October 22, 2013
For Immediate Release
585 words (main text only)
Affluent Reveal Large Untapped Sales Potential for Luxury Brands;
Brand Experience, Familiarity, and Perceptions Surprisingly Low
Brand ownership/experience during the past five years, brand familiarity/knowledge, and brand perceptions were measured for 17 different luxury brands in a new survey by the American Affluence Research Center of the wealthiest 10% of U.S. households that account for almost half of all consumer spending. There appears to be great untapped sales potential for luxury brands among the affluent as the level of ownership and familiarity for almost all brands was lower than what might be expected among this group of consumers that can best afford luxury. Perceptions of the brands were also lower than what might be expected.
In this exhibit, “familiar” excludes those who have owned or experienced the brand during the prior five years. Some brands have a broad product line (including fragrances and cosmetics) with price points that make the brand more accessible and attractive to more people or to a particular gender. Also, the experience with hotels and retail stores is partially a function of geographic coverage, and some brands may be more accessible than others to more people. These factors should be considered when reviewing the data.
Brand ownership/experience during the past five years ranged from a high of 58% of the affluent for Nordstrom’s to a low of 4% for Breitling. When combining ownership/experience with familiarity/knowledge, the total for each brand is generally in the range of low 50s percentage to mid 60s percentage of the affluent. This shows almost half of the affluent report no experience or familiarity with most of the luxury brands.
These results are perhaps understandable given that over 80% of millionaires are self made and thus were raised in households where experience and familiarity with luxury brands was limited or non-existent. The results demonstrate the opportunity or need to “educate” the affluent about the features, appeals, and value of luxury products and brands. It cannot be taken for granted that the affluent recognize and accept these concepts.
With the exception of six brands (Clinique, Lancôme, Nordstrom’s, Four Seasons and Ritz-Carlton hotels, and Lexus) that are at about 20% or less, a quarter or more (and up to 44% for Louis Vuitton) of the affluent believe the brand is “overrated”. For these same six brands, the affluent feel the brand is targeting or appealing more to “quality oriented” consumers than “status seekers”, which is the term applied to most of the other brands.
For each brand, the negative perception of “overrated” is lowest among those who have experienced the brand and highest among those who admit they lack knowledge or familiarity with the brand. Those who are only familiar with the brand fall in the middle of these two groups.
It is interesting to note that even among those saying they have owned or experienced the brand, few say the brand is targeting or appealing to someone “like me”. A surprising number (about 20% to 25% for most brands) said the brand was targeting someone “wealthier than me”. No more than 6% of the affluent felt that any of the brands were appealing to someone “younger than me”.
As would be expected, for many brands there were substantial differences in the data within different age, gender, income, and net worth groupings.
This data illustrates the importance of screening for respondent usage, ownership, and familiarity in any type of brand rating research. It appears that much brand research should be used with caution, as it does not screen respondents in this way or distinguish between the responses of those with experience or knowledge of the brand and those that do not.
A complimentary copy of the 74-page, 76-exhibit report is available to the media.
Key findings and highlights of the survey can be viewed here. The survey is based on a projectable national sample of 327 respondents representative of 11.4 million U.S. households with a minimum $800,000 net worth. The respondents reported an average income of $295,000 per year and average net worth of $3.1 million. The average value of their primary residence is $1.3 million.
About Us: Established in 2001 and with an exclusive focus on the affluent market, The American Affluence Research Center conducts the original and only continuous twice-yearly tracking studies of the mood and future spending plans of the wealthiest 10% of U.S. households based on net worth. AARC has become a recognized authority and a credible source of reliable insight and marketing information about the values, lifestyles, attitudes, and purchasing behavior of America’s most affluent consumers.