[Case Study] From “Trend Seekers” to “Frugals”: Six types of the Wealthy in Japan by Cluster Analysis
What comes into your mind when you hear the word "wealthy"? You may think of wealthy people as those who enjoy hobbies, traveling, or captivated in investments heavily. Although we sum up them into the term "wealthy", there should be various characteristics among them.
Nikkei Research analyzed the differences among the wealthy; defined as people who had financial assets of 100 million yen or more, from the data of a survey conducted in Japan last year (November 2020).
We used the data of the purchasing behavior and values (43 questions, answered on a scale of five from "applicable" to "not applicable") of 420 respondents who answered that their financial assets were 100 million yen and above. By cluster analysis, they were classified into six clusters.
Then, for each cluster, we used Nikkei Research's proprietary data mining tool, “KeyExplorer”, to discover each unique characteristic by analyzing the answers of all 77 questions in the survey, including demographics, working styles, and how they spend their day off. Table 1 shows the result, interpreted and ordered from those that seem to fit the general figure of the wealthy.
Table 1. The Six Clusters of the Wealthy
| Characteristic | Distribution(%) | |
|---|---|---|
| A | Trend seekers. Do not hesitate to spend on hobbies and cuisines. | 7％ |
| B | Concerned about environmental issues. Prefer consuming that supports solving social issues. | 24％ |
| C | Likes traveling and going out. Dislike extravagance. | 19％ |
| D | Proud of their business. Be with pets on holidays. | 13％ |
| E | Savings first. Being vigilant for disasters and other risks. | 23％ |
| F | Likes to be at home. Being frugal shopping cheaply and wisely. | 13％ |
Let's look at each cluster one by one through the lists of characteristics (Table 2).
Table 2. Characteristics of each Wealth Cluster
| A. Trend seekers. Do not hesitate to spend on hobbies and cuisines. |
| This cluster may be the most recalled stereotype of a wealthy person. They have their particular tastes, always seeking the latest trends, and chooses the best-rated items whether if it comes costly. |
| B. Concerned about environmental issues. Prefer consuming that supports solving social issues. |
| This is another cluster that is relatively easy to imagine. They value their families, have strong concerns over environmental issues, and want to contribute to solving social issues through their consumption. They are most likely to sympathize with companies that care about the environment. Their favorite way to spend their holidays is golf. |
| C. Likes traveling and going out. Dislike extravagance. |
| Similar to the second cluster, B, this cluster also values their families and prefers to go out rather than spending time at home. Male of above 60s are the majority, they like spending their holidays traveling, watching movies, walking around the neighborhood, and driving. |
| D. Proud of their business. Be with pets on holidays. |
| This cluster has a large share of businesspeople in positions with a high level of responsibility, especially of women. From the responses, they show positive confidence in their company and their work. Many like to spend time with their "pets" on holidays. |
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E. Savings first. Being vigilant for disasters and other risks.
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| Through their responses, it seems that they are always preparing for risks, such as moving as much of their income into savings, being welcome to insurances, and stockpiling food and other supplies. Many of them are healthcare professionals. |
| F. Likes to be at home. Being frugal shopping cheaply and wisely. |
| The last group may be far from what you think of as wealthy. Many of them are frugal, looking for cheap stores and spending money on only what they need. They like to be at home -- "internet surfing" was mentioned as a common way to spend their holidays. |
Table 3. Household Income, Financial Assets, and Monthly Expendable Money of each cluster
| Share | Share within the Wealthy | Average Annual Household Income (10K Yen) | Average Financial Assets (10K Yen) | Average Monthly Amount of Expendable Money (Yen) | ||
|---|---|---|---|---|---|---|
| The Wealthy | 3% | 100% | 1,186 | 14,988 | 190,560 | |
| Clusters | ||||||
| A | Trend seekers. Do not hesitate to spend on hobbies and cuisines. | 7% | 1,489 | 15,726 | 219,839 | |
| B | Concerned of environmental issues. Philanthropists devoted to solving social issues. | 24% | 1,321 | 14,608 | 188,922 | |
| C | Likes traveling and going out. Dislike extravagance. | 19% | 999 | 15,093 | 201,296 | |
| D | Proud of their business. Be with pets on holidays. | 13% | 1,395 | 15,142 | 229,245 | |
| E | Savings first. Being vigilant for disasters and other risks. | 23% | 1,109 | 15,153 | 164,184 | |
| F | Likes to be at home. Being frugal shopping cheaply and wisely. | 13% | 989 | 14,682 | 171,000 | |
| Non-Wealthy | 97% | 623 | 1,818 | 43,820 | ||
How was our analysis?
There were different types of wealthy people, each with different values. By referring to these six classifications, I hope it helps you when you need to understand your customers and think about who in the wealthy segment demands your products and services.
As we have shown in this case study, we have our unique method to analyze for understanding the characteristics of clusters more clearly. If you have done a cluster analysis but are experiencing difficulties in interpreting it, please contact us.
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