Today there are more affluent households than ever before, from more diverse ethnic and psychographic backgrounds, and they include a wide range of age demographics as well as various degrees of wealth. They're just as likely to be shopping at H&M or grabbing a latte at Starbucks on Saturday as they are to be making the rounds at an exclusive country club.
However, thanks to the flagging economy, many have one thing in common: They're not feeling nearly as affluent as they once did.
About 55% of the wealthiest Americans -- the top 10%, with an average net worth of $3.1 million and an average annual salary of $315,000 -- have cut back on expenditures in the past year and will make a conscious effort to keep cutting during the next 12 months, according the spring 2008 survey by the American Affluence Research Center.
Plans to buy vehicles, build new homes or extensively remodel their current ones have also hit historic lows among the über-wealthy that are the subject of the center's six-and-a-half years of twice-annual surveys.
Pam Danziger of Unity Marketing, who classifies affluent consumers as those who make at least $100,000 in wages -- or about 20% of American households -- recently noted that luxury-consumer confidence is way down. Some 41% of those consumers expect to spend less in the next year, and only 13% plan to spend more.
"When gas hits $3.50 a gallon, I don't care how much money you make, you're going to notice it," Ms. Danziger said. "Luxury is the easiest thing to hold back on. ... They might have just as much money as they did six months ago, but today they don't feel as flush."
So what's a marketer looking to sell to affluent consumers to do?
The unaffected few
Well, there are some at the rarefied levels of wealth who are still spending at the same or increased levels. It may take more targeting or research, but there is evidence that certain segments are still indulging.
The weak economy also may open opportunities to appeal to affluent consumers' "bargain" side. Why buy a $1,500 Tod's handbag when substituting a $350 Dooney & Bourke bag (as Ms. Danziger just did) makes you feel just as good?
And because there are more affluent consumers than ever before -- thanks to double-digit growth of households with incomes of $100,000 or more in the past few years, according to Unity Marketing -- there are more potential customers.
This burgeoning affluent class is also more diverse than before, with more women, minorities and young people heading the households. Minorities lead 13% of affluent households, 5% are headed by women with no husbands present and 30% are either Gen X or Millenials. That means greater segmentation than in the past -- and a more difficult marketing challenge.
In short, marketers need to get to know the modern affluents. So we pulled stats and figures from various researchers to help you do just that. The five categories on the left are Ms. Danziger's characterizations of the "personalities" of affluent consumers, while the traits on the right were culled from other researchers' demographics and psychographic studies.
TEMPERATE PRAGMATISTWhen Unity Marketing profiled the personalities of the affluent market in 2003, this category didn't exist. But in 2007, temperate pragmatists accounted for 22% of the market. They appreciate luxury products but the pursuit and purchase of them holds no great appeal. They are least likely to "indulge" and spent only about $9,000 on lux purchases in the second quarter -- about half of what the average affluent consumer spent. Of the five personalities, they have the lowest average incomes, at $146,000, and the oldest average age, with the majority in the 55-to-70-year-old range.
BUTTERFLIESAs the name implies, this group is changing, morphing from self-indulgent spenders to more socially responsible consumers. While they only slightly outspend the more pragmatic-affluent personalities, this group has the highest average income. They spent just over $15,000 on luxury items last quarter, almost exactly average. Much of this group is made up of baby boomers aged 45 to 55.
COCOONERSEqual in size to the pragmatists is this group of affluent consumers who desire luxurious homes as both shelter and investment. Ms. Danziger describes them as "luxury consumers who prefer the status quo." They tend to be somewhat cautious in their luxury spending and dropped about $12,000 in the second quarter, or about 25% less than the average affluent. Men account for more than half (52%) of this group.
LUXURY ASPIRERSThe mantra for this group could be buy, buy, buy. They are highly materialistic and identify luxury as what they buy and what they own. They haven't reached the level of affluence they hope to attain but recognize -- and buy -- brands with the best lux recognition. Their incomes are below the average, but they dropped almost $17,000 in the second quarter on luxury items.
X-FLUENTSLess-than-ideal economic conditions won't slow this group down. These consumers want what they want when they want it. They "describe their luxury lifestyle as the best of the best," Ms. Danziger reports. They spent more than $24,000 on luxury items in the second quarter. They're also the youngest-skewing of the five personalities, with the majority falling into the 24-to-34-year-old range, and are most likely to live in the downtown area of a major city.
HIGHLY ASSERTIVEPeople who make more than $100,000 a year are 38% more likely to be extremely assertive, and people who make $200,000 or more are 57% more likely to be that way, according to Mindset Media. Sarah Welch, Mindset's chief operating officer, said: "It makes sense -- they're not afraid to ask for those raises and promotions." They are also 52% more likely than the average consumer to purchase four or more pairs of sneakers each year, 54% more likely to always buy organic and 57% more likely to see four or more movies at the theater every month.
HOUSE-RICHWhile the subprime-mortgage market crumbles, many of the wealthiest 10% of Americans are safely ensconced in their primary homes with low mortgage balances or none at all. That means while their real-estate values may be dropping, the equity in their homes is extremely high, with incidences of being "upside down" on mortgages very rare, said Ron Kurtz, president of the American Affluence Research Center. The spring 2008 study found that those who did have the lowest level of equity in their homes were least likely to make major purchases this year and also more likely to decrease spending on a variety of smaller-ticket items such as dining out, furniture, home-entertainment equipment, recreational activities and charitable contributions.
SOCIAL MEDIA-SAVVYHouseholds with annual earnings of $100,000 or more use the widest range of internet tools and websites to learn about brands' customer-service experiences when buying new products. Research from the Society for New Communications Research, funded by Nuance Communications, showed that those in the wealthier group use multiple search engines and advanced search techniques, in contrast to their sub-$30,000-salary compadres, who are more likely to choose -- and believe -- customer information on corporate websites, along with popular social sites such as YouTube, MySpace and Facebook.
"They're very sophisticated in terms of their use of social media," said Nora Barnes, research fellow and one of the study's authors. "They're also the people who say they're most likely to share their own experiences online ... and to say they choose companies and brands based on customer care online."