The Mendelsohn Affluent Survey: The Affluent and Luxury Marketplaces February, 2008 Monroe...

The Mendelsohn Affluent Survey: The Affluent and Luxury Marketplaces

February, 2008

Monroe Mendelsohn Research, Inc. • 841 Broadway • New York, NY • 10003-4704 • 212-677-8100 • FAX 212-677-8833

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Agenda

• Monroe Mendelsohn Research

• Selected Results from The 2007 Affluent Survey

• The 2008 Affluent Survey

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Monroe Mendelsohn Research

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Monroe Mendelsohn Research

• Founded in 1958 by Monroe Mendelsohn.

• Business grew based on high-quality research and integrity.

• MMR conducted only custom marketing research until 1978, when The Mendelsohn Affluent Survey was launched.

• Recently launched The Affluent Omnibus Survey.

• Continues to conduct custom marketing and media research studies.

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Mendelsohn's Affluent Survey

• An annual syndicated survey now going into its 32nd year.

• Measures "affluent" households across America — the top quartile ($85K+ in 2007).

• Collected data in 2007 by mail using a 16-page questionnaire that covered many topics.

• Produces an annual database of approximately 13,000 affluent respondents.

• Used for strategy, marketing, selling, and media selection purposes by many advertisers, ad agencies, publications, and cable networks that market to the many segments of affluent America.

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Mendelsohn's Affluent Omnibus Survey

• A new, recontact survey that complements the Affluent Survey.

• Allows subscribers to insert their own custom questions into the 2008 Mendelsohn Affluent Survey.

• Will be used for marketing and media purposes by participating advertisers, ad agencies, publications, cable networks, digital networks and other organizations that market to the many segments of affluent America.

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Selected Results fromThe 2007 Affluent Survey

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The Affluent

Using MMR's definition of Affluent, there are slightly more than 29 million Affluent households according to

the U.S. Census's latest survey.

Household Income Segments

# of Households

(000)% of

Households

Total 116,011 100

Under $85,000 86,915 75

$85,000 to $149,999 20,329 29,096 18 25

$150,000 to $199,999 4,751 4

$200,000 to $249,999 1,776 1

$250,000 or more 2,240 2

Source: U.S. Census, Current Population Survey, 2007

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The Affluent (continued)

These 29 million Affluent households comprise 25% of the U.S. population, but they earn more than half

the total income.

Household Income Segments

# of House-

holds (000)

% of House-holds

Total $Household

Income

Share of House-hold

Income

Total 116,011 100 7.7 trillion 100

Under $85,000 86,915 75 3.3 trillion 43

$85,000 to $149,999 20,329 29,096 18 25 2.2 trillion 29 57

$150,000 to $199,999 4,751 4 805 billion 10

$200,000 to $249,999 1,776 1 390 billion 5

$250,000 or more 2,240 2 1.0 trillion 13

Source: U.S. Census, Current Population Survey, 2007

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• The 2007 Mendelsohn Affluent Survey projects that there are about 2.6 million "High Net Worth" households (with $1 million+ in liquid/investable assets) living in the U.S. They are labeled as "HNW" in this presentation.

• Households with $250K+ household income, the other Affluent segment profiled in this presentation, are labeled as "$250K+".

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HNW households tend to be older than $250K+ households

TotalAffluent $250K+ HNW

% % %

Age

18 to 29 years 6 4 2

30 to 34 years 9 7 1

35 to 39 years 13 10 3

40 to 44 years 15 14 8

45 to 49 years 16 16 12

50 to 54 years 15 15 12

55 to 64 years 19 24 32

65 years or older 8 12 29

Mean age 47.8 50.3 57.4

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About a third of HNW households report HHI of $250K+


% % %

2006 Household Income

$85,000 to $99,999 25 0 11

$100,000 to $124,999 30 0 13

$125,000 to $149,999 16 0 12

$150,000 to $199,999 16 0 18

$200,000 to $249,999 6 0 12

$250,000 to $499,999 6 74 20

$500,000 or more 2 26 14

Mean Household Income ($000) 157.7 483.3 300.4

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More than one third of the $250K+ segment report liquid assets of $1 million+

Total

Affluent $250K+ HNW

Liquid assets % % %

Under $10,000 8 3 0

$10,000 to $19,999 5 1 0

$20,000 to $49,999 10 3 0

$50,000 to $99,999 12 4 0

$100,000 to $199,999 15 9 0

$200,000 to $249,999 5 3 0

$250,000 to $499,999 13 14 0

$500,000 to $749,999 6 13 0

$750,000 to $999,999 3 8 0

$1,000,000 to $1,499,999 4 9 40

$1,500,000 to $1,999,999 2 7 20

$2,000,000 to $4,999,999 3 19 34

$5,000,000 to $9,999,999 * 4 5

$10,000,000 or more * 1 1

Mean among owners ($000) 427 1374 2246

* = less than 0.5%

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The 867,000 households that have both $250K+ household income and liquid assets of $1 million+ constitute a prime target

$250K+: 2,245,000

HNW: 2,600,000

Both: 867,000

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The Affluent are overwhelmingly white

Total

Affluent $250K+ HNW

% % %

Race

Asian only 6 7 5

Black/African American only 6 5 4

White only 87 86 90

Other/multiple answers 2 2 1

Hispanic descent

Yes 6 5 4

No 94 95 96

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The majority of the Affluent have attended college

Total

Affluent $250K+ HNW

% % %

Highest level of education

High school graduate or less 22 14 13

Some college 22 15 19

College degree 35 37 35

Postgraduate study 6 8 9

Postgraduate degree 16 26 24

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The Affluent are overwhelmingly married/partnered

Total

Affluent $250K+ HNW

% % %

Marital status

Single 4 3 3

Married/partnered 91 92 90

Divorced, separated, widowed 5 5 7

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Compared with all U.S. households, the affluent are currently more likely to live in the Northeast or the

West

TotalU.S


% % % %

Census Region

Northeast 18 22 24 22

Midwest 23 22 17 19

South 37 33 31 34

West 22 24 29 26

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A good number of the HNW segment is retired

Total

Affluent $250K+ HNW

% % %

Employment Status

Total employed 82 77 59

Not currently employed 9 12 9

Retired 9 11 32

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Professional/managerial adults in the $250K+ and HNW segments

are likely to be C-suite types

Total

Affluent $250K+ HNW

% % %

J ob Title

Any chief officer 22 44 43

Chief executive officer 11 30 29

Chief operating officer 9 17 15

Chief financial officer 8 15 14

Chief investment officer 4 9 8

Chief information officer 6 9 8

Chief purchasing officer 7 9 9

Chief marketing officer 7 14 12

Chief planning officer 7 12 10

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The $250K+ and HNW segments tend to have substantial total assets

Total

Affluent $250K+ HNW

% % %

Total Asset Value of Household

Under $250,000 2 0 0

$250,000 to $499,999 11 * 0

$500,000 to $749,999 17 1 0

$750,000 to $999,999 16 2 0

$1,000,000 to $1,499,999 21 7 1

$1,500,000 to $1,999,999 11 10 9

$2,000,000 to $2,499,999 8 9 13

$2,500,000 to $2,999,999 5 13 15

$3,000,000 to $3,999,999 5 17 20

$4,000,000 or more 6 40 41

* = less than 0.5%

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The majority of the Affluent use financial advisors

Total

Affluent $250K+ HNW

% % %

Used any of the following 65 84 87

Tax consultant 29 42 38

Financial planner 25 37 40

Full-service broker 18 35 41

On-line trading 14 22 19

Discount broker 5 10 12

Other broker service 5 7 7

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The Affluent own their principal residence

Total

Affluent $250K+ HNW

% % %

Description of Principal Residence

Own principal residence 97 97 98

Private house 92 91 91

Apartment/condo/co-op 3 4 6

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The $250K+ and HNW segments are more likely to own multiple residences

Total

Affluent $250K+ HNW

% % %

Number of residences

One 71 49 54

Two 19 32 32

Three 5 11 9

Four or more 5 8 5

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The $250K+ and HNW segments also own other real estate

Total

Affluent $250K+ HNW% % %

Ownership of Real Estate Other Than Principal Residence

Have other real estate 34 59 54

Private house 15 29 26

Apartment/condo/co-op 6 16 14

Time-share condo/resort 6 7 8

Weekend/vacation home or apartment 4 8 7

Farm or ranch 3 6 5

Residential rental property 7 12 10

Commercial property 2 7 6

Undeveloped land 4 9 8

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The $250K+ and HNW segments are active in investing, traveling, etc.

Total

Affluent $250K+ HNW

% % %

Lifestyle Plans of Household Members for Next 12 Months

Invest in stocks, mutual funds, etc. 39 55 55

Remodel or renovate 39 37 33

Take a trip/vacation outside the U.S. 37 57 52

Redecorate home 26 26 22

Buy or lease a new car, SUV, or truck 25 34 28

Take a cruise 16 20 21

Buy a new home 9 13 9

Have a baby 7 7 3

Get married 5 5 4

Get engaged 3 4 3

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The $250K+ segment tends to travel frequently


% % %

One 15 7 10

Two 15 11 13

Three or four 14 13 17

Five or six 8 13 13

Seven to ten 8 16 13

Eleven to fourteen 3 9 7

Fifteen to nineteen 2 6 4

Twenty or more 4 13 8

Total domestic/foreign round trips in past 12 months

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The $250K+ segment is more likely to fly "private"

Total

Affluent $250K+ HNW

% % %Have been a passenger on a private aircraft as an alternative to a commercial flight in past year 5 15 10

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Europe is the most visited foreign travel destination among the $250K+ and HNW

segments

Total

Affluent $250K+ HNW

% % %

Selected Foreign Travel Destinations

Bermuda/Bahamas/Caribbean 11 19 16

Mexico 9 15 11

Europe 9 23 22

Canada 7 13 12

Central or South America 2 5 5

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The Affluent are civic-minded

Total

Affluent $250K+ HNW

% % %

Public activities engaged in

Wrote/e-mailed public official 21 27 30

Gave a speech/addressed a public meeting 17 27 24

Worked 10+ hours a month for non-political charity org. 17 24 25

Took an active role in a civic or social issue 14 21 21

Wrote/e-mailed a newspaper or magazine editor 10 12 14

Served on own/another company's board of directors 9 24 20

Actively worked for political party or candidate 4 8 7

Wrote an article or book for publication 4 7 7

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The Affluent, especially the $250K+ and HNW groups, are spenders

Affluent $250K+ HNW

% % %

Selected Category Purchases in Past 12 months

Home furnishings 80 84 79

Women's evening apparel 43 56 45

Fine jewelry 37 50 44

Women's designer/couturier clothing 29 39 30

Luggage 28 40 33

HDTV 25 39 30

Artwork or collectibles 22 34 31

Original paintings/drawings 10 20 16

Antique furniture/furnishings 8 13 11

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The Affluent are involved culturally

Total

Affluent $250K+ HNW

Events during past year % % %

Sports events 63 69 63

Live theatre performances 48 64 62

Museums 48 62 58

Other music concerts 47 57 50

Art auctions/gallery exhibits 31 48 45

Auto shows 20 23 19

Antiques shows 17 22 23

Dance/ballet performances 15 20 19

Classical music concerts 14 22 25

Boat shows 12 15 14

Live opera performances 5 12 12

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The Affluent join private clubs

Total

Affluent $250K+ HNW

% % %

Belong to private club 40 60 55

Athletic club 22 33 24

Country club or golf club 10 25 27

Other private club 6 5 7

Beach or pool club 4 7 5

Tennis or racquet club 3 8 8

University club 3 5 4

Boat or yacht club 3 6 6

Metropolitan or city club 2 5 4

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Some of the Affluent enjoy boating

Total

Affluent $250K+ HNW

% % %

Own any boat 15 19 18

Own power boat 14 17 16

Two or more 2 4 3

Own sail boat 1 2 3

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The $250K+ and HNW segments are more likely to have wine cellars and to

purchase by the case

Total

Affluent $250K+ HNW

% % %

Have a wine cellar/wine refrigerator 11 29 23

Purchased wine by the case 18 41 35

Purchased liquor by the case 5 9 9

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Wine is the Affluent's favorite alcoholic beverage


Alcoholic Beverages consumed % % %

Table wine -- American 60 73 70

Table wine -- imported 42 60 51

Vodka 39 52 48

Rum 30 34 31

Tequila 28 37 31

Sparkling wine -- American 28 38 33

Champagne/sparkling wine -- Imported 21 35 28

Gin 19 29 31

Wine coolers 18 15 14

Scotch 17 31 32

Bourbon 16 23 26

Brandy or cognac 15 22 23

Before or after dinner wine 14 23 22

Blended or rye whiskey 13 17 18

Canadian whisky 12 17 19

Irish whiskey 9 13 15

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The Affluent use the Internet

Total

Affluent $250K+ HNW

% % %

Use Internet (total) 97 98 95

At home 91 92 89

At work 63 66 49

Both at home and at work 58 62 45

Other location 5 10 8

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The Affluent use the Internet to communicate and get information

Total

Affluent $250K+ HNW

% % %

E-mail/communicating 88 92 89

Obtaining information 92 94 90

Travel 76 81 76

News 68 70 63

Medical 52 52 50

Sports/entertainment 51 51 44

Financial products 42 48 49

Other products/services plan to buy 69 70 63

Other information 40 41 39

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The Affluent also use the Internet to conduct business

Affluent $250K+ HNW

% % %

Making transactions 83 86 80

Bought miscellaneous products/services 65 69 62

Travel arrangements 65 74 67

Banking transactions 57 59 48

Bought apparel/clothing/footwear 50 57 45

Downloading music/videos 34 38 23

Securities transactions 17 24 23

Bought home furnishings 17 23 18

Selling products/services 15 15 11

Other uses of the Internet 23 23 18

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There are many cable networks that reach the Affluent

Total

Affluent $250K+ HNWSelected Cable Networks Viewed in Past Seven Days % % %

CNN 41 48 50

ESPN 39 41 43

The Discovery Channel 39 39 38

Arts & Entertainment 37 37 40

The Weather Channel 36 35 42

The History Channel 34 35 39

Food Network 33 31 32

Fox News Channel 29 34 35

Comedy Central 28 24 21

HGTV (Home and Garden TV) 27 23 24

CNBC 25 31 34

ESPN2 24 26 28

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The cable networks with the highest concentrationsof $250K+ and HNW are the following

Rank $250K+ HNW1 Bloomberg Television Bloomberg Television

2 GOLF (The Golf Channel) GOLF (The Golf Channel)

3 CSTV (College Sports TV) MSNBC4 BBC America CNBC5 CNBC BBC America6 HLN (Headline News) CSTV (College Sports TV)7 MSNBC FOXNC (Fox News Channel)8 Science Channel CNN9 Style Network HLN (Headline News)10 Biography Channel The Weather Channel

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The Affluent still read publications and can be reached by them


Average-Issue Audience of Selected Publications % % %

People 17 20 17

House & Garden 12 13 14

National Geographic 12 15 16

Sports Illustrated 11 13 11

Newsweek 10 16 15

Time 10 16 16

Southern Living 10 11 12

USA TODAY 9 15 15

Cooking Light 8 10 10

Money 7 11 13

Travel + Leisure 7 13 12

Martha Stewart Living 6 7 8

House Beautiful 6 8 8

The Wall Street Journal 6 19 18

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The publications with the highest concentrations of $250K+ and HNW in rank order are the following

Rank $250K+ HNW

1 Departures Departures2 Private Clubs Barron's3 Robb Report Private Clubs4 Harvard Business Review The New Yorker5 Barron's The Wall Street Journal6 ABA Journal Golf For Women7 The Economist New York Magazine8 New York Magazine The New York Times (Sunday)9 Financial Times The New York Times (weekdays)10 W The Economist11 Architectural Digest Links Magazine12 Veranda Robb Report13 Condé Nast Traveler W14 The Wall Street Journal Condé Nast Traveler15 The New York Times (Sunday) BusinessWeek

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As has been demonstrated, there are two ways of segmenting and targeting the luxury market—income and wealth.

$250K+: 2,245,000

HNW: 2,600,000

Both: 867,000

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Questions about the 2007 Survey

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The 2008 Affluent Survey

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The 2008 Affluent Survey

• Will again measure "affluent" households across America — the top quintile in 2008 ($100K+ in 2008 compared to $85K+in 2007).

• Will collect data by mail using a 20-page questionnaire in 2008 that will cover a number of new topics (compared to the 16-page questionnaire in 2007).

• Will add digital media brand audience metrics in 2008 (those URLs accessed by mobile phones and/or PCs) using a single source survey methodology.

• Will obtain details on usage of web-enabled mobile phones and PC’s in 2008.

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The 2008 Affluent Survey (Continued)

• Will use “enhanced” category expenditure, investment and savings, real estate, and personal/household income scales in 2008.

• Will add a substantial number of category topics and expenditures in 2008.

• Will add use of video games (web and console-based) in 2008.

• Will add writing and reading blogs in 2008.

• Will add viewing of broadcast networks in 2008.

• Will add listening to satellite radio in 2008.

• Will add upscale stores shopped in 2008.

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The 2008 Affluent Survey (Continued)

• “Enhanced” category expenditure scales will increase from a high of $7,500+ to $15,000+.

• “Enhanced” investment and savings scales will increase from a high of $2 Million+ to $3 Million+.

• “Enhanced” real estate scales will increase from a high of $1 Million+ to $3 Million+.

• “Enhanced” personal income scale will increase from a high of $200K+ to $500K+.

• “Enhanced” household income scale will increase from a high of $1 Million+ to $4 Million+.

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Questions about the 2008 Survey

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