In new ground breaking research, a national survey of the wealthiest 10% of US households reveals how the affluent define "luxury" by price points and brands. The survey respondents were asked to specify the most they could imagine spending for 37 different products and services. They were also asked to name the brand they would most likely purchase for each of the items. The results of this new research demonstrate that surveys that attempt to measure spending on "luxury" items are useless, at best, and dangerously misleading, at…
In new ground breaking research, a national survey of the wealthiest 10% of US households reveals how the affluent define "luxury" by price points and brands. The survey respondents were asked to specify the most they could imagine spending for 37 different products and services. They were also asked to name the brand they would most likely purchase for each of the items.
The results of this new research demonstrate that surveys that attempt to measure spending on "luxury" items are useless, at best, and dangerously misleading, at worst, if "luxury" is not precisely defined by specific price points. The same appears to be true for surveys that attempt to identify "luxury" brands without specifying price points to define "luxury".
Unlike other affluent and luxury market research that is based on online surveys of panels of people who are compensated for participating in regular and frequent surveys, our unique mail surveys are based on samples drawn at random to be representative of the precisely defined population of affluent households, consistent with the research of the Federal Reserve Board. Confident of their anonymity, the respondents to our surveys are typically more affluent and more open in providing confidential information.
The profile of the survey sample is as follows: $304,000 average household income, $3.1 million average household net worth, and $1.6 million average household investable assets. The average value of their primary home is $1.2 million. The average age is 55 while 86% are married and 60% are males. The sample represents 33 states plus the District of Columbia.
In this study, both men and women were asked about the same 15 products and services. Women were asked about an additional 11 gender oriented products and men about an additional 11 products.
Both men and women were asked to provide a price and a brand for a new auto for personal use, a room in the winter in a Caribbean resort, a European cruise, a hotel room in New York City for a vacation, a refrigerator, an original painting, a washer/dryer set, a king size mattress, a set of linens for a king size bed, wall to wall carpet, a watch for dressy occasions, a watch for every day, a bottle of wine for a special dinner at home, frames for sun glasses, and a large 24" wheeled garment bag.
Women were asked to provide a price and a brand for a dressy suit, shoes to go with the dressy suit, a cocktail dress, shoes to go with the cocktail dress, a pair of jeans, a pair of diamond stud earrings, a purse for every day, skin rejuvenation cream, liquid make-up/foundation, a bottle of perfume, and lipstick or gloss.
Men were asked to provide a price and a brand for a business suit, shoes to go with the business suit, dress shirt to go with the business suit, a tie to go with the suit, a tuxedo, shoes to go with the tuxedo, shirt to go with the tuxedo, a sport coat, slacks to go with the sport coat, a dressy long sleeve shirt, and dressy short sleeve shirt.
The research results support two important observations about the affluent market.
First, the affluent market, as defined by the wealthiest 10% of US households, is composed primarily of people with middle class backgrounds who continue to pursue a somewhat middle class lifestyle with middle class values They are not conspicuous or ostentatious consumers. They spend conservatively and save carefully.
Second, with the exception of a small niche segment, this market does not appear to be very knowledgeable about the pricing and brands of products that are generally recognized by marketers as being in the higher price points associated with the luxury category. This seems to be an opportunity to substantially increase the market for high end luxury products if the affluent market can be educated about why they should consider buying them and the brands that offer them.
None of this is new news or indicative of a new trend. The research by Professor Thomas Stanley that led to "The Millionaire Next Door" and related books in the 1990s produced similar conclusions.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
