The luxury market is gaining attention as sales are on the upswing among leading international luxury brands, according to an updated study of luxury consumer behaviour from US-based marketing agency Unity Marketing.
The latest study, entitled 'Luxury Market Report 2004: Who Buys Luxury, What They Buy, Why They Buy', was based on focus group research and a quantitative survey of 500 consumers (with an average income US$152,000 per year) who have purchased one or more home luxuries, personal luxuries (such as fashion or jewellery) or experiential luxuries (such as travel, fine dining or spa/beauty services).
Experience is king
According to the study, the average luxury consumer is now driven experientially; it's not about the money any more. They mainly interpret and participate in the luxury market experientially. "Luxury just isn't about the thing anymore. It's about the special experience you feel in buying or owning that thing," said Pam Danziger, president of Unity Marketing and author of the book, 'Why People But Things They Don't Need'.
Danziger says that luxury is about achieving a comfortable lifestyle, and having the things that make life easier and more satisfying. But most of all, the real meaning of the luxury life comes through family, friends, and experiences that deepen the luxury consumer's appreciation of life. Comfort, ease, and good experiences are the keys for these consumers.
"Today we tend to equate the luxury market with international badge-value brands but affluent consumers are just as likely to shop with the 'masses' at discount stores as they are to frequent Madison Avenue boutiques," said Danziger. "One of the most important things about the luxury consumer is that he or she is not that different to anybody else. They just happen to have more money."
According to the report, almost 90% of luxury consumers agree that "luxury doesn't have to the most expensive thing or be the most exclusive brand". In fact, these consumers are democratic in their approach to luxury. While much is made in the luxury goods industry about maintaining product exclusivity (usually through high price and limited distribution), many luxury consumers don't agree with the idea that luxury is better when it is exclusive. Instead, some 77% agreed that "luxury is for everyone, and is different for everyone".
Motives for exclusivity
Consequently, exclusivity brings little luxury value to today's consumer. But despite this, luxury consumers still yearn for 'specialness' in their experiences. While exclusivity for the sake of exclusivity is not valued by American luxury consumers, exclusivity is better derived from the customer's ability to express a personal point of view, an attitude, or their own unique qualities. The challenge for luxury marketers, according to Danziger, is to make their customers feel special but to never let it cross over into 'class snobbishness'.
One of the main things luxury consumers said they expect now is superior quality, finer detail, and superior workmanship and materials. Nearly 90% agreed that "when you buy a luxury item it should be 'a cut above the average'". Danziger asserts that it is this expectation of quality that makes luxury consumers willing to spend so much more - it's the extra feeling of confidence in the product.
But extra quality need not necessarily cost more, the survey found. Luxury consumers are also bargain shoppers who are always looking for a good deal. While they appreciate superior quality they also get an experiential thrill from paying less for the best. More than 80% said they enjoy the feeling of buying luxuries on sale and usually search out the lowest price or the best value.
Those who can readily afford to pay full price are still hesitant to do so because they are actively shopping for luxuries at a discount. They get a kick out of buying on sale, finding a bargain, and winning at the shopping game. This suggests to The Wise Marketer that, because of the inherent 'playing the game and winning' psychology, customer loyalty points-collection and frequent-buyer discount programmes could be or become a key feature of luxury consumers' shopping habits.
In it for good
One thing, however, is certain: once a consumer has lived the luxury lifestyle and had the good experiences, they are unlikely to want to go back. According to Danziger, they are most likely to invest increasingly heavily in maintaining their life of creature comforts. And they will continue to buy luxury because they appreciate the enhanced experience, not because it imparts status or social advancement.
Full details and ordering information for the Luxury Report 2004 can be found on Unity Marketing's web site.