A bell curve is a simple model for understanding the common relationship between price and sales volume within a market. The top of the bell curve marks the middle of the market, where most customers are willing to pay for a given product or service. The ends represent value and high-end providers respectively.
Today, this market distribution seems to be shifting. A technology-enabled long tail and globalization have created more market alternatives – and more competitors. As a result, a new middle has been established further down-market across practically all industries.
To remain competitive in the wake of this macro shift, you need to reconsider your company’s position.
Mid-market brands must move down market to maintain their mid-market position. Such a move means facing value competitors with lower cost structures and service expectations. If your mid-market brand maintains its price point, you will need to reposition it as a higher-end brand. But be warned: Premium brands will be moving downstream.
High-end brands will get squeezed by market contraction. A smaller market will prompt competitors to redouble their efforts to maintain their position. Your high-end brand may need to redefine the premium segment to hold its price and sales position, or plan to move down market.
Value brands will see new competition from the mid-market and might explore new offerings with pricing models well below the previous market bottom. You might consider technology, disintermediation, partnering, or other cost-reduction measures to achieve new price targets. If your value brand maintains its price point, you will need to reposition the brand as more of a mid-market provider. But be warned: Your new competitors in this space will offer higher quality and a better service experience than your customers have been accustomed to receiving.
Any of these scenarios will involve reconsidering your answers to these key strategic questions – a starting place for building a sustainable brand platform.