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Understanding the Affluent Market

3 Parts of Presentation. Defining the affluent market, its size, and its compositionUnderstanding the values, motivations, and current mood of the affluentVacation home ownership and interests among the affluent. Defining the Affluent Market. Income?Net Worth?How much?. Wealthiest 5% by Income.

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Understanding the Affluent Market

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    1. Understanding the Affluent Market *Size & Composition *Values, Motivations, & Current Mood *Vacation Home Market Presented by Ron Kurtz, President The American Affluence Research Center October 6, 2008 Amenity Communities Marketing Summit

    3. Defining the Affluent Market Income? Net Worth? How much?

    4. Wealthiest 5% by Income $100,000? $150,000? $200,000?

    6. Wealthiest 5% by Net Worth $800,000? $1,500,000? $6,000,000?

    7. The wealthiest 10% of U.S. households, based on net worth 11.4 million households (22 million adults) 80% are millionaires Minimum net worth of $828,000 and average of $3.1 million Average income of $256,000 Earn 36% of total personal income Own 70% of total net worth of all U.S. households Control 89% of all publicly traded stock and mutual funds

    8. Average age of 59 14% under 44 53% between 45 and 64

    9. The Affluent Market

    10. Risky Data Anecdotal evidence Inaccurate Statistics Media exaggeration

    11. The 9 Million Millionaires 80% are self made (Thomas Stanley/William Danko) Not conspicuous or pretentious consumers Retain middle class values and lifestyle (Dr. Gary Buffone) The Middle-Class Millionaire (Lewis Schiff)

    12. The Affluent Values Motivations Current Mood

    13. Wealthiest 10% of U.S. Households Popular Stores Target, Costco, and Home Depot Holiday Gift Budget $2,800 Purchases Past 12 Months 17% fine watch/jewelry priced @ $5,000 or more 33% car valued @ $40,000 or more 15% item of ladys couture apparel @ $1,000 or more

    14. Wealthiest 5% of U.S. Households Sample Profile $472K average income $4.5MM average net worth Annual Spending $13,000 for vacations away from home $5,800 for dining out

    15. Primary Motivations of the Affluent Save money (find good value) Receive acknowledgement of their affluence Receive recognition as being something more than affluent (smart, worldly, collector, etc.) Obtain exclusivity (in good company with access to things beyond average persons access) Acquire things money cannot buy (unique experiences, access to people not normally accessible) Secure quality and convenience (leverage time)

    16. Attitudes Toward Spending 31% spend freely to enjoy life 69% spend conservatively to protect long-term financial goals. 96% spend a little more for a product that will last 4% spend a little more for something eye catching or in current fashion 82% look for discounts/compare prices before making a major expenditure 18% believe discounts are false savings; you get what you pay for

    17. Outlook for the Economy

    18. Outlook for the Economy

    19. Actions Taken to Reduce or Defer Expenditures

    20. Affluent Spending Less

    21. Reasons for Reducing Expenditures

    22. Reasons for Reducing Expenditures

    23. How Will Your Spending Plans Change? For dining in casual/family restaurants For entertainment (movies, concerts, sports.) For vacation travel

    24. Expected Changes in Spending for 17 Products and Services

    25. Expected Changes in Spending for 17 Products and Services

    26. Expected Changes in Spending for 17 Products and Services

    27. Plans to Purchase 8 Major Items

    28. Plans to Purchase 8 Major Items

    29. Plans to Purchase 8 Major Items

    30. Profile of Those Reducing Expenditures versus Those Not Reducing Expenditures

    31. 3 Thoughts to Consider Those reducing expenditures are still spending Those not reducing expenditures represent a large market segment Market and competition will continue to be challenging

    32. Number of Homes Owned by the Affluent

    35. Plans to Acquire New Vacation Home

    36. Subscriber Income of Upscale Media

    37. 4 Thoughts to Consider Affluent market is large and can be segmented in various ways About 80% of the affluent are millionaires, of which 90% are self made with middle class values and life styles Mood of the affluent appears to be bottoming out, with a positive outlook for 12 months out Affluent indicate plans to build 96,000 vacation homes and to buy 264,000 vacation homes during the next 12 months for a total of 360,000 potential sales

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