If you have children, you may have read “One Duck Stuck” at some point, and if you did, you may recall the refrain, “no luck…still stuck” … which, in the continuum of business models and brand focus has applicability as well – namely with companies and brands along the value, mid-level, and premium continuum (or “good, better, best” continuum).
The world of consumer goods and services has increasingly become a polarized one, with companies in the premium and value segments enjoying much success, and those in the middle, well, “stuck.” Whether evaluating restaurants, footwear, grocery, health and beauty items, pet products, or gyms, for instance, the trend is indisputable – value and premium outpace the middle.
Why is this? There are a couple of notable dynamics. The middle means the consumer is “indifferent” (the middle is neither viewed as a smart, no frills option, nor as the high quality, cache-laden option). And in the absence of a strategic message addressing both why value buyers should “trade up” and why premium buyers should “trade down,” this “indifference” spells trouble.
Focusing on the value segment, the burgeoning presence of private label is well documented and certainly speaks to the success of less expensive alternatives on retailer shelves (oftentimes in the presence of a brand). The increasing bifurcation of American households into the “haves” and “have nots” has seen scores of consumers trade down as stagnant real-wage growth, limited career prospects, debt burdens and uncertainly have taken their toll.
On the other end of the spectrum, in a robust, late-stage economic expansion, it’s also not surprising to see premium, or luxury, performing well. Consumers of means (the “haves”), as well as aspirational risers, seek the experience, identity and cache that come with premium. Also playing into this, are millenials who value green and sustainability – attributes that, all else equal, often cost more.
Examples across the spectrum include Planet Fitness on the value end, SoulCycle on the premium end … 24 Hour Fitness in the middle. Five Guys on the value end, The Capital Grille on the premium end … Applebee’s in the middle.
So, brands and companies – seek out the light at either end of the tunnel – because you can’t spell “middle” without “dim.”
We welcome further discussion! Please contact Craig Lawson (email@example.com).