Today's affluent consumers place a higher priority on family, altruism and enriching experiences, ahead of luxury products and short-term satisfaction. This is an important distinction for businesses trying to attract this growing and influential group.
Economic growth and urbanisation are rapidly expanding the affluent middle class in India. With 10 million people moving to urban areas each year and incredible growth in service industries, particularly technology, telecommunications and business process outsourcing, India has a vibrant affluent middle class. New global research reveals distinct motivations and attitudes amongst this group which go beyond traditional demographic and geographical boundaries.
The Organisation for Economic Co-operation and Development expects this group to increase from 1.8 billion in 2009 to 4.9 billion by 2030*. This expansion is global but the pace of change is particularly fast in China, Singapore, India, Brazil and the United Arab Emirates.
Within the global middle class, the ‘mass affluent’ group within the top 10-15% of income has considerable spending power and the potential to shape the aspirations, buying habits and loyalty of other consumers.
The traditional definition of the affluent middle class has been on the basis of income, spend or the products they buy. Here’s a profile of the modern middle class consumer.
Profile of the mass affluent consumer
Young and affluent: An average age of 50 with 36% under 44.
Regular and discerning traveller: Mass affluent consumers take an average of 5 business and leisure trips per year but in India this leaps up to 9.9. Nearly three quarters (68%) stay in 4-5 star hotels on business and leisure.
Thinking long-term: The top three most important factors for mass affluents are spending time with family, providing for family and saving for the future with 92% falling into this group.
Experiences are more important: Whilst branded items are popular in China and the United Arab Emirates, seeking new experiences and experiencing new cultures is key for the majority.
Savvy shoppers: Mass affluent consumers use an average of 5 ways of informing their buying decisions or seeking deals, including price comparisons, cashback and auction sites, discounts through credit cards and banks and digital vouchers. Some use up to 10 different ways to ensure they get the best deal.
Powerful and commercially important brand advocates: Mass affluent consumers participate in an average of 4 loyalty programmes, with some influenced by up to 10 loyalty programmes. Nearly three quarters (73%) are willing to make a repeat purchase from a brand they feel loyal to, 70% will recommend brands to friends and family and 53% will choose a particular brand even if it is more expensive.
A new international study involving 4,400 consumers across eight countries identifies four ‘tribes’ which share common traits which cut across age, gender and international boundaries:
1. The Prudent Planners are motivated primarily by family and trying to help others.
2. The Stylish Spenders yearn for the finer things in life.
3. Mid-life Modernists are characterised by their enthusiasm for technology.
4. Finally, the Experientialists who put money-can’t buy experiences at the top of their priorities.
Consumer habits of the four groups
Prudent Planners are the largest tribe representing 41% of the class. This group is motivated primarily by family and altruistic goals and is most prevalent in the United States and United Kingdom. Three quarters of this tribe (76%) cite spending time with family as their top indulgence and they have a higher than average interest in giving to charity (31%) and protecting the environment (30%). Prudent Planners travel less than the other tribes but still take an average of six business and leisure trips a year. As a result, airline loyalty programmes are popular with this group, particularly if they extend benefits to the cardholder’s family. It is clear that to win over this group, companies need to think and act differently than they are today.
In contrast, Stylish Spenders seek the finer things in life. This tribe is most common in China and the United Arab Emirates and is four times more likely to buy leading brands than other affluent middle class consumers (76% compared to 22%) and drive a luxury car (70% compared to 25%.) This is the group which invests the most in travelling in style across all aspects of the travel journey. Stylish Spenders are a small but very influential tribe with over half under 34 years of age (55%) and 32% earning over $190,000 per annum. Despite their high spending power, this group is the most loyal to brands they trust, participating in an average of five loyalty programmes and feeling loyal to up to eight brands.
Mid-Life Modernists stand out for their enthusiastic use of technology, with 61% citing gadgets as their biggest indulgence, 90% spending more than five hours a week using their smartphone and 45% spending over 20 a week online via a computer. Mid-Life Modernists are well represented in India and Singapore. Digital experience has a significant influence on this group and businesses which invest in this area can create powerful advocates amongst Mid-Life Modernists. This tribe is willing to endorse and promote a brand they feel loyal to via social media, with three quarters prepared to recommend a company to their friends and family; 74% more likely to make a repeat purchase from a trusted brand and 67% saying they are engaged members of loyalty programmes.
Unique, money can’t buy experiences and exclusivity rather than standard products and services motivate the Experiential tribe. This group is prevalent in China, the United Arab Emirates and the United Kingdom and are most likely to enjoy experiencing a different culture (76%) and use travel as a way of keeping in touch with friends and family (67%). Experiences such as spending on holidays (81%), dining out and luxury foods (64%) are also a priority. Engaging these customers demands flexible rewards that include attainable travel redemption options and enriching lifestyle benefits.
How the middle class expects travel related services to be
Travel is a common motivator for the affluent middle class and they all expect travel enhancements such as airport lounge access, fast track security and upgrades from their banks or credit card providers but there are different expectations between the groups.
Stylish Spenders travel in luxury, viewing services such as airport lounge access, concierge services, airport valet and pick-up by limousine as “essential”. Travel to the most luxurious locations with the opportunity for them to “show” their status is also important. Hence, we are seeing hotels and airlines such as The Mandarin Oriental and Delta Air Lines “Delta 360” invitation only club offering very exclusive rewards which are not widely publicised to attract this group.
For Prudent Planners and Mid-Life Modernists, which represent 69% of the affluent global middle class, offering more flexible travel related rewards, such as the chance to transfer points to family members or provide access to lounges or priority airline seating for family, will appeal the most.
To attract Experientialists, brands should consider expanding the rewards and benefits offered in their programmes to include more international content to reflect the motivations of this segment. For example, a credit card could give travellers priority access to the world’s best restaurants or the opportunity to experience local cultural events.
How the middle class prefers to use technology
Technology is playing a key role in shaping the aspirations of the mass affluent consumer.
In countries with rapidly growing middle class such as China, India and Brazil, technology has increased awareness and desire for premium products, travel and experiences. Websites such as VIPStore (an online retailer in China), Sukar (a luxury fashion site in the UAE) and SnapDeal (an online marketplace in India) coupled with rapid take-up of social media and mobile services make it easier to research new destinations and overseas brands and tell friends and family about new discoveries.
The research shows a strong correlation between the most active users of technology and willingness to recommend and endorse brands they trust. A group of ‘technophiles’ spend over 20 hours a week of their leisure time on the Internet and are avid users of apps, social media, online shopping and streaming of digital content. Within this group, 72% are willing to make a repeat purchase from a brand they feel loyal to, 70% would recommend that brand to friends and family and 53% will choose tis particular brand even if it is more expensive.
There are, however, clear differences in how the groups prefer to use technology.
For example, Stylish Spenders particularly value information which is personalised to them as well as the opportunity to tell others about access to exclusive destinations, hotels and restaurants via social media channels.
Smartphones, apps and digital experiences are valued by Mid-Life Modernists and offering promotions and price comparisons via mobile devices, particularly those that can benefit a whole family, is an effective way to engage with them. Modern, sophisticated digital design and navigation on websites, mobile applications and social media, together with a seamless handover as they move between these different channels is particularly important for this group.
Prudent Planners continue to value face-to-face interactions and retaining this as an option, rather than solely focusing on digital channels, is important for this sizeable segment.
Experientialists “live for the moment” and expect brands to regularly update digital content and offer unique experiences to maintain their interest.
How Retailers should motivate the affluent middle class
Understand what makes customers tick
Being able to understand consumer motivations and intent is as important as understanding the products they buy. Insight into customer needs and preferences will provide the foundation for building stronger customer relationships. The majority of affluent middle class consumers are motivated by spending time and providing for their families, and that rewards and incentives are important to these consumers despite their high earnings. Understanding what sorts of offers to make, to whom, and when, depends on the ability to meaningfully analyse data from across product categories and channels.
Focus on experience
Money can’t buy experiences and access to exclusive destinations, restaurants, hotels and services is increasingly important for mass affluent consumers. Like in the words of MasterCard, ‘some things money can’t buy. For everything else there is MasterCard.’ In return, the affluent middle class are willing to talk about their experiences and act as brand advocates.
Create customer relationships at brand level, rather than around product promotions
There is a well-proven, direct correlation between customer engagement and profitability. As loyalty experts, we know that engagement is driven by the value a brand can add at the various points of interaction.
It is important to identify value drivers that provide the depth and breadth needed to keep customers locked in for longer and also provide the structure to make your programme sustainable and scalable. Looking forward, we recognise the viability of ‘self-selected’ loyalty, comprising tailored initiatives driven by the value consumers themselves want to derive from their brand interactions.
Plan promotions & rewards around long-term customer goals, rather than short ones
Consumers have different expectations in terms of when and how they receive promotions and rewards from companies. A large proportion of middle class affluent consumers are focused on saving for the future and are unlikely to redeem points quickly, opting to save for the higher value rewards. This audience will be far more engaged if they feel companies are helping them achieve their longer term goals.
Research courtesy: Collinson Group
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