By Michael Bang
We’ve heard about trends regarding income equality for years now ― the collapse of the middle class. Rich gets richer and it is very important to deliver values to those who are willing to spend money on what they are attracted to and have financial resources to do so.
However, it has not been well noted that those better-off customers show different characteristics by demographic groups and I’d like to point out important customer trends to understand these upper-income customers.
First, the types of products higher-income customers pursue are different country by country according to the stage of economic development and culture.
For example, in developing countries such as China and Russia where the economy is generating thousands of millionaires on a daily basis, people want to show off their wealth and they look for luxury goods which can serve these needs.
Indeed, luxury brands such as Louis Vuitton or Prada, whose brand logo or “monogram” pattern can be recognized 15 meters away, are doing better in these countries than other more subtle luxury brands who do not reveal their brands as explicitly.
On the other hand, people in more developed markets prefer luxuries that they actually need and want to keep, not to show off. It is important for them to have only-one-in-the-world products ― it can be a car, customer-tailored shirt or dress shoes.
As these “newer” luxuries can be a financial burden even for upper-income customers, they will tend to save where they can, meaning that they will seek to secure them as long as they believe they can preserve their sense of dignity. So businesses should focus on providing values to satisfy specific needs of their customers in terms of both the level of luxury and cost competitiveness.
In conclusion, no matter how excellent your product or service is, it would be of no use if you can’t provide the luxury your customers want.
Michael Bang is a senior manager at Deloitte Consulting.