Are you in the trading up picture?
Last month I told you about what
marketers are calling the trading up phenomenon. This is the
term being used to explain why middle-market consumers are
willing to spend $4 for a cup of Starbucks when they could just
as easily buy an unbranded cup of coffee for 99¢.
In this article we will take a look at
the true identity of these consumers, what motivates them, and
how you might motivate them to trade with you.
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Although trading up involves people of
all descriptions, some consumer profiles are more likely to be
New Luxury spenders than others.
Dual-income couples with no kids (DINKs),
and dual-income couples with kids (DIWKs), are New Luxury
buyers. Because they earn two incomes, they have enough
disposable wealth to spend on premium goods and services. And,
because they are pressed for time, they feel the need to buy
things that make their lives easier and less stressful. This is
a benefit that many drycleaners fail to emphasize in their
marketing campaigns. Today, drycleaning is much more of a
luxury than a necessity.
Drycleaners should promote the fact that
having someone else care for your clothes is a way to
“enjoy the good life.”
Divorced women are also among the most
pronounced traders up. Divorced women tend to trade up in more
areas than any other group. Just because they don’t have
a husband, or in spite of the fact, they want to enjoy all of
the benefits that their married counterparts have.
Women are the dominant New Luxury
consumers, but they are very different from the
“housewives” of the 1950s. Today, most American
women participate in the workforce. Seventy-six percent of
women 25 to 54 work.
Not only are more women working, they are
earning higher salaries than ever before. Real income for
women, employed full-time, rose 41 percent from 1970 to 2001.
Many more women are single. Women are
less likely to get married, and those who do marry do so later
in their lives.
Traditionally, more men than women earned
college degrees, but the ratio began to change in the 1990s. By
2000, 13 percent of women aged 20 to 24 had earned degrees,
while only 8.6 percent of men aged 20 to 24 had. However, for
both men and women, a higher level of education generally
equates to a higher level of income.
As a correlation to these statistics, the
Fabricare Foundation’s study of the “best”
drycleaning customer was: women, between the ages of 35 and 54,
college graduates, married with no children.
American households, in general, have
more wealth available to spend on luxury goods and services
than ever before. There are about 112 million households in
America today. Almost 28 million of them have annual incomes of
$75,000+ and 16 million of those earn $100,000+. Since 1970 the
average household income has risen by more than 50 percent.
Another contributor to consumers’
wealth is the savings that have been passed on to them by the
large discounters. Retailers such as Wal-Mart, Costco, Home
Depot, Circuit City, and others, have reduced costs and work on
slim margins, allowing consumers to pocket the difference.
In most cases they don’t keep it in
their pockets. They trade up by buying more expensive goods and
services in other areas.
This is happening in the drycleaning
industry as well. For a large number of consumers, utilizing a
“discount” drycleaner, is a way to save money in an
area that is of little significance to them. They would rather
spend less on their cleaning to be able to spend more on other
goods and services, which have more importance to them. This,
of course, is not the attitude of everyone. Many customers
today realize the benefits of using a “full-price”
cleaner, and treasure the relationship they share with the
people to whom they entrust their clothes.
This emphasizes a point I’ve made
before: the middle-of-the-road drycleaner is being squeezed out
of the market. Consumers either have little concern for how
they dress and how their clothes are cared for, or they are
very concerned and are willing to pay premium prices to look
their best and have their clothing investment protected by a
professional drycleaner.
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