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Having a sister who married a Canadian, I can tell you that the standard of living there is good. Canadians, benefiting from their robust economy, can afford to buy premium products and services - the "new luxury". To meet the needs of these consumers, new luxury marketing strategies must innovatively incorporate three levels of a ladder of benefits: 1) superior quality, 2) functional performance, and 3) an emotional benefit which affects and engages the consumer. This consumer-driven, global economy the "trading up" phenomenon - was created and is driven by social and economic demand factors below.
Consumer Income - what consumers CAN buy:
Increased discretionary income has influenced what consumers can buy.
Increased number of women working outside the home increases total household income
A rise in numbers of affluent households.
An increasing number of married couples without children, single working females, and empty nester Boomers who are willing and able to spend
Consumer Taste - what consumers WANT to buy:
Consumer tastes are shaped by their knowledge, culture, and personality.
Consumers are more educated, knowledgeable and discerning about items they purchase
Consumers are sophisticated; they enjoy unconventional and conversation-seeking experiences and have the expectation that things they want are available to them.
Household structures have changed so that convenience items, though at a premium price, are wanted/needed to allow for highly-valued family time
Women have become more influential as primary purchase decision-makers.
Consumer needs for status, class, exclusivity demand premium products and services
Consumers wish to spend time and money on things that are meaningful to them such as personal relationships, self-improvement, adventure vacations, and their individual styles.
Globalization of business and trade has expanded volume and variety of premium products giving consumers more choices and has fine-tuned their taste for foreign imports.
Competition's product and price:
Companies must know their economic climate - be aware of what the competition is doing and retain a competitive advantage by thinking outside the box. Consumers of New Luxury goods embrace entrepreneurship and specialty items.
Companies must have high performance - stay ahead of the growth of substitutes by supporting resources for research and development for new, improved products and updates.
Companies must gain and retain consumer loyalty - understanding their customer's motivation and behavior to provide real value to the 4 Ps of marketing.
Continued demand for low cost alternatives; "trading down" allows for more consumer income to be used for "trading up"
Because premium products and services are affordable to the middle-market consumer, they also can sell in much higher volumes than high ticket super-premium products, and thus have greater potential for continued growth.
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"The New Luxury in Canada." 123HelpMe.com. 26 Feb 2020
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Consumer perception that high price equals high quality, low price equals low quality motivates purchase of higher priced products and services.
Peter Stranger, in his article Meet Your Next Customer , based on a book Trading Up by Silverstein & Fiske , discusses three forms of New Luxury goods. The graphs below show how different factors move or shift the demand curve.
Figure1. Movement along the demand line
Old Luxury brand extensions are lower-prices versions of typically high priced items. Figure 1 shows movement along the demand line. When all other factors remain the same, but the price of a BMW brand changes, for example, from $250,000 to $150,000, the quantity demanded increased from 100 cars to 300 cars. Companies are wise to produce lower-priced extensions of luxury brands to increase demand and expected profits.
Figure 2a shows a shift in the demand line. For example, consumer tastes prefer a $175 bottle of premium wine rather than a lower priced $45 bottle of wine. For a given price, consumers will pay a high price for one bottle of accessible super-premium wine rather than spending the same amount for 4 bottles of mediocre wine. The new demand curve shows that consumers have traded up, demanding and able to pay for more higher-priced wines. Companies are wise to market to the "premium" quality of their products to increase demand and expected profits.
Figure 2a. Shift of the demand line Figure 2b. Shift of the demand line
Another example of a shift in the demand line is shown in Figure 2b. The third form of New Luxury goods is prestige of the masses - an increased demand for superior quality of conventional products used by the masses, for example spinach or tea. Increased income and consumer tastes are also factors in wanting and being able to pay for "masstige" goods. A want for the higher priced premium fresh organic produce or imported specialty teas, rather than conventional frozen vegetables and lower priced teas, creates the shift and a new demand curve is formed. Companies are wise to market the prestige of their products to increase demand and profit.
Factors of consumer tastes, economics and prestige of the masses have created the New Luxury phenomenon. Along with their discretionary income, Canadians' tastes have adjusted upward. They want and are able to pay for premium products that provide quality, performance, and satisfy emotional needs. I, for one, will continue to enjoy gifts from my sister living in Canada.