StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Marketing in 2012: The End of the Middle - Article Example

Cite this document
Summary
The recession has changed the US market completely; the market has now transformed into two segments – one that caters to the higher-end consumers with incomes $100,000 and upwards and the other one…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.5% of users find it useful
Marketing in 2012: The End of the Middle
Read Text Preview

Extract of sample "Marketing in 2012: The End of the Middle"

The paper “Marketing in 2012 - the End of the Middle by Birkner" is an excellent variant of an article on marketing. The US is in grip of recession since late 2007. The recession has changed the US market completely; the market has now transformed into two segments – one that caters to the higher-end consumers with incomes $100,000 and upwards and the other one that lingers below this threshold. Consequent to this, the US Consumer Confidence Index that measures the degree of optimism has been falling perennially – from 41 percent observed on September 2009 to 23 percent in October 2011.

Not only the median family income is on the decline but also their net worth has eroded significantly during the period. As a result, the middle market has contracted to raise income inequality among the citizens. Economic recovery in 2012 has been noticed for the upper class with no change for the middle and lower classes. Income levels for the latter are not improving at all. The proof of it can be gauged from the retailer's approach to the strata of varied consumers. Consumers are on the constant lookout for the lower-cost options.

That is why the companies such as Proctor and Gamble, Coca-Cola have introduced smaller sizes packing to make them more affordable for a class of consumers. Many more companies, for instance, H.J. Heinz and fashion retailer Missonis new line of products catering to the middle- or lower-end market has been extremely successful. Consumers constantly search for lower-price quality products and perhaps, that could be the reason why discounts retailers such as Dollar General and Family Dollar are a great success as is evident from their higher earnings in 2011.

The middle-class consumers willing to spend on high-end products are now missing. In the coming years, the average-priced product targeting a middle class will not be a lucrative proposition. Marketers will have to either offer the most lucrative price to consumers or will have to convince them to spend the higher price for a higher value attached to their products.ANALYSISBirkner (2012) argues that a significant change has been noticed in the US consumer behavior after the 2007 recession. The US middle class has been a prominent consumer of the premium brand products without bothering much about its prices at least until 2007; however, that is not true now in the changed economic scenario.

The US unemployment rate as revealed by the US Bureau of Labor Statistics is still ruling high at around 8 percent and above. Higher unemployment rate means lower demand for the goods and services affecting most businesses. The recessionary economic climate has not allowed the real wages of the large proportion of the workforce to rise except a few in high-tech fields. While real wages of the workers do not rise, the prices of the goods and services keep on rising. With the limited monthly income at their disposal and rising prices, the middle-class buying behavior has taken a sea-change focusing on the lower-priced goods unless the product offers significantly high value for its higher price.

In other words, prices of the products have been extremely important to consumers. The changed consumer behavior has resulted in different marketing strategies by large reputed marketers such as Proctor and Gamble and Coca Cola. Smart marketers always want to formulate their marketing strategies keeping 4 Ps in central so that they do not lose their market share in their niche areas; product pricing is one of them. In difficult times, when consumers cannot afford large packing size due to their limited buying power, it makes sense to reduce packing size of the products so as to make them affordable and that is precisely what the companies such as Coca Cola or Proctor and Gamble are found to be doing.

Consumers want their trusted brands but at the same time do not want to spend more on their needs. H.J. Heinz too decided to introduce smaller-sized packing of its products essentially to lure low-income consumers.It is important to note that those who are catering to the higher-income consumers such as Neiman Marcus Inc. or Tiffany are not affected as they continue to deliver somewhat improved workings quarter after quarter; however, it is pertinent to note that Neiman, in the wake of the recession, have changed their ways of doing business.

Previously Neiman used to accept only their own and American Express credit cards; however, now they show no inhibition in accepting Visa and MasterCard. This goes in line with the basic marketing tenet that says, “Offer only that market needs”. A middle-market retailer such as Gap Inc. has not been doing well because the company fails to make an appropriate marketing strategy in line with the changed scenario. Gaps third quarter 2011 earnings declined by 36 percent and had to shut over 20 percent of its stores in the country.

Sears and J.C. Penney's sales too declined in the third quarter of 2011. When luxury brands such as Missoni, known for its unique and distinct style, targets middle or lower-class consumers with modified price structure, it gets enormous success in selling its products. This simply means that companies need to target either the low-cost segment or cater to the premium segment; there is no middle path now. Simply, offering products having priced in between is not going to help because middle-class people do not find any value attached to the average price offerings.

The market currently holds two segments: one is for price-conscious consumers and the other one is for those who want to offer exclusiveness in their products with discernible value offerings at a higher price. Marketers need to modify their pricing strategy according to the segment they want to cater but the fact remains that low-cost or affordable price market is now huge across most product lines and appropriate product positioning in one of the market segment is necessary for survival and growth.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Marketing in 2012: The End of the Middle Article - 8, n.d.)
Marketing in 2012: The End of the Middle Article - 8. https://studentshare.org/marketing/1806560-article
(Marketing in 2012: The End of the Middle Article - 8)
Marketing in 2012: The End of the Middle Article - 8. https://studentshare.org/marketing/1806560-article.
“Marketing in 2012: The End of the Middle Article - 8”. https://studentshare.org/marketing/1806560-article.
  • Cited: 0 times

CHECK THESE SAMPLES OF Marketing in 2012: The End of the Middle

Strategic Marketing of Energy Industry

It is recommended to use the flexible or the reasonable price strategy since this will allow the middle income group to fall with the consumer base.... the middle income group generally have low disposable income and so a reasonable price strategy will be mouth watering for them.... Report Answer 4 This part will recommend a marketing mix strategy for the energy providing organization.... The marketing mix serves the purpose of being an important business tool that refers to mainly 4 P's namely product, place, promotion as well as price....
5 Pages (1250 words) Assignment

Activity Plan and Initial Recommendations for Tourism Company

hellip; This research tells that though not everyone will have the capacity of affordability to go for a holiday trip, Gap 360 should focus more on the middle class, upper middle class, and higher class consumers.... The company that is the subject of this research is Gap 360, a global travel and tourism agency with plans and packages for every person in any corner of the world....
4 Pages (1000 words) Essay

Red Bull Marketing Strategy

The main aim of this marketing plan is to increase the lead that Red Bull has in the energy drink market.... Rising competition has resulted in the need for a change in strategy so as to maintain the lead that the product has… The marketing strategy will therefore look at all the factors that influence the market and design a plan that if implemented will enable the brand maintain its position as a global brand. The sales of soft drinks has been declining over the This is due to increased demand from young adults across the globe....
5 Pages (1250 words) Assignment

Business Plan for South West Airline

The company became one airline in 2012 after it was issued with an operating certificate (J.... It acquired fellow Air Tran Airways in 2011 and expectations are high on integrating the carriers by end 2014.... It is one of the most recognized airlines in the United States....
7 Pages (1750 words) Essay

Scion Cars Marketing Plan

There is also an increase in the middle-income earners thus the cars will have a steady market.... They will be produced to cater for and satisfy the needs Scion Cars marketing Plan Market Analysis The Scion brand of cars competes with other leading brands already established in the market.... The marketing plan.... The marketing plan.... marketing management: Analysis, planning, and control....
1 Pages (250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us