As the fiscal year ends this June, luxury marketers are starting to think of new ways to reach new consumers. Given the myriad of changes in the marketing and media landscape, there is still a segment of highly qualified consumers that are untapped and easy to reach. These consumers are not your usual suspects. And the first luxury purveyor to execute a sound, non-traditional marketing strategy will win their attention.
Who are these consumers? Here are some answers:
1. Meet the Royaltons. Multicultural and mass marketers generally refer to ethnic consumers as "minorities." Within this large demographic, however, is the growing body of affluent ethnic consumers--and they need to be viewed quite differently. In their 2008 strategic planning sessions, luxury purveyors should devote special emphasis to this group, which spans ethnicities, and is dubbed "Royaltons." Royaltons is a term derived from the word "royalty," meaning "of or relating to a monarch; a person or thing that holds a dominant position."
This under-the-radar but overly influential consumer segment offers a wealth of opportunity and increased sales for luxury purveyors. It's estimated that less than two percent of marketing budgets are dedicated to engaging this target audience because luxury brands are focused on the uber-affluent or the more obvious affluent consumer.
For example, Hispanics represent our largest minority, now numbering about 42 million. Of those, six percent earn more than $100,000. Merrill Lynch estimates, however, that this relatively small segment of affluent Hispanics will spend $300 billion this year -- representing almost two-thirds of overall Hispanic buying power. Hispanics make up between five and ten percent of elite university enrollments; some 40,000 Hispanics are physicians.
America's single most affluent consumer group: Asian-Americans, who now total about 13 million. The number of Asian-American families with incomes of more than $200,000 is about the same (156,000) as Hispanic and African-American families combined, according to Packaged Facts. This group represents between 10 and 25 percent of elite university enrollments. Within this group, Asian Indians are the fastest-growing and wealthiest ethnicity. Almost 40 percent of all Indians hold a professional degree.
A less familiar ethnic group, Russian-Americans, has arrived with a fury -- about four million strong. They are twice as likely to have graduated from college as the overall American population and 50 percent more likely to report an income of $75,000 or more. They consume luxury goods at a rapid pace.
In order for luxury marketers in 2008 to better allocate their dollars towards Royaltons, it's important for them to embrace an aggressively proactive "portfolio attitude" to research, analyze and develop strategies across the complete landscape of opportunity. This should be inclusive of a consumer blueprint, marketing audit, proprietary research, and a well-crafted strategic plan that leverages existing human capital or identifies new sources of business intelligence.
We anticipate this as the single biggest effort luxury marketers can tackle in 2008. Just don't expect miracles overnight.
2. The New Mass Marketing Have you heard the news? Mass marketing is out. Target marketing is in.
Let's take a specific set of target groups, Royaltons (affluent ethnic consumers), and build a new mass marketing program. Here's how it works.
You've determined that you want to target a cluster of Royaltons including African Americans, Asian Americans, Hispanic Americans, and Russian Americans. Each will have its own concentric circle that includes niche and grassroots efforts: sponsorships, influencer programs, marketing partnerships, online engagements, retail events/promotions, charity support and more. These individual concentric circles will work together to build critical mass that in turn translates into the new mass marketing. And if you were wondering what resonates with this group, in general, try high- touch engagements that allow consumers to interact with the brand. Traditional advertising is a waste of your marketing dollars.
Targeting smaller groups of influencers in a cost-effective manner may require more time and effort upfront, but the payoff in building a blueprint for the future, making inroads into each "community," and developing a meaningful and authentic dialogue with this consumer, will be priceless in the end.
Our recommendation: Don't let your lack of diversity research or insight hinder your brand growth. Hire a well-rounded diversity expert to act as your Chief Integration Officer. This expert will design a methodology for your diversity initiative inclusive of standard operating procedure guidelines.
3. Women and Wine With all the talk over the last few years about marketing to the largest group of consumers and purchase influencers (women), we predict that wine marketers will finally place more effort into engaging affluent female consumers. After all, according to a 2006 Gallup survey, women make 55% of U.S. wine purchases. According to another survey, nearly a quarter of women's wine purchases are over $100.
The evidence suggests that wine marketers are starting to recognize the trend, with wine clubs, Web sites, and ladies' nights at bars, all designed to appeal to women imbibers. There's a low-alcohol, low-calorie wine, White Lie Early Season chardonnay, with a 9.8 percent alcohol content, compared with the 13 percent and 14 percent found in some vintages. Displays of pink and white wines in bottles bearing such flowery names as Seduction have been derided by the Web site womenwine.com as the Virginia Slims of the wine trade. Wine marketers need to understand the more contemporary, affluent and accomplished women. They are not looking for upscale wine coolers. Unless you are marketing a wine that benefits the Susan G. Komen Foundation, it's not advisable to use pink or anything that speaks to the "child" inside a woman.
Aggressive marketers with leadership cultures will customize programs that also target Royaltons via member- based organizations and associations. This is a great niche not currently being filled by any wine marketer (or other marketer for that matter). Affluent ethnic women feel more pressure than their white counterparts to be respected and feel a sense of accomplishment, and therefore work harder to achieve this. If you want to reach this time- strapped consumer, deliver programs that merge her desire for a work-life balance and the respect she's likely earned.
Our recommendation: If wine companies want to achieve brand dominance, they need to create experiences that maximize women's social life and enhance their businesses and careers.
We predict that more emphasis will be placed on differentiating products at the retail level that aim to make the shopping experience and purchase decision easier. This will be accomplished through on- premise and off- premise events, including weekend in-store tastings, sponsored invitation-only wine dinners at upscale restaurants and high- profile event sponsorships of women's social events and professional organizations.
Andrea Hoffman is the Founder and CEO of Diversity Affluence™, a New Jersey based marketing communications consultancy and research firm. As the first company of its kind, Diversity Affluence™ helps brands and businesses to understand and market to Royaltons. For more information about our services visit http://www.diversityaffluence.com ,or contact Andrea at 973-846-0155 or firstname.lastname@example.org
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