Treasure Hunt: Inside the Mind of the New Consumer

Citation

Warrington, T. (2007), "Treasure Hunt: Inside the Mind of the New Consumer", Journal of Consumer Marketing, Vol. 24 No. 1, pp. 59-60. https://doi.org/10.1108/07363760710721019

Michael Silverstein introduced the trading up concept in 2003 in his book Trading Up: The New American Luxury. Now, in Treasure Hunt: Inside the Mind of the New Consumer, Silverstein explores the trading down phenomenon. While Trading Up focused on opportunities in the luxury brand market, Treasure Hunt focuses on the opportunities in the low‐end discount goods market.

Silverstein refers to these two phenomena – trading up and trading down – as the bifurcation of the consumer goods market. Growth in both of these areas is leading to death in the middle. “Middle class consumers have embarked on a relentless, continuous treasure hunt. The treasure hunt is a real and global phenomenon that presents challenges to both retailers and their suppliers, and has delivered death in the middle to the average, middle market producer – companies like Chevrolet and Kraft” (p. xv).

Treasure Hunt consists of ten chapters. Each includes a consumer profile, supporting statistical data, relevant corporate examples, and insight toward marketing strategy.

Chapter 1: The Bifurcating Market, introduces the premise of this global shift in trading up and trading down. This change in consumer buying behavior is leading to slow or negative growth in the middle. “Many businesses that have long prospered by bringing midpriced products to middle‐market consumers suddenly find themselves facing ‘death in the middle’” (p. 4). Kraft, JC Penny, Maxwell House, and Chevrolet are among those companies mentioned who face difficulty serving the middle market. “In category after category, premium entries are growing, bargain brands are stealing share, and the middle is shrinking” (p. 11). Silverstein presents four strategies for winning in this bifurcating market – trade down, trade up, span both poles, or struggle to hold the middle.

Chapter 2: The New Middle Class Consumer, looks at several market segments and their motivations behind trading up and trading down. Perhaps most important in this chapter is the explanation of the “value calculus” – the formula consumers use in purchasing decisions. According to Silverstein, there are six factors involved in the value calculus: price, technical value, functional value, purchase excitement, integration, and emotional value.

Chapter 3: Cheap is Good, focuses on the new mindset of the consumer: Finding real value is now something about which to boast. This is the “treasure hunt”. Silverstein uses Aldi – a hard discounter in Europe – and the dollar store concept as examples.

LG and Marriott have been successful at serving both the trading up and trading down market. These case studies are discussed in Chapter 4: Spanning the Poles.

Chapter 5: All Treasure, All the Time, discusses consumers' quest for the best value. Much of the chapter is devoted to consumers' use of eBay and Tchibo, a European retailer who lures customers with the treasure hunt mentality. Tchibo promises “a new experience every week” to keep customers coming back.

In Chapter 6: When the Calculus Shifts, Silverstein notes that “there is usually a single dominant factor in each person's value calculus, a factor that is always more important than price and that drives each and every purchase” (p. 132). By understanding these different purchase motivations, companies will be better prepared to provide products and experiences that meet or exceed consumer expectations.

Chapter 7: In a Pickle recommends research methods, specifically shop‐alongs, to better understand consumers. In shop‐alongs, researchers shop with the customer observing choices, discussing decisions, and participating in the entire customer experience. The chapter is wrapped around a McDonalds case study and focuses on changes in the competitive landscape.

Chapter 8: Nickles and Dimes, discusses the middle‐market consumers' financial condition and relationships with financial service providers. FleetFinancial is used as a case in reinventing the customer experience (previous to their buyout by Bank of America).

Retailers serving the middle market have been Left in the Dust (Chapter 9). A list of the largest retailers in 1970 versus 2004 shows many of the top retailers in 1970 (Sears, JC Penny, Kmart, Woolworth, McCrory) are either significantly lower on the list or have disappeared altogether. The remainder of the chapter looks at the grocery industry. Discount stores, warehouse stores, and even dollar stores have taken a great deal of share from grocery stores. In fact, Silverstein mentions that Wal‐Mart is now the largest grocery merchandiser in the USA!

In Chapter 10: Taking Action, Silverstein posits that the trading down market provides even greater opportunity than the trading up market highlighted in Trading Up: The New American Luxury. He suggests that companies caught in the middle are ignoring the split in the consumer middle market, and he suggests that “they accept the fact that their futures hang on their ability to do one of two things: deliver basic, trading‐down goods at unbeatable prices or create trading‐up goods with genuine differences that can command a premium” (p. 229). The middle‐market companies must revisit their data, rethink their strategies, and take action now. “We expect that over the next decade that the bifurcation of the economy will continue. Growth will be at the high and low ends of almost every market segment” (p. 244).

Silverstein's evidence of the bifurcation of the consumer goods market is plentiful. The statistical evidence of the movement in the high, middle, and low end markets is hard to ignore. The consumer profiles provide real insight into how consumers live and why they buy. The evidence of the divergence of the market is also apparent in these profiles.

Consumer goods retailers and suppliers, marketers, and entrepreneurs will find this book insightful and very interesting to read. The combination of quantitative (statistical evidence) and qualitative (consumer profiles and company cases) evidence keeps the reader moving from chapter to chapter in logical sequence. Silverstein provides ample support for this important consumer trend. To ignore it, may mean “death in the middle”.