Asia’s total number of luxury consumers is expected to reach 1 billion over the next decade. This enormous market potential is already drawing the attention of major brands. But new data from Agility Research & Strategy shows that those vying for success within the Asia-Pacific region much take consumer nuances into account.
“One of the most common misconceptions about affluent Asian consumers is that they are all the same,” Amrita Banta, managing director at Agility, said in an interview with Luxury Daily. “From our research, we have found that the perception of luxury among consumers in the various markets is different. In China, the respondents interviewed defined luxury as quality. Owning a luxury item is seen as a status symbol. In Hong Kong, although quality is important, luxury is equated to expensive items that are designer made and exclusive.”
Agility Research & Strategy recently conducted “Affluent Insights” research, which examined luxury spending trends within the top 25 percent of high-income Asian consumers. (For China, “high-income” refers to households that make $29,000 or more annually.) They singled out “Generation AAA” as the future of luxury consumption in Asia. These consumers, which range in age from 18 to 34, are named for “their aspiration for brands that demonstrate who they are, ambitiousness and affluence.”
“Luxury brands can reach out to AAA consumers by first understanding their demographics and psychographics,” Ms. Banta said. “Who are they? Where do they spend? What are their hobbies? How do they perceive luxury? What are the things that are most important to them?”
AAAs are Internet savvy; 47 percent purchase products online, and two-thirds research luxury items on the Web before purchasing them. But when it comes to marketing, offline advertisements are often more effective. AAAs in Singapore, Indonesia, and China are most receptive to fashion advertisements in shopping malls, while consumers in Taiwan look to television and those in Hong Kong to print magazines. Jewelry ads are most effective on websites or in magazines, while television is the primary outlet for cosmetics.
Despite varying consumer preferences across countries, AAAs share several commonalities. They spend “almost equally across categories,” and have the financial freedom to purchase mid- to premium-level goods. Sixty-one percent consider social responsibility when choosing brands to purchase, and 69 percent say they would like to have an exclusive experience with a brand before buying one of its products. Brand recognition is a priority for only 55 percent of AAAs.
Travel is also key for this generation. Consumers surveyed in China, Taiwan, Indonesia, and Singapore listed Hong Kong in their top three travel destinations. Seoul and Tokyo are also popular. Fifty-seven percent of AAAs reported that they do most of their spending while traveling, citing lower prices, duty-free purchasing, and wider selections of products. This means that going forward, brands should also think about how to market products to Chinese tourists in Japan and Korea.
AAAs in Singapore, Indonesia, Hong Kong, and mainland China prefer to shop in their free time. In Taiwan, cooking is the dominant hobby.
Agility also identified four different categories of affluent consumers, based on shopping preferences and behavior:
The Luxury Bargain Hunter. This consumer tends to spend more money on electronics than the other consumer categories, but has the least buying power of the four. Luxury consumers in Singapore are most likely to fall into this category; 34 percent of those surveyed identified as Luxury Bargain Hunters.
The Virtual Shopper. This buyer prefers to purchase his or her luxury products through e-commerce channels, and likes browsing and “prioritizing unique finds.”
The Indulgent Traveler. A mostly male category, this consumer “splurges at airports” and prefers to purchase jewelry, watches, and other hard luxury goods. Indulgent Travelers tend to view luxury products as symbols of social status, and seek out brands that are easily recognizable as signs of affluence. Within the Asia-Pacific region, Hong Kong has the highest number of this kind of consumer.
The Exclusivity Seeker. This consumer is defined by spending across a wide range of categories and a high disposable income. Exclusivity Seekers value luxury for its “heightened quality” and are most abundant in mainland China.
Banta also stresses the growing importance of social media to the Chinese consumer. “The social media engagement among luxury consumers will also play a huge role as these ‘masstige’ brands evolve,” she said. “Social media and digital marketing have no doubt resulted in greater price transparency, choice and availability, however exclusivity and customization will still be desired from discerning consumers.”
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