July/August 2004

Selling to the Moneyed Masses
by Paul F. Nunes, Brian A. Johnson, and R. Timothy S. Breene

. . . A second way to modify your offering in light of today's mass affluence is to rethink the offering's exchange model-that is, how it is paid for-and more broadly, what it means to own the good. What if there were no givens in your category as to rights of ownership, payment options, or expected duration of ownership? A Chicago-based company called Exotic Car Share assumed just that and created a new equity ownership program for rare, antique, and luxury automobiles. The program makes it possible to buy a one-fifth share in a Ferrari 360 Modena spider, for example, or Lamborghini Murciélago or Bentley Arnage T. For founder George Kiebala, the business model was a natural extension of the fractional ownership already common in jets, vacation properties, and even yachts. As with those goods, his company's offering made a genuine luxury accessible to a whole new tier of buyers.

    Beyond reducing price points, this kind of arrangement responds more deeply to the needs of today's moneyed masses. They are discovering what the megarich have often observed (without getting much sympathy): that ownership has its burdens. Every oceanfront home, vintage car, or precious piece of art requires care - so much that it often seems you don't own your possessions, they own you. Marketers would do well to consider that problem carefully, because the upkeep of possessions is no longer a problem for the megarich alone. Many of us who cannot afford full-time household managers have amassed unprecedented numbers of material good, from computing and entertainment systems to snowblowers and cappuccino makers - and we have less time to care for our possessions than we did in the past. (Americans, on average, worked almost 100 hours more per year in 2000 than they did in 1980.) What's more, there's a growing "claustrophobia of abundance," asserts marketing consultancy Yankelovich Partners, caused by the fact that "people just feel overwhelmed by [their] stuff." There's a reason that California Closets, which customizes storage solutions for home owners, grew sixfold from 1996 to 2002.

    Ownership can be less onerous, too, when it doesn't endure as long. This is why international retailer IKEA is working to change consumers' attitudes about furniture purchases. Its $50 million TV advertising campaign satirizes the sentimental attachments people have to old, and often ugly, home goods. When the ads' protagonists replace their furniture, a narrator chastises viewers for taking pity on the old items. "You are crazy," he tells the audience. IKEA marketer Christian Mathieu talked about the impetus for the campaign in a recent conversation. "We considered how Swatch, for example, changed its category," he said. "The company transformed watches from rare purchases into more affordable items that consumers bought as fashion statements." If furniture and watches can change, why not rethink the ownership models of other categories? Jewelry and art come to mind as other opportunities. In both cases, high cost is only one reason a customer might be disinclined to buy; another is the prospect of having to live with one's choice. Slowly a market is forming (part of which is a viable resale market) to allow consumers to lease original artworks just as they do automobiles.