The future success of luxury brands will be determined by the emerging customers and how well the brands anticipate their special needs and desires
With a focus on the future, the 2012 Obama campaignÂ has chosen â€œForwardâ€ as its campaign slogan.Â Inevitably it focuses peopleâ€™s attention on the next four years and the hope for a second Obama administration to bring more prosperity and opportunity to the American people.Â
I like the slogan and believe that it should be used not just in politics, but adopted widely by marketing executives as a motto to focus onÂ the future.Â They need to discipline themselves to think beyond the next quarter or two, beyond the next year and to the next four years, eight years, even ten years.Â For luxury brand marketers, in particular, they need to be lookingÂ beyond 2016 and to the presidential election of 2020, two election cycles out.Â For it is in 2020 that a new generation of Millennial consumers will reach critical mass in the affluent market.Â Their arrival will inevitably change the entire luxury brand business model, especially how marketersÂ will deliver a luxury experience to this new generation of consumers.
We can predict the future of the luxury consumer market
In my recent book, Putting the Luxe Back in Luxury:Â How new consumer values are redefining the way we market luxury,Â I devoted several chapters to the demographics of the affluent consumer market.Â The beauty of demographics for marketers and business planners is that population demographics are highly predictable.Â We can look at birth and death rates, immigration statistics and other quantifiable trends to project the makeup of the population five-ten-twenty years out and more.Â
Also highly predictable is who will reach affluence in the future.Â People who achieve affluence share many common characteristics, specifically high levels education, ambitious career goals in fields that are associated with high financial rewards, and a stable personal life that makes people highly likely to marry and invest in community by buying a home. Â By combining quantifiable demographic projections with our understanding of how people achieve affluence, we can very reliably predict those young people in the Millennial generation, born between 1981- 2000 and aged 12-31, who are on the road to affluence and thus those people who will be the target customer for luxury brands in the future.Â
Since affluence comes with middle-age, as peopleâ€™s income reaches its zenith from ages 35-to-54 years, we know that affluent Millennials willÂ take over as the largest generational segment in the luxury consumer market around 2018-2020.Â These will be the â€œForwardâ€ years for luxury brand marketers to focus on.
Unity Marketing recently selected a group of ambitious, high-achieving, highly-educated Millennial generation young people and conducted a series of focus groups to understand their attitudes, values, aspirations and expectations for their future.Â We talked about issues of greatest import to luxury brand marketers for the future of their businesses, including:
- Money — What money really means to them, what they are willing to do to get lots of it, how important it is in their lives, and what they will do with it once they get it Â
- Their American Dream â€“ How they see their future, what their personal lifestyle dreams and aspirations are,Â how they define theirÂ â€œAmerican Dreamâ€
- Materialism â€“ Their drive to acquire material luxury goods; their aspirations to achieve the â€˜good lifeâ€™
- Status symbols â€“ What status means to them, how they display their status
- Luxury â€“ How they define as luxury and its role in their lives
- Deep-dive into key sectors of the luxury market, specifically luxury jewelry, fine dining, luxury fashion, luxury hotels, luxury wine and luxury shopping and shopping experiences, including stores and online destinations.
The results of this research into the future customers of the luxury market has now been published in an in-depth report, entitled Wealth Wave: Millennials and their Luxury Aspirations, which includes Â a future look Millennials expectations in the luxury jewelry, fine dining, fashion, hotel, wine and retail markets. Â
Each generation defines what luxury is â€“
Millennials will bring their own unique perspective and expectations into the marketplace
Unity Marketingâ€™s investigation into the mindset of these ambitious young people on the road to affluence uncovered many distinct differences and unique generational perspectives of critical importance to the future success of luxury brands.Â But perhaps the most profound and potentially troubling one is that for this generation of well educated young people, there is a real danger that luxury is going to be perceived simply as a marketing concept or a term used in a marketing context, not something that has real meaning or resonance to their lives. Â
Simply calling a brand, a product or an experience a luxury doesnâ€™t necessarily make it so, as this discussion from the focus group reveals:
â€œI can’t remember the last time I’ve actually said the word luxury or luxurious in a sentence. I hear it in a Lexus commercial, but never just talking to my wife or my parents would I say, “I had a luxurious day. [Another] I’d second that. [Mod: Does that mean it [i.e. luxury] doesn’t really mean anything to you?] It’s watered down. It’s just watered down.”
Anticipating the future needs and desires of luxury consumers is possible â€“
Plan now for the evolution of a new luxury market brought about by the turnover of a new target generation
As of yet, the Millennials have not made a significant dent into the luxury market, being still in school or just starting out in their careers and not yet having ascended into the affluent market.Â Yet these ambitious, highly-educated young people are luxury brandsâ€™ future customers, and the future leaders of business.Â By 2020 the Millennial generationsâ€™ tastes, appetites and desires for luxury lifestyles will be strongly felt.Â For forward-focused marketers it could mean a coming luxury boom.Â Or it could also be a bust for those that ignore the profound changes this generation will bring.
â€œItâ€™s easier for companies to come up with new ideas than to let go of old ones.â€ â€“ Peter Drucker
Understanding the aspirations of Millennials for a luxury lifestyle is critical for luxury brands, including what money, status, and success means to them. Â Luxury marketers will need to both innovate with new products, services, marketing strategies and branding concepts, as well as let go of old ideas that will prove ineffective, even counterproductive, for marketing to this new generation.Â Unity Marketing has solutions to help you understand the future luxury market and make â€œForwardâ€ the slogan for your brand:
- Putting the Luxe Back in Luxury â€“ My book looks at both the present and future direction for the luxury market and includes the forward-looking data on the demographics of luxury to help you plan for your businessâ€™ future.
- Wealth Wave:Â Millennial and their Luxury Aspirations â€“ This in-depth report, which includes an executive summary of key findings and take action strategies, plus the detail focus group report with quotes and summary of the discussion, gives marketers new insights into the future direction of this generation that will come to the fore in the luxury market starting about 2018 or so.Â Get ahead of the curve by reading and studying your future customers.Â This solution will be especially valuable to luxury brands in these key core segments which were discussed in the groups:Â luxury jewelry; fine dining; luxury hotels and hospitality; luxury fashion, apparel and fashion accessories; luxury wine; and luxury retail including online and internet shopping destinations.
- Create a â€œForwardâ€ strategy for you brand — Â Need a customized marketing solution that will help you anticipate the future customers for your brand, then call me at 717.336.1600 or email firstname.lastname@example.org Â to discuss your needs.