Paradox: UHNWI’s have the money, but need inspiration & education when it comes to luxury
According to the latest UBS/Wealth-X report on UHNW (Ultra High-Net Worth Individuals – head of households, net worth of $30 million and above) many of them have grown super rich, at a fast pace with little awareness of luxury brands and service providers as brand managers would like to think. Their passion was their business, not flipping through lifestyle magazines eyeing things they couldn’t afford. The paradox: They have the money, but need the inspiration and the education.
Luxury brand executives should be asking themselves
• Since you probably don’t advertise in Waste Management News or Landscaping Weekly, while UHNWs may know your name (or not), how much do they really know about the variety of products and services you offer?
• For fashion, watches and jewellery brands, what is UHNW knowledge about your Men’s Collection versus Women’s and vice-versa?
• Do they know about your brand extensions?
• Do they know what makes your brand or category special?
• Do they know what you offer that’s different or better than your competition?
• Do they have a clear image of your brand or even primary awareness?
• Do you have a specific multi-platform marketing strategy (beyond just events and sponsorships) to target this unique, high-return audience?
Since the Marketing Funnel (Awareness – Opinion – Consideration – Preference – Purchase) was created in the late 1800s all of the above have been considered key to getting consumers to buy one’s product, so certainly these are questions that need to be discussed if you want your fair share of UHNW spending.
UHNWs in many ways are Luxury Newcomers
65% of the world’s wealthiest families (Heads of Households) are first generation wealth, and depending on how you define the term “self-made”, it is over 80%. Numerous other studies show many UHNWs grew up in Middle Class non-luxury consumer households.
Oracle founder Larry Ellison was raised in a two-bedroom apartment in a blue-collar neighbourhood of Chicago by relatives, for example. Google’s Sergey Brin spent his early life living with extended family in a pre-Glasnost three-bedroom Moscow apartment.
Implications: The self-made UHNW is not the same aspirational consumer many luxury brands spend most of their marketing dollars chasing, with the idea they enter the brand at accessible price points (wallets, fragrance, key chains) and as they progress in their careers eventually spend increasingly serious amounts.
The aspirational segment by and large probably continues to buy mainly at the entry level price points when they can afford it during their consumer lifespan, but never really graduating. On the other hand, the UHNW from the start of work until becoming very rich was focused on his/her business. Savings and credit cards were used to fund the business not buy expensive handbags and loafers.
Family members helped make the business by working during school breaks. There were few if any fancy family vacations, luxury cars or designer fashion. Free moments were spent reading was trade journals and figuring out how to turn their widget business into a billion dollars, or at least a hundred million.