Wealthy Shoppers Focus on Quality and Price as Brands Blur Lines Between Luxury and Mainstream

NEW YORK, NY--(Marketwired - May 16, 2013) - What specific factors differentiate luxury brands from mainstream brands? What would happen if one type of brand expands into the other's market? These are among the questions answered by wealthy shoppers with minimum household incomes of $150,000 surveyed by the Luxury Institute.

For 60% of wealthy consumers, particularly those with higher levels of wealth, quality is the overriding differentiator between luxury and mainstream goods and services. Price (55%) is cited as the second biggest point of differentiation. Craftsmanship (48%), prestige (47%) and design (38%) are also critical. Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.

Launching an extension into mainstream retail does not appear to be the kiss of death for luxury brands because there is little brand prejudice on the part of wealthy shoppers. If a luxury name branches out into mass-market, 84% of wealthy women and 78% of men would continue shopping with that company. In the case of a mainstream brand migrating up-market, 88% of wealthy women and 79% of men would remain customers.

Of the challenges facing the mainstream offshoot of a luxury brand, 24% of wealthy shoppers say the biggest risk is damage to the luxury brand's image or reputation; 17% cited perceptions of inferior quality at the lower-priced stores.

"Luxury brands can leverage their edge in quality and craftsmanship with current offerings by communicating these attributes clearly with consumers," says Luxury Institute CEO Milton Pedraza. "This enhances perceived value and alleviates price sensitivity."

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.