Michael Silverstein -- Trading Up: The Consumer-Driven Revolution

Rotman School Lifelong Learning 2004, June 6, 2004, 10:05 a.m.

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).

Introduction by Roger Martin

[Michael Silverstein]

About frugality, not excess consumption

Need to get inside the heads of a small number of individuals

Framework:  technical, functional and emotional benefits

Premium market (20% to 100% higher price) is growing

Real technical benefits:

Consumers can describe functional benefits

Not a static position:  it's a perpetual war.

Consumers decide what's important.

Son Charlie came into office on Sunday morning

Ely Callaway:

Proceeds for the book go to the Rotman School

[Tapes not shown]

This phenomenon is happening in a wide variety of products, from durables to disposables.

Chart:  consumers are trading up, trading down, or not buying at all.

Dogs:  have a $2000 dog, 4 centuries of breeding

Realignment of consumer needs and business capability

Women are the driving force behind luxury.

Barriers to entry in markets is declining

Fred Carl, who lives in Jackson, Mississippi.

Why the movement now?

Emotional drivers

Panera Bread:  came out of no where

Questing:  my home is my castle

Individual style

Exploiting trading up:

Neil Fisk, co-author, went to the Limited, Bath and Body Works

A lot of market research will reveal nothing about trade-up opportunity.

Checklist for growth:


Upscale products, upscale marketing

Demographics.  Observations beyond consumer goods to business-to-business?

Financial services?

If have 5-series and then 3-series, how to deal with cannibalization if the 3-series is too good

Shift to emotional needs?


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