By Pamela Danziger. My company, Unity Marketing, in association with House & Garden magazine, recently conducted a marketing study of the nation's luxury market. The goal was to understand consumers' motivations to buy luxury, as well as to study the luxury consumers' purchase behavior.
We conducted seven focus groups with high income, high household value luxury consumers. We took hypotheses developed from the focus groups and then tested these hypotheses via a quantitative survey. The median income of the consumers we surveyed was $150,000 and the household value was $250,000. Using the results, we identified three different psychographic segments of luxury consumers that are distinguished by their attitudes and motivations in buying luxury.
- Aspiring luxury class: (35 percent of sample). This is the lowest income group. Oriented toward materialistic expressions of luxury. Have not achieved the luxury lifestyle they aspire to.
- Luxury cocooners: Largest psychographic group (40 percent of sample). Very much into home and expressions of luxury in the home. Average spending on luxury was $9,000 annually. Of that spending, 55 percent -- or about $5,000 -- was on home-related luxury products.
- Butterflies: (25 percent of sample). These are the most evolved luxury consumers. Butterflies are more likely to think twice about luxury purchases. They're the richest category with the highest median household income ($172,000) and household value ($280,000). They also spend the most on luxuries ($15,000), but a greater percentage of their luxury spending is for personal luxuries. Only 35 percent ($5,000) of their luxury spending is for home-related luxuries.
When you talk about luxury consumers, you're talking about middle-aged, more mature consumers (people age 45-64). These people have probably already experienced buying their first, second, even third home. They have a "been there, done that" frame of mind in terms of buying and decorating a home. They're looking to spend their time in social activities and aren't wrapped up in their home. They spend money on a home and they want a nice home, but they're more interested in the services surrounding home buying. It's an external view of the home, with more focus on the notion of community.
Photo: Courtesy Unity Marketing
If the message is that cocooning is on the decline, that's big news. Cocooning has been the ultimate macro-consumer trend for the past 20 years. Just because cocooning is on the decline, it doesn't mean that the idea of "home" is on the decline. It does, however, indicate a shift in priorities for the consumers. I think that the idea of "home" has been that "home is good, home is great ... I want to be in the home market." I just don't think that's the ticket anymore. Consumers are now looking for something more. They're looking to connect and looking to build community and that happens outside the home. I think there are implications builders can take from this research. Where do these findings ultimately take you? The 50-year-old couple has raised a family and they're all out of the house. They've got these huge houses that are too big. I think we're going to see a trend of the empty nesters seeking a more livable environment. The trend seems to be heading toward smaller houses with activity centers; country club living on the golf course. The interest in second homes is strong, but the idea of community connectedness seems to be stronger.
Published in BIG BUILDER Magazine, January 2003