While most people’s finances are being squeezed, there are still those who have cash to splash. But knowing where they are, how they think and how to reach them is another story.
You might not know that there are 64 billionaires in China, or that the private jet travel industry is booming. Or that the Indian luxury market is growing at around 20% year on year.
Neither did I until I attended Luxury Briefing’s Wealth Summit in London last week, held at the appropriately lavish surroundings of the newly opened Corinthia Hotel (the £1 million specially designed chandelier said it all).
Many brands have been affected by their core consumer base’s recessionary struggles. But while luxury brands have had to contend with their audiences becoming more discerning, demanding and aware of their spending, the fact remains that the wealthy are largely still, well, wealthy.
As James Lawson, from Ledbury Research, pointed out, luxury brand strategies used to involve a “bun fight over the Sunday Times Rich List”, but today it is more complex than that. Different global wealth segments come with different psyches that brands must consider.
For example, the “founding fathers” of the United Arab Emirates are much more humble, respectful and conservative than their “enterprising sons”, who are more sociable and impulsive.
Russia’s wealthy can be described as either “friends of the state”, with links to the government and a dictatorial management style; the more liberal “smart operators” that work in new industries such as biotechnologies; or the younger “capital heirs” that are nervous about taking their parents’ business forward.
In China, the “Guanxi connectors” also have links to the government, and their business is reliant on connections. They need to be careful about displaying wealth, so ironically, will have multiple cars – a plainer one for meetings and a more showy one for personal use.
The “maverick entrepeneurs” who tend to be involved in construction and manufacturing have a gung ho attitude to how China has changed and are ostentatious in terms of the brands they buy.
China’s “modern matriarchs” even get a mention, as today’s wives have a strong influence on their families.
Lawson also pointed that by 2015, there are set to be more millionaires in the Asia Pacific region than in Western Europe.
These are all juicy insights for brands. But as speaker Rob Hersov of luxury consultancy Adoreum Partners also pointed out, reaching the right customers should involve little traditional marketing and more one on one networking.
“If you’re targeting Denmark, for example, you should know the people that can afford your product and what their interests are. This is how you target,” he said.
“Focus on people’s passions. High net worth individuals (HNWIs) do things such as collect art, wine, ski, hunt, or have houses in San Tropez. The only way to get in front of someone is to tap into an interest. You have to work with your customers one by one. When people are in their comfort zone and enjoying themselves, the doors are open.”
This certainly gives a new definition to direct marketing as we know it, but the art of schmoozing is also arguably an old one. Making it appealing is the challenge though.
Hersov gave an example of a golf course in Bulgaria that needed to attract visitors.
Adoreum developed an attractive golf weekend using Hersov’s black book of HNWIs and the event was so successful it is now held yearly. Hersov did not reveal whether the golf course had to build its own airport to look after all the private jets the HNWIs brought with them.
But it isn’t all about flamboyant fun. The fittingly named William Cash, founder of Spear’s Wealth Management, says the philanthropy business is booming as more HNWIs are unearthing their charitable sides.
There are an array of opportunities to market products and services to the wealthy consumers that are driving the $165 billion global luxury industry, as the Luxury Briefing’s Wealth Summit highlighted. Brands and entrepreneurs with the right insights will be able to cater their approaches accordingly.