A new white paper published jointly by Unity Marketing and American Affluence Research Center reveals the demographics of millionaires and debunks 10 myths that impede marketing luxury to this HNW and UHNW affluent consumer segment.
February 05, 2015 — Luxury marketers have already met the HENRYs — High Earners Not Rich Yet with incomes $100k-$249.9k — but they probably don’t know the HERNs — High Earners Rich Now. These are the nearly 5 million High-Net-Worth (HNW) households in the top 10% based upon wealth, but with incomes in the HENRY range, says Pam Danziger, president of Unity Marketing.
In fact, the $100k-$249.9k income segment makes up the largest share of the 12.3 million households with net worth of $941,700 that places them at the top 10% most wealthy Americans, according to the latest data from the Federal Reserve Board.
Download a free copy of the new white paper, Do the Millionaires Still Live Next Door or Have They Moved: Demographics of Millionaires., to learn more about the wealthy and high-net-worth Americans.
Income & Wealth Are Two Different Things
High levels of household incomes ($100k+) correlates with HNW ($1m+), but they are not one and the same:
Income is the value of money that is designated to be earned at any given point in time. It usually is a specific amount of money that is acquired in cycles or periods of time, i.e. annual earned income.
Wealth is money that is saved or stored. It is already earned and can be used anytime by its owner.
Marketers need to understand the difference and what it means when it comes to consumer spending and purchase behavior. “When purchasing most consumer goods and services, affluents tend to spend their income, rather than their wealth. After all, they didn’t get wealthy by spending their money, but by saving and investing it,” says Pam Danziger, president of Unity Marketing.
Luxury marketers need different strategies to market successfully to the high-earners purchasing with disposable income, as compared to the wealthy who want to hold tight to their accumulated wealth.
“The question is: How well do you know and understand the wealthy? Is your brand’s marketing plan based upon the ‘conventional wisdom’ about the wealthy that are shown on television, like CNBC’s Secret Lives of the Super Rich, and in magazines and newspapers?” Danziger asks. “If so, the marketing program may well be filled with misconceptions, misunderstandings and myths that will derail plans for growth.”
Consumer Spending Is Lagging while Incomes Are Growing
Luxury marketers face challenges ahead, as consumer spending dipped in the latest reporting period, all the while income rose. The latest report from the Bureau of Economic Analysis, the government agency that calculates the GDP, just reported that consumer spending declined by .3% in December, despite reported growth in personal income and disposable income. That means one thing: consumers are saving their gains, rather than spending them.
“The new austerity continues,” Danziger says. “Building wealth, saving for the next rainy day, and taking the recent gift at the gas pump and putting it away is the mood of American consumers in general and affluents, in particular.”
Are Any of These Myths about Millionaires Derailing Luxury Marketing?
In a new white paper, entitled “Do the Millionaires Still Live Next Door or Have They Moved: Demographics of Millionaires,” published jointly by Unity Marketing and American Affluence Research Center, ten commonly-held myths about millionaires and HNW consumers are examined and debunked.
Ron Kurtz, American Affluence Research Center, cautions, ” If you market a premium or luxury product, or retail such products, and you believe any of the following “myths” about millionaires, your marketing program and sources of data need to be revisited and refined:”
1. Asian and other foreign markets are where to look to find the most millionaires
2. Millionaires make lots of money
3. Millionaires live in big houses & drive late-model expensive cars
4. Millionaires inherit their wealth
5. Millionaires invest most of their money in the stock market
6. Millionaires know about luxury brands and price points
7. Millionaires shop at tony, high-end places
8. Millionaires don’t like to shop on the internet; They prefer to shop in stores
9. Millionaires don’t care about sales or discounts
10. Millionaires are conspicuous consumers who buy only the best, highest-priced brands
This important white paper will provide new insights and understanding about the wealthiest American and what motivates them to shop and spend on luxury goods and services.
Danziger says, “The opportunity for luxury and premium brands is huge today given the rapidly growing numbers of wealthy households, but marketers may be missing the opportunity by not putting research-based insights to work. Any one of these millionaire myths can derail success in marketing to millionaires. Unity Marketing and American Affluence Research Center can fill the gaps.”
Kurtz offers encouragement, “Creativity begins with the courage to challenge conventional wisdom. It’s time to challenge the conventional wisdom about wealthy Americans.”