Trading up

tradingup_intro_book1.jpgSome concepts are so easy to understand that I do not need to read a whole book to grasp them. An example is the book Trading Up by Michael Silverstein and Neil Fiske.

The key point of the book is middle class people either buy by “trading up”, luxury goods at a premium price or “trading down”, buying cheaper stuff. As a result in many sectors there is a lack of demand in the middle market segment. You can see this in personal audio, either you have an iPod – which sells at a high premium – or you have the cheapest mp3 player in the market. People typically trade up in a few areas and trade down in most others.

For marketers this is an important concept to use in positioning of their offerings. In many sectors, you either differentiate on status and quality or compete on price.

Not being a marketing person, I can only be amazed at the validity of this concept. I “trade up” in watches (IWC) and cars (Audi) and “trade down” in holidays (no need to fly to Kenia) and wines (will drink almost anything).

For an excellent introduction visit the Trading Up pages on the BGC website. Specifically look at the persona pages for examples of trading up and down.

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