2010 Trend Predictions for Rich Ethnic Consumers
As the fiscal year ends this June, luxury marketers are beginning to think of new ways to reach new consumers. Given the myriad changes in the marketing and media landscape, there is still a segment of highly qualified consumers that is untapped and easy to reach. These consumers are not your usual suspects. And the first luxury provider to execute a strong, non-traditional marketing strategy will attract your attention.
Who are these consumers? Here are some answers:
1. Meet the Royaltons. Multicultural and mass marketers generally refer to ethnic consumers as “minorities.” However, within this large demographic is the growing body of affluent ethnic consumers, and they need to be viewed quite differently. In their 2008 strategic planning sessions, luxury goods providers should devote special emphasis to this group, which encompasses different ethnicities and is called “Royaltons.” Royaltons is a term derived from the word “royalty”, meaning “of or relating to a monarch; a person or thing holding a commanding position”.
This inconspicuous but overly influential consumer segment offers a wealth of opportunity and increased sales for luxury providers. It is estimated that less than two percent of marketing budgets are dedicated to attracting this target audience because luxury brands target the super-rich consumer or the more obviously wealthy consumer.
For example, Hispanics represent our largest minority, now numbering about 42 million. Of those, six percent earn more than $100,000. However, Merrill Lynch estimates that this relatively small segment of wealthy Hispanics will spend $300 billion this year, representing nearly two-thirds of Hispanics’ total purchasing power. Hispanics make up five to ten percent of elite college enrollments; some 40,000 Hispanics are doctors.
America’s most affluent consumer group: Asian Americans, now numbering about 13 million. The number of Asian-American families with incomes of more than $200,000 is about the same (156,000) as Hispanic and African-American families combined, according to Packaged Facts. This group represents between 10 and 25 percent of elite university enrollments. Within this group, Asian Indians are the wealthiest and fastest growing ethnicity. Nearly 40 percent of all Indians have a professional degree.
A less familiar ethnic group, Russian-Americans, have arrived in fury: some four million people. They are twice as likely to have graduated from college as the general American population and 50 percent more likely to report an income of $75,000 or more. They consume luxury items at an accelerated rate.
For luxury marketers in 2008 to best allocate their money to the Royaltons, it is important that they take an aggressively proactive “portfolio attitude” to research, analyze and strategize across the opportunity landscape. This should include a consumer model, a marketing audit, proprietary research, and a well-crafted strategic plan that leverages existing human capital or identifies new sources of business intelligence.
We anticipate this as the biggest effort luxury marketers can tackle in 2008. Don’t expect overnight miracles.
2. The New Mass Marketing Have you heard the news? Mass marketing is out. Target marketing is in fashion.
Let’s take a specific set of target groups, Royaltons (rich ethnic consumers), and build a new mass marketing program. Is that how it works.
You have determined that you want to target a group of royals, including African Americans, Asian Americans, Hispanic Americans, and Russian Americans. Each will have their own concentric circle that includes niche and grassroots efforts: sponsorships, influencer programs, marketing partnerships, online engagements, retail events/promotions, charity support, and more. These individual concentric circles will work together to build a critical mass which in turn translates into the new mass marketing. And if you were wondering what resonates with this group in general, try high-touch engagements that allow consumers to interact with the brand. Traditional advertising is a waste of your marketing dollars.
Targeting smaller groups of influencers profitably may require more time and effort up front, but the rewards of building a plan for the future, tapping into each “community,” and developing a meaningful and authentic dialogue with this consumer, will be being priceless in the end.
Our recommendation: Don’t let your lack of research or knowledge of diversity hinder the growth of your brand. Hire a full diversity expert to act as your director of integration. This expert will design a methodology for your diversity initiative that includes standard operating procedure guidelines.
3. Women and Wine With all the talk in recent years about marketing to the largest group of consumers and buying influencers (women), we predict that wine marketers will finally put more effort into marketing. attract wealthy consumers. After all, according to a 2006 Gallup poll, women make 55% of wine purchases in the United States. According to another survey, nearly a quarter of women’s wine purchases exceed $100.
Evidence suggests wine marketers are beginning to recognize the trend, with wine clubs, websites and ladies’ nights out at bars all designed to appeal to female drinkers. There is a low-alcohol, low-calorie wine, White Lie Early Season chardonnay, with an alcohol content of 9.8 percent, compared to 13 percent and 14 percent found in some vintages. Displays of pink and white wines in bottles bearing flowery names like Seduction have been derided by the womenwine.com website as the Virginia Slims of the wine trade. Wine marketers need to understand the most contemporary, wealthy and successful women. They are not looking for fancy wine coolers. Unless you are marketing a wine that benefits the Susan G. Komen Foundation, it is not advisable to wear pink or anything that speaks to the “child” within a woman.
Aggressive marketers with leadership cultures will customize programs that also target Royaltons through member-based organizations and associations. This is a huge niche that is currently not being filled by any wine marketer (or other marketer). Well-off ethnic women feel more pressure than their white counterparts to be respected and feel a sense of accomplishment and therefore work harder to achieve it. If you want to reach this consumer on a whim, offer programs that combine your desire for work-life balance and the respect you’ve likely earned.
Our recommendation: If wine companies want to achieve brand dominance, they need to create experiences that maximize women’s social lives and enhance their businesses and careers.
We anticipate that more emphasis will be placed on product differentiation at the retail level with the aim of facilitating the shopping experience and the purchase decision. This will be accomplished through on-site and off-site events, including in-store tastings on weekends, invitation-only sponsored wine dinners at select restaurants, and high-profile event sponsorships from professional organizations and social events to women.