Trading Up

I recently completed reading Trading Up.

I really enjoyed the book.

I wrote a 4 page summary and sent it out to a buch of people - the beginning of the summary was this:

[begin]
For many companies today, Trading Up is a smart strategy for achieving growth and profitability in a world of cost cutting and shrinking margins. In dozens of categories, new luxury brands are selling at premiums of 20 percent to 200 percent over conventional goods and in much larger volumes than traditional "old-luxury" goods.

Some examples include: Viking, Victoria's Secret, Panera Bread, Callaway Golf, Kendall Jackson, Samuel Adams, BMW, Belvedere Vodka, and Whirlpool

America's middle-market consumers are trading up. Consumers are willing, even eager, to pay a premium price for remarkable kinds of goods known as New Luxury – products and services that posses higher levels of quality, taste, and aspiration than other goods in the category but are not so expensive as to be out of reach.
[end]

A friend of mine who works at EDS sent back a question:

Now the trick... take the high level message from the Book, forget about Consumer Goods per se, and apply the practices to goods and services in general. Thoughts?

I replied with the following:

[begin]
Great question! I have been studying branding and marketing for the last couple of years and the conclusion that I have come to is this; regardless of what you offer, it is still a human being that you have to connect with. So, many of the ideas presented in Trading Up apply. Positioning is critical... how you are perceived in the market place is paramount.

What does EDS offer? Why should someone choose EDS over CSC, IBM, etc?

If you look at new customer acquisition in the B2B space, the sales cycle is typically very long - especially in IT. I'd bet that most companies have a list of customers that has changed very little over the years. The "decision makers" at those organizations have been using EDS (or whomever) and no one has come along and given them a reason to switch. In other words, as you know, there are three factors at work here:

• Benefits Derived from New Supplier
  
• Emotional/Mental Comfort Level With Current Supplier
  
• Emotional/Mental Cost of Establishing New Relationship.
  

But to get back to your original question, sure... the ideas can be easily applied: This is really about customer intimacy, creating value for people that is above and beyond what they're used to. This requires true innovation, for example: anyone can build a software application, what else do you bring to the table?

As for the 4 emotional spaces people use to Trade Up, I think all four of them can be applied... with a little tweaking. For example:

"Taking Care of Me" (one of the 4 emotional spaces) would become; Help me do my job better, help me get a promotion, advance my company, etc.

Etc.

[end]

I think there is another issue after giving this some more thought. There is some aspect of word of mouth that is not as common in B2B relationships as with consumer goods.

The whole B2B-Buzz is something that I think about quite a bit... and I'll be posting more about it in the coming weeks.

Thoughts?