The Near-Affluent

American Demographics, Dec 1, 2002

There's not a lot of room at the top. Fewer than 11 million households have climbed the ladder to reach the more rarefied air of the $75,000 to $99,999 income range. This "almost rich" category is one that many marketers miss, according to Accenture consultants Brian Johnson in Chicago and Paul Nunes in Cambridge, Mass., whose "Target the Almost Rich" study appeared in the Harvard Business Review's June 2002 issue. Johnson and Nunes say that mass market products lack appeal to consumers in this income bracket, and that the true high end is out of reach for them. According to Census 2000 data, nearly 60 percent of these households are headed by people 35 to 54, which means that Boomers are dominating this market today. The majority of this group is married and have children living at home.

To appeal to these consumers, Johnson and Nunes suggest that marketers create "snob appeal" categories within the mass market. For example, specialty services, such as concierge medical services, would likely appeal to this segment if the price were right. Lower priced luxury items, such as the C230 Mercedes, which was recently introduced for under $30,000, would also appeal to this group. (For more on different demographic groups' motivations for purchasing high-end products, see "Defining Luxury: Oh, the Good Life" in American Demographics, November 2002.)

While these consumers are reaching up, they're also not quite rich yet. Coupons have a surprising appeal to people in this income group, says Melissa Harms, supervisor of targeting at marketing services firm Valassis, in Livonia, Mich. "There's a myth that people of upper incomes don't use coupons, that it's only lower income people. All of our research shows that it's the reverse," she says. Since higher income consumers are the ones who are reading newspapers, many are still effectively reached through coupons in newspaper inserts. This near-affluent category did well in the past decade, growing to 10 percent of all households in 2000, up from 5 percent in 1990. States that are growing the fastest in population - such as Utah, Colorado and New Hampshire - also have rapidly increasing numbers of near-affluent households.

TOP 50 METROS: $75,000 TO $99,999

Many of the near-affluent make their home in the nation's midsize to larger metros, including Minneapolis, Washington, D.C., San Francisco and Boston.

DISAPPEARING DIVERSITY

Blacks, multiracials and Hispanics are all underrepresented in the near-affluent category. Although racial minorities represent about 20 percent of all U.S. households, they account for only 15 percent of near-affluent households. Hispanics account for 9 percent of all households, but just 6 percent of households with earnings of $75,000 to $99,999.