August 04, 2006

Death in the middle?

Death in the middle ground

According to Michael J. Silverstein (Boston Consulting Group) in the American, European and Asian markets the consumers are bifurcating their shopping basket into two fast-growing pools of spendig: In one hand consumers are willing to pay more for premium goods and services; on the other hand consumers are seeking for low-cost bargains in basic goods (or low interest goods).

"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."

Who said luxury doesn't mix up well with low cost/discount?

[Source: "Death in the middle" + "Middle ground"]


Mr. T said...

I buy my grocery at Safeway, buy my t-shirts at eBay. Nevertheless I buy my suits at Saville Row, my TV and stereo at Bang & Olufsen and trainers at the Dispensary in Notting Hill. How'sthat Mr. Marketer?

deep|ed said...

An old truth. As planner I have talked about the different consumer-behavior in a couple of years now. Often we talk about the transfer from a behavior shaped like an aubergine to one shaped like a time glass.