Redefining the Luxury Market
This month, we shed more light on what has been called the “luxury market.” Tim Costello has been leading our readers to “Follow the Money” with his columns in CustomRetailer. The series continues next month with yet another specific market segment, as well as the strategies necessary to prepare your business to go after them.
The luxury market segment stands out as an obvious target because, as Willie Sutton supposedly once said, “I rob banks because that’s where the money is.” Luxury, however, like beauty, is in the eye of the beholder. Luxury means different things to different people. In the absence of being able to objectively define and quantify the “luxury market,” the American Affluence Research Center also believes it’s best to follow the money, and to understand the size, attitudes and behavior of the affluent market; i.e., the people who can afford the higher priced items in the categories of products and services that would be considered expensive by middle income consumers.
AARC has always defined the affluent market as the wealthiest 10 percent of U.S. households, as determined by the Federal Reserve Board, based on net worth. This is an objective, quantifiable definition of a market segment that should be the focus of marketers who believe they are offering a luxury product or service.
The twice-yearly study of the mood and spending plans of the wealthiest 10 percent of U.S. households, which accounts for almost half of all consumer spending, is designed to provide information critical for effective marketing to luxury customers and the affluent in the U.S. and abroad.
These customers have become increasingly value-driven and more and more demanding of superior service, intelligent communication and a personalized understanding of their wants, likes and desires. The most important attributes of a sales transaction is relationship-based, and these customers value knowledgeable, trustworthy, polite and courteous service that is considerate of their time.