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Here come the mass affluent
Companies are increasingly targeting a lucrative demographic that is hard to pin down.
July 27, 2005: 11:20 AM EDT
By David Ellis, CNN/Money staff writer

NEW YORK (CNN/Money) – If the $7 toothbrush, the $4 grande caramel macchiato or even having someone clean out the gutters on your home are spending staples for you, your social status might be better than you think.

You might even want to call yourself one of the "mass affluent."

The mass affluent are those individuals who fall between the middle class and wealthiest of consumers. They usually have money to spend and are willing to pay for quality, performance -- or life's little indulgences such as that caramel macchiato.

According to a recent study by research firm Yankelovich, the mass affluent consumer is usually white, married, living in a two-income household with a white-collar job and one child.

With an estimated 22 million mass affluent consumers today in the United States, this group is not only growing, it is quickly becoming one of the most lucrative consumer demographics for product marketers to target.

"In targeting people that have more money to spend on products, this would be the first group to go after," says Christina Silvio-Haggerty, the marketing director for the American Marketing Association.

This trend, dissected by Paul Nunes and Brian Johnson in their 2004 book "Mass Affluence: Seven New Rules of Marketing to Today's Consumer," first emerged in the 1970s.

Up until that point, advertisers and marketers classified most Americans households as belonging to the "mass market."

At the time, almost 90 percent of American households made less than $65,000 (inflation adjusted). By 2000, 62 percent made more than $65,000, according to "Mass Affluence" co-author Nunes.

With that shift in wealth, the mass affluent demographic has blurred the once-distinct boundaries between the upper and middle classes and their buying habits.

Previously, where we might have only seen a basic toothbrush for $2.29 and the rechargeable model for $109.99, now we see the mid-range model for $6.99, which both middle and upper class consumers are buying.

The influence of mass affluence

What makes the mass affluent demographic so appealing to companies, is the fact that they influence the buying behavior of the general public, said Silvio-Haggerty.

"They dictate what a lot of us consumers want to buy," she said. "Within the middle class they'll start wanting or needing the same types of products."

Companies in the consumer product and services industries have responded by upgrading their products or rolling out new ones.

Wal-Mart, for example, has introduced more upscale products such as fresh herbs at its supercenters and higher grades of gold at its jewelry counters.

Then there's the company MDVIP, which offers a concierge form of medicine. Patients receive more individual attention by paying $1,500 out-of-pocket to deal with a doctor who has 300 patients instead of 3,000.

"You can hardly open a newspaper and not see an example of a company that is moving to take advantage of this," said Nunes, an executive research fellow at Accenture's Institute for High Performance Business.

The mass affluent consumer has even created diversity among products that were typically considered homogeneous.

Mercedes Benz, traditionally known as a symbol of wealth, now offers lower-priced models.

Instead of just offering a standard movie ticket, many theatre chains give customers the option of paying a little extra for reserved seating.

"It's not about income levels," said Nunes. "It's about giving customers a choice in areas that were 'one-size fits all' industries."

Through research on the mass affluent demographic, MasterCard launched its World MasterCard card in May to specifically reach this group said Nicole Risafi, vice president of global product for MasterCard.

"From our banks' perspective it is a very attractive segment," said Nicole Risafi, vice president global product for MasterCard. "They have money to spend, they tend to use credit cards and they are also very appealing because they offer banks substantial cross-sell opportunities."

Sharing the wealth

What remains unique about such products is that many consumers are not automatically priced out of these items and they tend to attract consumers across a wide range in incomes.

According to Nunes, the influence of mass affluent consumers can also be a good thing for those of us who could not typically afford luxury items.

Consumer electronics items such as DVD players have become cheaper as technology becomes streamlined, while such services as air taxis or private jet flights, which were commonly regarded as available only to the wealthiest individuals, are now within reach.

"What it is doing is bringing this offering that is attractive down from the bailiwick of the extraordinarily rich to what is now a pretty affordable offering," said Nunes.

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