Bifurcate This!

“In the low-value segment, consumers buy products for a purely functional use and don't care or need the company's technical expertise.”

 – Michael J. Silverstein, in “Treasure Hunt” Inside the Mind of the New Consumer

Wow!  That is a very powerful – and scary – statement (backed up by extensive research) by Michael J. Silverstein the author of “Treasure Hunt.”  He is a Senior Vice President of The Boston Consulting Group and the co-author of the 2005 business book best-seller, “Trading Up.” – (Why Consumers Want New Luxury Goods – and How Companies Create Them.)

So… while in 2005, “Trading Up” gave great hope to many manufacturers and retailers that many “middle class” consumers were will to pay “just a little bit more” for some premium brands that appeal to the mass-market consumer (think Panera Bread in Fast Casual Food or Belvedere Vodka – in a category of liquor that by law must be flavorless! – the middle class consumer had to actually find a way to pay for these small luxuries!!!

Enter “Treasure Hunt” and the concept of “bifurcation!”  To bifurcate is to branch, or fork, into two channels or branches.  So in order to pay for the small luxuries of Trading Up, another channel – Trading Down – actually enables them to pay for these prized luxury items – hence the “Treasure Hunt!”

Actually, we (I consider myself solidly middle class) do both at the same time – we simultaneously Trade Up and Trade Down – we Treasure Hunt!  We simply avoid the boring, traditional, tired companies (both retail and manufacturer) that dominated the marketplace for so many years – can you say General Motors, Sears, etc.  These dinosaur companies reside in the “deadly middle” of the marketplace – aka “The Black Hole.”

I will do a complete book review of “Treasure Hunt” in the next few days.  It is a vitally important business book – and it is supported by one of the best websites I have ever seen for a book!

I wanted to re-read it in preparation for my work next week at the NAMM Show in Anaheim, CA.  I will be meeting with current and prospective clients there and I need to advise them that there is plenty of potential for growing their business if they can embrace the concepts detailed in “Treasure Hunt.”  It is not just a race to the bottom – in margins and selling prices!

But first they will have to learn how to bifurcate their businesses!  Trade Up!  Trade Down! – either way can and will work (with the right strategy) but… avoid the “black hole of the middle” if you want to stay in business to attend the NAMM Show next year!

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