This year is shaping up to be the year of the rich – at least for marketers. New numbers out from a variety of sources show demand for luxury products growing but mere mortals (Walmart calls them “everyday Americans”) are just getting by. But what does this mean?
According to Federal Reserve economist Michael Feroli, there is uneven progress in the growth of household expenditures; he estimates that the top 20 percent of the wealth in this country is responsible for 40 percent of consumer spending. Feroli is quoted in BloombergBusinessweek as saying, “the heaving lifting is being done by upper-income households.” These numbers are important because household spending accounts for roughly 70 percent of the U.S. economy.
Now you can argue all day about the social implications of all this and the issues of right and wrong. You could even get in a really good Marxist conversation if you tried hard enough and maybe grew a beard. And you would be justified – this pattern isn’t good for us as a nation.
But when Tiffany diamond pendants and Gucci bags are lifting the economy – we’re talking about some pretty profound social implications. What’s immediately interesting to me from a professional perspective is how this persistent shift is going to change marketing. How do you market to a nation that is increasingly divided into two camps: one that needs pampers and one that needs Chistian Louboutins? What happens to national marketing, advertising and digital and traditional media campaigns?
We could be running the risk of losing the “splurgers” – the groups that like to treat themselves to luxury items once in a while. But, the truth is that over the long run I think that the marketing industry won’t change significantly because of this shift. I think we’ll see an uptick in high-end marketing dollars spent as Gucci and Maserati ramp up campaigns around new products. But, we will also see continued spend on commodity goods campaigns as brands compete harder for consumer dollars. If anything, we may see more innovation in digital campaigns as brands look for new ways to extend marketing dollars.