Among the affluent, experiences trump material goods, while wealth itself seems to trump long-assumed differences between one generation and another.
At least that's what new data from a study says about consumers with incomes of $100,000 and above, fielded in May among 870 consumers by Stevens, Pa.-based luxury marketing consultancy Unity Marketing. The findings were, naturally, just what the study's sponsor, American Express, wanted to hear as the company celebrates the 20th anniversary of American Express' Platinum Card.
Very nearly six out of 10 affluent consumers say they get the most satisfaction from their purchase of luxury "experiences," such as upscale restaurants, travel, entertainment and cultural/art events, sports events, personal health and beauty services and home services. Although they indicate that they spend an average of $14,270 on personal luxury goods in a one-year period, only 21 percent of them say that buying luxury goods gives them the most satisfaction. The message, for both marketers of upscale goods like Prada, Neiman Marcus, Cartier and Coach, as well as for dining, services, and travel destinations, is to focus on luxury consumers' desire for an "experience dimension" whether it's shopping, eating, taking in a show or touring.
"The question is 'how can you deliver a greater experience value?' in the shopping environment to make affluent consumers feel they're getting a special, distinctive experience," says Unity Marketing Founder and Principal Pam Danziger. "The fact that affluent consumers say their highest satisfaction rate in luxury purchases is in experiences doesn't mean they don't buy a lot of goods." One in 5 luxury consumers, in fact, favors home luxury goods as the source of their greatest satisfaction, and the group spends an average of $12,300 annually on home luxuries.
Unity Marketing defines "affluents" as the 10.1 million U.S. households with incomes from $100,000 to $149,999, and "super affluents" as the 5.6 million households whose incomes exceed $150,000. The affluent, according to Unity, tend to be members of the Baby-Boom generation. In 2002, average income was highest among households aged 45 to 54, at $74,934. The 35-to 44-year-old households -- mostly Generation X -- have an average income of $68,310.
But when it comes to preference for experience over material product benefits, Boomers and Xer values are virtually indistinguishable, Danziger says the research -- which included 35 percent Gen Xers in its sample -- indicates. "I don't see a lot of difference in satisfaction about luxury expenditures between one age group or another," she says. She adds that survey respondents who said they value experiences most assert that 'enhancing quality of life' is an extremely important motivation for pursuing 'experiential luxuries.'
The Unity Marketing/American Express findings seem to support further research from Boston Consulting Group's Michael J. Silverstein and Neil Fiske on the luxury "trading up" and "trading down" concept among consumers. In travel, for instance, most of the affluent consumers in the Unity Marketing/American Express study choose to get to their destination inexpensively, and then splurge on hotels. This jives with Boston Consulting's findings that "when buying travel, consumers trade up and trade down.... The greatest success for purveyors of travel-related goods is to be had at the low end (particularly in low-cost airlines) and at the high end, in new luxury premium goods and services, including hotels and airline alternatives."
Says Danziger, "We're seeing, in this trend, the emergence of a 'mass' and 'class' phenomenon among affluent consumers. They travel with the masses and sleep and dine with the classes." For more information on the American Express Platinum Luxury Survey, contact
and for further information on Boston Consulting Group's Trading Up study, contact
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