Selling to the Middle Again
Jewelers have been advised for years to go after luxury consumers to differentiate themselves from discounters who serve the bottom of the market. In the process, many have abandoned the broad middle market.
But the new book Mass Affluence (Harvard Business School Press, 2004) suggests it might be time to look at the middle again. Authors Paul Nunes and Brian Johnson believe true opportunity lies in providing products and services to these consumers, who have become increasingly affluent but arent super-rich. If you give them an experience of luxury thats within their reach, say the authors, your sales will soar simply because there are so darn many of these folks.
The authors cite statistics showing one out of seven households earns a six-figure income today, up from one of every 27 households just 30 years ago. Many of these consumers can afford to move up from discount jewelry, even if they cant splurge on super-luxurious pieces.
To lure these consumers, Nunes and Johnson recommend a three-step process of marketing reinvention:
1. Capture new market positions that seize the middle ground between unaffordable luxury and affordable but inadequate jewelry (remember, mass merchandise doesnt fulfill the expectations of the newly affluent middle market).
2. Offer products designed to fit todays affluent middle market (it has to be swell, but not too swell).
3. Reconfigure the way you sell and promote these products to reflect an upscale but not wildly expensive image.
The authors cite Tiffany & Co. as an example of a retailer who followed these rules with great success. Its silver jewelry is affordable yet well-made, with an aura of upscale that goes from the in-store experience to the blue box. Many watches and other branded jewelry could hit the market at just the right balance of price point and sophistication.
Nunes and Johnson surveyed the new affluent population and found theyre often frustrated because all they see are products that are too expensive and deliver more than they need or that are priced below what theyre willing to pay and dont fulfill their more upscale requirements.
The success of brands such as David Yurman is a testament to the wisdom of the path Nunes and Johnson suggest. Yet theres more to catering to mass affluence than just picking the right products and brands. Many retailers should rethink the entire way they do business, say the authors. In the months ahead, well share some of their creative ideas for how to do this. Stay tuned.
Peggy Jo Donahue