Middle ground

Consumer markets are facing increasing polarisation as shoppers either trade up to premium products or seek low-cost bargains.

by Knowledge@Wharton

The middle ground remains the biggest segment of purchasing but is shrinking - for exmaple, in televisions it is already down 40%, in cars 12%.

Overall, it is estimated that the middle market will decline by 5% a year over the next five years, offset by the bottom-end growth of a similar amount and a 10%-12% increase in premium purchasing.

Companies staying in that market will find the going tougher and be forced to make major business decisions, such as shutting plants, changing overhead structures and getting out of product categories. Shifting up or downmarket is the alternative.

Moving upmarket requires a focus on innovation to produce goods that allow consumers to celebrate their success; downmarket is about cost-reduction and optimal pricing.

Death in the middle: why consumers seek value at the top and bottom of
markets, Knowledge@Wharton, 10 May 2006.

Reviewed by Steve Lodge.

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