Luxury Market Positioning

When you search for products and product ideas to reach your customers, you may need to change the strategies you use to make sure your customers are more likely to make a purchase. According to Mass Affluence by Paul Nunes and Brian Johnson, the way that customers are buying products is changing, partly because the customer themselves are changing: Consumers have more money than they did previously. Consumers want to spend their money on useful items.

Consumers want to feel like their items are more luxurious. Essentially, what the authors are suggesting is that while luxury alone is not enough to get customers to purchase items anymore, all customers want to feel like they are getting something that is truly valuable.

Originally, a company would come out with a luxury product, and then offer a cheaper, worse product that for those that wished they had something more luxurious. For a long time this strategy worked. Consumers that couldn’t afford iPods but wanted an mp3 player would purchase some weak, functionless mp3 player from a cheap brand in order to get “close enough” value for their money.

Yet the book suggests that this strategy may no longer be the case. Instead, consumers are demanding that everything they purchase bring them excellent value. So then rather than come out with a great version of a product and a cheap version of a product, companies may need to shift their focus upward, creating a great product, and then creating an even better product.

The great product will attract all types of buyers, provided it is the right price and brings the value the customer expects. But the “greater” product will still attract the even more affluent customers, because the product itself will be of a greater luxury to the consumer. By doing so, even those that purchase a “low end” product are purchasing a product they won’t regret, but those with more of the means will still be spending more money on the items of greater value.

It will be interesting to see if the change in spending habits of consumers sticks. For now, it does appear that offering greater luxury for the affluent crowd rather than offering less luxury for the less affluent crowd may be a better strategy for your products and your marketing campaigns.