Design products and services are a luxury item and Danzinger’s point about how we tend to stick with one demographic as they move through the life cycles hits the nail on the head. We need to be looking for new markets and younger customers if we want to be in business in 5 years. Read on to learn more.
Meet the HENRYs – High Earners Not Rich Yet – are doing well, with an income between $100K and $250K. But they’re a far cry from wealthy; reserve that adjective for the ultra-affluents, who earn more than $250K per year, or for those with high net worth, with amassed wealth of more than $1M. The HENRYs are the unassuming mass segment of the affluent consumer market, and they could well be your most important target customer now and for the future.
The latest trend report from Pam Danzinger, Meet the HENRYs: Positioning for the mindset of the High-Earner-Not-Rich-Yet customer, highlights just why these lower-income affluents are so important to marketers. “The recent recession has left the true middle class severely limited in their ability to purchase goods and services in the near future,” says Pam Danziger, president of Unity Marketing and author of the report. “This means HENRYs are the ‘new mass market’ for marketers and brands up and down the pricing scale.”
The HENRYs are ready to respond in force, if not necessarily in high levels of individual spending. While HENRYs spend about half as much as do ultra-affluents on luxury and high end purchases, their significantly greater numbers (21.6 million households) mean that the total value of the HENRY market is about four times that of the ultra-affluent market (2.9 million households).
“Marketers have historically felt that ultra-affluents were their ideal consumer, but there simply aren’t enough ultra-affluents to keep luxury brands afloat,” says Danziger. “Instead, luxury brands need to broaden their reach to include these consumers. This creates a unique challenge, as they are now competing with mass market brands that would also like to reach up and tap into HENRY spending.”
Danziger also found that targeting HENRYs is a sound strategy for helping brands position themselves in the future. “While it is typical for brands to identify a target customer and stick with this demographic as it ages, today’s luxury brands need to look at young HENRY consumers age 25-34. As these younger affluents mature, their incomes will rise, making this population the source of most of tomorrow’s ultra-affluents. Luxury brands that want to continue to reach the highest income customers need to reach out to slightly less affluent Millennials today.”
Reprinted from Pam Danzinger, Unity Marketing’s blog