren, Fashion, Retail, Digital, Apps, Mobile, Luxury Institute, National Retail Federation, NRF

Joel says:

Chinese luxury consumers are, on average, relatively younger than their counterparts in developed countries. Forty-five percent of Chinese luxury consumers are between the ages of 18 and 34 years old. These demographic statistics make China a top choice for luxury retailers seeking to expand internationally over the long-term.

January 18, 2012 05:42 PM #

Toby says:

I havent had a chance to take a closer look at how the study was conducted yet but I believe there is some information missing: you simply cant just talk about "wealthy consumers with a minimum annual income of $150,000". What kind of target group is this? You need to narrow consumer groups down, to actually make results valid.

There is rich and there is super rich: which is a big difference. A young entrepreneur who just made his first 200K doent spend money the way Bill Gates does. And he certainly has other needs.

Futhermore social demographics are crucial: there is rich and there is rich - there is Kate Middleton and there kim kardashian as ricky gervais might say. They probably have totally different requirements which brands and products they buy.

Last but not least: neuromarketing results proved multiple times that "what consumers say" (e.g. in a recent study) doesnt necessarily is "what they believe". They might say there mostly looking for superior quality but really they want that car/dress/necklace they just saw in People Magzine or whatever. Just look at Ed Hardy... ;)

January 19, 2012 05:55 AM #

Tom Parrett says:

This is all pretty obvious, general, and of little use to anybody but a reporter short of story ideas. It's apparently a tracking study that measures perceptions of quality (whatever that means), craftsmanship. design and customer service (and perhaps other things) for year-to-year comparisons in half a dozen countries. But who are the respondents, beyond people making more than $150,000 -- in big Western cities, that's probably a half the population in the core and a far sight from a definition of the luxury consumer for any respectable luxury brand.

I notice that Mr. Silverstein's column here is just a lightly edited version of the Luxury Institute's press release on its study. And his information about Coach is a reprise of a previous column of his that also features the Luxury Institute. Gee, even trade magazines deeply beholden to the companies they cover for advertising and goodwill try to put a bit of distance between themselves and their subjects, for the sake of their readers.

January 21, 2012 09:43 AM #

John says:

Interesting article. The Luxe consumers are not only looking for quality, class, brand, there is the growing clamour for “engagement” using social media with consumers and stakeholders alike; this creates further pressure on how to balance exclusivity, aspirational value and premium pricing of luxe brands, with open-access and dialogue. I had come across a interesting article over here which has good points on the luxe consumers wealth, investment patterns across the eat and west. www.trendscape.in/whither-responsible-luxury/

January 24, 2012 04:26 AM #