We market to many demographics. Demographics are how marketers categorize customer segments. By using statistical characteristics of human populations, advertisers identify a target audience that they want to advertise to. Since our core service, media buying and planning, requires us to be experts at identifying the best media channels for reaching specific demographics, we have to use data, research, experience and intuition to best create advertising plans that target customer segments based on their characteristics. Today we’re going to highlight a few important things to consider for your luxury marketing plan.
A demographic that we’ve been recognized for being successful at reaching is advertising to the affluent. Affluence can be subjective. So we’re going to share with you a couple of the different types of affluent customer segments we’ve been successful at reaching with our advertising campaigns. Luxury marketing to affluent consumers is not as easy as geotargeting an expensive zip code with digital ads or adding a household income qualifier to a media purchase.
Luxury marketing requires a deep understanding of the psychology of wealthy consumers and using that knowledge to reach them better and more strategically.
If you’re familiar with the books written by Dr. Thomas Stanley, you may be familiar with the concept of the “Millionaire Next Door”. Dr. Stanley, the bestselling author of the book with the same title, identifies seven common traits that show up again and again among those who have accumulated wealth. One of the most interesting discoveries Dr. Stanley made was that most of the truly wealthy in the U.S. don’t live in Beverly Hills or on Park Avenue-they live next door.
In his books (we’ve read them all!) he highlights the differences between those who appear to have a high net worth and those actually have a high net worth. Understanding the differences and the identifying the emotional ways consumers spend, save and invest money is imperative to figuring out how to best advertise to your desired affluent demographic.
Many Luxury marketing advertisers are seeking high income producers who are also hyper consumers.
These advertisers often start off by describing their target demographic as simply “affluent” or by giving us a target household income to reach, but when we get through a more thorough marketing needs analysis, we discover that they’re actually interested in targeting consumers who earn high incomes AND have the propensity to spend on status products and brands that are badges of wealth.
Let’s call this demographic High Income, High Consumption or “HIHC”. (Dr. Stanley refers to them as UAWs (under accumulators of wealth). The HIHCs demographic is an entirely different demographic than the “Millionaire Next Door” profiled in Dr. Stanley’ decades of research and many books because HIHCs aren’t always wealthy or affluent in terms of net worth. In fact, there is often a negative correlation between their purchase of luxury items and their overall net worth. Dr. Stanley affectionately calls this demographic
“Big Hat, No Cattle”.
Therefore, these consumers are demographics often targeted by high end brands promoting status symbol purchases and luxury products. There is a solid ROI for advertisers seeking this demographic because these consumers are inclined to spend their high income. Think of the YOLO consumer. These consumers tend to be professionals like doctors, lawyers, corporate managers, etc. This doesn’t mean all doctors or lawyers are big spenders, but most HIHC are professionals with high incomes. They often see money as easily generated and therefore value it differently than the contrasting demographic we’re about to describe. These HIHC invest in wine, upscale neighbhorhoods and luxury homes, fancy watches, designer shoes, luxury cars, etc.
In high contrast to the HIHC demographic detailed above, Dr. Stanley identifies what he calls the “Millionaire Next Door”. It’s critical not to overlook the differences between these two demographics when marketing to wealthy people.
The Millionaire Next Door is a very different demographic from the HIHC demographic, so they require an entirely different advertising strategy. This demographic, we call High Net Worth, Low Consumption or “HNWLC”. Dr. Stanley calls them PAWs (Prodigious Accumulators of Wealth). He identifies them as
“Folks who have a lot of cattle, no big hat needed!”
This HNWLC demographic is less concerned about status and glittering displays of wealth than they are about financial security and making value based purchase decisions. This demographic usually contains more business owners, teachers (Yes teachers! Who have become good investors), engineers, some sales professionals, and blue-collar trade workers. This demographic is more concerned about value, financial security and investments than they are in flashier purchases and badges of wealth.
You’d be correct in assuming that most marketers find it much easier to advertise status and luxury to high-income producing, high consuming consumers “HIHC”s than to advertise to the Millionaires Next Door, the “HNWLC” demographic. However, we have become skilled at creating advertising plans that reach each of these two very different demographics.
They require altogether different media plans.
It takes more than a luxury marketing media kit, showing high income, to properly align media purchases with an advertiser’s desired affluent demographic. If either of these demographics are part of your luxury marketing plans for your business, we’d love to meet with you to discuss what we’ve discovered through our years of experience of successfully creating ROI producing media plans in our Seattle advertising agency. Connect with us here to get started on your advertising strategy for reaching wealthy demographics.