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My client - a luxury car manufacturer - wants to appeal to affluent millennials (HHI $100K+), who they feel may not yet be purchasing their vehicles but will in the future. We want to know what values &/or events can this luxury car brand align with to resonate with millennials. Or in other words ... how can they inspire aspiration for their brand as this generation builds its wealth, so when they're ready to purchase a luxury car, they purchase their brand?
Hello! Thank you for your question to Wonder about luxury brands and affluent millennials. The short answer is that millennials have a highly entrepreneurial spirit and desire personalized and values-aligned products, socially connected brands, and cost-efficient solutions. In general, "millennials have been reluctant to buy items such as cars, music and luxury goods," preferring instead to share services and products to reduce costs and environmental impact. The good news is that luxury brands have been successful in appealing to affluent millennials, particularly those with an annual household income of $100,000 or more. I was able to locate several case studies that illustrate the strategies that have inspired this younger generation to buy their brands.
PRICE BEFORE BRAND
Before a luxury brand can successfully implement a marketing strategy to affluent millennials, it is important to understand that this generation is unlike any other before it. While it is true that according to an interview with a "luxury panel" on what millennials want, "across the generations, millennials, Gen Xers and boomers all want the best in design, quality and craftsmanship, along with great service," millennials are looking for more. They are less concerned with material possessions than they are with experiences. Mickey Alam Khan, editor-in-chief of Luxury Daily, a luxury business publication, said in his panel interview, "One of the biggest changes in the last few years has been the shift in the luxury-consumption mindset from “I have” to “I experience.” So it’s gone from simply material acquisition to a collection of exquisite memories to be cherished for a long time from unique experiences." This is backed up by Goldman Sachs' study on coming-of-age millennials, which found that only 15% of people age 16 to 35 believe that owning a car - considered a must-have for previous generations - is extremely important. This contrasts with the 30% who said they had no intention of purchasing a car in the near future.
In addition, when asked the question "When I shop, I always try to buy branded products," only 9% of millennials age 16-24 and just 8% age 25-34 said they strongly agreed with the statement. This percentage didn't differ too much from the older generations, but the key factor that fuels these branded purchases is what is important. When asked "what factors make you loyal to a brand?" 55% of millennials said the quality was important compared to 59% of other generations. Instead, millennials were more concerned with price, with 33% saying cost was an important factor in choosing a brand. This is in contrast to just 27% of members of older generations citing price as a factor in their purchasing decisions. So, while millennials want quality products, they also want good value, and they are willing to sacrifice some quality if another brand offers a similar product for less. Larissa Faw, a reporter with MediaPost, supports the idea that millennials are price-conscious. In her panel interview she said, "Once upon a time, luxury meant price. You almost just knew something was a luxury product because it was insanely expensive. Now, luxury means exclusivity and authenticity. One-of-a-kind items that come from a true place. A product can be $5, but if it is the only one and rare, that is luxury."
PERSONALIZATION
This quote leads into another millennial buying characteristic, which is the desire for personalized products. In general, millennials are "skeptical, with an inherent distrust of large corporate organizations." They " are very independent. Instead of looking for brands to hold their hands throughout a purchase decision, affluent millennials do not want a brand’s constant involvement in the decision-making process." "They want things that are highly customized and extremely relevant to them personally. They want content that is targeted to them as individuals." They don't want to keep up with the Jones'. They want to be the Jones'. They are the trendsetters and they don't want cookie cutter products. As "The Case for Winning Over Affluent Millennials" puts it, "we generally accept that millennials are trendsetters for the overall consumer economy." Furthermore, "millennials, because they are so connected online, often post their likes and dislikes, further influencing companies to offer millennials with goods and services they want."
SOCIALLY CONNECTED
Based on the Goldman Sachs' study, "The online world - and social media in particular - have given the Millennials a platform to reach the world." Never before has a generation grown up with technology in the way the millennials have. This has had a profound impact on how brands must target this audience. Mickey Alam Khan said, "Luxury brands are being shepherded along a digital path where online and mobile are the start of the research process that may or may not culminate in a store sale." Millennials often don't even step foot in a brick and mortar store to make their purchases. In fact, in 2014, the year of the Goldman Sachs' study, 83% of respondents age 16-24 and 90% of respondents age 25-34 made an online purchase within the last 12 months. It is, therefore, critical that brands interact with millennials, including affluent millennials online if they intend to attract buyers. In fact, " Unlike their non-affluent millennial counterparts, affluent millennials have the means to live out millennial trends such as organic, fresh food and conscious capitalism, which are often merely aspirational to the rest of the millennial cohort. Couple this ability to convert aspirations into reality with the fact that affluent millennials are far more likely to post online than their non-affluent peers, and it is clear to see who the influencers are within this massive group of consumers."
VALUES-ALIGNED PRODUCTS
One of the biggest differences between millennials and the older generations is that "they are values-driven and are highly motivated by companies that are clear about who they are and what they stand for." This is where brands can really shine with this group of consumers. Affluent millennials want their purchases to mean something. "For many young people, it’s not simply about flashy identification with a lifestyle or a product, but a reflection of their values," says Mickey Alam Khan. They want to express their values through their possessions. Millennials as a whole are jaded, so they desire authenticity from their brands and "authenticity is more about the founders, the brand purpose, the brand ambassadors and 'how' they do what they do." They care about the environment, which is one reason why "they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what's being called a 'sharing economy'." Companies like Uber and Lyft have leveraged this trend, with 73% of ride-sharing services having been taken by people age 15-34, according to a 2014 UC Berkeley study. They are also attracted to companies that "talk about helping people, not making profits." They want to feel good about giving their money to a company that has the same values they do. "They are seeking to “buy into” shared ideals and bigger ideas.
CASE STUDIES
Many luxury brands have been successful in marketing to affluent millennials. Here are a few case studies of brands that have mastered one or more of the desired millennial factors.
COMPANIES DOING IT RIGHT
1. American Express - This company took the millennial entrepreneurial attitude and created Small Business Saturdays and they continue "to encourage shoppers to support small, local businesses every year on November 27th." They successfully embraced the individuality of affluent millennials, 27% of which are self-employed and 54% of which plan to start their own business." In addition, American Express began their " The Journey Never Stops" campaign, which "features key millennial entrepreneurs talking about their journey to the top and how American Express supported them." They key to the success of this campaign was that it did not focus on the benefits millennials could get from having their card, but instead on reinforcing the idea that successful entrepreneurial millennials would not have been able to succeed without American Express.
2. Mercedes - "Mercedes is a premium luxury brand and not something you would typically associate with young adults between the ages of 18 and 34." However, because affluent millennials "view themselves as buying stock in that company" whenever they purchase a product or service from a brand, they feel like they are part owner of that company. They want the brand to acknowledge them with engagement and socialization through technology. Mercedes took advantage of the trend that "millennials increasingly express who they are in terms of how others see them; luxury items are essential in communicating their place in the social scene and their appreciation for excellence." Since the "Mercedes brand is often associated with 'making it'," affluent millennials are willing to make a premium purchase and feel good about what it means."
3. Birch Box - This subscription service has taken advantage of the millennials' desire for personalization. This beauty company "allows consumers to try products in the comfort of their own home while having the newest products." The reason this company has seen so much success with millennials is "because of the ability to offer a customizable product that is delivered to the home." Birch Box has tapped into both the technological preferences of millennials by giving them the means to customize their product online and the desire to have the newest products before anyone else by sending them directly to their home as soon as they hit the market.
LESS SUCCESSFUL COMPANIES
1. Honda - While this isn't a luxury brand, Larissa Faw says luxury brands can learn from this company's mistakes. In her panel interview, she said, "I know Honda isn’t a luxury brand, but its recent commercials featuring top toys from the 80s—like Strawberry Shortcake and Skeletor from He-Man—speaking to the camera to try to sell me a car were pathetic in how hard they were trying to appeal to millennials." Companies that try too hard to be authentic will turn millennials off because they don't trust companies anyway so their over-the-top advertisements only alienate them further.
2. Upscale alcohol brands - While she didn't name a specific brand, Larissa Faw said of the numerous advertisements attempting to make millennials think these brands are authentic: "I don’t need to see another old-timer posing with his dog on a farm to tell me a brand is authentic—and that this makes it okay to charge $300, since it has been aged in a barrel for 100 years. This authenticity does matter to millennials, but I see it becoming too commonplace." In other words, if you try to manufacture authenticity, millennials will see right through it and choose another brand.
STRATEGIES FOR SUCCESS
While it is true that affluent millennials are mistrustful of corporations and not as likely to purchase on the basis of brand heritage, "once they are satisfied,...they become extremely loyal and can be powerful advocates for brands." Capturing this loyalty is critical because when the Goldman Sachs study asked "how do you communicate with others about a service, product, or a brand?" 44% said they communicated through texting, 38% through social media, 38% through instant messaging, and 16% through blogging. When an affluent millennial becomes loyal to a brand, the brand has appealed "to the group of individuals who are essentially the trend leaders within a massive group of influencers [which] can snowball into a consumer movement that spans multiple generations." To gain this loyalty, brands must:
1. Interact with affluent millennials through social media. "Instagram, Pinterest and Snapchat are the top social channels that luxury brands need to master for digital marketing... These social channels let you interact directly with Millennials in their own language, in spaces where they are most comfortable." According to the Goldman Sachs study, 34% of respondents age 18-35 like a brand more when it uses social media. Interacting with a brand online increases the trust level of millennials.
2. Make them feel special. "The industry needs to make [millennials] feel special, by offering services that understand their life stage... If you come at millennials with the mindset to make them feel special, you can’t go wrong." This is tapping into the millennials' desire to be original. They don't want to have the same thing as everyone else, so "any company that is able to develop customized and personalized experiences will win them over." This focus on experience over ownership of material possessions is important. Create an exclusive experience and affluent millennials will want to be a part of something their peers aren't. "Millennials expect your brand to be part of their daily lives, and they value those initiatives that grant them true insider access or let them peek behind-the-scenes at the creation of luxury goods."
3. Use influencers. With a generation that has lost confidence in traditional advertising and corporate messages, brands must make pathways into where affluent millennials do place their trust: online. "Digital influencers, which include Youtube celebrities, lifestyle bloggers, and Instagram stars as well as a growing number of creators across popular social networks are real people who are democratically selected by this fickle group of money spenders... it’s these influencers who hold the keys to persuading and accelerating the path to purchase for an ever-increasing and crucial set of consumers – the millennials." Since millennials are typically jaded when it comes to traditional celebrities, it is essential for brands to leverage less traditional celebrities to promote their products. Millennials will listen to these influencers as they have almost constant access to them.
4. Give generously. A poll conducted by Morning Consultant for Fortune Magazine found that " Millennials are more likely than Gen X'ers and Baby Boomers to say it matters if American businesses give back to society.... Young people were also more inclined than their elders to say they would buy products from a company that contributes to charity, or to recommend the business to a friend." This goes along with the trend of millennials wanting to purchase products from companies that are aligned with their values. For brands to make headway with affluent millennials, it is important for them to highlight what they do to help other people. They can't simply focus on the benefits the consumer will receive. This is why Mickey Alam Khan stressed "the importance of storytelling and codes for luxury brand and luxury retailers to get their message across." Affluent millennials connect with stories, especially if the story makes them feel good about giving their money to a company that focuses on charity.
CONCLUSION
The millennial generation is one of the largest generations in history and it is moving into its prime spending years. Brands that want to take advantage of the huge marketing potential must find a way to tap into this unique and complicated population segment. The way to do this is to attract the affluent members of this generation. They are the consumers who influence their peers. These entrepreneurial, independent, and technologically savvy young people are poised to shape the economy. By using social media, making them feel special, using influencers, and focusing on charity over profits, luxury brands can gain an edge with the affluent millennials and secure their loyalty for decades to come.
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