Get (the) rich

BOX: In brief

 

-         High net worth individuals like to be talked to by companies and brands that recognize their success and appear successful themselves.

-         The demographic is always on the hunt for an exclusive experience and therefore highly tailored experiential marketing can be effective.

-         Forget mass media, think events, personalised invitations and services because word of mouth can be your most powerful tool.

-         Brand loyalty among the rich can be hard to establish because if they spy a more exclusive offering, better quality and even greater value somewhere else they can be swayed.

-         It's a good idea to get exposure at exclusive summits and seminars where the rich gather and partnering with a brand that frequently operates in the rare air of the rich, particularly financial brands can effectively open the door.

 

To get the attention of the rich, and the super rich you need to act like you breathe their air, live in their neighbourhoods and don't really need them anyway. Meenakshi Viswanathan looks at how to attract and keep the attention of the high net worth set and most importantly shake some of their consumer power loose.

The worst kept secret in global demographics is that Asia, and particularly Hong Kong, is an incubator of super wealth. The mansions on the Peak and those bubbling Riviera-style enclaves with the spanking new mega opulent gated communities on the other side of the island as well as the buzzing commuter helicopter traffic over the harbour all tell the tale. It may have always been a place for fortunes to be made and spent, but never before has the surge from well educated middle-class comfort to millionaire and then billionaire been so energetic.

According to the most recent annual World Wealth Report compiled by Merrill Lynch and research out Capgemini, Asia was home to some of the fastest-growing millionaire markets in 2006. With Asian countries occupying half of the top 10 spots in the report.

So with a growing number entering the wealth club both here and around the region and joining the ranks of those who have been members for some time, how can marketers shake loose some of that spending power? It has a lot to do with attitude.

Teo Ai June, vice president and country manager, IndoChina, for MasterCard Worldwide, identifies three key concepts in capturing the attention of this particular consumer segment: convenience, trust and success.  Of these, she says the last is the critical one.

"As consumers, they not only want to be treated as being successful but also want to do business with other successful individuals," Teo says. The view is that the company selling to HNWI must be seen as coming from a position of success itself, which in turn will enable these consumers to become more successful at what they do.

Success is what defines this group of individuals and particularly the newer members of the demographic and this growing wealth is moving some new markets in Asia into the wealth

All these millionaires, known as high-net-worth individuals (HNWI) for demographic and marketing purposes, form an elite category, which does pretty much everything - work, shop, party and vacation - in a different way to the rest of us. Needless to say, they are usually big spenders and as such, marketing to them, and winning some of those dollars, which tend to only move in large amounts, can be an intricate dance.

They belong to a special club and they expect to be treated as such and, therefore, "mass market" advertising, marketing and sales just won't do.

There's a joke about your average lady who walks into an upscale designer boutique and wants to know the price of a jacket. The salesgirl chuckles to herself as she answers. The moral of the story: There are places where if you ask for the price, it means you probably can't afford it.

And indeed, unlike the majority of the population for whom affordability is a factor, for the ultra-rich, it is more about the overall experience.

"If I pay for something and it is expensive, that's fine as long as I feel that I have received value in return," Jean Forrest, general manager, marketing, at Peninsula Hotels says.

Forrest knows all about proving value through experiential marketing, the iconic Peninsular Hotel Hong Kong, with its exclusive bars like the Philippe Starck created Felix high up in the Kowloon clouds, helicopter shuttle service and fleet of "Peninsula Green" Rolls Royce Phantoms there is a lot of branding that goes beyond the hotel's imposing façade.

In a demographic largely defined by a passion for networking, it is important that the experience a brand provides is good enough to be passed around these influential circles as HNWI tend to share the experience with their friends, who are usually also part of the elite group.

"Word-of-mouth is always the most credible endorsement," Forrest says. And the best way to ensure loyalty, according to her, is to ensure consistent levels of service and ongoing communication with guests and supporters.

You are what you consume

Experiences like helicoptering on to the rooftop of the Peninsula for the night and having one of the hotel's pageboys fetch you songbirds from the Mongkok Bird Market (an image famously pictured by Annie Leibovitz for her Portraits of Peninsula series which was later used in a print campaign and the "No task is too big (or too small) for a Peninsula Page" theme) aren't exactly every day, nor mass market, experiences.

That's just the point Angela Mackay, executive director and head of Asia-Pacific for the Financial Times, believes.

"Wealthy people can buy just about anything so a pleasurable and unusual experience is a differentiating factor," Mackay says.

Margie Logarta, managing editor at Panacea Publishing Asia, which publishes Business Traveller Asia-Pacific, and its eight other editions around the world, says getting on a plane and travelling around the world is so easy that these people are looking for the "wow-factor" in terms of where they can go, what they can do and the facilities offered to them in places they stay.

Destinations need to be more exotic (think Tibet, Bhutan, Antarctica) and facilities at hotels need to be more out-of-the-box.

Logarta says a technology butler, who takes care of all your hi-tech needs, and a bath butler, who helps you relax and de-stress, are both passé. The latest concepts in luxury hotels and service apartments are a chocolate concierge, who guides you through different varieties of chocolate, and a water butler, who makes sure you get safe drinking water.

So what does this hunt for the latest, newest, most exclusive experience mean?

"At the end of the day," Logarta says, "it's all about bragging rights."

In a research conducted by MasterCard on what matters most to high-end consumers, simplicity, managed customisation and value were more important, compared to the novelties and gimmicks usually on offer.

"High-net-worth individuals have all along been sophisticated and discerning, and they continue to grow in sophistication as they become exposed to a wider spectrum of global brands targeting them," MasterCard's Teo says.

Since cost is no consideration, HNWI expect the very best in all the products they seek, along with a high level of service, regardless of where in the world they are.

High-end consumer electronics maker Bang & Olufsen's head of marketing Serin Lee, says this class of consumers wants to be taken care of.

"The products that they want are usually the ones that stand out from the mass, they want to be special."

If HNWI demand more from their spending budgets, they are also smarter than others when it comes to making sure their money is working for them and multiplying itself for their future.

Their overall financial habits depend on their generation - whether the wealth is old money or new money.

Deep pockets shallow loyalty

When these big spenders make their big purchases, they are usually spoilt for choice with many brands competing for their attention.

In terms of consumer spending, HNWI clearly place a high value on style and design over practicality, according to William Hsu, CNN Asia Pacific's VP, advertising and sales.

Brand loyalty is strong as HNWI prefer branding and quality over price, and it can be ensured in three ways, according to CNN's Hsu.

"Firstly, exclusivity, knowing that only a handful of like-minded people will ever enjoy the same product," he says. The second trick is personalisation - HNWI must be made to feel like they are part of an elite group and not as if they are being mass-marketed to.

Finally, he says, it is very important to offer a level of luxury and quality unparalleled in the global market.

However, given the extent of competition, high-end consumers can easily be led away and it is important for a company to keep innovating to maintain their interest in its product offerings.

This is not without its challenges. One of the main problems encountered is "understanding the different segments within the high-net-worth market and their behavior as consumers," Teo says. This is because the wealthy are a fickle lot as consumers, and want to always keep up with changing trends.

 

Usually, what this means is that the companies need to constantly be aware of who constitutes the high-net-worth segment and this entails more than simply reading the various business title's rich lists every year.

 

"It comes down to just having clean and updated database lists...," the Peninsula's Forrest says. This enables companies to ensure that their marketing efforts are reaching the right target audiences.

 

 

Reaching the rich...this could get expensive

HMWI are usually more discerning than most consumers and there are many brands vying for their share of mind, heart and wallet, says MasterCard's Teo. "It is therefore important to gain trust and build a continuous relevance to their evolving needs."

 

Logan Ravishankar, CEO of MyJet Asia, an aircraft charter company operating out of Singapore, says he rarely relies on regular forms of advertising to attract customers. Since his clientele is so exclusive and often includes repeat customers, he maintains an ongoing relationship with them by hosting cocktail parties, sometimes aboard one of his jets.

 

This also gives potential customers an idea of what it feels like to travel in such an aircraft, where they do not have to share the space with strangers.

 

Ravishankar also puts up banners displaying his company's logo and other information at events where a large number of wealthy people are likely to be present.

 

Other companies, such as MasterCard, use a mix of direct marketing and sponsorship platforms to reach their target audiences. The MasterCard Luxury Week Hong Kong is one such event that enables some of the world's leading luxury brands to interact with the high-net-worth market.

 

The Dow Jones Consumer Media Group sponsors events, such as the annual Asia 200 survey and China Financial Markets Conference, says Olivier Legrand, director of marketing, Asia, for the company, whose flagship publication is the Wall Street Journal Asia.

 

Likewise, the Financial Times holds an event called the Business of Luxury Summit, where senior luxury sector executives, corporate decision-makers and financiers from all over the world come together for presentations, panel discussions and general networking.

 

Such gatherings enable the various players in the luxury industry - from providers and agents to the high-net-worth consumers themselves - to come together and interact meaningfully with each other. This is particularly important as today's HNWI, especially the younger set, like to be kept well-informed and updated on unique offerings available to them.

 

Product companies also hold joint events with other affluent brands. "It is a good way of [creating] brand awareness ... it is a way of us expanding the base of our customers," Lee of Bang & Olufsen says. One of the events her company jointly hosts is with banks for their privilege customers on prestige credit cards.

HNWI are always short on time but are becoming increasingly technologically savvy, turning to the internet for quick information, so brands that can join the dots are already at an advantage.

 

"The internet is very powerful, and online marketing for luxury brands is something that is just now slowly starting to develop," the Peninsula's Forrest says.

 

As for direct mail, it is only effective if you know who exactly your customers are. Only then does direct mail - traditional or electronic - speak to them and become an effective marketing channel, says Forrest. "However, when you want to reach a wider audience, selecting the right target publications is key," she adds.

 

Special treatment for the jet-setting high-flyer

 

When a company secures wealthy customers, it goes to great lengths to keep them. Since HNWI are not looking for sales or deals when they make a purchase or take a vacation, in the way average consumers and shoppers tend to do, it is a whole other ballgame retaining this elite class of customers and ensuring that your competition does not wean them away from you.

 

What these people are looking for above everything is superior levels of service. As they travel frequently, be it for business or for pleasure, they need airlines and hotels to acknowledge the value of their time.

 

MasterCard has tie-ups with airlines and hotels to meet its HNWI clients' travel needs. The company, in collaboration with Meritus Mandarin Hotel in Singapore, launched a MasterCard Platinum Floor for its platinum and titanium cardholders, which gives them a risk-free reservation guarantee at that hotel when they travel to Singapore.

 

MasterCard also offers a World Elite card to financial institutions to make available to their high-net-worth customers. This card provides travel consultant services and upgrades, besides personalized recommendations and assistance with reservations at restaurants and entertainment and shopping venues.

 

Hotels are not far behind in offering niche services to retain their exclusive customers and attract new, elite guests. Having a spa at a hotel or resort has become very common.

 

"At the Peninsula Hotels, we have taken this to the next level by providing more than just spas, with an entire programme entitled ‘Peninsula Wellness' through cuisine and product offerings to appeal to all five senses both during the guests' stay and beyond," says Forrest.

 

Luxury is always "in"

 

Barrie Goodridge, CEO, Asia, of Switzerland-based Edipresse Group, which publishes the society and luxury lifestyle title Hong Kong Tatler, says the concept of luxury will doubtless remain in fashion always, "what's changing rapidly is the amount of people who can afford that lifestyle," that, he believes means more consumers in the market who have deep pockets and more discerning tastes.

 

"The elite and the wealthy are elite and wealthy because they are very smart when it comes to spending and investing. They truly know value when they see it," he says.

 

That doesn't mean it is going to get any easier for marketers courting the fat wallet set. As companies set higher standards in terms of quality and customisation of services, the competition keeps evolving to higher levels of product and service innovations to please the wealthy class of consumers.

 

As research conducted by MasterCard shows, the size of the rich in Asia is expected to expand over the next decade, going up to 11 million households in parts that are already considered affluent and 58 million in emerging regions. What's more, this group will have the potential to allocate more than US$600 billion (S$909 billion) in discretionary spending.

 

With stats like these, companies and brands have their work cut out to make sure they get a piece of the high-net-worth market pie in coming years.