The Class Menagerie

Posted on by Chief Marketer Staff

“The rich are different than you and me,” declared F. Scott Fitzgerald.

But they’re becoming less so — at least for marketers, who have seen a blurring line between the ultra-rich and the upper echelon of the middle class. Two trends are behind the shift: changing consumer habits and emerging marketplace realities for elite brands.

More than 40 percent of U.S. households today are considered affluent, with net assets of at least $100,000. At the very top are 268 billionaires and approximately five million millionaires, according to Forbes, New York City. The millionaire total has doubled since 1994 and will triple by 2013 thanks to inheritances, projects Lincoln Financial Group, Philadelphia.

As the elite audience grows, corporate mergers are marrying luxury brands with mainstream counterparts — think DaimlerChrysler or Jaguar and Ford. That forces elite brands to target a wider audience. “They are pressured to dip down to the moderately wealthy, rather than [just targeting] the super-rich,” says Kevin Berg, vice chairman of DraftWorldwide, Chicago, and former ceo of lifestyle marketing shop KBA Marketing (now part of Draft).

Attitudes are shifting, too. Wealthy consumers have traded ostentation for product quality, and mainstream consumers have adopted what Yankelovich Partners calls “affluent attitude.” Ninety percent of Americans feel they deserve the same level of customer service as the wealthy, reports the Norwalk, CT-based research firm.

The very wealthy “are [turning to high-end brands] for their own welfare, rather than wearing luxury as a badge of honor,” says Joe Hartnett, chief integrated marketing officer for The Phelps Group, Santa Monica, CA, whose clients include Crystal Cruises.

At the same time, more middle-class consumers are striving for high-end goods. The average customers for Los Angeles-based Crystal Cruises are in their late 50s or 60s and earn $200,000-plus per year. But the company is starting to sell more vacation packages (ranging from $7,000 to more than $20,000) to 40-year-olds making considerably less. “Traveling upscale is becoming important not just for the wealthy but a notch below that,” says Crystal spokesperson Mimi Weisband. “They want to make sure they’re getting their money’s worth.”

Let Them Buy Cake

Elite brands are adopting more mainstream promotional techniques and fostering less-stuffy images. “Marketing in this sector traditionally relied on direct mail and the occasional live event,” says Berg. “Now, you’re seeing more luxury brands embrace mass media.” In a first among high-end watchmakers, for instance, New York City-based Raymond Weil broke a TV campaign for the 2001 holiday season and is sponsoring the tour of Bond, a classical music group.

Automakers have been the most active as “luxury brands move downstream to catch buyers earlier in their life cycles,” says Mike Wells, vp-marketing for Lexus.

“You see a lot of luxury car manufacturers talking to customers moving up from a brand that might not be considered luxury,” adds Berg. Cadillac, Warren, MI, is currently targeting first-time luxury buyers with a direct-mail campaign.

Promotional efforts are following suit, taking on a hipper, edgier theme. This summer, Torrance, CA-based Lexus teams with Los Angeles-based Twentieth Century Fox for a tie-in to Minority Report, which stars Tom Cruise and is directed by Steven Spielberg. Lexus developed a futuristic prototype that will be featured in the film and on its Web site. It also will launch a national mobile tour this summer to bring the prototype to both dealers and movie theaters.

Last November, the company startled many in the marketing world by aligning with San Jose, CA-based TiVo — a service considered counter-productive to marketing — to help launch the Lexus ES 300. A sweepstakes dubbed New World of Luxury asked TiVo users to seek out four TV spots for the ES 300, then use service features (such as slow motion, rewind, pause, and fast-forward) to answer questions posed in a special area. Viewers could then log onto www.lexus.com to enter the answers and become eligible to win a car. More than 80,000 of TiVo’s 300,000 subscribers participated in the effort, according to Wells.

BMW of North America, Woodcliff Lake, NJ, woos consumers from multiple economic levels by pitching performance over elegance. “We appeal to a psychographic rather than a demographic,” says vp-marketing Jim McDowell. “Frankly, people looking just for luxury can probably make a better choice than us.”

“The most significant promotions for us are the ones that get people behind the wheel,” says McDowell. The company hosts the ongoing BMW Ultimate Driving Experience, at which new and existing customers take a two-hour driving course, and the company donates $1 for each mile driven to the Breast Cancer Foundation.

Other brands tap upscale consumers to augment their existing customer base. New York City-based Schieffelin & Somerset’s Hennessy brand derives 85 percent of its sales from Asians, with the remainder coming from “luxury goods consumers,” says brand manager Todd Prybylski. “This is a small but important component for us. It gives a halo effect.”

Hennessy is exploring ways to target affluent consumers after years of focusing on the education of restaurant staffs. In February and March, the brand tapped wine expert Steve Olsen to host consumer events at top restaurants in 10 cities and lead cooking demonstrations featuring Hennessy products.

Birds of a Feather

While upscale brands may be trolling for a wider customer audience, they generally keep to themselves when it comes to marketing partnerships. Leading Hotels of the World, New York City, offers support to five-star independent hotels and hotel groups globally. The company’s Luxury Alliance Program brings together high-end marketers such as Crystal Cruises and Orient Express Trains.

“It’s important to identify with a handful of companies that go after the same demographic you do,” says vp-marketing Helen Choi. “When your clientele has an annual income of $500,000 or $600,000, there’s only so much new business you can add.”

Leading Hotels of the World lets members of the Crystal Society loyalty program join its own affinity group, The Leaders’ Club. Similarly, Crystal Cruises allows members of Dallas-based Neiman Marcus’ Inner Circle to redeem their shopping points with the cruise line.

Crystal Cruises may also soon begin accepting advertising from other luxury brands in its new Crystal Cruises’ Passport quarterly magazine, which is being distributed to 130,000 loyalty club members.

In March, Bloomingdale’s, New York City, and Volvo Cars North America, Irvine, CA, announced a one-year marketing alliance. Their initial joint effort featured a sweepstakes that counted each dollar charged on a Bloomie’s credit card as a sweeps entry to win either a trip to Paris or a new Volvo C70 convertible.

Additional efforts will follow throughout the year, including an offer to top cardholders for a trip on a Volvo sailboat, Bloomie’s gift cards awarded for test drives, and a fall sweeps. Convergence Group, New York City, handles for Bloomingdale’s.

Even New York City-based Rolex — which generally sniffs at promoting directly to consumers (leaving that task to its retail partners) — maintains mass visibility through more than 15 highbrow sports sponsorships. Those include tennis (the official timekeeper at Wimbledon for 23 years), sailing (exclusive sponsor of the New York Yacht Club), and horse racing (sponsor of The Rolex Kentucky Three-Day Event for 21 years). These days, not everyone in those audiences can afford a Rolex.

Roll over, F. Scott, and tell Henry James the news.

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