New Survey Identifies Price Points and Brands for 37 Products and Services
“Luxury” is a very ambiguous word that is used very loosely. Perceptions of luxury vary by individual and by product.
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 create 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 popular perception is that the US has witnessed increasingly conspicuous and ostentatious consumption by an increasingly affluent market for a period of about 30 years, which has been interrupted by brief interludes of retrenchment during the occasional recession and the 9-11 tragedy. This perception has resulted from anecdotal “research” in the media that uses examples such as a young Wall Street attorney spending $50,000 of a year end bonus for a new watch or a secretary spending $1,000 for a new hand bag.
The media has created the impression that there are hundreds of thousands of people making a million dollars a year or more among the ranks of the entertainers, professional athletes, Wall Street bankers and attorneys, Fortune 500 executives, real estate developers, and entrepreneurs who have taken their company public. This, together with the purchases of luxury goods by international visitors leveraging the weak value of the dollar, has given a distorted view of the size and nature of the true affluent market in the US.
The perception of the size and spending patterns of the affluent market created by the media is inconsistent with the data from the Internal Revenue Service and The Federal Reserve Board. The research of the affluent by Professor Thomas J. Stanley that began in the 1970s and led to “The Millionaire Next Door” and a series of related books beginning in 1996 produced similar conclusions regarding the lifestyle, values, spending, and savings profile of the affluent as that suggested by the AARC research. In fact, since AARC’s inception in 2002, the results of its research have been consistent with Professor Stanley’s research.
The 43 page, 74 table report can be purchased for $595 (including a set of 302 pages of data cross tabulations). Place your order by clicking on Order Luxury Defined Report or calling 770-740-2200.