AA affluence and the Meaning of Luxury


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A socio-cultural exploration by Footsteps about affluent African Americans and their perspectives of luxury

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AA affluence and the Meaning of Luxury

  1. 1. AA Affluence and the Meaning of Luxury
  2. 2. Yesterday’s Perspective • There has historically been a symbiotic relationship between consumer affluence and the consumption of luxury goods
  3. 3. Far-out Historical Perspective • “The concept of luxury has been present in various forms since the beginning of civilization. Its role was just as important in ancient western and eastern empires as it is in modern societies… • “With the clear differences between social classes in earlier civilizations, the consumption of luxury was limited to the elite classes. It also meant the definition of luxury was fairly clear. Whatever the poor cannot have and the elite can was identified as luxury…” • Wikipedia definition of “Luxury Goods”
  4. 4. Close-end Historical Perspective • ”In his 1958 classic, The Affluent Society, Harvard Economist John Kenneth Galbraith made the argument that society as a whole had become affluent – after all most all families had tremendous modern conveniences previously known to be luxuries such as plumbing and heating, washing machines, electric stoves and refrigerators and two cars…. • “He argued that as society becomes relatively more affluent, private business must "create" consumer wants through advertising to create an artificial demand for products beyond the individual's basic needs. Given today’s economic crisis, it is hard to argue with this principle which he wrote about 50 years ago. This is a particularly relevant concept for luxury goods…” • “Back to the Future of Luxury,” Presentation by Dale N. Dewey, CEO - Luxury Solutions to The Luxury Marketing Council & The French-American Chamber of Commerce January 22nd, 2009 - Houston, Texas
  5. 5. And today, there is a lot more luxury to go around
  6. 6. The massification-of-luxury brands Super Luxury Luxury Near LuxuryUltra Premium Affordable LuxurySuper Premium Premium Upmarket •IdrisMootee, CEO Idea Couture, Inc., Luxury Brand Marketing, Presentation to Global Senior Executives Forum
  7. 7. So, what is “luxury” today?
  8. 8. Luxury Mindset • The 2007 Conference Report entitled, The Global Luxury Market: Exploring the Mindset of Luxury Consumers in Seven Countries,” says that the most valued luxuries are: – Time (35%) – Life experiences (26%) – Products and services providing comfort, beauty, and quality (18%)
  9. 9. Regarding products and services, let’s define the 3+3 of “luxury”*… 3 factors and 3 levels *This and following four pages are excerpts from “The Eternal Principles for Creating Luxury Brands” by Dr. Dan Herman @ TheManager.org
  10. 10. 3 factors 1. Luxury is nonessential, desired but not needed 2. Luxury is “hard to get” restricted by high price, small series, exclusiveness 3. Luxury is superb, inspiring feelings of wonder and excitement
  11. 11. 3 levels 1. Signature brands: most expensive, personal, singular creations – one of a kind 2. Supreme brands: Limited series products 3. High end brands: High quality mass production
  12. 12. Five Categories of Luxury Sumptuous Products Cars, jewelry & watches, fashion, cosmetics, fragran ces, food & beverages, cigars, furniture, homew ares, electronics… Exclusive Products Banking, financial services, insurance, cellular, airlines, clinics, consulting… Luscious Retail Spaces Stores, chains, shoppi ng centers, malls… Illustrious Places Restaurants, bars, clubs, h otels, resorts, housing projects, offices, commer cial complexes… Prestigious Organizations Brotherhoods, selective memberships…
  13. 13. 16 Usages for Luxury Products 1. Feel special and apart from the crowd 2. Feel superior and privileged 3. Full of value and importance 4. Exercise ability and freedom (“I can afford it”) 5. Reward themselves for efforts and achievements 6. Console one and recuperate from setback or misfortune 7. Signal status and command acknowledgement and respect 8. Demonstrate refinement, connoisseurship and/or perfectionism 9. Delight the senses and create an infrastructure for favorable experience 10. Participate in a certain group and lifestyle 11. Signal affiliation and belonging 12. Remind oneself of one’s real/aspired identity 13. Enflame hope and mobilize motivation and energy 14. Indulge and pamper oneself, take care of oneself 15. Feel loved, taken care of and even spoiled 16. Show feelings of gratitude, admiration or great affection
  14. 14. With all that as backdrop, we will focus our comments on the luxury of high-end brands of sumptuous products
  15. 15. So, let’s talk about black folks…
  16. 16. 2010 Census… Reports that the current US black population is at… 42 Million From 12.3 % of U.S. in 2000 To 13.6% of U.S. in 2010
  17. 17. Top 10 AA Cities: Size and Growth Top 10 AA Metropolitan Areas AA Population 2004 (000) AA Population 2010 (000) Percentage +/- New York 3,808 3,574 -6.1% Atlanta 1,399 1,785 +27.6% Chicago 1,738 1,755 + 0.9% Wash DC 1,376 1,491 +8.4% Los Angeles 1,497 1,356 -9.4% Philadelphia 1,372 1,286 -6.3% Miami 853 1,175 +37.7% Detroit 1,128 1,037 -8.1% Houston 966 1,015 +5.1% Dallas 843 955 +13.3% 2010 Census American Community Survey Atlanta replaces Chicago as the #2 AA market in size and leads all metropolitan areas in growth
  18. 18. The “Reverse” Migration • Per the 2010 Census, the black population in the South is close to 60%,which is the highest its been since 1960 • Black population grew by 11 % in large southern metropolitans but by 15 % in adjacent smaller counties, suggesting a strong movement of blacks to the suburbs Source: Many U.S. Blacks Moving to South, Reversing Trend Published: NY Times March 24, 2011
  19. 19. Who They Are • Blacks that are relocating to the South are typically – Twenty one - forty (21- 40) years old – College Educated – Singles / young families – Professionals & Entrepreneurs • Primary reasons for relocating – First time home buyers – Employment opportunities – Better quality of life / Cost of living – Better education for children – Cultural (getting back to their roots) Source: Many U.S. Blacks Moving to South, Reversing Trend Published: NY Times March 24, 2011
  20. 20. Back in the 1950’s, when Galbraith first made his comments about affluence, they would have only applied to black entertainers and athletes, and a handful of black professionals and entrepreneurs • Judy Foster Davis, Realizing Marketplace Opportunity: Early Research on the Black Consumer Market by Mainstream Marketers: 1930-1970, CHARM 2011 Proceedings
  21. 21. But since the passage of the Civil Rights Act in 1964, now for the 1st time in America, the Census shows that African Americans have an Affluent Class
  22. 22. The Growth of An Affluent African American Segment 19902009% Difference $50K+ % of Whites 40% 52% 23% % of African-Americans 21% 33% 36% $75K+ % of Whites 20% 33% 39% % of African-Americans 8% 17% 53% $100K+ % of Whites 10% 21% 52% % of African-Americans 3% 9% 66% – Source: U.S. Census,http://www.census.gov/hhes/www/cpstables/032010/hhinc/new06_000.htm20 09
  23. 23. Affluent African Americans* • 2.4 million affluent African Americans (HHI over $75K) – Average income $122,000 • Affluents are 17% of all AA households – Control 45% of total $1 Trillion AA buying power * African American Market in the U.S., Package Facts, 2008
  24. 24. Affluent African Americans Brand Selection • African Americans are more likely than their counterparts to choose a brand based on emotional satisfaction: 60% vs. 46% • They also feel that it is more risky to buy a brand you are not familiar with…49% vs. 38% • Affluent African Americans like to buy brands that have badge value 2005 Yankelovich MONITOR Multicultural Marketing Study
  25. 25. What does “luxury” mean to Affluent AA’s* Characteristics of Luxury • Quality • Value • Reliability • Exclusivity • Exceeds expectations at all touch points Top 7 Purchasing Categories • Luxury Travel • Fine Dining • Luxury Automobiles • Personal Services • Luxury Home Items • Designer Apparel • High End Wine/Liquor • Uptown Magazine 2008 Online Lifestyle Survey/Qualitative Research
  26. 26. A summary of the common lifestyle drivers from Uptown Magazine’s 2008 online lifestyle survey provides an overview of the market: • Luxury: They surround themselves with luxury items and experiences • Travel: They are frequent domestic and international travelers • Entertainment: They are interested in finding the best in fine dining and related social scenes • Vocation: Their entrepreneurial drive is strong and they view personal and professional networking as essential • Vehicles: They believe in experiencing an important “trade-up” item in their luxury experience • Status: They are independent and have a propensity to be single/divorced with no dependents
  27. 27. Note on Affordable Luxury • For affluent AA’s Affordable Luxury is the combination of “quality” and “deal or discount” • Uptown Magazine 2008 Online Lifestyle Survey/ Qualitative Research
  28. 28. In this world of massification- of-luxury, what has been the general market reaction?
  29. 29. Advice to Luxury Brands: Put on the White Gloves • “The time of luxury goods has not passed. There is nothing wrong with Hermes, Graff, Porsche, and Frette. Luxury brands like these have always existed. They only became brown-bag brands after people who shouldn't have been spending moneyon them started snapping them up in a free-spending frenzy.The luxury category was inflated by those who weren't true luxury buyers • “The marketing strategy I'd advise for long-time luxury brands, those with a history of exquisite products and gracious service? Make sure the consumers you want to attract, those worth attracting, consider your brands worth the exquisite price point. Wealthy consumers will not pay for luxury unless the products are well worth it and unless they, as capable buyers, are treated well • “With the competition heating up, it's time to become even more exclusive. Put on the gloves--the white gloves, that is. Offer a level of service beyond expectations. Reestablish your right to be in the stratosphere. Establishing a middle position will only muddy the waters. You're better off as a brilliant niche brand than a middling mass-market brand” » Marketers Struggle To Reignite Badge Brands, Allen Adamson, 04.10.09, Forbes.com
  30. 30. AA’s and Luxury Brands • What the foregoing excerpt makes clear is the “elitist class” relationship that the GM traditionally has had with luxury goods continues…i.e., – If they can’t afford it, they should not own it • The question arises: Now that there is an affluent segment of African Americans, how do they (and African Americans in general) feel about luxury consumption?
  31. 31. AA’s and Luxury Goods • What Shane White and Graham White, the authors of “Stylin, African American Expressive Culture,” make clear is that, from the beginning of the time African Americans have been in America, their engagement with luxury goods is more than a signal of class membership; it is also about the unique expression of their individual character +Class = GM luxury Class Character = AA Luxury
  32. 32. 2 Different Paths for Luxury • GM: Class – Luxury items are stratified by having money/capital • It is only appropriately experienced by those who can realistically afford it and who have learned how to appreciate it • AA: Class and Character – Luxury items are used to project an AA’s unique image of themselves • This regardless of whether others think that person should be buying them given other more pressing life priorities
  33. 33. African American Culture: A Look Behind Closed Doors • The Way We Are: Double Consciousness – W.E.B. DuBois: African Americans understand that we are seen as group members in America but amongst ourselves we are judged as individuals • Having this dual consciousness means that we put on one face to function in America at large but in our own communities we are free to be our truer selves • To truly understand AA behavior you must know/understand their public and private faces and when each applies
  34. 34. Double Consciousness Psychology • Having this dual perspective has led to different ways in which to cope with the challenges of framing the world Time perspective is one those challenges Some AA’s have adopted a short-present orientation while others are more long-term future oriented Locus of control is another challenge Some AA’s see the world using their own internal compass as their guide while others use external voices as the stars to guide their behavior
  35. 35. Summary of AA Luxury Multifaceted definition of luxury is held in common with GM Purpose of luxury for AA’s plays out in defining their class (like the GM) but uniquely also in their expression of their character The ways luxury plays out in the AA community is either: -Conspicuous Consumption -Materialism -Legacy -Experiential DEFINITION PURPOSE PERSPECTIVES