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Trading Up: Why Consumers Want New Luxury Goods--and How Companies Create Them: 0 Paperback – 29 Apr 2008
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aIncredibly smart and illuminatinga]. packed with insights on how shoppers think and behave.a
aAn upbeat survey of a range of consumer brandsaWhirlpool, Belvedere, Williams-Sonomaawhich, the authors argue, are successful because they appeal not just to the material needs of consumers but to their emotional desires.a
aRebecca Mead, "The New Yorker"
aAnyone who has passed a Dunkina Donuts to duck into a Starbucks recognizes the phenomenon. For brands that have smartly positioned themselves, from Victoriaas Secret to Williams-Sonoma, trading up is paying off.a
aRobert Weisman, "The Boston Globe"
a"Trading Up" helps to explain an important trend and is interesting reading as a sociological study as well as business strategy.a
?Harvey Schachter, "The Globe and Mail"
?Incredibly smart and illuminating?. packed with insights on how shoppers think and behave.?
?An upbeat survey of a range of consumer brands?Whirlpool, Belvedere, Williams-Sonoma?which, the authors argue, are successful because they appeal not just to the material needs of consumers but to their emotional desires.?
?Rebecca Mead, "The New Yorker"
?Anyone who has passed a Dunkin? Donuts to duck into a Starbucks recognizes the phenomenon. For brands that have smartly positioned themselves, from Victoria's Secret to Williams-Sonoma, trading up is paying off.?
?Robert Weisman, "The Boston Globe"
?"Trading Up" helps to explain an important trend and is interesting reading as a sociological study as well as business strategy.?
?Harvey Schachter, "The Globe and Mail"
About the Author
Michael J. Silverstein is a senior vice president of The Boston Consulting Group and the coauthor of the business bestseller Trading Up. He works with leading companies around the world.
Neil Fiske is the former head of the Chicago office of The Boston Consulting Group and is now the CEO of Bath & Body Works.
John Butman is an established business author and journalist.
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Although Silverstein focuses on trading up in this book, he mentions elsewhere that in 2004 in the U.S. alone, trading down was at $1 trillion almost twice as big as trading up. The "savings" that consumers get from an increasingly efficient economy can be re-injected in even more consumption. This consumption frenzy has resulted in abysmal saving rates that will haunt the U.S. when ongoing demographic changes will start to undermine the financial stability of complementary sources of income as Peter Peterson correctly points out in "Running on Empty."
In the meantime, smart entrepreneurs and companies have reinvented their marketplace by making "massstige" or mass prestige products available to an ever-growing proportion of the critical middle market. These products command a price premium over conventional offerings, but are priced well below super-premium or old luxury products. Furthermore, these mass prestige products are pretty resilient in a downturn economy.
Trading up is driven by changes to both demand and supply. On the demand side, changes to the role of women as economic agent, the decline of the traditional family, a modified perception of consumption, higher home ownership, more discretionary wealth, and the "savings" passed on to American households by large discount retailers have fuelled the stratospheric rise of the New Luxury market.
On the supply side, Silverstein clearly shows in one product category after the other that the New Luxury trend-setters have been keen to meet that demand. These leaders have made their creed to observe the following eight best practices:
1. New Luxury trend-setters assume that their target customers are very smart. Under no circumstances should these customers be underestimated.
2. New Luxury trend-setters disprove the traditional economic truth that when price goes up, volume necessarily goes down. New Luxury products often embody the 20/40/60 rule. These products regularly account for up to 20% of the category's volume, 40% of its revenues and 60% of its profits.
3. New Luxury trend-setters create a ladder of real benefits. They not only offer a product with a superior technology and/or design that result in a superior functionality, but also, and more importantly, engage their customers emotionally in an uncertain and fast-paced world. Silverstein has identified four powerful emotional drivers, i.e., taking care of me, connecting, questing and individual style.
4. New Luxury trend-setters do not rest on their laurels in terms of innovation, quality and a flawless experience. The ever-faster cascading effect of innovation, quality and flawless experience from top to bottom in more and more categories obliges New Luxury makers to be restless and paranoid in these areas.
5. New Luxury trend-setters reinvent the price range and positioning of their brand by building an aspiration escalator that leads the consumer from the low-end to the high-end with a clear mix of features and benefits at each step.
6. New Luxury trend-setters customize their value chains to deliver what they promise to their target customer segments. Control of the value chain is considered more important to New Luxury trend-setters than its ownership. Like a film director, they have become very good at synchronizing the different actors who help them to be successful in meeting the wants and needs of their target audience.
7. New Luxury trend-setters not only use traditional consumer-research methods, but also spend more time to understand the wants and needs of their target customers. The cultivation of brand apostles and word-of-mouth are critical to develop the desired buzz and viral marketing for maximum leverage in the marketplace.
8. Finally, New Luxury trend-setters consider themselves outsiders rather than insiders. They know that their success today will be just a temporary illusion if they do not continue to set new standards for innovation, quality and a flawless experience.
To summarize, Trading Up is relevant not only to marketers, but also to any consumer who wants to become even smarter in an increasingly sophisticated marketplace.