Premium Consumer Research Report

Finding ‘the
great ignored’
43%
Trading up
Understanding the
premium mindset
of online consumers buy
premium products...
...or
182 million
...and
The premium path
to purchase
33%
What this means
for advertisers
half
Is your marketing strategy ignoring
use the internet
to research
people...
MSA delivers
your audience
of them?
THE GREAT IGNORED
how demographic targeting is missing the premium consumer
Trading up
Understanding the
premium mindset
Premium consumers are not necessarily wealthy. Think about those teenagers
with iPhones or the couple whose cars cost almost as much as their house. It’s not
as simple as basic demographics. They’re harder to spot. In fact only half can be
picked up through standard demographic profiling. Only 1 in 4 earn €50k or more
per year. To find them you’re going to need a more sophisticated approach.
They’re more common than you think with over 40 per cent of consumers buying
premium at some point. It’s a group that’s growing too, as savvy consumers trade
up to premium products in sectors they care about. Our research shows that
people tend to be premium in a handful of categories where they see value in
spending more, perhaps saving money in other areas to afford it. Some might
even buy luxury in one or two areas. As you can see, they’re a complex group!
The premium path
to purchase
What this means
for advertisers
MSA delivers
your audience
The average household income of a premium
consumer is €39,000.
More than 50% would not be classed as affluent
using traditional demographic targeting.
Why is this significant? Because advertisers have traditionally considered
premium consumers to be affluent and have assumed that by talking
to a specific audience (ABC1s for example) they would reach their
target consumer. However, doing this misses a very large group,
in fact 54 per cent who might be buying premium in a particular
category. We call them the great ignored.
54%
It’s a mindset, not demographics.
Patricia Consonni, MRM Worldwide, Italy
46%
Standard
Luxury
Hidden affluent
“The great ignored”
Demographically
affluent
Demographics won’t cut it
You need to know how they think
Source: A Cut Above the Rest research, 2010
Finding ‘the
great ignored’
Finding ‘the
great ignored’
Trading up
Understanding the
premium mindset
The premium path
to purchase
In some ways it’s easier to define premium by explaining what it isn’t. For starters, it isn’t
luxury. Luxury items generally command a price premium of at least 50 per cent over
mid-market goods, whereas premium occupies a space between mid-market (meaning
standard or mainsteam) and luxury that is generally between 20 and 50 per cent higher
in cost. And it’s a growing sector with 43 per cent of online consumers already buying
premium at some point.
What this means
for advertisers
MSA delivers
your audience
43% of online Europeans buy premium.
There are 182 million premium consumers
in Europe.
So premium is a purchase that is, for the ordinary consumer, ‘a stretch above the normal
but still affordable’. Take a television set for example; the mid-market purchase might be
an LG for €350, the premium purchase a Sony Bravia for €450, and the luxury purchase, a
Bang & Olufsen state of the art set for around €2,000. For a car, the equivalent might be a
Ford Mondeo at €20,000, a BMW 318 at €24,000, and a Bentley at €140,000.
I’m not a big spender but, what I will do, is
save up and buy the very best quality I can.
In the past, it was largely assumed that people who
purchase premium products were demographically
affluent, but this is inaccurate. Brands that only use
traditional demographic targeting to reach this
audience segment would miss more than 50%
of consumers who are buying premium, as they
wouldn’t be classified as ‘affluent’.
Standard
Although many brands believe they offer a premium
product or service, not much is really understood about the premium consumer. The
group’s existence is often ignored, with the world seen as simply luxury and everything
else. This is why Microsoft commissioned the ‘Cut Above the Rest’ research study,
summarised here and available in full from your local Microsoft Advertising team.
Luxury
Premium
PREMIUM IS NOT LUXURY
And not affluent either
Source: A Cut Above the Rest research, 2010
Mark, 40, UK
Trading up
Understanding the
premium mindset
Where mid-market is mostly rational, and luxury is predominantly emotional,
premium sits between the two and the purchase, based not just on price
but on desire for something better than average, involves decisions on both
levels. And they’re selective, paying more for something in a specific category
or trading up in an area that interests them whilst remaining decidedly midmarket in other areas.
Those who buy Sony TVs over LG, or pay a premium for organic food, do so
because they can see a distinct benefit in performance, features, quality and
other factors. Reputation plays a role, but it acts as an indicator of the brand
values rather than a simple emotional driver (which means brand advertising
alone is not enough).
Mid market doesn’t have to justify itself (it’s the average price), nor does luxury
(that’s the definition of luxury) – but premium needs to demonstrate values
that appeal to the rational and emotional. Premium buyers take time to reach
their decision, weighing up the rational benefits while using the emotional cues
to shortcut the decision process.
The premium path
to purchase
What this means
for advertisers
MSA delivers
your audience
73% of premium buyers admit to ‘doing a lot of
research’ about a purchase.
54% of premium TV buyers use the internet to
inform a purchase.
Brand is only worth it when it is
supported by high quality... the name
itself is not enough.
Michele, 45, France
Premium buyers therefore need to be engaged throughout the sales cycle. To
do that, you need an integrated media plan, where providing information to
support decisions is pivotal in guiding consumers to your product or service.
They need to see the tangible benefits delivered in order to weigh up your
product against a mid-market alternative. Appeal to their rational mindset and
they’ll be inclined to pay more.
I’m fairly prudent at heart, I don’t like wasting
money. Every penny I spend I like to know is well
spent, which is why I tend to do a lot of research
before I buy. Mark, 40, UK
It’s a rational choice
So you need to show your value
Source: A Cut Above the Rest research, 2010
Finding ‘the
great ignored’
Trading up
Premium buyers get their awareness of your
product the way everyone else does –
from your brand.
But the premium customer researches brands
to ensure that the one they want is the best
for them – and overwhelmingly, use the
internet to do it.
The premium customer isn’t all about rational
decisions – they have a feelgood factor as well –
and it comes from buying the best.
Understanding the
premium mindset
The premium path
to purchase
What this means
for advertisers
MSA delivers
your audience
Research, research, research. If you haven’t got the message, the premium purchase path is
based largely, though never exclusively, on research. And there’s no better place to conduct
research than online. Premium consumers are a sociable group and they like to share their
expertise, making social media a big part of the path to purchase as they seek out opinions
or become advocates themselves.
Our research shows that advertisers should not focus on what makes premium consumers
different, but on what makes them the same. Not income, age, or sex, but purchasing
behaviour. All premium consumers purchase products in a very similar way, whether they are
demographically affluent or not. Their interest may be attracted by your brand image, either
offline or online, or via word of mouth from friends and family online or in person, but they’ll
look beyond the surface before making that decision to pay more for your product.
This initial phase is followed up with a research phase in which all premium consumers seek
to find out as much as they can about the product before buying it. This is because they
want value, in addition to the ‘feel good factor’ about that brand that was initially sparked
in phase one. It is absolutely essential that brands get this right, as it holds the key to the
premium consumer’s mind-set and wallet.
All premium consumers purchase products in a similar way.
Research is key to influencing decisions.
Steer the most likely customers to find the knowledge
that your product’s a cut above the rest, and give them
the feelgood factor that buying the best confers – and
you’re much closer to ensuring a sale.
I go on the internet, look for the product, look at the price, I look
at customer reviews and blogs, I look at technical specs; I do
everything on the internet. Marcel, 28, Germany
Online
research
is
key
But you need to support your offline activity too
Source: A Cut Above the Rest research, 2010
Finding ‘the
great ignored’
Trading up
Understanding the
premium mindset
The premium audience is a tangible group, and offers real opportunities for
advertisers who are not currently targeting this sizable audience segment.
It’s clear that an integrated offline and online branding campaign can play a
significant role in prompting a purchase for a premium product buyer, and
so marketers need to be sure to get this right. In addition, the use of social
networking is key, tapping into the importance of word-of-mouth.
However, advertisers also need to ensure they are doing enough in the second
‘research’ phase of the purchase cycle too. Building a brand presence in online
channels such as instant messaging, email and social media, and linking
through to useful information is an essential part of the process.
So, in summary, brands need to look beyond demographics to find the
majority of the premium consumer group, creating campaigns that explain
the tangible value offered by their brand. It’s not enough just to advertise
product or image, instead requiring a more consultative approach based on
the provision of key information.
Online consumers need to realise that a product is ‘a cut above the rest’.
The premium path
to purchase
What this means
for advertisers
MSA delivers
your audience
A premium brand can’t rely on brand advertising alone –
the image a consumer has of the brand is built on many
long term and short term differentials. In today’s marketing
environment, this means that readiness of brand and product
information, social networking presence, point-of-sale sales
knowledge and post sales service (to name just a few) are
crucial elements of the brand strategy.
Toby Shaw, Brand Manager, Sony Electronics
• Premium is a big market (with over 40% of consumers
buying premium at some point).
• But don’t confuse premium with affluence - over half of
premium buyers are not affluent.
• Premium products have a tangible benefit – it’s worth
spending more.
• The purchasing decision is primarily rational, supported by
emotional factors.
• Information is king – premium consumers do their
homework before buying.
• Online is the obvious place to reach premium buyers, as
part of a blended campaign.
You need to use the right tools
And understand your audience
Source: A Cut Above the Rest research, 2010
Finding ‘the
great ignored’
Finding ‘the
great ignored’
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Trading up
Messenger*
122m users
Market leader
Understanding the
premium mindset
11 M
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#1 m u N
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The premium path
to purchase
What this means
for advertisers
B
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use
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MSA delivers
your audience
Microsoft
Media Network
Xbox live
36m users*
300 top
global websites
* figures show monthly European users
Microsoft Advertising is recognised as having a truly premium network,
with notable inventory that people know and trust. Our quality is second to
none, with premium properties such as MSN, Windows Live Messenger and
Hotmail, as well as over 300 premium sites across our Media Network. And
with 167 million unique users, we bring breadth as well as quality.
Our market-leading support goes beyond inventory, featuring full targeting
solutions to reach and deliver the audience you need. Our wealth of audience
insight will help you understand how, where, why and when your customers
purchase. We have the social networking and targeting tools to reach the right
eyeballs at the right times, and Rich Media solutions to really engage with
consumers on sites they love and trust. And with our profile, behavioural and
remessaging targeting tools, we can help you identify your target audience,
continue the conversation, extend campaign reach, and drive purchases.
In short, Microsoft Advertising lets advertisers safely reach the audience they
need, across premium inventory, using a wide range of targeting solutions.
Success Stories
Innovative menswear e-tailer Poshcuffs have achieved great
success driving sales using Microsoft’s targeting solutions to
reach a premium male audience. Read more...
Premium skincare brand Nivea increased purchase intent by
34% by intelligently targeting its audience, with help from
Microsoft. Read more...
When BMW wanted to launch the new X1 to a discerning
audience, they turned to Microsoft Advertising, resulting in 8%
increase in brand awareness and 10% increase in intent to buy.
Read more...
Travel and leisure retailer lastminute used Microsoft
Advertising’s targeting solutions and achieved stunning results
– over 100% increase in conversions and 6,300 new purchases.
Read more...
Your trusted partner
To becoming a cut above the rest
Source: A Cut Above the Rest research, 2010
So there exists a growing savvy premium audience. But how do you find
them and connect with them online? This is where we can help.