Get (the) rich
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 and Clarice Chiam look 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 is an incubator of super wealth. 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 outfit 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, 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 high-net-worth-individuals 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, particularly the newer members of the demographic, and this growing wealth is moving into some new markets in Asia.
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.
"One of the best definitions of a brand is ‘A brand is a promise fulfilled'," Brian Yim, founder, group publisher and managing editor of Asia Pacific publication MillionaireAsia says. "Hence the most important aspect is without a doubt, credibility and not just meeting but exceeding expectations consistently."
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.
"We find that word-of-mouth is a powerful means to capture a HNWI's circle of friends," Yim says. And the best way to ensure loyalty, according to him, is by always being relevant and true to the audience by putting a finger on the pulse to get an accurate gauge of the latest trends in the millionaire lifestyle, and by engaging them regularly, and offering them exceptional privileges and benefits exclusive to them.
Going beyond the necessary, in defiance of the ordinary
Experiences like flying by private jet to Singapore-based luxury airport terminal JetQuay, having a limousine receive you on the tarmac and then enjoying five star services and facilities whilst boarding passes are produced and baggage is checked in 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," she says.
Margie Logarta, managing editor at Panacea Publishing Asia, which publishes Business Traveller Asia-Pacific, 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 behaviour 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 to ensure that marketing efforts are reaching the right target audience and this entails not just simply reading the various business title's rich lists every year, but more importantly having up-to-date database lists.
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, while MillionaireAsia's complementary arms of event and lifestyle products such as private wealth management conference MillionaireAsia Summit, private jet parties, and full charter service of luxury train and cruise operator Eastern & Oriental Express ensures it regularly and actively engages with and reaches out to high-net-worth readers.
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 and are increasingly turning to the internet for quick information. With online marketing for luxury brands something that is just now slowly starting to develop, brands that can join the dots are already at an advantage.
As for direct mail, it is only effective if you know exactly who your customers are as only then does direct mail - traditional or electronic - speak to them and become an effective marketing channel. This explains why direct mailing to this focused segment is popular, Yim says.
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.
"People don't associate the value of an airline ticket with the value of the extra time they have to seal that million dollar deal before they leave the country," Vincent Metais, JetQuay's vice president-commercial Asia Pacific for Worldwide Flight Services says.
"Our customers use the terminal because it expands the time they control. Our value lies with the fact that our travellers are freed from the issues of travel and can just focus on investing their time on what matters most to them, whether business or pleasure."
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 personalised 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 more than just a spa at a hotel or resort has become de rigueur in the competitive hospitality industry to stay ahead of the competition.
Savvy marketing to the individual
With HNWI placing a high premium on personalised service that goes the extra mile, it isn't enough for marketers to attempt second-guessing customers' likes and dislikes when marketing to the high-net-worth segment. Steven McGinnes, head of brand strategy Asia at Design Bridge says while what HNWI will value depends on the individual, the brand however still needs to reflect and communicate that value in a pertinent and relevant way.
"If the HNWI is purchasing the brand to demonstrate their buying power then it needs to effectively communicate this. If they want to show off their discerning taste or appreciation of provenance, then the brand needs to be stating that for them. Of course, how loudly the brand needs to be shouting that message depends on the individual's style, the category within which the brand is operating and the region in which all this is happening," McGinnes says.
On top of that is the fact that the circle of HNWI are increasing in Asia - more are able to afford the high life which means more consumers in the market having deep pockets and more discerning tastes. This 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 will have to keep 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 set 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.
Box out 1
- High net worth individuals like to be talked to by companies and brands that recognise 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.
Box out 2
Luxury Market Verticals
By B. S. Retnam
• Art and Antiques (Specific data is collected on already-framed reproductions; unframed reproductions; custom-framed art or reproductions; other custom framing; original art; sculpture, statues, 3D art; antique furniture and collectibles; wall decor)
• Electronics and Photography Equipment (Computers; iPods and other MP3 devices; cameras; cellular phones; televisions; DVD/video players; audio equipment; home entertainment systems; PDAs)
• Furniture, Lamps and Floor Coverings (Lamps and lighting; upholstered furniture; wooden furniture; rugs and floor coverings)
• Garden and Outdoor (Patio furniture; grills; lighting accents; fencing; power gardening equipment; decorative pots; garden statues; chimeneas and outdoor stoves; garden shelters; water gardens; porch and patio decorative accents)
• Home Decorating Fabrics, Wall and Window Coverings (Wall coverings, such as wall paper; ready-made curtains, drapes; window coverings, such as blinds, shades; home decorating fabrics for custom upholstery, curtains, drapes, etc.)
• Kitchen Appliances, Bathroom Equipment and Building Products (Kitchen appliances, such as stoves, ovens, refrigerators; bathroom equipment, such as tubs, showers, toilets, fixtures; kitchen equipment, such as cabinets, countertops; air conditioning/filtration systems; water systems)
• Kitchenware, Cookware, Housewares (Small appliances; cookware; bakeware; cutlery; storage and organisation; barware)
• Linens and Beddings (Sheets and pillowcases; comforters, spreads; pillows and pillow accents; bath linens; mattresses and box springs; duvets and shams; feather beds and mattress covers; table linens)
• Tabletop, Dinnerware, Stemware, Flatware (Dinnerware, including fine china, ceramic or stoneware, serving ware and decorative accents; crystal and glassware decoratives, stem ware, serving pieces, barware; flatware, including sterling silver flatware, serving pieces, decorative accents and other flatware)
- Clothing and Apparel (Women's casual, dress/business, formal/evening, outerwear; men's casual, dress/business, formal/evening, outerwear; teens' clothing; children's clothing; baby clothing)
- Cosmetics, Fragrance and Beauty Products (Fragrances, perfumes; bath and body lotions; face care; hair care; cosmetics and makeup; sun and tanning products)
- Fashion Accessories (Women's handbags, shoes, brief cases, and fashion accessories, such as scarves, belts; men's wallets, brief cases and men's fashion accessories, including shoes, belts, etc.; luggage for men and women)
- Jewelry (Women's and men's jewelry by type, including necklaces, earrings, bracelets, rings, bridal/wedding, pins and brooches; women's and men's jewelry by material, including 14k and above gold, sterling silver, platinum, gold plate or vermeil, costume jewelry; and women's and men's jewelry by stone, including diamonds, other precious gemstones, semi-precious gemstones, pearl, faux or man-made, no gemstone content)
- Watches (Women's and men's watches by style, including formal/dress or casual/sports)
- Wine, Liquor and Spirits (Wine, champagne, vodka, whiskey, rum, scotch, cognac, bourbon, sherry/port)
- Pens, Writing Instruments and Desk Accessories
- Pet Products
- Automobiles (including brands Acura, Audi, BMW, Cadillac, Jaguar, Infiniti, Land Rover, Lexus, Lincoln, Mercedes, Porsche, Saab, Volvo)
- Home Services (Housecleaning/maid service, lawn care, landscaping, party planning/catering, pool service)
- Personal Instruction
- Spa, Massage, Beauty and Cosmetic Services
- Travel (Foreign and domestic luxury hotels, commercial air, resorts, cruises, group tours, adventure travel, private air travel)
- Dow Jones
- MYJET Asia Pte Ltd
- Bang and OIufsen
- Design Bridge
- Financial Times
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