Trading Up The New American Luxury

by Fiske, Neil; Silverstein, Michael J.; Butman, John

• ISBN13: 9781591840138
• ISBN10: 1591840139
• Format: Hardcover
• Copyright: 2003-10-13
• Publisher: Portfolio Hardcover

Summary

A fascinating look at why millions of consumers are "trading up" to premium goods, and how companies can profit from this phenomenon. Middle-market consumers have more discretionary income than ever before and are willing to pay extra for "new luxury" goods and services-items that deliver higher quality, technical advantages, and superior performance to conventional products. Above all, consumers are looking for emotional engagement-they look to products to help them manage the stresses of everyday life, and to help them realize their aspirations. A new luxury good may be as simple as a shampoo ($9 from Aveda, versus $3 from Suave) that brings moments of comfort and sensual pleasure, or as complex as a car ($26,000 for a bottom-of-the-line Mercedes, versus $20,000 for a Pontiac) that delivers feelings of safety and excitement. Clothing, cars, beer, coffee, kitchen appliances, lingerie, personal care, pet food, restaurants-in dozens of categories, new luxury goods occupy a sweet spot in the market, because they can sell in much higher unit volumes than "old luxury" goods, but command much higher profit margins than ordinary products. But new luxury leaders-such as Callaway Golf, Victoria's Secret, Panera Bread, Belvedere vodka, Whirlpool Duet, and Williams-Sonoma-create andmarket their goods very differently than do conventional companies. Trading Upexplores what's driving this move to premium goods, tells the inside stories of many New Luxury companies and their leaders, and offers insights and methods that can help the reader take advantage of this remarkable phenomenon. The book is based on the authors' experience in helping clients create billions of dollars worth of New Luxury products as well as on exhaustive supporting research.

Author Biography

Michael J. Silverstein is a senior vice president and global consumer and retail practice leader at The Boston Consulting Group.

Table of Contents

Foreword	vii
Preface	xi
Part One: Trading Up to New Luxury
Trading Up to New Luxury: An Overview	3	(20)
The Characteristics of New Luxury	6	(3)
The Forces Behind New Luxury	9	(4)
Seeing the Pattern	13	(5)
A Preview of the Chapters	18	(3)
Trading Up Brings Benefits to Business and Society	21	(2)
The Spenders and Their Needs	23	(25)
Rising Incomes and Available Wealth	25	(2)
Increased Home Values and Equity	27	(2)
Reduced Cost of Living and More Discretionary Income	29	(1)
Women As New Luxury Earners and Spenders	30	(2)
A Changing Family Structure	32	(3)
A Longer Dating Period and High Rates of Divorce	35	(1)
Education, Sophistication, and Worldliness	36	(2)
Greater Emotional Awareness and Permission to Spend	38	(5)
The Four Emotional Spaces	43	(5)
The Creators and Their Goods	48	(24)
A Distinct Type of Goods	51	(4)
Supply Side Forces That Fuel New Luxury	55	(5)
Focus on Speed and the Collapse of the Innovation Cascade	60	(4)
New Luxury Is More Than Marketing	64	(1)
The Practices of New Luxury Leaders	65	(7)
Where Goods and Emotions Intersect	72	(27)
Taking Care of Me: Time for Myself, Convenience, Renewal, and Reward	75	(7)
Connecting: Attracting, Nurturing, and Belonging	82	(7)
Questing: Adventure, Learning, and Play	89	(4)
Individual Style: Self-Expressing, Self-Branding, and Signaling	93	(3)
Goods As a Language of Social Dialogue	96	(3)
Part Two: The Leaders
The World Is a Sexy Place	99	(16)
Born to Sell	100	(2)
Origins of the Victoria's Secret Brand	102	(1)
Patterning European Luxury Lingerie	103	(2)
Lingerie for the Most Beautiful Women in the World	105	(1)
Managing the Brand	106	(3)
The Thirty-Second Ladder	109	(3)
Lessons from New Luxury Lingerie	112	(3)
Eating As an Emotional Experience	115	(21)
The Rise of the Fast Casual Restaurant	117	(3)
Panera Bread: An Eating Experience Built Around Bread	120	(7)
The Cheesecake Factory: Around the World in a Meal	127	(2)
Trader Joe's: Questing in the Supermarket Aisle	129	(4)
The Winning Practices of New Luxury Food Suppliers	133	(2)
On the Menu for the Future	135	(1)
Only the Best for Members of the Family	136	(14)
The Girl Business	137	(8)
Pets and Their People	145	(5)
Inside the New American Home	150	(28)
Winners and Losers	156	(1)
Battle of the Titans: Home Depot and Lowe's	157	(1)
Arbiters of Style, Taste, and Sophistication	158	(10)
Appliance Innovators: Sub-Zero, Viking, and Whirlpool	168	(7)
The Winning Practices of New Luxury Home Players	175	(3)
Awakening the American Palate to Wine	178	(23)
The Post-Prohibition Era: ``What's the Word? Thunderbird.''	181	(2)
The American Awakening	183	(6)
Jess Jackson and the ``Fighting Varietal''	189	(6)
A ``New World'' Order	195	(2)
The Master Blender's New Luxury Practices	197	(2)
The Trading-Up Pattern in Wine	199	(2)
The Old World in New Luxury Bottles	201	(16)
Belvedere: Reinventing Vodka	201	(8)
Samuel Adams: Brewing the Best Beer in America	209	(8)
Demonstrably Superior and Pleasingly Different	217	(16)
Ely's Vision: To Popularize the Game of the Rich, Famous, and Skilled	219	(3)
The Demonstrably Superior and Pleasingly Different (DSPD) Big Bertha	222	(4)
A Thirteen-Times Premium for Emotional Engagement	226	(2)
The Callaway Scorecard	228	(3)
The Callaway Legacy	231	(2)
A Cautionary Tale of an Old Luxury Brand	233	(20)
The Decline and Fall of an American Old Luxury Icon	234	(1)
The Best Car in America	235	(5)
A New Definition of Premium: Performance	240	(4)
Lexus: The Ultimate Reliability Machine	244	(3)
A BMW in Every Driveway?	247	(6)
Part Three: Excelsior
The Opportunity	253	(10)
The Opportunity in Services	255	(2)
Factors That Will Contribute to the Spread of New Luxury	257	(3)
The Demand Society: The Middle Market Takes Control	260	(3)
A Work Plan	263	(15)
The Impetus	263	(2)
Vision: Knowing Where and How to Look	265	(7)
Translation: Moving from the Abstract to the Tangible	272	(2)
Execution: From Rollout to Revisiting the Concept	274	(4)
A Call to Action	278	(7)
Is a Premium Price Strategy Risky in the Current Global Economy?	279	(1)
A Challenge to Our Readers	280	(1)
What Can Companies Caught in the Middle Do?	281	(1)
Why Is There Urgency to Act Now?	281	(4)
Part Four: The Back Story
Luxury: A Philosophical and Historical Context	285	(7)
About Our Sources	292	(8)
The Spenders and Their Needs	293	(1)
The Creators and Their Goods	294	(1)
Where Goods and Emotions Intersect	295	(1)
The World Is a Sexy Place	296	(1)
Eating As an Emotional Experience	296	(1)
Only the Best for Members of the Family	296	(1)
Inside the New American Home	297	(1)
Awakening the American Palate to Wine	298	(1)
The Old World in New Luxury Bottles	298	(1)
Demonstrably Superior and Pleasingly Different	299	(1)
A Cautionary Tale of an Old Luxury Brand	299	(1)
Acknowledgments	300	(7)
Index	307