Many years ago, it used to be safe to be the middle brand, not too expensive, not the cheap brand, but just right. Comfortable. Over the last 5-6 years, that no longer is as valid as it used to be. Let’s take the restaurant industry as an example. By no means is this phenomenon only limited to the restaurant industry. It goes across almost all business sectors.
Mid-level chains are getting squeezed. Places like Applebee’s, Friday’s, and Chili’s are in danger of becoming extinct from the food landscape. Even low-mid tier chains such as Friendly’s, Chevy’s, and Quizno’s are feeing the pain and are facing drastic location cuts or even outright bankruptcy. Food costs are soaring. Core customer base is being more selective. Combine this with the absence of strong marketing, and you have a situation that threatens these mid-level brands. (The exception are brands such as Subway and Chipotle Mexican Grill. These chains have more brand clout, better economies of scale, and have continued to market heavily to a more choosier customer.)
In today’s marketplace, brands that tend to do well in both up economies and down are those who have two key components.
1. They know who they really are – Brands who know what emotional uniqueness they deliver win. This is why people are still willing to wait in line for a new iPhone 4S in a down economy or that McDonald’s stock price has been crushing it over the last year going from the mid $60′s in Dec. 2010 to over $92 in Oct. 2011. It is this uniqueness that separates them from “commodity” Again, it’s not the phone or the burger. That’s commodity. It’s what the brands stand for on the emotional level that isn’t easily duplicated.
2. The extremes are better positions to defend – Being the high quality, luxury leader or the value-based champion, are positions that win. This is why Tiffany’s has NEVER gone on sale in their history. This is why Wal-Mart still is the king of retailing. In the high/low categories, there are less competitors and it is more easily differentiated. On the other hand, the middle is crowded with over 80% of competitors playing in this space and that makes it harder for a brand to separate themselves from the pack.
In great times, consumers move their purchases up to luxury brands, but still will buy at value-based brands because of the deals they can get. The middle 80% can prosper because many consumers will move from the value-base tier to mid-level brands. In down times, many consumers will move out of the mid-level brands to the value-based brands. Those who are more wealthy, don’t feel the pinch as bad, so they tend to stay with the luxury brands. This leaves a vacuum in the middle. Even when the economy returns, many consumers are now more loyal to the high and low ends of the market and it’s harder to win them back to the middle.
Understand what your brand truly stands for and know where that places you in your sector. This will allow you to objectively evaluate where you are. If you happen to be in the deadly middle, you’ll have to decide how to get the brand out of the middle of the road, and soon. Otherwise, you’ll end up roadkill.