Prestige brand discounts have paid off
Contrary to expectations, discounts offered by prestige brands during the past few years in the weakened economy have apparently been accepted by affluent and luxury consumers without diluting the stature of those brands, according to a the spring 2011 survey of the wealthiest 10% of US households by the American Affluence Research Center.
Some 60% of the affluent consumers surveyed said that these discounts did not affect their opinion of the brands concerned, and one quarter (25%) said these discounts had motivated them to make purchases they might not have otherwise made. Only 5% said that such discounts lowered the image or prestige of a brand.
These findings suggest that affluent consumers recognise that there are certain situations in which discounting by prestige brands is reasonable and understandable, if not part of an ongoing practice. Approximately half said that discounts seemed to have been a reasonable way to maintain sales during the economic downturn, while fewer than 20% said that these discounts raised questions about whether quality had been lowered and whether or not previous prices and profit margins were fair.
Similar responses were given when affluent consumers were asked about their opinion of discounts that prestige brands communicate via the internet or mobile devices only to existing customers or to members of special 'flash sale' sites. This suggests that the affluent do not have a problem with situations where discounting by prestige brands is limited to special groups, with 39% feeling that this type of discounting seems to be a reasonable way to build sales.
Women aged 50 and over, along with the higher net worth groups, were slightly more sceptical or critical in their responses to both questions. Survey respondents had an average annual household income of US$333,000, an average primary residence value of US$1.2 million, an average net worth of US$3.1 million, and average investable assets of US$1.8 million.
A detailed description of the survey and a selection of highlights from its findings has been made available online - click here.