It can happen overnight or it can be gradual and new brands are introduced at a premium position to a more established brand - we'll call it HotStuff® -

Meanwhile, the quality offered by lower-end brands in HotStuff's category is improving dramatically, without raising prices. HotStuff's sales begin to slump. It appears that HotStuff is no longer such…hot stuff.

While it continues to be desirable for certain consumers, the once highly attractive position of HotStuff is being squeezed from above and below. Consumers are trading up to the sexy, new brands that offer a more relevant and appealing value proposition, while others are trading down because they don't see a reason to continue paying HotStuff's prices when they can get a substitute product for less. Those choosing to trade up may even have begun to think of HotStuff as a commodity.

This dynamic is happening in many categories

Take spirits, for example.  The brands that once held the desired, top-shelf positions for most consumers (Absolut, for instance) have been pushed down by newer, sexier brands.  The new brands have been able to create an emotional connection within the consumer's current mindset. Now Absolut is stuck in the middle, relegated to satisfying functional needs with far less emotional draw.

In contrast, consider Campbell's Soup. Instead of allowing the brand to be pushed down into the deadly middle, they have successfully segmented their line in a number of different ways to keep the brand relevant and desirable to consumers purchasing at the top of the category.

Why is being middle-of-the-road no longer safe and secure?

We believe there has been a fundamental shift in how consumers choose to spend their money. The era of the "me" generation has passed, and consumers are looking for more ways to rationalize and substantiate the value of their purchases – they want a story to tell. In the flash-and-spend nineties, a nice label and a high price tag backed with healthy advertising spending were the keys to making a brand a standout  –  and consumers were drawn to it. But that's not the case today.

The world has changed. There are a lot more consumers with more wealth who have far more brands to choose from.  And there is a multitude of media outlets for them to learn about these brands. And consumers can purchase these brands just about anywhere they shop, from big box to specialty stores to supermarkets — even gas stations.  This doesn't mean they're spending less…they're just spending differently.

Consumers connect to brands that have a quality story rooted in product truths and are reflective of their personal values.  They're learning to become connoisseurs at every price point and determining if there is a reason to make a purchase that goes beyond badge value.  If they don't find that reason, they trade down to a brand that delivers well enough on a functional level, or a commodity.  This has serious implications for the brands in the middle of all product categories, from home furnishings to financial services to package goods.

It's always "Marsha, Marsha, Marsha...Cindy, Cindy, Cindy."

If a brand is the "Jan Brady" in its category, consumers can either trade up or down — and that puts it smack in the middle of nowhere special.  A brand may continue to be the "chosen one" for a loyal customer base for a period of time, but if its position is not made more relevant again, a marketer's worries of becoming a commodity could very soon become reality, and that valuable and profitable loyal base will erode.

What we know about consumers of upmarket brands is that they aren't willing to pay a premium for goods that only satisfy functional needs.  They want an experience that satisfies both their emotional and rational needs and helps them feel great about making the purchase. They respond to things like credentials, authenticity, honesty and value.

Moving the brand back upmarket

Integrated marketing communications programs that highlight these elements are the last line of defense to ensure the audience gets a story that they want to tell – and that a marketer wants them to tell.  While a brand's story needs to be relevant, substantive and rooted in product truth, it also needs to be passionate, emotional and persuasive.  Consumers need to feel the love…they need to be exposed to the heritage and innovation that makes a brand distinctive through the many channels of communication available today.

Despite the facts that there are many fish in the sea, and that a specific brand may be viewed as a commodity, consumers, especially the ones who buy the brands positioned and priced below that brand, need something more to move them upmarket to ensure a purchase.

mark shipley / chief thinker
markshipley@smithandjones.com
smith & jones
297 river street / troy, ny 12180
888.754.3210 toll-free
518.272.2400 main
518.272.2930 fax

www.smithandjones.com