Month: September 2005

There is a shift in the mind-set of companies that are looking to maintain their market position or to grow their businesses. Brand extensions are the key. While this is nothing new, many companies are launching what I’ll call economy-based brand extensions. Companies like “Mercedes”:http://www.mercedes-benz.ca/ are selling inexpensive versions of their luxury cars; the airlines “Delta”:http://www.delta.com, “United”:http://www.united.com, and “Air Canada”:http://www.aircanada.ca are running scaled-down versions of their premium flights; and new beers born from leading brands are battling for market share in the economy beer segment.
These companies are attempting to target the cost-conscious consumers. (Let’s face it, who isn’t looking for name brand products at reasonable prices?) There are many forces at work in this complex mind-shift, which can be attributed to the impact of the big-box retailers such as “Costco”:http://www.costco.com and “Walmart”:http://www.walmart.com, skyrocketing gas prices, and the changing attitudes of middle and upper-class shoppers who are now openly flaunting their bargain-hunting skills. These factors are having a significant impact on all brands.
There is nothing new about using price as a lure to attract cost-conscious consumers. Online and traditional coupons and point-of-sale promotions have been staples of the shopping experience for years. But, why is this change happening at such an increased rate?