Tapping into a Changing Luxury Market

Nov 04, 11 | 12:07 am

By Maria Lenhart

No longer label-conscious and no longer likely to be WASPs with inherited money, today's luxury consumers are also more discerning than their predecessors. For travel sellers, the evolution of this lucrative market demands new approaches.

The changing demographics of luxury travelers, along with strategies for marketing to them, were shared by Greg Furman, president of the Luxury Marketing Council, in a presentation on Defining Luxury at the recent Ensemble Travel conference in Las Vegas.

Robust, discerning market

Despite the tough economy, luxury travel in the U.S. remains a robust market, accounting for $270 billion in spending per year, according to Furman. Furman defines the luxury market as households with assets of $1.5 million and up.

Lower-income customers "have stopped spending - they're gone," he said. By contrast, the "luxury market has shrugged off the recession faster than expected."

However, the recession has brought big changes in the behavior of luxury consumers, he added. "They are far more discerning than they used to be - they're not attracted to something because it's high-priced."

More diverse

"Luxury consumers are no longer comprised of people with old money - less than 10% have inherited wealth. It's primarily working class people who have moved up," Furman said. "They acquired their wealth."

They are also now increasingly diverse in terms of race and ethnicity.

A surprising number of luxury purveyors are not cognizant of these facts, Furman said. "For example, Latinos represent about $110 billion in spending per year, but many brands don't even have them on their radar."

Another big difference is that it is becoming increasingly difficult to identify a luxury customer by appearance.

"Rich people no longer dress the part, so you can no longer make any assumptions when people walk in the door," Furman said.

Experiences, not labels

Furman noted that while luxury customers in emerging markets such as China and Russia are very label- and status-conscious, those in mature markets, including North America, are no longer motivated by these values.

"It's no longer about bragging rights; it's about having great experiences," Furman said. "In particular, they want multigenerational experiences when it comes to travel. This trend will explode as Baby Boomers get older."

Luxury consumers want travel that is unique and memorable, he said. "They want an exquisite experience, where every touch point of the trip is seamless and reflects attention to detail."

The personal touch

Reaching these sophisticated consumers takes new approaches, primarily because they have grown cynical about traditional marketing and advertising, Furman said .

Personal engagement and deep knowledge of customers' needs and preferences are key to cultivating the luxury market.

"Luxury customers want you to know about their purchasing history," he said. "You really have to know them and what they've done."

Even small acts of customer engagement, such as sending out a card for a child's graduation, can go a long way toward establishing a trusted, long-term relationship, Furman noted.

Collaborate with other businesses

To expand their luxury client base, travel agencies should collaborate with other brands or businesses that also target luxury consumers, Furman advised.

Possibilities include retailers, such as jewelers; universities; high-end restaurants; professional associations, and car dealerships. Furman cited the examples of Seabourn's successful partnerships with Steuben Glass and the New York City Opera.

Collaborations can include jointly hosting events or promotions for customers.

They also can provide agents with opportunities to share resources, best practices and marketing ideas with business counterparts."It's important to get together with other brands and to look at what they're doing with things like e-marketing and the web.

"Everyone gets more money from the best customers by working together," Furman said.

Engage frontline employees

To find new and effective marketing ideas, mine ideas from within the agency itself, especially by consulting with frontline employees, Furman advised.

"The smartest brands realize that their frontline people often have great ideas. It's no longer about all the wisdom coming from the top down."

Source: travelmarketreport.com; To continue reading 'Click Here'.