SAN DIEGO (MainStreet) — Hermes, Chanel and Louis Vuitton may be familiar names for some, but those who can most afford such luxury products are often the least aware of them or the least impressed with them.
A survey from the American Affluence Research Center found that the affluent believe most luxury brands are "overrated."
The survey of 11.4 million households in the U.S. that represent the wealthiest 10% of Americans measured brand ownership, familiarity and knowledge for 17 luxury brands over a five-year period.
To participate, individuals had to have a minimum net worth of $800,000.
With the exception of six luxury brands — Clinique, Lancome, Nordstrom, Four Seasons, Ritz-Carlton and Lexus — a quarter or more of the affluent surveyed said they believe luxury brands are overrated. Nearly 44% of those surveyed felt Louis Vuitton in particular is overrated and is aimed at status seekers rather than the consumer who is quality conscious.
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"The affluent, for the most part, have little understanding of luxury price points and luxury brands. It's only when you get to the top 1% of U.S. households that you begin to see some understanding of the price point and brands" says Ron Kurtz, head of the American Affluence Research Center.
"People who appear in the media most — corporate executives, athletes, celebrities — they are a very small percentage of the wealthy. And they are the ones who tend to be more the conspicuous consumers of luxury brands."
This could be good or bad news for luxury product makers, depending on how the information is used.
The way Kurtz sees it, the survey highlights an untapped market of consumers who could be reached through more tailored and more informative advertising.
"Over 80% of millionaires are self made, and so they were raised in households that are not familiar with glitzy, true luxury items," he explains.
To reach this audience, advertisers need to steer away from the slick and often shallow visual marketing campaigns and provide more information-oriented ads with text about the product and its quality craftsmanship.
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For instance, the six brands that the survey participants said they support and value (Clinique, Lancome, Nordstrom, Four Seasons, Ritz-Carlton and Lexus) — get that support specifically because the affluent said they feel the brands appeal more to the "quality oriented" consumer, not the "status seeker."
The survey, conducted in September, asked participants what type of consumer they felt specific luxury brands are targeting — "status seeker," "quality oriented," "style oriented," "wealthier than me," "younger than me" and "like me."
Interestingly, a surprising number of survey participants said they feel luxury brands are often targeting or appealing to someone "wealthier than me" — this from a group of people who own more than 80% of the stock and securities owned by Americans, according to Kurtz.
The net worth categories used in the questionnaire were selected to conform to the categories used by the Federal Reserve Board to define the wealthiest 10%, 5% and 1% of U.S. households. Those categories translate into people with a minimum net worth of $800,000, $1.5 million and $6 million.
"These are people who are careful spenders and very aggressive savers. But the point is that they have the ability to afford these products. The question is whether they see the value of acquiring the products," Kurtz says.
"These advertisers simply need to present a credible story about the quality and value their products represent," Kurtz concludes.
— By Mia Taylor