Feature: Ultra-Luxury and The Boomer
Who they are, what they want and how to give it to them.
“He who dies with the most toys wins.” This proclamation uttered in the 1970s by capitalist media tycoon Malcolm Forbes encapsulates the difference between old luxury and new. Old luxury meant Rolex watches and stretch limousines. But today’s luxury is something else altogether.
Despite the fact that the new luxury class—Baby Boomers—are enjoying more discretionary income than any generation to come before them, their retort to Forbes’ statement would likely be, “No, he who dies with the most toys, dies.” Because unlike their parents, Baby Boomers know that owning luxury products for the sake of owning them no longer brings satisfaction. It’s experiences they’re after, and whether those experiences chalk up to looking and feeling younger, traveling to exotic lands or driving a car fit for a racecar driver, they have the time and the means to pursue their dreams. So how does this drastically different outlook translate to your company’s products and services?
Pamela Danziger has studied Baby Boomers and the luxury market extensively. She is the owner of luxury marketing firm Unity Marketing, and the author of Let Them Eat Cake: Marketing Luxury to the Masses—As Well as the Classes (Dearborn, 2005). Here, we present four key findings from Danziger’s study as they apply to our local market.
"Luxury is . . . different depending on who you are and what you value."
First, let’s define our playing field. Demographically, Danziger divides the luxury market into three groups based on annual household income: trading up ($75,000-99,999), new luxury ($100,000-149,999) and ultra-affluents ($150,000 and above).
Despite gaps in their income, Danziger notes that all affluents, to a greater or lesser extent, favor experiences over material goods. So the key to understanding them lies in understanding how they spend their money in order to achieve experiences that reflect their values.
Michael Saunders and Co. Realtors Kim and Michael Ogilvie top the charts when it comes to selling ultra-luxury properties. Earlier this year, they closed the deal on the largest home sale on record for Sarasota County at $13 million. They believe the city of Sarasota appeals to Baby Boomers’ values of simplicity. “We have no pollution, no traffic compared to other cities, and low crime,” says Michael Ogilvie. “It’s a safe, non-toxic environment with arts and beaches. It allows them to live the simple life.”
How else do today’s luxury homebuyers differ from previous generations? “They’re asking different questions now. Up until three years ago, people weren’t concerned about hurricane windows or elevation. People want to know their investment will withstand the elements,” says Michael Ogilvie. His partner, Kim, agrees. “They’re interested in the minutia,” she says. “Our parents never would’ve asked for a spec book.”
Encore Motorcars co-owner George Manian, Jr. says the people who buy $150,000 sportscars value performance and service, but other factors come in to play, too. “It might be the car’s artistic value, or an emotional or personal attachment to the car.” Manian says almost everyone had an idea when they were young of the kind of car they aspired to, but most of his customers have surpassed those goals. “They feel good about themselves and what they’ve achieved in life. They value workmanship, quality and the safety of a fine automobile.” Or maybe they value something else altogether. “Just because you can afford a Rolls doesn’t mean you’ll buy it,” he says, adding that some people would prefer to make a statement with a hybrid.
Stephanie Kempton, director of research at Clarke Advertising, notes that Gucci knockoffs aren’t going to cut it for the consumer who values the experience gained by owning a handbag made with fine leather and superior craftsmanship. “Old luxury was wearing a Cartier watch just to own it. Now it’s about understanding what a person gets out of wearing Cartier,” says Kempton. “It’s a paradigm shift for marketers—building a brand versus really knowing your consumer and how they approach products and experiences.”
Luxe Boomer Rule #1:
If you’re trying to reach affluents, emphasize values, not brands.
Luxury is . . . not about money, status or prestige
“It’s about the feeling, not the thing,” Danziger writes. According to the her study, the experience of luxury embodied in the goods and services consumers buy— rather than ownership or possession itself—is a key difference between how Baby Boomers perceive luxury compared to previous generations. Furthermore, Danziger states that experiential luxuries—luxury travel, fine dining, spas and beauty treatments, housekeeping—is the fastest growing category of luxury.
“It’s about creature comforts,” says Kim Ogilvie. “It’s less about show, more about personal expression of the self. It sounds new agey, but it happens to be true.”
Kempton, the Clarke researcher, notes that with today’s consumer, “if it feels good, it must be luxury.” She says, “Luxury to today’s consumer is doing something they couldn’t do before. They have the money and the time, and they want to stay, look and feel young.” Which points to why the cosmetic surgery industry has seen a 53 percent increase since 2000 according to the American Society of Plastic Surgeons.
But at the Ritz-Carlton, Sarasota, membership referrals manager Nikki Taylor says, “Don’t be so fast to discount the prestige factor. Our guests like to feel unique and special. Being one of the most recognized, and yes, prestigious, luxury brands in the world does allow for that.”
George Manian sums it when he says, “The ultimate luxury is to do what you want to do, buy what you want to buy, and do it when you want to do it.”
Luxe Boomer Rule #2:
Translate your product into an experience. Cosmetic surgery plays into the experience of feeling young, while using a Viking stove allows homeowners to experience the quality typically enjoyed only by professional chefs.
Luxury is . . . not inspired by the Jones’; it’s inspired by the Winfreys and the Gates’
Danziger asserts that while previous generations were largely influenced by their neighbors, today, we’re more likely to be influenced by Oprah or Wisteria Lane than the Chicago transplants next door. After all, many of us can name Oprah’s favorite bubble-bath or picture her Hawaii vacation home, but it’s unlikely we know what our neighbors use in the shower, or where they disappear to when their house is empty for weeks. Danziger calls this celebrity influence “vertical desire.”
“Media is so much more pervasive today,” says Kempton. “But consumers have more discretion. Consumers ask, ‘is this true to my values?’ They ask, ‘how do these goods and services help me achieve happiness?’” If it happens to be Oprah’s bathrobe, then so be it. But unlike previous generations, Kempton doesn’t believe Boomers are going to buy something just because Oprah’s name is attached to it. “They’re in search of comfort, not labels,” she says.
Manian says this vertical trading up isn’t as much of a factor when it comes to the kinds of automobiles he sells. “People know what’s in their means, and that’s what they can achieve.” For the lower level affluents, trading up from a Lexus to a Lamborghini isn’t a possibility. Manian notes, “It’s much harder to stretch that extra mile” when we’re talking about six figure products.
But vertical influence is alive and well in the area of house and home. Realtor Michael Ogilvie cites Diane Keaton’s kitchen in the movie Something’s Gotta Give as the most requested kitchen among homeowners. “That kitchen is about home and warmth and light,” he says. “It’s what feels good about old houses. It reminds people of houses up north, childhood homes with tall windows, wood floors and lots of light, only with modern conveniences.”
Luxe Boomer Rule #3:
Keep dibs on pop culture. If your customers ask for Diane Keaton’s kitchen, you’ll want to know what it is and how to give it to them.
Luxury is . . .even sweeter when its customized, hard-to-find and on sale.
“There’s nothing sweeter than finding a Prada bag half price,” says Kim Ogilvie. “It’s about the hunt, the game. Super affluent people have had to be creative in order to get where they’ve gotten. The challenge or the game doesn’t stop there.” She should know. Remember that $13 million property she and her husband sold? It wasn’t until the price dropped a whopping $3.75 million before a buyer stepped forward. “I don’t care if you make $20,000 a year or if you have a net worth of $2 billion,” says Michael Ogilvie, “everyone wants to know they got a good value, a good investment.”
“It’s like a club” says George Manian, who says the people who buy ultra-luxury brand cars—Bentley, Ferrari, Rolls Royce, Lotus, Lamborghini—want something very unique, “something you don’t see everywhere.” Yet at $150,000 a pop, one wouldn’t necessarily think the Bentley car owner would be very interested in finding a bargain. Not true, he says. First of all, the cars he carries are pre-owned, the first step in a wise car buying decision, and Manian says value plays a huge role in making a sale. “Everybody wants to feel like they got a great deal. We can convey value, but in the end, the customer really has to know it for themselves.”
When it comes to customization, the Ogilvie Realtors say today’s buyers value the names behind their homes. Architects like Clifford Scholz, Thorning Little and Guy Peterson are in high demand. High-end builders like Perrione, Collingwood and Michael Walker are names the ultra-luxury consumer is hip to. But it still all comes down to location, which is where the cache of “hard-to-find” comes into play. “The ultimate luxury is to be near the water,” says Kim Ogivlie. “Buying in the A-plus neighborhoods is always going to be a smart investment.” With only so much waterfront property to go around, one could say homes with a view are like rare jewels. “Properties in these locations aren’t going to lose their value,” says Michael Ogilvie.
Manian concurs. “They’re smart consumers,” he says. “That’s why you see millionaires shopping at Wal-Mart and Sam’s Club.”
Luxe Boomer Rule #4:
Ultra-affluents will pay big bucks for products and services when they align with their values and desire for experiences. But don’t discount the importance of communicating a good deal.
Luxury is . . . a moving target.
Danziger writes that as prices fall and products go from luxury to “masstige,” they lose appeal among the ultra luxury consumer. Top-tier affluents want products and services that make them feel above the crowd. With companies such as Coach, Jaguar and Tiffany & Co. offering products at entry-level price points, does the higher end Coach bag, or the robin’s egg blue box lose its appeal among the more affluent?
Godiva walked the slippery slope when it began selling its chocolates at the mid-level Dillard’s and Hallmark. But it bounced back by offering its exclusive line, G, which retails at $100 a pound and is only available during the holidays at select locations.
“Once something becomes mainstream, the ultra-affluent move up to a whole other level,” notes Ogilvie, citing granite as an example. “Now it’s more about concrete countertops, honed granite and natural materials,” she says.
Changes within the Ritz-Carlton brand illustrate how customer service is also a moving target. Much has been written about how the luxury hotel company has adapted to its evolving luxury consumer by loosening the reigns of formality and transitioning into more of a “casual elegance.” Nikki Taylor says, “Today’s luxury guests are very different from our guests 20 years ago. They are younger and plugged into high-technology; many travel with their families and want their kids to be pampered.” She adds, “True 2007 luxury is about creating unique, memorable and personal experiences, aiming for the emotional outcomes of each guest.”
Luxe Boomer Rule #5:
Stay one step ahead of your ultra-affluent customers. If your product line introduces a mid-level product, play up the exclusivity of one of your higher-end lines.
THE PLAYING FIELD:
“Trading Up” Luxury Market: $75,000-$99,999
Sarasota County Households: 12,680
Manatee County Households: 12,320
National stats: Represents 12.2
million households, or 11% of all U.S. households.
“New Luxury” Consumer: $100,000-$149,999
Sarasota County Households: 10,442
Manatee County Households: 7,541
National Stats: Represents 10
million households, or 9% of all U.S. households.
“Highly Affluent”: $150,000 and above
Sarasota County Households: 5,523
Manatee County Households: 3,675
National Stats: Represents the highest spending segment in all
categories of luxury. Super Affluents make up 5.6 million households, or 5% of all U.S. households.
FROM BUTTERFLIES TO X-MEN
In her book Let Them Eat Cake (Dearborn), author and marketer Pamela Danziger identifies four psychographic groups based on what consumers value the most: Luxury Cocooners (who value their nests), Butterflies (who value self-actualization), Luxury Aspirers (who value brand name products) and X-Fluents or “extreme affluents” (who value a materialistic luxury lifestyle). Here’s a closer look at these groups:
Market Penetration: 24%
Dedicated to making their “nest” more luxurious. Express identity through luxury purchases and participate fully in their luxury lifestyle. Examples: Donald Trump, Martha Stewart
Market Penetration: 30%
The most highly evolved luxury consumers, butterflies know things won’t make them happy. Even though they are less materialistic in outlook, they are highly involved in luxury purchases. Their focus is on personal and experiential luxuries, and so they have emerged from their cocoons to seek connection with the outside world. Butterflies gain the least satisfaction in home luxuries. and are looking for balance between inner emotional life and eternal world in the pursuit of luxury. Examples: Bill Gates, Oprah Winfrey, Ted Turner
Market Penetration: 26%
Have not yet achieved the level of luxury to which they aspire. They view luxury as an expression of what they have and what they own. For these consumers, luxury is best expressed in the things and brands they buy and display.
Market Penetration: 20%
X-Fluents are the most highly indulgent luxury consumer, buying most frequently and spending more. Although they share a yearning for the experiences that luxury affords, unlike Butterflies, they are firmly grounded in the material world. They seek out luxury things and experiences, spending freely on their luxury passions. Highly invested in luxury living and maintaining a luxury lifestyle. Examples: Paris Hilton, Ivana Trump and anyone profiled on The Lifestyles of the Rich and Famous.
By Britta Alexander.
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