We love High and To The Right. Nothing pumps the ego like premium positioning. There’s plenty to suggest that starting here and “moving down-market” is a winning game plan, all things considered. You can slum your way to success in a lot of markets.
There’s another idea that appeals to me a lot, and if you’ve been reading the memos lately, you know that my head is in the luxury market right now. Anyone can start high and go low. What’s very intriguing, however, is starting high and not moving down-market, but moving the masses up-market.
Said another way, how one can move down the pyramid is less intriguing than lifting the pyramid itself a little higher.
There are plenty of reasons to think this is a good idea. High pricing means the opportunity for high margins. There’s the ample opportunity for the aura of exclusivity. There’s the positive halo effect that premium positioning can bring to a brand, as well. Being aspirational can be its own reward. The converse is also clear, where dropping your price can deteriorate your brand positioning. Again, your experience may vary and there are plenty of exceptions to each archetype.
There are plenty of challenges that face the marketing who stares down this assignment. Is the market ready to pay a lot more than they used to for what you’re selling? Is your channel ready to sell it (or do you have to do it yourself)? A good acid test might be asking yourself, “if I turned on the demand generation spigot today, what would happen?” Would consumers scratch their heads in wonder at the experience you’re offering them or at the price you’re charging? If it’s the latter, you’re moving too fast.
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> Preparing the ground: changing the consumer’s frame of reference is needed before you can turn on demand generation. Whether this means honing the experience so that the price fits the emotional impact or planting the idea that you are what’s next, we all need to acknowledge that you can’t rush consumer mindshare. As Mao says in his treatise on guerilla warfare, “the people’s war is a political struggle.” If circumstances change, you delay your timetable. When the time is right, you strike.
> Preparing the channel: if the phone started ringing today, would the consumer experience with them be as good as the experience you expect them to have with your product? Or would it be a wing and a prayer? If you have to think about this for a moment, it’s probably the latter. Time spent ensuring a rigorously consistent consumer experience would be time well spent.
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Plenty of people before me have been pulling on this thread, from the Experience Economy to Trading Up. Wolf Ranges and Sub-Zero fridges aren’t just for restaurants anymore, are they? Coffee pretty much costs $4 a cup, doesn’t it? And you can probably afford a Mercedes if you want, whereas for most of our parents’ generation, such a thought would never have entered their minds.
It’s not about “affordable luxury” anymore — it’s about bridging the gap between luxury and why it makes sense for me.
Has luxury become an entitlement? Is this a good thing? If you’re a social philosopher, no. For a marketer? Probably yes.
Copyright (c) 2007 Stephen Denny
Stephen, what I find interesting is how brands tend to revamp and upgrade their image expecting too fast reaction from consumers. One of the most impressive case is Skoda. The company was bought by VW, cars were redesigned, a lot of optionals are given for free and the cost is below than the average car cost with the goal of getting market share and then rise prices. The process started more than 10 years ago, yet Skoda is seen as a cheap car.
Brand repositioning is often closer to chiropractic than surgery. People don’t change their perceptions overnight — they need to be adjusted carefully and over time. Too much change is painful.
The car industry is a good example of this, from your Skoda case study to the revamping of Cadillac to where Hyundai, Nissan, and many others are attempting to go.
Looking at this post, however, the pitfall of many high end brands is the attempt to go ‘down market’, introducing a low end model or family that drags the entire family down with it. Clearly, you address a larger market at the lower price point (usually at a lower margin, too) — but can we ‘trade people up’ to the higher price point instead?