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24 | Kitchen & Bath Design News January 2015 Consumer Insights { -eslie )art } W hen the reces- sion hit, many marketers won- dered if well-to-do consumers would eventually resume spending once it was all over. The $64,000 question: Would business return to "normal?" Several years into the re- covery, the answer appears to be "no way." Instead, we have come to a very new normal. Today's consumer mind- set goes way beyond value. Among the afuent, it's much more about values. It's a sea change in attitudes brought about frst by an aging pop- ulation and then accelerated by the recession. So says Pamela Danziger, president, Unity Marketing, and author of Putting the Luxe Back in Luxury , who has spent years studying the afuent. The sobering reality, she says, is the luxury market will be stagnant until 2020. Baby Boomers, while still signifcant because of their numbers, are in or approaching retirement. It's a time of life where experi- ences count more than things and saving money becomes in- creasingly important. The 35-to-54 age group is the most active in the lux- ury market, but there aren't enough GenXers to take up the slack from the Baby Boomers. Danziger says once Millennials, the Boomers' children, come into that age group, the size of the luxury market will grow. CHANGING VALUES But numbers aside, what's truly signifcant is the change in temperament of a sizeable portion of afuent consumers. "Many people with means are rejecting a lifestyle of ma- terial wealth and luxury," the book points out. "That doesn't mean they want to do without. But they now recognize that personal happiness and status are not connected to things." Danziger calls this "respon- sible consumerism." The new post-material mindset is more about caring, sharing and en- hancing the quality of life. This change in values, or some would say a return to older values, requires engag- ing most afuent customers in new ways. "People's spending fol- lows their values," Danziger stresses. "Values are the foun- dation for lifestyle branding and marketing." Her studies show 50% of af- fuents believe it is important to buy from companies whose values align with their own. For our industry, there's a silver lining in this: While experiences now give afuent consumers the most pleasure, home ranks second as a source of happiness and satisfaction. The mature (55+) segment of the high-income market is generally jaded about lux- ury and has a lifestyle that revolves more around down- sizing. Yet Danziger reports, "They will trade up to luxury occasionally, rather than regularly, such as on a major home remodeling project." And young afuents want bigger, better houses than the ones they grew up in. So properly presented, kitchens and baths dovetail well with today's new val- ues: experiences over things, spending time with family and friends, and maintaining a healthy lifestyle. But it's up to us to understand how our tar- get consumer defnes luxury within the kitchen and bath. It's important to remem- ber, however, that just because people have money doesn't mean they'll automatically spend it on top-of-the-line products. Here's where val- ues come into play. Financial security ranks number one among eight key life values, according to Unity Market- ing's surveys of the afuent. They are looking to maximize their investment, so we have to justify every penny we are asking people to spend on a kitchen or bath. Before the recession, Unity Marketing identified four personality types in the luxury market, but now there are fve. The new personality type, Temperate Pragmatists, represents 20% of the luxury market. Temperate Pragma- tists have no desire for the conventional trappings of a luxury lifestyle. These are people with means who don't respond to traditional marketing, and disdain sta- tus symbols, conspicuous consumption or pretense. They prefer to live modestly, adopting a casual and green lifestyle. Concerned with health and ftness, they are careful shoppers. Butterflies, also 20% of the luxury market, have turned away from self indul- gence and are now concerned about how their spending impacts the world. They pre- fer to purchase experiences rather than things. Primarily aging Baby Boomers who are not brand oriented, they be- lieve in giving back and want a more meaningful life. When they do buy things, they are motivated by the feelings or experiences that come from owning them. So a new kitch- en may appeal because it's a way of bringing the family together for celebrations. A new bath may appeal because of the relaxing experience of a spa shower or tub. Along with Butterflies, Cocooners are the oldest segment of the luxury mar- ket, accounting for 19%. Cocooners wrap themselves in a luxurious home for safety and shelter. They prefer to spend on their homes be- cause to them, experiences like travel are feeting. X-fuents or extreme af- fluents have the highest incomes and demand the best of the best. They appreciate experiences but are more ma- terialistic and brand-oriented than Butterfies. They live in chic neighborhoods and com- prise 23% of the market. Aspirers, at 18% of the mar- ket, don't appear to share in the new mindset. They are young- er, highly materialist, brand conscious and tend to defne themselves by what they own. When addressing the majority of today's affluent market, forget the old adage of selling the sizzle, not the steak. "Now you have to sell the steak, too," says Danziger. "They want measurable, quan- tifable indicators of quality." Wealthier consumers want facts, fgures and lots of information to justify their spending. You can't just say quality; you have to prove it in ways that matter to your cus- tomer. Do they believe quality is workmanship? Design? Rar- ity? Lasting performance? You need to demonstrate in a measurable way how your oferings will improve their quality of life. Quality is just a starter, though. You also have to be in sync with their values. To them, family comes frst. Afuents take care of them- selves in order to take care of their families, and will fnd time to emotionally recharge, exercise, eat well and spend time with friends. Other important values are social responsibility and environmental stewardship. The main indicator of a frm's social responsibility for afuents is how it treats its employees. They also believe companies should give back. Green is not a fad. In a survey of 1,200 consumers, more than two-thirds said a company's green practices influence where they shop and what they buy. Danziger observes, "It's a trend toward responsible consumerism, not an over-the-top green lifestyle, but one where environmental concerns are increasingly entering into the purchase equation." While they will not always spend more for totally green living, they are increasingly willing to opt for a greener choice. She expects that to continue, especially since younger afuents place a higher value on social and environmental values. l5oday`s consumer mindset goes way beyond Walue. "mong the a⒐uent it`s much more about Walues.z Changing Values Impact The Luxury Market In the luxury market, the key to driving sales is understanding consumers' values and how this impacts their purchasing decisions. Read past columns and features and send us your comments about this article and others by logging onto our Web site: www.ForResidentialPros.com