A socio-cultural exploration by Footsteps about affluent African Americans and their perspectives of luxury

1. AA Affluence and
the Meaning of Luxury

2. Yesterday’s Perspective
• There has historically been a symbiotic
relationship between consumer affluence and
the consumption of luxury goods

3. Far-out Historical Perspective
• “The concept of luxury has been present in various forms since the
beginning of civilization. Its role was just as important in ancient western
and eastern empires as it is in modern societies…
• “With the clear differences between social classes in earlier
civilizations, the consumption of luxury was limited to the elite classes. It
also meant the definition of luxury was fairly clear. Whatever the poor
cannot have and the elite can was identified as luxury…”
• Wikipedia definition of “Luxury Goods”

4. Close-end Historical Perspective
• ”In his 1958 classic, The Affluent Society, Harvard Economist John
Kenneth Galbraith made the argument that society as a whole had
become affluent – after all most all families had tremendous
modern conveniences previously known to be luxuries such as
plumbing and heating, washing machines, electric stoves and
refrigerators and two cars….
• “He argued that as society becomes relatively more
affluent, private business must "create" consumer wants through
advertising to create an artificial demand for products beyond the
individual's basic needs. Given today’s economic crisis, it is hard to
argue with this principle which he wrote about 50 years ago. This is
a particularly relevant concept for luxury goods…”
• “Back to the Future of Luxury,” Presentation by Dale N.
Dewey, CEO - Luxury Solutions to The Luxury Marketing Council
& The French-American Chamber of Commerce January
22nd, 2009 - Houston, Texas

5. And today, there is
a lot more luxury to go around

6. The massification-of-luxury brands
Super Luxury
Luxury
Near LuxuryUltra Premium
Affordable LuxurySuper Premium
Premium
Upmarket •IdrisMootee, CEO Idea Couture, Inc., Luxury Brand Marketing, Presentation
to Global Senior Executives Forum

7. So, what is
“luxury” today?

8. Luxury Mindset
• The 2007 Conference Report entitled, The
Global Luxury Market: Exploring the Mindset
of Luxury Consumers in Seven Countries,” says
that the most valued luxuries are:
– Time (35%)
– Life experiences (26%)
– Products and services providing
comfort, beauty, and quality (18%)

9. Regarding products and services, let’s define the
3+3 of “luxury”*…
3 factors and 3 levels
*This and following four pages are excerpts from “The Eternal Principles for Creating Luxury Brands” by Dr. Dan Herman @ TheManager.org

10. 3 factors
1. Luxury is nonessential, desired but not needed
2. Luxury is “hard to get” restricted by high
price, small series, exclusiveness
3. Luxury is superb, inspiring feelings of wonder
and excitement

11. 3 levels
1. Signature brands: most
expensive, personal, singular
creations – one of a kind
2. Supreme brands: Limited
series products
3. High end brands: High quality
mass production

12. Five Categories of Luxury
Sumptuous Products
Cars, jewelry &
watches, fashion, cosmetics, fragran
ces, food &
beverages, cigars, furniture, homew
ares, electronics…
Exclusive Products
Banking, financial services,
insurance, cellular, airlines, clinics,
consulting…
Luscious Retail
Spaces
Stores, chains, shoppi
ng centers, malls…
Illustrious Places
Restaurants, bars, clubs, h
otels, resorts, housing
projects, offices, commer
cial complexes…
Prestigious Organizations
Brotherhoods, selective memberships…

13. 16 Usages for Luxury Products
1. Feel special and apart from the crowd
2. Feel superior and privileged
3. Full of value and importance
4. Exercise ability and freedom (“I can afford it”)
5. Reward themselves for efforts and achievements
6. Console one and recuperate from setback or misfortune
7. Signal status and command acknowledgement and respect
8. Demonstrate refinement, connoisseurship and/or perfectionism
9. Delight the senses and create an infrastructure for favorable experience
10. Participate in a certain group and lifestyle
11. Signal affiliation and belonging
12. Remind oneself of one’s real/aspired identity
13. Enflame hope and mobilize motivation and energy
14. Indulge and pamper oneself, take care of oneself
15. Feel loved, taken care of and even spoiled
16. Show feelings of gratitude, admiration or great affection

14. With all that as backdrop, we will focus our
comments on the luxury of high-end
brands of sumptuous products

15. So, let’s talk about black folks…

16. 2010 Census…
Reports that the current US black population is at…
42 Million
From 12.3 % of U.S. in 2000
To 13.6% of U.S. in 2010

17. Top 10 AA Cities: Size and Growth
Top 10 AA
Metropolitan
Areas
AA
Population
2004 (000)
AA
Population
2010 (000) Percentage +/-
New York 3,808 3,574 -6.1%
Atlanta 1,399 1,785 +27.6%
Chicago 1,738 1,755 + 0.9%
Wash DC 1,376 1,491 +8.4%
Los Angeles 1,497 1,356 -9.4%
Philadelphia 1,372 1,286 -6.3%
Miami 853 1,175 +37.7%
Detroit 1,128 1,037 -8.1%
Houston 966 1,015 +5.1%
Dallas 843 955 +13.3%
2010 Census American Community Survey
Atlanta replaces Chicago as the #2 AA market in size
and leads all metropolitan areas in growth

18. The “Reverse” Migration
• Per the 2010 Census, the black population in the South is close
to 60%,which is the highest its been since 1960
• Black population grew by 11 % in large southern metropolitans but
by 15 % in adjacent smaller counties, suggesting a strong
movement of blacks to the suburbs
Source: Many U.S. Blacks Moving to South, Reversing Trend Published: NY Times March 24, 2011

19. Who They Are
• Blacks that are relocating to the South are
typically
– Twenty one - forty (21- 40) years old
– College Educated
– Singles / young families
– Professionals & Entrepreneurs
• Primary reasons for relocating
– First time home buyers
– Employment opportunities
– Better quality of life / Cost of living
– Better education for children
– Cultural (getting back to their roots)
Source: Many U.S. Blacks Moving to South, Reversing Trend Published: NY Times March 24, 2011

20. Back in the 1950’s, when Galbraith first made his
comments about affluence, they would have only
applied to black entertainers and athletes, and a
handful of black professionals and entrepreneurs
• Judy Foster Davis, Realizing Marketplace Opportunity: Early Research on the Black
Consumer Market by Mainstream Marketers: 1930-1970, CHARM 2011 Proceedings

21. But since the passage of the Civil Rights
Act in 1964, now for the 1st time in
America, the Census shows that African
Americans have an Affluent Class

22. The Growth of
An Affluent African American Segment
19902009% Difference
$50K+
% of Whites 40% 52% 23%
% of African-Americans 21% 33% 36%
$75K+
% of Whites 20% 33% 39%
% of African-Americans 8% 17% 53%
$100K+
% of Whites 10% 21% 52%
% of African-Americans 3% 9% 66%
– Source: U.S.
Census,http://www.census.gov/hhes/www/cpstables/032010/hhinc/new06_000.htm20
09

23. Affluent African Americans*
• 2.4 million affluent African Americans (HHI
over $75K)
– Average income $122,000
• Affluents are 17% of all AA households
– Control 45% of total $1 Trillion AA buying power
* African American Market in the U.S., Package Facts, 2008

24. Affluent African Americans
Brand Selection
• African Americans are more likely than their
counterparts to choose a brand based on emotional
satisfaction: 60% vs. 46%
• They also feel that it is more risky to buy a brand you are
not familiar with…49% vs. 38%
• Affluent African Americans like to buy brands that have
badge value
2005 Yankelovich MONITOR Multicultural Marketing Study

25. What does “luxury” mean
to Affluent AA’s*
Characteristics of Luxury
• Quality
• Value
• Reliability
• Exclusivity
• Exceeds expectations at all
touch points
Top 7 Purchasing Categories
• Luxury Travel
• Fine Dining
• Luxury Automobiles
• Personal Services
• Luxury Home Items
• Designer Apparel
• High End Wine/Liquor
• Uptown Magazine 2008 Online Lifestyle Survey/Qualitative Research

26. A summary of the common lifestyle drivers from Uptown Magazine’s 2008
online lifestyle survey provides an overview of the market:
• Luxury: They surround themselves with luxury items and
experiences
• Travel: They are frequent domestic and international travelers
• Entertainment: They are interested in finding the best in fine
dining and related social scenes
• Vocation: Their entrepreneurial drive is strong and they view personal
and professional networking as essential
• Vehicles: They believe in experiencing an important “trade-up” item in
their luxury experience
• Status: They are independent and have a propensity to be
single/divorced with no dependents

27. Note on Affordable Luxury
• For affluent AA’s Affordable Luxury is the
combination of “quality” and “deal or
discount”
• Uptown Magazine 2008 Online Lifestyle Survey/
Qualitative Research

28. In this world of massification-
of-luxury, what has been
the general market reaction?

29. Advice to Luxury Brands:
Put on the White Gloves
• “The time of luxury goods has not passed. There is nothing wrong with Hermes, Graff, Porsche,
and Frette. Luxury brands like these have always existed. They only became brown-bag brands
after people who shouldn't have been spending moneyon
them started snapping them up in a free-spending frenzy.The luxury category was
inflated by those who weren't true luxury buyers
• “The marketing strategy I'd advise for long-time luxury brands, those with a history of exquisite
products and gracious service? Make sure the consumers you want to
attract, those worth attracting, consider your brands worth the exquisite price
point. Wealthy consumers will not pay for luxury unless the products are well worth it and unless
they, as capable buyers, are treated well
• “With the competition heating up, it's time to become even more exclusive.
Put on the gloves--the white gloves, that is. Offer a level of service beyond expectations.
Reestablish your right to be in the stratosphere. Establishing a middle position will only muddy
the waters. You're better off as a brilliant niche brand than a middling mass-market brand”
» Marketers Struggle To Reignite Badge Brands, Allen Adamson, 04.10.09, Forbes.com

30. AA’s and Luxury Brands
• What the foregoing excerpt makes clear is the “elitist
class” relationship that the GM traditionally has had
with luxury goods continues…i.e.,
– If they can’t afford it, they should not own it
• The question arises:
Now that there is an affluent segment of African
Americans, how do they (and African Americans in
general) feel about luxury consumption?

31. AA’s and Luxury Goods
• What Shane White and Graham White, the authors of
“Stylin, African American Expressive Culture,” make clear is
that, from the beginning of the time African Americans have
been in America, their engagement with luxury goods is more
than a signal of class membership; it is also about the unique
expression of their individual character
+Class = GM luxury Class Character = AA Luxury

32. 2 Different Paths for Luxury
• GM: Class
– Luxury items are
stratified by having
money/capital
• It is only appropriately
experienced by those
who can realistically
afford it and who have
learned how to
appreciate it
• AA: Class and Character
– Luxury items are used to
project an AA’s unique
image of themselves
• This regardless of
whether others think that
person should be buying
them given other more
pressing life priorities

33. African American Culture:
A Look Behind Closed Doors
• The Way We Are: Double Consciousness
– W.E.B. DuBois: African Americans understand that we are seen as group
members in America but amongst ourselves we are judged as
individuals
• Having this dual consciousness means that we put on one face to function
in America at large but in our own communities we are free to be our truer
selves
• To truly understand AA behavior you must know/understand
their public and private faces and when each applies

34. Double Consciousness Psychology
• Having this dual perspective has led to
different ways in which to cope with the
challenges of framing the world
Time perspective is one
those challenges
Some AA’s have adopted
a short-present
orientation while others
are more long-term
future oriented
Locus of control is another
challenge
Some AA’s see the world
using their own internal
compass as their guide
while others use external
voices as the stars to guide
their behavior

35. Summary of AA Luxury
Multifaceted
definition of
luxury is held in
common with
GM
Purpose of luxury
for AA’s plays out
in defining their
class (like the GM)
but uniquely also
in their expression
of their character
The ways luxury
plays out in the
AA community
is either:
-Conspicuous
Consumption
-Materialism
-Legacy
-Experiential
DEFINITION PURPOSE PERSPECTIVES