January 11, 2011: Little Luxuries
Don’t think this is just about the 1 percent who are featured regularly in the news these days.
A survey conducted by Advertising Age magazine and published at the end of 2011 defined “Affluents” as “adults living in households with at least $100,000 in annual income.” The survey found that 94 percent of that market had purchased at least one luxury item in 2011, and 70 percent intend to buy a luxury item in 2012. And everyone wants in on the act. Even among households bringing in less than $100,000 92 percent had made a luxury purchase, and 59 percent plan to do so in the coming year.
Ad Age says “the bar has been lowered in terms of what constitutes a luxury,” and that many are defining a luxury experience as a “small indulgence” or “treat.” And perhaps the most interesting finding is that luxury now includes the concept of value: 89 percent of Affluents claim, “When I decide to purchase a luxury item, I go out of my way to find the best price possible.”
The Ad Age survey concludes that “consumers were ultimately seeking a self-reward to satisfy their feeling of ‘I deserve.’” So while some defined luxury as a trip to a spa, others considered a manicure-pedicure a luxurious treat.
The key here is for smart entrepreneurs to market their products and services accordingly. Traveling, dining out, even buying furniture can all be marketed as luxurious experiences, across all age and most income demographics.
Considered “Austerity Chic,” it’s all about selling perceived premium products at discounted prices. Just like Starbucks made a cup of coffee luxurious, think about how you can upscale your products or services. The liquor industry embraced the concept of redefining mundane items during the Great Recession. Manufacturers are labeling their products (vodka, gin, wine and tequila among them) ultra-premium, and then selling them for less. In 2010, more than one-quarter of all “spirits drinkers” started buying these cheaper luxurious brands.
Ad Age predicts the trend will continue to boom. Both the Affluents and non-Affluents in their survey report their interest in luxury items and premium brands will increase, particularly in the first six months of 2012, and that they will “become more interested in luxury autos” as well as “in categories as diverse as travel, dining and electronics.”