One of the challenges for marketers targeting the “Top 1 Percent” has always been most research really doesn’t target the Top 1 Percent. Ron Kurtz is founder of the American Affluence Research Center whose focus is the wealthiest 10 percent of U.S. households based on net worth. He talks about the problems with researching the well to do.
By Ron Kurtz
There are at least five good reasons why researchers arrive at different conclusions about the spending outlook of the affluent and luxury consumers.
- Net worth is more stable than income as an indicator of wealth (and attitude toward spending) than household income. Most research looks at household income and most media buyers use household income as a media target.
- Some researchers define affluent and luxury consumers starting at $100,000 annual income. This level of income will not go far, especially for a family in a major city on the east and west coasts. If you are going to use household income, to reach consumers who are buying luxury goods and services on an ongoing basis you need to target at least $10 million in net worth and $400,000 household income.
- Some researchers ask respondents to recall and reconstruct past spending for “luxury” products and services. This approach is flawed because spending history is difficult for consumers to reconstruct accurately, especially across many products and a span of time exceeding a few weeks, unless a diary method is used, which is rarely the case. Our surveys rarely ask for details about past behavior as we focus on the future outlook and spending plans of the affluent because we think future consumer spending intentions are more important for marketers to understand what the market environment will be when planning their budgets and programs.
- Most researchers ask about spending for “luxury” products and services without specifying the price points that define “luxury” for specific types of products. Our experience has found “luxury” is a very ambiguous word that means different things to different people. We have also found that there is a big difference between affluent consumers and luxury consumers. It is very risky to lump them together.
- Most research of the affluent is done among online panels of people who agree to fill out frequent surveys for very small incentives. We do not believe such people are representative of the truly affluent because the surveys offered to members of such panels can be very frustrating and time consuming. There is no apparent reason why the truly affluent would want to participate in such panels. We conduct mail surveys of a sample drawn to be projectable for the universe of the wealthiest 10% of U.S. households based on net worth. Mail works better because participants can be confident that their anonymity is protected and they will provide confidential data on their income and net worth. Among other reasons why mail works well, in many, but not all, instances is that the mailing can include incentives that create a sense of obligation for responding.
Ron Kurtz is President of The Kurtz Group, which consists of The American Affluence Research Center, which specializes in surveys and mailing lists of the affluent, and The Management Resource Group, which provides strategic marketing consulting services to the travel and hospitality industries.A frequent writer for trade publications and speaker at industry functions, Ron is often quoted in the media as a recognized authority on the affluent market and the travel industry.Ron has consulted to such prominent organizations as The World of ResidenSea, The Four Seasons Ocean Residence Club, Merrill Lynch, the Bahamas Ministry of Tourism, Rio Suites and Casino, and Celebrity Cruises.Ron’s experience includes 20 years in senior management positions in the cruise, airline, and hotel industries. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He has served as the president or chief marketing officer of four cruise lines.Ron earned his MBA degree at the Harvard Graduate School of Business, where he served on the faculty as a Research Assistant, and his BBA degree at the University of Texas.He is the author of “Market Research: Strategy and Techniques,” published by The American Management Association.