HubSpot uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For more information, check out our privacy policy. Written by Caroline Forsey cforsey1. You wake up early and jog to the Starbucks on the corner of your street. There, you wait in line to order a pumpkin-spiced latte, as you skim emails on your iPhone. Afterwards, you return home, put on your new Lululemon workout apparel, and hop on your Peloton for an at-home workout.
In this scenario, you've "traded up" in a variety of consumer categories: including coffee, technology, clothing, and even workout gear. Alternatively, why not purchase workout apparel from Marshalls or Target? Ultimately, trading up refers to a consumer's tendency to pay more for a higher-quality, more expensive product or service from a brand to which they've formed an emotional attachment, and feel a sense of loyalty. But trading up doesn't just refer to a consumer's behavior in the marketplace at-large: it also refers to a consumer's decision to upgrade their product for a newer model with additional features.
As a marketer, it's critical you understand the concept "trading up" to discern how you might evoke brand loyalty in a crowded marketplace — or, how you might market a new version of your product to existing consumers. There are two contexts in which you'll find the term "trading up" used: within a marketplace at-large, and within your company's own product suite.
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In this context, trading up refers to a consumer's decision to purchase a more expensive product because of the brand value they feel it delivers. This is why consumers will purchase a car for 10X the normal price if it's marked with BMW, but why they might not make the same decision for a car from a lesser-known brand.
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There are a few reasons why a consumer will trade up in the marketplace. For one, a consumer might trade up because the brand meets their aspirational vision of who they want to be. There is undoubtedly a different vision that comes to mind when a consumer thinks of Starbucks versus Dunkin' — in exchange for this vision, a consumer might be willing to pay more for a coffee. These top-of-the-line brands often feel "premium" and luxurious, incentivizing consumers to pay more than they would for another version of that product in the marketplace from a lesser-known or lower-quality brand.
However, that isn't to say that consumers purchase products from certain companies entirely based on brand name alone. No matter how impressive Starbucks' brand image is, it doesn't do much good if the coffee is disgusting. Ultimately, you can't have one without the other. A brand like Starbucks, BMW, or Apple rises to the top of their industries because they provide high-quality, well-engineered products — not just because they have a good brand image to match.
Additionally, these brands have built a good deal of trust with existing consumers, which leads to positive word-of-mouth marketing. For instance, nowadays, Apple doesn't need to appeal to consumers with constant commercials and billboards — instead, they can trust their loyal brand advocates to do the heavy-lifting just consider the jokes you find on Twitter when you search "green bubbles" , which signifies a non-Apple user.
Suggestions from friends and family is the second powerful reason a consumer will trade up. Perhaps you've never considered purchasing a Peloton, until you heard your friends raving about the product. Friends will only suggest a product if it's truly high-quality and meets their needs above all other competitors in the marketplace. Which is why, ultimately, you need both a strong brand and a powerful product or service for consumers to feel they're trading up from the "status quo product" that exists in your industry.
Next, let's explore what it means for a consumer to trade up at your company in particular. For instance, let's say you sell a starter version of your software, but you've just released a new professional version, with higher-quality features. If your consumers choose to upgrade to the new version of your product, they're "trading up". In many ways, this mirrors the first definition. You might think of your starter version as a used car, and your professional version as this year's latest model. To encourage consumers to trade up, you'll want to demonstrate how the new features of your product are powerful and necessary — not just "nice to haves" but "need to haves".
Now that we've explored what trading up means for a consumer, let's explore what it means as a marketer. Understanding the reasons a consumer might trade up can help you leverage your brand and products to incentivize consumers to feel they're trading up when they purchase your products or services. While I used some major brands in my examples, you don't need to be a large corporation for consumers to feel they're trading up. For instance, consider my new favorite coffee shop, the Bittersweet Shoppe , on Newbury Street.
The cozy cafe is filled with sunflowers and offers fantastic customer service — now, when I go there, I feel like I'm trading up from Starbucks. Ultimately, I like the experience of entering their coffee shop, which is what a good brand image is all about.
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If you work for a small business, there are plenty of strategies you might implement to create a strong brand , including building a brand strategy, prioritizing consistency, and using a strong mission or vision statement to guide all your decisions. They don't make higher highs or a breakout above the previous highest price. If they did, that would indicate a bull market.
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They don't make lower lows or drop below the previous level of support. If they did, that suggests a correction. A sideways trend often refers to the stock market. But it can occur in any investment, including bonds, commodities, or foreign exchange. A sideways market means prices are getting ready to continue forward in the same direction they had been in before.
It's unlikely that a sideways market will occur before a significant change in direction. It's also known as consolidation. It's a normal part of trading action. Traders are uncertain as to which direction the market could make next.
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They are building on past gains by being cautious. They wait for the market to reverse its course. The longer they hold on, and there is no definite change, the more confident they become. Consolidation often occurs as the market gets ready to make higher highs or lower lows. There is a critical exception. That's if it occurs during a transition of the business cycle. A sideways market then signals the next phase of the business cycle.
For example, if there has been a period of irrational exuberance , that signals the peak of the business cycle. A sideways market could occur before a downturn. Similarly, a recession marks the bottom of the business cycle. A sideways market at that time might signal a new bull market. You must pay attention to the leading economic indicators. They tell you what phase of the business cycle we are currently experiencing.
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To identify a sideways market, you must first find out the levels of support and resistance. Support is the price where buyers come back in. They don't let the price fall below that level. Resistance is where buyers sell the investment. They don't believe it will go much higher. A sideways market will trade within those two levels of resistance and support.
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That's also called a range-bound market. It may occasionally rise above or below those levels, but it doesn't follow through with an even higher high or lower low.