Trading Up: Why Consumers Want New Luxury Goods--and How Companies Create Them Paperback – Illustrated, 2 Aug. 2008

great book on new mss market luxury.

In the original and now in this revised edition, Silverstein and Fiske brilliantly examine "New Luxury": a rapidly developing socio-economic trend as America's middle-market consumers are trading up to "products and services which possess higher levels of quality, taste, and [key word] aspiration than [other] goods in the [same] category but are not so expensive as to be out of reach...[trading up to products and services which] sell at much higher prices than conventional goods and in much higher volumes than traditional luxury goods and, as a result, have soared into previously uncharted territory high above the familiar price-volume demand curve." The significance of this paradigm shift has profound implications for literally anyone who competes each day for consumers' attention, consideration, and (most important of all) business.Think about it. How to explain the spectacular success of diverse companies such as Starbucks, Martha Stewart Living Omnimedia, Lexus and BMW, Williams-Sonoma and Bed, Bath & Beyond, Restoration Hardware, Victoria's Secret, Prada, Coach, Panera Bread, and Callaway? Granted, most consumers cannot afford to purchase everything from companies such as these but an astonishing number of consumers are not only willing but eager to pay a premium for at least a few of the products offered.Why? Silverstein and Fiske offer several reasons. New Luxury merchants never underestimate their customer; they shatter the price-volume demand curve; they create a ladder of genuine benefits (i.e. technical, functional, and emotional benefits); they escalate innovation, elevate quality, and deliver a flawless experience; they extend the price range and positioning of the brand; they customize the customer's value chain to deliver on the benefit ladder; they use influence marketing to "seed" success through brand apostles (i.e. "evangelism"); and finally, they continually attack the category like an outsider. What Silverstein and Fiske offer is this volume is a rigorous analysis of those companies which continue to be most successful in the New Luxury economy. They also explain in detail precisely HOW they achieve such success.

Excellent book, speedy delivery

The book was published in 2003 by some guys from the Boston Consulting Group. It talks about how people will pay a premium for certain higher priced products. The book comes to its point through a number of case studies. It gives the history of such companies as Panera, Chipotle, Samuel Adams, BMW, Callaway, and Victoria's Secrets and discusses how these companies were able to be successful selling in mass higher priced items. If anything, it was fascinating to read about the histories of these companies. I especially am excited to have more knowledge on Victoria's Secret.

Too focussed on the US

Great book with great content. The cases are excellent. Helped me and my team in a business recommendation we prepared for one of my international clients. I recommend it so much.

Très bon ouvrage pour ceux qui s'intéressent aux comportements des consommateurs et au segment du premium et plus avec une étude approfondie sur son développement.Certains pourront en effet voir par secteur ou étude de cas de par l'expérience de son auteur au sein du BCG, ce que d'autres verront comme étant l'essentiel du livre.

Michael Silverstein has written a built-to-last business book about a global phenomenon that is not going away unlike so many other business fads. Trading Up and trading down has a transformational effect on more and more categories, retailing and markets. Silverstein clearly explains that the increasingly sophisticated consumers of the critical "middle market" have been key to drive a polarization of the product and service offering to the high and low ends of the price spectrum. Woe be to the businesses which continue to offer conventional goods and services getting "stuck in the middle." Think for instance about the Big Three of Detroit, traditional airline companies, and some chains of department stores.Although Silverstein focuses on trading up in this book, he mentions elsewhere that in 2004 in the U.S. alone, trading down was at $1 trillion almost twice as big as trading up. The "savings" that consumers get from an increasingly efficient economy can be re-injected in even more consumption. This consumption frenzy has resulted in abysmal saving rates that will haunt the U.S. when ongoing demographic changes will start to undermine the financial stability of complementary sources of income as Peter Peterson correctly points out in "Running on Empty."In the meantime, smart entrepreneurs and companies have reinvented their marketplace by making "massstige" or mass prestige products available to an ever-growing proportion of the critical middle market. These products command a price premium over conventional offerings, but are priced well below super-premium or old luxury products. Furthermore, these mass prestige products are pretty resilient in a downturn economy.Trading up is driven by changes to both demand and supply. On the demand side, changes to the role of women as economic agent, the decline of the traditional family, a modified perception of consumption, higher home ownership, more discretionary wealth, and the "savings" passed on to American households by large discount retailers have fuelled the stratospheric rise of the New Luxury market.On the supply side, Silverstein clearly shows in one product category after the other that the New Luxury trend-setters have been keen to meet that demand. These leaders have made their creed to observe the following eight best practices:1. New Luxury trend-setters assume that their target customers are very smart. Under no circumstances should these customers be underestimated.2. New Luxury trend-setters disprove the traditional economic truth that when price goes up, volume necessarily goes down. New Luxury products often embody the 20/40/60 rule. These products regularly account for up to 20% of the category's volume, 40% of its revenues and 60% of its profits.3. New Luxury trend-setters create a ladder of real benefits. They not only offer a product with a superior technology and/or design that result in a superior functionality, but also, and more importantly, engage their customers emotionally in an uncertain and fast-paced world. Silverstein has identified four powerful emotional drivers, i.e., taking care of me, connecting, questing and individual style.4. New Luxury trend-setters do not rest on their laurels in terms of innovation, quality and a flawless experience. The ever-faster cascading effect of innovation, quality and flawless experience from top to bottom in more and more categories obliges New Luxury makers to be restless and paranoid in these areas.5. New Luxury trend-setters reinvent the price range and positioning of their brand by building an aspiration escalator that leads the consumer from the low-end to the high-end with a clear mix of features and benefits at each step.6. New Luxury trend-setters customize their value chains to deliver what they promise to their target customer segments. Control of the value chain is considered more important to New Luxury trend-setters than its ownership. Like a film director, they have become very good at synchronizing the different actors who help them to be successful in meeting the wants and needs of their target audience.7. New Luxury trend-setters not only use traditional consumer-research methods, but also spend more time to understand the wants and needs of their target customers. The cultivation of brand apostles and word-of-mouth are critical to develop the desired buzz and viral marketing for maximum leverage in the marketplace.8. Finally, New Luxury trend-setters consider themselves outsiders rather than insiders. They know that their success today will be just a temporary illusion if they do not continue to set new standards for innovation, quality and a flawless experience.To summarize, Trading Up is relevant not only to marketers, but also to any consumer who wants to become even smarter in an increasingly sophisticated marketplace.

Excellent read and provides strong examples. I enjoyed reading this book while I earned my MBA because I was able to leverage classroom learnings, while applying those thoughts to the book.