Your customer's perceived position of where your brand is in the market can have a major impact on your sales.

Whether your brand is catering to the higher or lower end of your product category, people tend to gravitate to the much broader middle ground. 

Depending on whether your product is high importance (which typically requires more consideration and slow thinking) or low importance (in which a decision can be made spontaneously and through fast thinking), customers can be convinced to either trade up or down.

For brands looking to steal or grow market share, this can be an incredibly useful tool. 

Teaching your customers to trade down

For example, German low-price grocery chain Aldi has entered the UK market and managed the seemingly impossible, stealing significant market share of more established players such as Sainsbury’s and Tesco. In fact, according to data from Kantar Worldpanel, Aldi has now overtaken the Co-Op to become Britain's fifth largest supermarket by market share. 

The grocer has overcome its initial perception of being a German low-cost retailer, often bundled together with Lidl. It has achieved this by linking its brand with the promise of British quality foods for a cheaper price and in doing so, has attracted the British middle class, convincing them it’s perfectly acceptable to ‘trade down’.  

Urging your customers to be selective, sometimes…

In a recent campaign from Marks & Spencer, the retailer urges people to say no to everything from "uncomfortable knickers" to "staying silent” and “yes” to what really matters. Based on the insight that people are overloaded with stress and inundated by choice, M&S tells its viewers to seek out what is important in a world of abundance and "spend it well", which also happens to be the tagline of the campaign.

This is positioning the brand as a better than average option for your shopping, urging its customers to trade up where it really matters. 

Increasing your potential audience by branching out

For the past couple of decades H&M stores have been spreading across the globe. In recent years, the Swedish fast-fashion retailer has increased its number of stores by 10%-15% annually. Now however, the growth has started to taper off and H&M has realised that it has started to reach the boundaries of its potential target audience. 

This has formed the basis of a new strategy to expand its portfolio into individual brands with separate concepts, covering almost the entire price spectrum from low-end to high-end clothing. One very successful example has been the launch of COS. With its focus on minimalist style and high quality, the brand enables the retailer to reach both those people who would never consider buying its products and get people who typically shops at H&M to occasionally 'trade up’. 

H&M Group

The reason why ‘trading up’ and trading down’ is so powerful is because of our inherent need to both reaffirm the choices we make as consumers and simultaneously get the approval of others.

While ‘trading down’ might be done from a strictly financial necessity, the right communication can change the consumer’s perception and make it a positive and even desirable decision.

At the same time, for consumers who most of the time look to their budgets, the right message can change their perception of a product and allow them to ‘trade up’ when it matters. At our agency, KHWS, we call this whole approach to changing a brand’s perception ‘Better than Average’ and it is one of the nine sales triggers that forms part of our Brand Commerce planning model to increase sales.

Read more about the Brand Commerce model:

Michael Sandstrom

Published 21 July, 2017 by Michael Sandstrom

Michael Sandstrom was formerly a Strategic Planner at KHWS, the Brand Commerce agency, and a contributor to Econsultancy. You can connect with him via LinkedIn.

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