According to the Luxury Marketing Council, the regular retail mass market experiences a 4% to 6% growth annually. Contrast those numbers to the annual growth of the luxury retail market, which has averaged growth of 20% to 32% each year for the years from 1998 to 2008. Forecasters predicted the luxury market would be more than $1 trillion per year in 2010. Of course, that didn’t happen because the economy did a belly-flop. However, according to the experts, the luxury market is catching its breath. Luxury is making a comeback.
Who is purchasing all these luxury products? There are 2.7 million customers in the United States with liquid portfolios of $1 million or more. Of those 2.7 million affluent customers, 1.2 million have a net worth of over $5 million. And their numbers are increasing at the rate of 100,000 per year. Add to that the fact that there are 215 million people in the United States over the age of 50 in 2010. Which means over the next 20 years $12 trillion in inheritance will change hands.
The rich are definitely getting richer.
However, even among the rich there is no equality. Marketing luxury products to Paris Hilton requires a different approach than marketing luxury to John Wayne. Paris was born with a gold spoon in her mouth, and John Wayne pulled himself up by his bootstraps. Both are rich. Yet they require different marketing tactics.
Of those getting richer, 10 million of them are self-employed women, entrepreneurs who are running and growing their own businesses. In fact, at least 20% of the people in the workforce are self-employed, and they control a whopping 70% of the wealth. Of those classified as ultra-rich, 50% are self-employed.
The U.S. Census reports provide much interesting information about the affluent self-employed. Seventy-five percent of self-employed individuals have no employees. Many of these one-person businesses are home-based, including professional, scientific, and technical services, construction, retail trade, personal services, repair, and maintenance.
Most self-employed businesses are “self-made.” Of those who run self-employed businesses with paid employees, 77% used their own money to start the business. This is compared to the 59% of the self-employed business owners with no employees. Of these “self-made” businesses, 79% are in the areas of accommodation and food service; 78% are in manufacturing, 74% in wholesale trade, and 72% in retail trade.
An astonishing 28% of all self-made businesses were started with no money. And 10% of all self-employed business owners used credit cards to start their company. Most of these affluent self-made people are highly educated, 23% having earned a college diploma, 17% had a graduate degree, and a whopping 64% had some college credit.
Of the self-made affluent, 31% are over the age of 55, 29% fit the 45 to 54 age group, and 24% are 35 to 44-years old. The bulk of these self-made people, 70%, depend on their business for their income. Half of them work more than 40 hours per week.
These statistics from the U.S. Census make a singular announcement: lots of rich Americans literally did pull themselves up by their own bootstraps. The psychology of the affluent self-employed provides interesting information, which may be used in marketing to this particular group of affluent customers.
Generally speaking, rich people share certain common characteristics. One is persistence. They never give up. No matter how many obstacles they come across, they keep going and eventually attain their goal. Which means that if one wishes to become rich, persistence is necessary.
Many rich people got rich doing what they love to do. They are passionate about their business. This passion transforms their business from work and turns it into fun. If work isn’t fun or at least enjoyable, it soon becomes drudgery.
Another thing rich people have in common is generosity. They are not greedy, making as much money as they can Monday through Friday, and on the weekends counting it like Scrooge. Instead, they give part of it away to charities, foundations, and other admirable causes. It is almost as if giving money away somehow produces more money for the rich person, which means even more to give away, and on and on.
One more quality rich people share is innovation. They keep coming up with new ideas. Which means they are creative, and avoid getting stuck in a rut. Once an idea has run it course, rich people simply move on, and think of another idea. Which means they do not do it the way it has always been done. Rich people believe there is a better way to do it.
A lot of rich people tend to have one other common trait. They own their own businesses. They have an idea, which they implement successfully. Successful implementation of an idea results in the birth of a business, a company. Other rich people do not start a business. Instead, they invest their money in someone else’s business. Either way, whether the rich person starts a company or invests in a company, it is still self-employment.
The concept of shared characteristics can be continued and further defined. The latter group, those who are self-employed, share certain common attributes. According to a survey done by Forbes magazine, successful entrepreneurs have the following qualities:
1. Common sense. Common sense is the ability to take a complicated process and simplify it, reducing the process to its elementary parts. This simplification results in the ability to see why something is working or not working, and to make the necessary changes for improvement.
2. Specialized knowledge. Successful entrepreneurs have a full understanding of their particular business. More often than not, this wisdom is gained by means of experience in their field. Wisdom allied with experience makes it possible for the entrepreneur’s business to weather the storms of any new venture. According to Forbes, 45% of all new start-up businesses fail within the first two years. Of the 55% that do not fail, specialized knowledge is given as the explanation for success.
3. Self-confidence. Defined as confidence in one’s own judgment, opinion, and ability, self-confidence is essential to the success of anyone who is self-employed. It manifests itself in risk-taking and decision making. According to Forbes, self-confidence is a skill, and not an innate talent, which means self-confidence can be acquired through training and practice.
4. Get things done. Getting things done is a combination of hard work, persistence, and focus. In other words, entrepreneurs strive mightily, don’t give up, and keep their eyes on the goal. According to Forbes, getting things done means having self-discipline and making a choice. Making choices is extremely painful.
5. Creativity. Creativity is combining artistry with inventiveness, which results in a new way of seeing a thing, and then fabricating it. Forbes states entrepreneurs need to be creative in many different areas, including product design, management, marketing, advertising, and sales.
6. Leadership. Leadership is not simply inspiring people, but also motivating them, training them, and caring about them. Leaders are personable, and have a knack for getting along with diverse groups of people.
7. Self-reliance. Entrepreneurs realize they have only themselves on which to depend. If things fall apart, they are responsible. If their business succeeds, they get the credit. They truly do pull themselves up by their own bootstraps.