Saturday, January 22, 2011

Downgrading and Upgrading

Air travel used to be glorious. People dressed up and dressed their children in "Sunday best" for a flight. It felt special.

Bus travel, on the other hand, was for normal people.

Then deregulation changed the travel industry. The riff-raff like me de-boarded buses and started flying. Airports now feel like Greyhound terminals used to feel. Air travel is for normal people, and a bus terminal is entered only if absolutely unavoidable. You avoid making sudden moves and you never make eye contact with people.

Moving downmarket is easy and profitable. A brand can take years to develop exclusivity, then suddenly Kmart carries it and everyone buys it (for a short time.)

Moving upmarket is more difficult, but does happen. Toyota was for people who needed a car but never needed to drive up hill. But the marketing people delivered a consistent message for give decades: "you made the right decision when you bought a Toyota." People like to be told they didn't do something dumb, so gradually everyone started believing them.

The takeaway: Toyota established their brand just in time. Kia, Hyundai, and a host of other companies would have killed them by now if Toyota had not worked so hard in their marketing. You need to build a brand, go upmarket, differentiate yourself rather than digging in to survive. 

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