What Do Rich People Buy?

By Christopher Zoukis

Together, these three categories of affluent customers control the bulk of the wealth in the United States, which means in the world. They represent untold buying power. What is even more interesting is how they handle their money. Their perspective of money is as different from the average person’s as their wealth is greater.

For one, the wealthy insist that their money work for them. They utilize their money to make more money. The wealthy want the money they deposit in the bank to draw interest. But they do not view the interest the bank pays as an investment. The same holds true for CDs. CDs are not an investment. To the wealthy, CDs and bank deposits are nothing more than a place where they keep their money until the money can be truly invested in a much more profitable venture.  Image courtesy elephantjournal.com

Wealthy people invest in stocks. They study the stock market and do not depend on hot-tips or touted stocks. Discipline and management are vital aspects of their stock investments. Their risk of loss is low because they buy cheap and sell high, and they accomplish that through sound information and research.

The Money Times, November 2012, reported that rich executives bought the following stocks: Allscripts-Misys, which yielded a 52-week return of 73.1%. Cincinnati Financial, which yielded 25.8% at the end of 52-weeks. Dow Chemical, which provided a 52-week return of 35.2%. Exelixis, which returned 62.9%, and Fortune Brands, which returned 50.4%.

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Marketing and Enthusiasm

By Christopher Zoukis

U.S. Census numbers indicate that gays and lesbians live in every part of the United States. Most of them are intelligent, educated, and technologically attuned. Many of them are wealthy. They enjoy spending their money on travel and luxury goods.

For example, Kimpton Hotels and RPhoto courtesy luxedb.comestaurants did a research survey, because they wanted to attract gay and lesbian customers. The result? Lesbian businesswomen, who take frequent vacations and stay in luxury hotels, have the same values, lifestyles and hobbies as their heterosexual counterparts. They enjoy spas, exercise facilities, tasteful interior décor, and personal services, such as massages and facials. Lesbian customers prefer to spend their money at businesses that support feminist causes and other non-profit organizations. 

Kimpton now offers getaway packages to lesbians and heterosexual women, both of which are a steadily growing source of revenue for Kimpton.

Another example is Budget car rental company. Budget instituted a marketing campaign targeting gay men. It was quite simple, but very effective. Budget treats gay partners as if they were married. There is no surcharge for another driver. Gay customers like this kind of treatment. They remember it. Whenever they travel, they come back to Budget.

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Luxury Products Move Down As People Move Up

By Christopher Zoukis

The definition of the word “luxury” changes very rapidly. What was considered a luxury product yesterday is commonplace the next day. On a certain Tuesday only rich people could be seen wearing a certain brand of clothing. Two days later, everyone is wearing it.

Some experts call this phenomenon “product migration.” Another term used is “product devolution.” Simply put, it is “movement.” Luxury products move down because lots of people want to own them. They do not own them because they cannot afford them. So they work hard to improve themselves and their skills. They may start their own business. The result is they make more money. When they do, the first thing they do is “move up.” They go out and buy the luxury items they always wanted, but could not afford.  Image courtesy rides-mag.com 

People move up as soon as they can. This upward movement toward luxury products and services tends to pull the definition of “luxury” down. As more and more people obtain a luxury product, the product loses its luster. It is not as exclusive as it once was. In fact, it becomes almost commonplace. It becomes “affordable luxury,” which is an oxymoron, because the term “luxury” implies exclusivity. If people who make $50,000 per year are now buying it, technically, it is no longer a luxury product. And the company marketing and selling a luxury product that has become “affordable luxury” is no longer marketing and selling luxury. They are now selling a product that affluent customers perceive as ordinary. When this happens, affluent customers, who are just like everyone else, move up. They begin looking around for luxury products that are exclusive. Affluent customers always move up, never down.

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