You can't have everything. Where would you put it? --- Stephen Wright
Since most of us can't afford everything, we spend extra on the few items that really matter and save on the rest. This is why you can see a Hyundai at Birks and a Porsche at Costco.
We want bargains for everything. A great value can tempt us to buy what we might not otherwise: a Coach handbag or tickets to the disappointing The Lord of the Rings play. To compensate, we might buy the house-brand of flour or toilet paper. Buying cheap now means buying smart since quality has improved for low-priced goods. Farewell the stigma of being spotted at a factory outlet or lined up early on Boxing Day.
Author Michael Silverstein helps us understand ourselves in Treasure Hunt: Inside the Mind of the New Consumer. Moving from the middle downwards and upwards at the same time is happening around the world (estimated at $500 billion in the US, $500 billion in Europe). The losers are in the middle because we can get superior or cheaper.
The trends even affect intangibles like life insurance where consumers move up to the most flexible (universal life) or down to the cheapest (term).
The Top Categories
Since our values differ, what we buy won't make sense to anyone else. Using our own values won't help us understand others. It's hard for anyone else to tell how much we'll spend on a product, service or experience.
Example: The snow blower we got two winters ago drew puzzled looks from neighbours who counted on global warming as their salvation from shoveling. We bought to save time and our backs after heavy snowfalls (which paid off this winter).If you look at the top six categories for trading up and trading down, five make both lists
- travel and entertainment (Trading Up 1, Trading Down 4)
- homes and home renovations (Trading Up 2, Trading Down 1)
- cars (Trading Up 3, Trading Down 2)
- dining out (Trading Up 4, Trading Down 3)
- food and beverages (Trading Up 6, Trading Down 5)
This leads to anomalies such as
- sending children to a private school and driving an economy car
- buying a home theatre with a large widescreen tv and cutting back on dining out
- traveling but staying in budget hotels
Ladder Of Benefits
Three types of benefits encourage us to trade up: technical, functional and emotional. When absent, we trade down. Just like consumers around the world.