Marketing Home Products

Citigroup calls it the “Consumer Hourglass Theory.” Others cite a “trading up, trading down” trend. No matter the label, America’s swiftly evolving consumer markets have created a fairly distinguishable divide.  And to win in this economy, you’re going to need to do it without the middle class.

Luxury jeweler Tiffany & Co. saw a 33% rise in earnings during its second fiscal quarter and as reported by the Wall Street Journal, “lower-priced silver baubles, once a favorite of middle-class shoppers… are now its weakest sellers in the U.S.” What’s more, Porsche sales management claimed “the highest order intake in the company’s history” and predicts that the numbers will climb higher still. Similarly, BMW and Mercedes-Benz executives reported positive sales, with no indication that demand may slow. And luxury retailer Saks promoted that sales for the first half of this year were up 11% and announced a return to profitability with great resiliency on the part of the affluent consumer.

So is the secret to success as simple as chasing the high-end target market? Not so fast.

Consider Dollar General and web discounters who attract value conscious consumers, capitalizing on the gap between the “haves” and “have nots” Even power player WalMart is mired in the middle. Have you seen the new Walgreens drugstore on Wall Street that sells sushi and offers nail salon services or visited a Costco that serves as a one-stop shop for both bulk pack toilet paper and a bottle of first-growth Bordeaux? Proctor & Gamble, for example, saw how shoppers’ habits were changing, and fundamentally changed how it develops and sells product. The company’s strategy now is to please both high-end and lower-end markets by offering home goods such as soap, toothpaste, razors and paper towels through distinctly price-differentiated brands.

The popularity of Target's new Missoni collection introduction crashed its servers last week. Photo credit: Paul Nelson

At K&A, we’re seeing a considerable and distinct balance between opposite ends of the buyers’ market. There’s a bifurcation taking place in the U.S. whereas the clout of the middle class is seriously diminishing. Just this past week at the Casual Market show in Chicago, we witnessed higher end products and low price alternatives co-existing within the same experiential event… appealing not to the middle-of-the-road consumer, but instead to shoppers at one end of the spectrum and the other. Take EcoSmart and Eco-Fue, two brands represented at Casual Market. Both introduced new Bioethanol fireplaces. EcoSmart’s high price-point fireplace carries a suggested retail of around $1000 while Eco-Fue markets to a more price-conscious consumer with burners starting at $75. Both brands keenly recognize and are taking advantage of the split market phenomena, manufacturing profitable products to meet increasing demand at both ends of the economy.

While median household earnings fell for the third consecutive year according to the Census Bureau and more than 15% of Americans are living in poverty, consider that…

• Luxury clothing and accessories purchases are demonstrating significant strength this year compared to a similar time period last year, according to  American Express Business Insights
• Custom residential markets seem to be recovering faster than other types of housing with Southern California rising for the first time in some 14 months.
• Luxury markets are experiencing greater stability and are demonstrating stronger numbers than other entry-level segments
• Home sizes may be growing slightly, as 60% of residential architects say upper-end home sizes are increasing or staying the same

Most Millennials are old souls striving for a successful, yet carefree existence not easily found in what many would call a difficult reality.

According to MediaPost’s “’90s Nostalgia: Millennials Long for Simpler Times,” by Melanie Shreffler, Millennials surprisingly long for the past… a time when they felt safe and secure. According to Shreffler, these were the “good old days.” For many, it’s hard to think that Millennials have anything less than a privileged life, but it’s quite the opposite. Millennials have spent most of their lives believing that they can do just about anything, an idea that their teachers, parents and friends instilled in them. But this group of mostly 20-somethings is learning that not everything is picture perfect.

Millennials are becoming adults in one of the worst economic slumps the U.S. has seen in decades. Instead of seeing the light at the end of a long tunnel of hard work, many Millennials are finding themselves unemployed. Many of them can’t even find their first job and are working for little or nothing just to gain experience for their resumes. Frequently feeling stressed and anxious, many are afraid to make their next move for fear that it will be the wrong one.

90s show "All That" brings back memories for Millennials

It’s no surprise that now Millennials are gravitating toward activities that bring them back to their childhood and youth – a time when everything was easy. They’re finding comfort in things that transport them back to that time, including indulging in television shows that make them feel as carefree as when they watched it for the first time. Stations like Nickelodeon have picked on this need. The network recently introduced a midnight programming block called “The ‘90s Are All That!” airing programs that were favorites of Millennials a decade ago. MTV is making a similar move by bringing back some of its more popular ‘90s shows with minor updates, including Beavis and Butthead and 120 Minutes.

Others have deemed a comeback for the decade, which is nice for the 20-something Millennials who are stuck between childhood and adulthood. Will going back in time give them the motivation to grow up?

And how do these trips down memory lane affect marketing initiatives aimed at the influential Millennial generation?

If consumers really said what they were thinking, marketing to them would be so much easier, wouldn’t it? Forbes.com recently debuted an app that takes us one step closer to getting inside the mind of the consumer. The facial expression reader app, developed by Affectiva and the MIT Media lab, asks participants to turn on their Web cams and watch video ads while the app gathers data about their facial expressions and reactions.

This technology was originally developed at MIT to help people who have difficulty reading emotion, but is now being commercialized with the potential to aid marketers with everything from their calls to action to analyzing and changing product offerings based on how users respond.

Imagine if every company with an online presence had the ability to implement this technology on its website. Businesses would essentially be able customize what each user sees. For example, say a user is watching a video with information about granite countertop “A,” and he smiles; the facial recognition technology analyzes that data and could send the user to a page with more information about that particular product or even directly to the purchase page. The same situation could apply if a user looks confused or discouraged; the app reads the expression and adjusts information accordingly by changing products, providing additional information or sending the user to a different page. With this technology, organizations will essentially be able to sell online almost the same way they would in a face-to-face setting. Being able to read an expression and adjust your “pitch” through a website would be revolutionary!

Additionally, the analytics that would result from this technology would be incredibly beneficial. Organizations would be able to gather data about what products, pages and/or information that viewers are most interested in, least interested in, most confused about, and where the drop off occurs. Being able to gather this data and build a better offering gives online business a new dimension. Every industry, including the home and building industry, could greatly benefit from the opportunity that this face recognition technology could provide.