The Affluent Market

1. Executive Summary
   
   
   
   • Demographics
     
     
     
     • Introduction: Who Is Affluent?
       
     • Market Definition
       
     • Affluent Mindset
       
     • Affluent Household Population Increasing
       
     • Where the Affluent Live
       
     • Home Ownership
       
     • Affluents Are Well-Educated
       
     • Affluents and Employment
     
     
   • The Market
     
     
     
     • 1997 Affluent Income Nears $2 Trillion
       
     • Figure 1-1: U.S. Aggregate Affluent Household Income, 1993-1997 (dollars)
       
     • Affluents Earn Half of Nation's Income
       
     • "Emerging Affluents" Include Generation X, Boomers
       
     • The Affluent and the Economy
     
     
   • Affluents as Consumers
     
     
     
     • Spending Patterns and Affluent Mindsets
       
     • Affluents Spend Twice the National Average
       
     • Table 1-1: Share of Income by Household Expenditure: Affluent vs. Overall U.S. (dollars and percent): 14 Household Expenditures
       
     • Wealthy Americans Spend More in Nearly All Consumer Categories
       
     • Affluents Demand Products with Quality, Value, Reliability
       
     • A Full Mailbox: Affluents Shop by Catalog
     
     
   • Affluent Media
     
     
     
     • Affluents Desire Information Over Entertainment
       
     • Affluents Are Readers
       
     • Affluents Are Discriminating Television Viewers
       
     • Affluent Listeners Tune In to Radio
       
     • Affluents Embracing the Internet
     
     
   • Marketing to Affluents
     
     
     
     • Standard Marketing Assumptions May Not Apply
       
     • Understanding the Affluent Consumer—Who Is Wealthy?
       
     • Affluent Behavioral Types, Mindsets
       
     • Traditional Marketing Tools May Not Be Effective
       
     • Psychographics Offer More Detailed Profiles
       
     • Common Traits and Shared Values
       
     • Successful Marketing Embraces Themes of Quality and Value, Family
     
     
   • Scope and Methodology
     
     
     
     • Scope of Report
       
     • Methodology
   
   
   
   
2. Demographics
   
   
   
   • Introduction
     
     
     
     • Who Is Affluent?
       
     • Market Definition
     
     
   • Income
     
     
     
     • Sources Used for Measuring Income
       
     • Household vs. Individual Income
       
     • Income Segmentation by U.S. Census Bureau
       
     • Income Segmentation by Other Analysts
       
     • Packaged Facts Focuses on Affluents with Household Income of $100,000+
       
     • Disposable vs. Discretionary Income
     
     
   • Net Worth
     
     
     
     • Net Worth as a Measure of Wealth
       
     • Table 2-1: Distribution of Net Worth by Household Income Quintile, 1993 (dollars and percent): 5 Income Quintiles
       
     • Use of Net Worth to Determine Affluence
       
     • Stanley and Danko's "Millionaires Next Door" Have High Net Worth
       
     • Strategic Directions Group Also Uses Net Worth Measure
       
     • U.S. Trust, PSI, and Roper Use Both Income and Net Worth as Measures
     
     
   • Affluent Mindset
     
     
     
     • As Much a State of Mind as of Bank Account
       
     • Affluents Share Some Common Traits, Values
       
     • They Work Hard for the Money
       
     • Financial Security a Major Concern
       
     • Affluents Embrace Technology
       
     • Affluents Want to Look and Feel Good
       
     • Market Segmentation by Mindset: The Rich Are Different from Each Other
       
     • Figure 2-1: Number of U.S. Affluent Households, 1990-2002
     
     
   • Population
     
     
     
     • Affluent Households Increasing in Number
       
     • Affluent Household Growth Expected to Continue
       
     • Table 2-2: Number of U.S. Households: Affluent vs. Total U.S., 1990-2002 (number and percent)
       
     • Top Fifth of U.S. Households Earn Half of Nation's Income
       
     • Figure 2-2: Affluent Share of U.S. Aggregate Household Income by Quintile, 1990 vs. 1996 (percent): Lowest, Second, Third, Fourth, Highest Quintile
       
     • Table 2-3: Affluent Share of U.S. Aggregate Household Income by Quintile, 1990 vs. 1996 (percent): Lowest, Second, Third, Fourth, Highest Quintile
       
     • Affluent Majority Is Middle Aged
       
     • Table 2-4: Median Age Distribution and Income: Affluents vs. Overall U.S. Population, 1996 (number, percent, and dollars): From Age 15 to Age 65 and Over
       
     • Younger, Older Affluents Have Different Mindsets
       
     • Generation Xers Already a Trillion-Dollar Market
     
     
   • Gender and Race
     
     
     
     • Affluents Predominantly White
       
     • Table 2-5: Median Income by Race, 1995 vs. 1996 (dollars): Asian/Pacific Islander, White, Hispanic, Black, All Races
       
     • And Predominantly Male
       
     • Table 2-6: Median Earnings of Full-Time, Year-Round Workers by Gender, 1995 vs. 1996 (dollars): Men and Women
       
     • Affluent Gender Differences and Similarities
       
     • The Affluent Gay Market
     
     
   • Geographic Distribution
     
     
     
     • Geography and Wealth
       
     • Where the Affluent Live
       
     • Table 2-7: Top 10 States in Per Capita Income, 1990 vs. 1996 (dollars)
       
     • Median Income of States
       
     • Table 2-8: Top 10 States in Median Household Income, 1990 vs. 1995 (dollars)
       
     • Buying Power Also Determines State's Wealth
       
     • Most Affluents Found in or Near Major Cities
     
     
   • Family and Home
     
     
     
     • Most Affluents Are Married, Own Their Own Home
       
     • Half of Affluents Have Children at Home
       
     • Children's Well-Being Important to Affluents
       
     • Children of Affluents Less Likely to Make, Save Money
       
     • Home Ownership
     
     
   • Education
     
     
     
     • Affluents Are Well-Educated
       
     • Table 2-9: Median Educational Attainment and Income: Affluents vs. Overall U.S. Population, 1996 (percent and dollars): 3 Levels
       
     • Large Majority of Millionaires Are College Graduates
     
     
   • Employment and Occupation
     
     
     
     • Affluents and Employment
       
     • Affluents Are Professionals and Entrepreneurs
       
     • Most Millionaires' Occupations Lack Glamour
   
   
   
   
3. The Market
   
   
   
   • Figure 3-1: Estimated U.S. Aggregate Affluent Household Income, 1993-1997 (dollars)
     
   • Market Size and Growth
     
     
     
     • 1997 Affluent Income Nears $2 Trillion
       
     • Table 3-1: Estimated U.S. Aggregate Affluent Household Income, 1993-1997 (number of households and dollar income)
       
     • Affluents Earn Half of Nation's Total Income
       
     • Table 3-2: Affluent Share of U.S. Aggregate Household Income 1990-1996 (percent and dollars)
       
     • California, New York Lead in Buying Power
       
     • Table 3-3: Top 10 States with Highest Disposable Income (dollars and percent)
     
     
   • Factors Affecting Market Growth
     
     
     
     • "Emerging Affluents" Include Generation X, Boomers
       
     • The Affluent and the Economy
       
     • Healthy Business Climate Tempers Stock Market's Influence
       
     • The "Wealth Effect" Theory
       
     • Wealthier Affluents Reducing Household Debt
       
     • America's Wealthy: The Next Generation
       
     • Figure 3-2: Projected U.S. Aggregate Affluent Household Income, 1997-2002 (dollars)
     
     
   • Projected Market Growth
     
     
     
     • Affluent Market to Near $2.9 Trillion in 2002
       
     • Table 3-4: Projected U.S. Aggregate Affluent Household Income, 1997-2002 (number of households and dollar income)
   
   
   
   
4. Affluents as Consumers
   
   
   
   • Overview
     
     
     
     • Spending Patterns and Affluent Mindsets
       
     • Affluents Spend Twice the National Average
       
     • Table 4-1: Share of Income by Household Expenditure: Affluent vs. Overall U.S. (dollars and percent): 14 Household Expenditures
       
     • Wealthy Americans Spend More in Nearly All Consumer Categories
       
     • Several Indicators Show Luxury Purchases on the Rise
       
     • Savvy Affluents Opt for Understated Luxury
       
     • Affluents Demand Products with Quality, Value, Reliability
       
     • 
       
     • But Seek Innovation and Expressions of Individuality
       
     • Boutiques and Discount Stores: Affluents Shop at Both
       
     • A Full Mailbox: Affluents Shop by Catalog
       
     • Trend Towards Customization
     
     
   • Affluent Consumer Focus: Housing
     
     
     
     • Affluents Spend Twice the National Average on Housing
       
     • Table 4-2: Annual Housing Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 7 Types
       
     • Affluents Homes Bigger, Newer, But Housing Costs Take Smaller Budget Bite
       
     • Table 4-3: Home Value, Age, and Monthly Cost: Affluent vs. Overall U.S.
       
     • Affluent Buyers Prefer Large, Single-Family Homes
       
     • Affluent Homeowners Want Innovation, Amenities
       
     • Also Wanted: Older Single-Family Homes in Established Neighborhoods
       
     • Older Homes Prompt Renovation Activity
       
     • Condominiums and Apartments Enjoying New Popularity
       
     • Affluents Own Second Homes and Recreational Real Estate
     
     
   • Affluent Consumer Focus: Vehicles
     
     
     
     • Affluents Own More Cars and Spend More on Them
       
     • Table 4-4: Annual Automobile Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 4 Types
       
     • Luxury Automobile Market Shifting
       
     • Used Cars Attractive to Thrifty Affluents
       
     • Wildly Popular SUVs Move Affluents Through Suburban Jungles
     
     
   • Affluent Consumer Focus: Financial Services
     
     
     
     • Affluents Are Prime Consumers of Financial Products
       
     • Investment Activity on the Rise
       
     • Millionaires Own Stock, Are Long-Term Investors
       
     • Affluents Like to Trade
       
     • Table 4-5: U.S. Adult Investors by Annual Number of Stock Transactions, 1997 (total number, median age, median household income)
       
     • Affluents Likely to Hold Securities Valued Over $100,000
       
     • Table 4-6: U.S. Adult Investors by Value of Securities Owned, 1997 (total number, median age, median household income)
       
     • Wealthiest Investors Hold Zero-Coupon Bonds, Company Stock
       
     • Table 4-7: U.S. Adult Investors by Type of Security Owned, 1997 (total number, median age, median household income)
       
     • Affluents Knowledgeable, Actively Interested in Financial Management Financial Service Providers in Demand, Especially by Women
       
     • Little Loyalty to Financial Service Providers
       
     • Affluents Most Likely to Use Brokerage Services
       
     • Financial Institutions Targeting Lower-Income Affluents
       
     • "One-Stop Shopping" Financial Services Also Wooing Affluents
       
     • Socially Responsible Investing and Philanthropy
       
     • Estate and Family Wealth Management Industries Grow as Affluents Age
       
     • Online Investing and the Affluent
     
     
   • Affluent Consumer Focus: Travel and Travel Services
     
     
     
     • Affluents Premium Consumers of Travel
       
     • Affluents Account for 75% of All Travel Dollars
       
     • Affluent Travelers Want Service, Amenities
       
     • Affluents Use Travel Agents, Follow Recommendations
     
     
   • Affluent Consumer Focus: Apparel, Jewelry, and Accessories
     
     
     
     • Affluents Strongest Apparel Consumers
       
     • Affluents Spend More Than Average on Apparel and Accessories
       
     • Table 4-8: Annual Apparel Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 6 Types
       
     • Wealthy Affluents Spend More on Apparel
       
     • Affluents Spend More on Jewelry Purchases
       
     • Watches: Luxury Timepiece Sales Increasing
     
     
   • Affluent Consumer Focus: Health Services and Personal Care
     
     
     
     • Affluents Spend More on Health Care
       
     • Table 4-9: Annual Health and Personal Care Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 6 Types
       
     • Health and Appearance Matter to Affluents
       
     • Table 4-10: Heavy Use of Facial Moisturizers by Household Income Bracket, 1997 (percent and index): From Less than $10,000 to $100,000+
       
     • Trend Towards "Boutique" Health Care
     
     
   • Affluent Consumer Focus: Food and Beverages
     
     
     
     • Affluents Spend Almost Double the National Average on Food
       
     • Table 4-11: Annual Food Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 8 Types
       
     • Affluents Enjoy Gourmet Foods
       
     • Affluents Spend More on Dining Out
       
     • Affluents Spend Twice as Much on Alcoholic Beverages
     
     
   • Affluent Consumer Focus: Entertainment and Leisure Products
     
     
     
     • Affluents Spend More than Double on Home Furnishings and Equipment
       
     • Table 4-12: Annual Household Furnishings and Entertainment Expenditures by Type: Affluent vs. All U.S. Households (dollars and percent): 10 Types
       
     • Conveniences and Gadgets: Affluents Like Small Appliances
       
     • Home Electronics: Technology and Innovation Are Appealing Elements
       
     • Affluents Use Computers
       
     • Affluents and Entertainment: The $100,000 Bar Mitzvah
       
     • Affluents Pay Premium Prices for Quality Toys, Educational Products
     
     
   • At the Retail Level
     
     
     
     • Upscale Retail Centers Cater to Affluent Shoppers
       
     • Affluents Find Hard Sell Distasteful
       
     • Relationships with Retailers, Service Providers Valued by Affluents
       
     • Loyalty Programs, Frequent Shopper Rewards Popular with Affluents
   
   
   
   
5. Affluent Media
   
   
   
   • Overview
     
     
     
     • Affluents Desire Information Over Entertainment
     
     
   • Print
     
     
     
     • Affluents Are Readers
       
     • Newspaper Readership Greatest Among Affluents
       
     • Magazines Enjoy Affluent Readership
       
     • Business Publications Attract Wealthiest Readers
       
     • Specialty and Trade Publications, Professional Journals Reach Specific Affluent Groups
       
     • In-Flight Magazine Readership Taking Off
       
     • Affluent Media Profile:Architectural Digest
       
     • Affluent Media Profile:Forbes
       
     • Affluent Media Profile:Fortune
       
     • Affluent Media Profile: The Ivy League Magazine Network
       
     • Affluent Media Profile:Travel and Leisure
     
     
   • Television, Radio, and Direct Marketing
     
     
     
     • Affluents Are Discriminating Television Viewers
       
     • Affluents More Likely to Have Cable
       
     • Affluent Listeners Tune In to Radio
       
     • Affluent Mailbox a Full Mailbox
     
     
   • Alternative Media
     
     
     
     • Affluents Embracing the Internet
       
     • Affluents Use Internet for Information, Recreation
   
   
   
   
6. Marketing to Affluents
   
   
   
   • Marketing Fundamentals
     
     
     
     • Standard Marketing Assumptions May Not Apply
       
     • Understanding the Affluent Consumer—Who Is Wealthy?
       
     • Affluent Behavioral Types, Mindsets
       
     • Traditional Marketing Tools May Not Be Effective
       
     • Psychographics Offer More Detailed Profiles
       
     • Common Traits and Shared Values
       
     • Successful Marketing Embraces Themes of Quality and Value, Family
       
     • Provide a Rationale
       
     • Relationships Are Key
       
     • Value and Price Not Necessarily Related
     
     
   • Affluent Advertising
     
     
     
     • "Whisper" Campaigns More Effective Than Hard Sell
       
     • Information, Please
       
     • Establish Strong Product, Brand Identity
     
     
   • Promotion Strategies
     
     
     
     • Cultural, Other Sponsorships Successful
       
     • Partnering for Marketing Events Also Effective
       
     • Audi Uses Trend Influence Marketing
       
     • Other Promotional Strategies Also Work
       
     • Cyberspace Holds Great Potential
     
     
   • Examples of Advertising Targeted to Affluents
     
     
     
     • Housing and Furnishings
       
     • Fixtures
       
     • Furnishings
       
     • Vehicles
       
     • Acura TL
       
     • Jaguar XK8
       
     • Range Rover Sport Utility Vehicle
       
     • Lexus LX470 Sport Utility Vehicle
       
     • Volkswagen Passat
       
     • Financial Services
       
     • Mastercard International
       
     • American Express
       
     • Aetna Retirement Services
       
     • Lincoln Financial Services
       
     • Union Bank of Switzerland
       
     • Travel and Travel Services
       
     • Westin Hotels and Resorts
       
     • Virgin Atlantic Airways
       
     • Continental Airlines
       
     • British Airways
       
     • Apparel, Jewelry, and Accessories
       
     • Nautica Apparel
       
     • Gucci
       
     • Tiffany and Co
       
     • Patek Philippe
       
     • Ebel
       
     • Health Services and Personal Care
       
     • Food and Beverages
       
     • Entertainment and Leisure Products
       
     • Sony
       
     • Bose
       
     • Philips Flat TV
       
     • Barnesandnoble.com
       
     • Gund
   
   Appendix I: Advertising. This appendix appears in bound editions only.
   Appendix II: Addresses Of Selected Marketers