CONSUMERS

The Complex Nature of Affluence Research

by

Susan Kime

|

This is the featured image caption
Credit: This is the featured image credit

**Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research**

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

**Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research**

Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research

My qualifications for writing this piece are these: I have done graduate level research, created my own design and collection methodology, and taught research design and program evaluation for two years, at the university level. I know the gnawing questions regarding research design, data collection methods, and validity/reliability measures. These are issues that kept me awake at night, worrying.

Is there something in the design, or in the research questions or in the sample size that will literally invalidate two years of work? Is there such a thing as true objectivity? And how valid are mail surveys? How generalizable are the results, especially if I can’t do longitudinal studies? How many similar observations and answers determine a true trend? And, was Heisenberg correct after all, with his Uncertainty Principle? If the more precisely one property is measured, the less precisely the other can be controlled, determined, or known, and where is the Tylenol-PM?

“ Is there such a thing as true objectivity? And how valid are mail surveys? How generalisable are the results? ”

I have written two articles on JustLuxe about Luxury’s Mixed Messages, and I have not discussed one of the most challenging reasons for the mixed messages: the complicated nature of affluence research. There’s a reason: when I discuss the numbers and trends in this type of work, I often do not know the methods of data collection, and the designs used. I know, as most do, the emerging numbers and the generalizations posited from those numbers.

Affluence research is a type of market research — a method of surveying individuals using controlled and specific processes. It produces quantitative, measurable data, that often can be used to predict buying patterns, future demand, identification of target markets.

Quantitative market research refers specifically to the collection of factual, measurable data that includes personal data — sex, age, annual income, or number of children, of the person being surveyed. It also includes data like the number of times the interviewee visits a particular store or restaurant, the amount of money she spends on groceries every month, and the number of hours she spends watching television or listening to the radio.

“ Regarding reliability, the question relates to whether research results already garnered, can be applied to a wider group than those who took part in a study? ”

A great amount of valuable information can be extracted from these data, so it is incumbent on the researcher to be as stringent as possible in his or her design and data collection procedures, as most errors can be traced to problems with how data are gathered. In particular, these errors occur due to problems associated with research validity and reliability, the two cornerstones of all quantitative and qualitative research.

Regarding validity, the question relates to whether the research is really measuring what it claims to be measuring. For instance, if a marketer is purchasing a research report from a company claiming to measure how people prefer the marketer’s products over competitors’ products, the marketer should understand how the data were gathered to help determine if the research really captures the information the way the research company says it does.

And, regarding reliability, the question relates to whether research results already garnered, can be applied to a wider group than those who took part in a study. In other words, would similar results be obtained if another group containing different respondents or a different set of data points were used? If results are similar then it is likely the method of data gathering is reliable. Assuring research can be replicated and can produce similar results is an important element of the scientific research method.

“ Media are inundated with trend forecasts and predictions, often based on anecdotal research, old data or large changes in very small numbers ”

With this said, Ron Kurtz, President and CEO of the American Affluence Research Center has taken on some of these issues with his Trends Caveats. His 30 year-plus research experience involves an MBA from Harvard, a book he wrote on Market Research Strategy And Techniques, and successful market research projects for Ford, Gillette, and groups in the travel field. He formed his own market research firm, American Affluence Research Center in 2002, where he has done a substantial amount of longitudinal survey research with the top 1% of the affluent population.

His Trends Caveats have been recently disseminated, and deal with his concerns with trends forecasts and the problems they evoke. I recently asked him about his motivation for writing them, and he replied, “I wrote my Trends Caveats out of a concern for those who read affluence research and accept findings that look positive and happy. Of course people want to have happy outcomes."

“But right now, media are inundated with trend forecasts and predictions from marketing and research agencies, consultants and pundits of all types. These predictions are often based on anecdotal research, old data or large changes in very small numbers, if they are quantified at all. This becomes problematic data, and I wanted people to be aware of it.” Here are the Caveats:

Basic Behaviour

Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time. This is evidenced by research begun in the 1970s by Thomas Stanley, author of “The Millionaire Next Door” and the more recent “Stop Acting Rich and Start Living like a Real Millionaire.” Our affluence research since 2002 has been consistent with that of Mr. Stanley’s.

Changes vs Trends

A change from one year to the next is not necessarily a trend, especially if it applies to a large increase in a very small percentage of the market. That is more likely to be a fad that may or may not become a meaningful trend over a period of two or more years. For example, a market segment that triples from one percent to three percent is not a trend but may be an indicator of an emerging market.

Affluent vs Aspirational

Affluent consumers are not necessarily luxury consumers. Of course, the definition of “luxury” is in the eye of the beholder, which could be another important caveat when considering the forecasts of the trend pundits. Only the wealthiest one percent of U.S. households appear to be knowledgeable about the price points and brands of true luxury products. Before the recession, some luxury consumers were among the so-called mass or aspirational affluent. These consumers have been largely shaken out of the true luxury market.

Segmentation

It is important to stay focused on the key marketing priorities of attracting new customers and retaining the loyalty and increasing the purchases of existing customers. Marketers should avoid chasing emerging consumer market segments if that will cause them to be distracted and dilute efforts targeting their existing primary consumer markets.

Traditional Marketing

Traditional marketing communications channels should not be forsaken, especially if marketers are targeting affluent and luxury consumers. The conversations among marketing professionals seem to be exclusively focused on the opinions and statistics regarding the importance of the various forms of digital channels of communications. An unintended consequence of digital media is that the consumer audience has been substantially fractionated. Equally important, many in the large numbers of digital fans and followers of luxury brands are aspirational consumers and other “luxury-curious” voyeurs who cannot afford the products.

Consumer Characteristics

The true affluent, who are typically careful spenders who live within their means, are the more knowledgeable and more sophisticated consumers. Their priorities have always been quality and value when making a purchase decision. In addition, the vast majority of the affluent have always avoided ostentatious or conspicuous consumption. These are not new priorities for the affluent.

Common Sense

Last but not least, there is no substitute for using common sense when thinking about how to be consumer-sensitive in all aspects of the relationship, interaction and communication with customers. Just put yourself in the shoes of your customers. This Golden Rule applies to product, pricing, service, post-sale relations, communications and all forms of interaction with the customer.

Many of these are arguable, yet as a whole they certainly define some of the issues faced with affluent market research paradigms — both in theory and practice right now.

Susan Kime
Susan Kime

Senior Luxury Journalist, JustLuxe.com, Pursuitist.com, DestinationLuxury, Caviar Affair

Susan Kime’s career combines publishing, editorial, and media relations. She writes for Pursuitist, James Edition, JustLuxe, Destination Luxury, and Caviar Affair. Her areas of specialization include UHNW Real Estate trends, evolving meanings of luxury, and high end adventure travel and river cruising.

CONSUMERS

The Complex Nature of Affluence Research

by

Susan Kime

|

This is the featured image caption
Credit : This is the featured image credit

**Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research**

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

**Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research**

Susan Kime, luxury columnist for JustLuxe.com, highlights one of the most challenging reasons for the mixed media messages: the complicated nature of affluence research

My qualifications for writing this piece are these: I have done graduate level research, created my own design and collection methodology, and taught research design and program evaluation for two years, at the university level. I know the gnawing questions regarding research design, data collection methods, and validity/reliability measures. These are issues that kept me awake at night, worrying.

Is there something in the design, or in the research questions or in the sample size that will literally invalidate two years of work? Is there such a thing as true objectivity? And how valid are mail surveys? How generalizable are the results, especially if I can’t do longitudinal studies? How many similar observations and answers determine a true trend? And, was Heisenberg correct after all, with his Uncertainty Principle? If the more precisely one property is measured, the less precisely the other can be controlled, determined, or known, and where is the Tylenol-PM?

“ Is there such a thing as true objectivity? And how valid are mail surveys? How generalisable are the results? ”

I have written two articles on JustLuxe about Luxury’s Mixed Messages, and I have not discussed one of the most challenging reasons for the mixed messages: the complicated nature of affluence research. There’s a reason: when I discuss the numbers and trends in this type of work, I often do not know the methods of data collection, and the designs used. I know, as most do, the emerging numbers and the generalizations posited from those numbers.

Affluence research is a type of market research — a method of surveying individuals using controlled and specific processes. It produces quantitative, measurable data, that often can be used to predict buying patterns, future demand, identification of target markets.

Quantitative market research refers specifically to the collection of factual, measurable data that includes personal data — sex, age, annual income, or number of children, of the person being surveyed. It also includes data like the number of times the interviewee visits a particular store or restaurant, the amount of money she spends on groceries every month, and the number of hours she spends watching television or listening to the radio.

“ Regarding reliability, the question relates to whether research results already garnered, can be applied to a wider group than those who took part in a study? ”

A great amount of valuable information can be extracted from these data, so it is incumbent on the researcher to be as stringent as possible in his or her design and data collection procedures, as most errors can be traced to problems with how data are gathered. In particular, these errors occur due to problems associated with research validity and reliability, the two cornerstones of all quantitative and qualitative research.

Regarding validity, the question relates to whether the research is really measuring what it claims to be measuring. For instance, if a marketer is purchasing a research report from a company claiming to measure how people prefer the marketer’s products over competitors’ products, the marketer should understand how the data were gathered to help determine if the research really captures the information the way the research company says it does.

And, regarding reliability, the question relates to whether research results already garnered, can be applied to a wider group than those who took part in a study. In other words, would similar results be obtained if another group containing different respondents or a different set of data points were used? If results are similar then it is likely the method of data gathering is reliable. Assuring research can be replicated and can produce similar results is an important element of the scientific research method.

“ Media are inundated with trend forecasts and predictions, often based on anecdotal research, old data or large changes in very small numbers ”

With this said, Ron Kurtz, President and CEO of the American Affluence Research Center has taken on some of these issues with his Trends Caveats. His 30 year-plus research experience involves an MBA from Harvard, a book he wrote on Market Research Strategy And Techniques, and successful market research projects for Ford, Gillette, and groups in the travel field. He formed his own market research firm, American Affluence Research Center in 2002, where he has done a substantial amount of longitudinal survey research with the top 1% of the affluent population.

His Trends Caveats have been recently disseminated, and deal with his concerns with trends forecasts and the problems they evoke. I recently asked him about his motivation for writing them, and he replied, “I wrote my Trends Caveats out of a concern for those who read affluence research and accept findings that look positive and happy. Of course people want to have happy outcomes."

“But right now, media are inundated with trend forecasts and predictions from marketing and research agencies, consultants and pundits of all types. These predictions are often based on anecdotal research, old data or large changes in very small numbers, if they are quantified at all. This becomes problematic data, and I wanted people to be aware of it.” Here are the Caveats:

Basic Behaviour

Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time. This is evidenced by research begun in the 1970s by Thomas Stanley, author of “The Millionaire Next Door” and the more recent “Stop Acting Rich and Start Living like a Real Millionaire.” Our affluence research since 2002 has been consistent with that of Mr. Stanley’s.

Changes vs Trends

A change from one year to the next is not necessarily a trend, especially if it applies to a large increase in a very small percentage of the market. That is more likely to be a fad that may or may not become a meaningful trend over a period of two or more years. For example, a market segment that triples from one percent to three percent is not a trend but may be an indicator of an emerging market.

Affluent vs Aspirational

Affluent consumers are not necessarily luxury consumers. Of course, the definition of “luxury” is in the eye of the beholder, which could be another important caveat when considering the forecasts of the trend pundits. Only the wealthiest one percent of U.S. households appear to be knowledgeable about the price points and brands of true luxury products. Before the recession, some luxury consumers were among the so-called mass or aspirational affluent. These consumers have been largely shaken out of the true luxury market.

Segmentation

It is important to stay focused on the key marketing priorities of attracting new customers and retaining the loyalty and increasing the purchases of existing customers. Marketers should avoid chasing emerging consumer market segments if that will cause them to be distracted and dilute efforts targeting their existing primary consumer markets.

Traditional Marketing

Traditional marketing communications channels should not be forsaken, especially if marketers are targeting affluent and luxury consumers. The conversations among marketing professionals seem to be exclusively focused on the opinions and statistics regarding the importance of the various forms of digital channels of communications. An unintended consequence of digital media is that the consumer audience has been substantially fractionated. Equally important, many in the large numbers of digital fans and followers of luxury brands are aspirational consumers and other “luxury-curious” voyeurs who cannot afford the products.

Consumer Characteristics

The true affluent, who are typically careful spenders who live within their means, are the more knowledgeable and more sophisticated consumers. Their priorities have always been quality and value when making a purchase decision. In addition, the vast majority of the affluent have always avoided ostentatious or conspicuous consumption. These are not new priorities for the affluent.

Common Sense

Last but not least, there is no substitute for using common sense when thinking about how to be consumer-sensitive in all aspects of the relationship, interaction and communication with customers. Just put yourself in the shoes of your customers. This Golden Rule applies to product, pricing, service, post-sale relations, communications and all forms of interaction with the customer.

Many of these are arguable, yet as a whole they certainly define some of the issues faced with affluent market research paradigms — both in theory and practice right now.

Susan Kime
Susan Kime

Senior Luxury Journalist, JustLuxe.com, Pursuitist.com, DestinationLuxury, Caviar Affair

Susan Kime’s career combines publishing, editorial, and media relations. She writes for Pursuitist, James Edition, JustLuxe, Destination Luxury, and Caviar Affair. Her areas of specialization include UHNW Real Estate trends, evolving meanings of luxury, and high end adventure travel and river cruising.

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