Trading up is when consumers switch brands or products for better value outcomes, often driven by product features, quality, or brand loyalty considerations.
Demi Skipper was inspired by a Ted Talk by a “red paper clip guy” to embark on her trading-up journey, from trading her hairpin for other items until eventually reaching her goal of owning a house.
Brand Value
Brand value refers to a brand’s equity or perceived worth in the minds of consumers, including elements such as customer loyalty, reputation, and perceived quality that contribute to making a brand distinct, desirable, and valuable to consumers. Brand values are essential in many areas, from market analysis and price forecasting to determining consumer spending preferences for specific products or services.
Trading up is an integral component of consumer behavior that can boost your sales. To facilitate trade-up, ensure you’re offering top-notch products while incentivizing consumers with clear brand identities and incentives, and focus on meeting consumer needs when introducing new offerings.
With so many consumers switching up, it can be challenging for companies to stand out in the marketplace. To increase brand recognition and ensure long-term loyalty from your customer base, encourage trade-up via promotions and marketing initiatives. Doing this will make customers feel accomplished and proud that they made such an upgrade – increasing brand loyalty.
As a publicly traded company, assessing your brand value can aid investor relations (IR) efforts. Integrating brand valuation metrics into financial reports would give investors more information on your performance than earnings calls alone can.
In addition, if you plan to take your business public, evaluating its brand value can help increase stock prices and attract investors. While this process might take some time, you must begin considering ways to measure and report its worth so you’re ready when its official inclusion becomes part of your balance sheet.
Aspirational Vision
Aspirational vision is one of the main drivers behind consumers’ willingness to trade up in the marketplace. Consumers see brands that represent something essential about themselves as motivation to spend more on it than with another brand – for instance; they might choose Starbucks over Dunkin’ as they imagine themselves being one of their customers and jogging to work each morning while sipping pumpkin spiced lattes at their local store, while skimming emails on their iPhone while wearing Lululemon workout apparel.
Asserting an ambitious and grandiose vision for your product suite or organization is integral to its development and culture. Imagine1day sets an inspiring goal of “providing quality education to every child in Ethiopia by 2030,” motivating team members across their organization.
As a marketer, understanding these factors can help your brand inspire loyalty in consumers by making them feel like they’re trading up rather than swapping out for something different. You can do this by creating an impressive brand identity and high-quality products.
Friends and Family
Customers trade up for brands and products that reflect an aspirational vision of who they want to be, leading them to pay more for top-of-the-line luxury items like iPhones versus Dunkin’ Donuts coffee. Such luxury brands don’t need to heavily market themselves because brand advocates do the hard work by spreading word of mouth about themselves among consumers.
Advice from family and friends is also a significant influencer when it comes to trading up. Perhaps someone you know raved about their new Peloton bike, and you became intrigued enough to invest. Word-of-mouth recommendations provide powerful influencers as they offer genuine recommendations grounded in real experiences rather than superficial societal ideals.
Blindly trading up can be risky. Spending your money, time, and emotion trying to live up to an unattainable ideal can result in feelings of dissatisfaction; therefore, it is wise to step back and assess your actual needs and wants rather than jumping onto every new trend. Further, dismissing genuine friendships to meet an image will never bring happiness – make sure your product or service offers something worth recommending by consumers, as this could spread like wildfire!
Needs and Wants
Consumers that wish to trade up can purchase better products from the same brand. This may happen across categories like coffee, technology, clothing, and workout equipment – for instance, buying the latest model car that costs 10X more than its starter counterpart may represent an opportunity. It also occurs across industries when new offerings meet customer needs or want.
Understanding this concept can provide marketers with invaluable insight into how to promote trade-up behavior across their product suite and the broader marketplace. Furthermore, understanding why certain brands command such high prices will allow them to drive trade-up behavior within their offerings and others that don’t.
One key distinction between needs and wants is that failure to fulfill needs may threaten an individual’s survival; needs include food, water, and shelter.
Wants are any goods and services an individual desires as part of their caprice. For instance, an individual might desire a designer coat but could live without it; or they might want to purchase an expensive apartment but can only afford a more modest home.
Deliberating a consumer’s needs and wants can sometimes be confusing, so creating lists of both and prioritizing them may help. Doing this will allow them to better focus their time and money on those things that matter and highlight any discrepancies between wants and needs.
Consumers should regularly visit competing company websites and compare what is offered at different price points to ensure they’re not missing any opportunities or deals due to failing to take advantage of any lower price offers. Doing this also gives an understanding of industry standards so they can make educated decisions regarding which offer would best meet their unique situation.
