Press Release

Luxury Consumers Kept Up an Aggressive Pace Buying Luxuries in 2004
Increased Spending on Luxury Automobiles Pushes Spending Growth Even Higher

Stevens, PA April 26, 2005 - Last year the typical luxury consumer spent $33,188 on average buying luxuries, an increase of 33 percent over their reported spending in 2003 of $25,010. While spending in all categories of luxuries rose in 2004, increased spending on luxury automobiles resulted in the greatest boost to overall luxury spending, according to Unity Marketing's new Luxury Report, 2005.

But by taking spending on luxury automobiles out of the equation, the typical amount spent by luxury consumers buying home luxuries, luxuries bought for or used in the home, like furniture, appliances, electronics and bedding; personal luxuries, like fashion and fashion accessories, jewelry and watches; and experiential luxuries, notably travel, fine dining, home services, and spas and beauty services, rose a more modest 13 percent, from $18,799 in 2003 to $21,250 in 2004.

Luxury consumers spent lots more on luxury cars in 2004
Some 15 percent of luxury consumers bought a luxury automobile last year and spent on average $46,394, a stunning 31 percent increase over the $35,300 they spent in 2003. "That the luxury consumer is spending more on luxury cars contrasts with Mercedes Benz' results in 2004 when their more affordable, near-luxury C-Class car became MBUSA's best-selling model ever with a reported 69,251 sold," says Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses - as well as the Classes. "While Mercedes Benz is reaching down to make their cars more affordable across a wider spectrum of customers, it has given other luxury brands like BMW, Lexus, Volvo and even Cadillac, which have been more vigorous in maintaining their premium pricing, an opportunity to attract new luxury buyers.

"That isn't to say that the net gain of nearly 70,000 new model Mercedes-Benz C-Class cars on American roads isn't a tremendous marketing success for MBUSA. But it may be giving the competition an opportunity to attract the typical Mercedes' affluent buyer. They need to make sure their core customers aren't trading down to the C-Class, since their sales last year of their luxury S-Class, M-Class, CL-Class and G-Class all took a hit. Strategies for marketing luxury to the 'masses' often conflict with success strategies for marketing luxury to the 'classes,'" Danziger concludes.

About Unity Marketing's new Luxury Report, 2005
This important new study of the luxury market provides the results of a three-year longitudinal research study of the luxury market, which combines qualitative and quantitative methodologies. Some 600 luxury consumers were surveyed (62 percent female and 38 percent male respondents) for the 2004 study. Their average income was $135,000 and their ages spanned 25 to 65 years of age, with 43 percent of the survey sample Baby Boomers and 44 percent GenXer luxury consumers.

Details about what these luxury consumers bought, how much they spent, where they made their purchases, and in certain categories the luxury brands they patronized are reported in three major categories of luxury:

Home Luxuries

• Art and Antiques
• Electronics and Photography Equipment
• Furniture, Lamps and Floor Coverings
• Garden
• Home Decorating Fabrics, Wall and Window Coverings
• Kitchen Appliances, Bath Room Equipment and Building Products
• Kitchenware, Cookware, Housewares
• Linens and Beddings
• Tabletop, Dinnerware, Stemware, Flatware

Personal Luxuries

• Automobiles
• Clothing and Apparel
• Cosmetics, Fragrance and Beauty Products
• Fashion Accessories
• Jewelry and Watches

Experiential Luxuries

• Dining
• Entertainment
• Home Services
• Spa, Massage, Beauty and Cosmetic Services
• Travel

This report provides the facts and figures needed to develop winning marketing and business strategies for luxury marketers. It takes a horizontal view of the luxury market, recognizing that luxury marketers compete not just with companies within their vertical product niche, but across all luxury categories as well.

Within each category of luxury, the key drivers for purchase are studied, such as role of luxury brand in purchase decision; the influence of sales price on purchase; where the shopper bought their last luxury; why they bought luxuries; whether their luxury purchases were made a gifts; and other motivational factors.

Special feature: Find out which of the four different types of luxury consumers are your best customers
A special feature in Unity Marketing's Luxury Report 2005 is a psychographic profile of the four key types of luxury consumers. These include:

• X-Fluents (Extremely Affluent) who spend the most on luxury and are most highly invested in luxury living;
  
  
• Butterflies, the most highly evolved luxury consumers who have emerged from their luxury cocoons with a passion to reconnect with the outside world. Powered by a search for meaning and new experiences, the butterflies have the least materialistic orientation among the segments, yet they spend nearly as much as the X-Fluents on luxury;
  
  
• Luxury Cocooners who are focused on hearth and home. They spend most of their luxury budgets on home-related purchases;
  
  
• Aspirers, those luxury consumers who have not yet achieved the level of luxury to which they aspire. They are highly attuned to brands and believe luxury is best expressed in what they buy and what they own.

Written for anyone and everyone that sells luxury, from marketers, advertisers, retailers, service providers, this report is an essential tool to understand the dynamics of the luxury market, today and into the future.

For more information, call Pam Danziger, 717-336-1600 or email pam@unitymarketingonline.com

About Pam Danziger and Unity Marketing

Pamela N. Danziger is a nationally recognized expert in consumer insights for luxury marketers, whether they sell luxuries to the masses or the 'classes.' She is president of Unity Marketing, a marketing consulting firm she founded in 1992 to unite marketers with their target markets through consumer insights. She taps consumer psychology to advise clients such as Lenox, Cartier, Herend, Spring Air, Sears, The World Gold Council, The Conference Board and American Express.

Her latest book, Let Them Eat Cake: Marketing Luxury to the Masses - as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) was published in January 2005. She also authored Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).

She has appeared on CNN's In the Money, CNN International, NBC's Today Show, CNBC, CBS News Sunday Morning, Fox News' Your World with Neil Cavuto, ABC News Now, NPR's Marketplace and is frequently called upon by the Wall Street Journal, New York Times, American Demographics, Women's Wear Daily, Forbes, USA Today, Associated Press, Los Angeles Times, Chicago Tribune for insight.