To understand what the term “act” means, let’s start with a scenario.
You get up early and jog to the Starbucks on the corner of your street. There, wait in line to order a pumpkin spice latte while you scan emails on your iPhone.
After that, return home, put on your new Lululemon workout clothes, and get on your peloton to train at home.
In this scenario, you “traded” in a variety of consumer categories: including coffee, technology, clothing, and even exercise equipment.
For example, why did you feel the need to go to Starbucks and pay $ 6 for a drink instead of making a quick pot of coffee in your Keurig? Alternatively, you can buy training clothing from Marshalls or Target.
(No judgment on any of these decisions: I made them too.)
Ultimately, commerce refers to a consumer’s tendency to pay more for a higher quality, more expensive product or service from a brand with which they have developed an emotional bond, and to experience a sense of loyalty.
However, trade does not only refer to a consumer’s behavior across the market, but also to a consumer’s decision to upgrade their product to a newer model with additional features.
As a marketer, it is important that you understand the concept of “Trading Up” in order to understand how to generate brand loyalty in a crowded market – or how to market a new version of your product to existing consumers.
Here, let’s examine what Trading Up means and what it means specifically for marketers.
What does action mean?
Trade across the industry.
There are two contexts in which the term “trading up” is used: in an entire market and in your company’s own suite of products.
First, let’s examine what trading means in an entire market.
In this context, trade refers to a consumer’s decision to purchase a more expensive product because they believe it will provide brand value. This is why consumers buy a car for 10 times the normal price when it is labeled BMW, but why they may not make the same choice for a car from a lesser known brand.
There are several reasons a consumer will trade in the market. For one, a consumer might act because the brand is fulfilling its ambitious vision of who they want to be. There’s no doubt another vision that comes to mind when a consumer thinks of Starbucks versus Dunkin ‘- in return for that vision, a consumer might be willing to pay more for a coffee.
These top brands often feel “high quality” and luxurious and motivate consumers to pay more than for another version of this product on the market from a lesser known or inferior brand.
However, this does not mean that consumers will buy products from specific companies that are based solely on brand name. No matter how impressive the Starbucks branding is, it doesn’t help much if the coffee is gross.
Ultimately, you can’t have one without the other. A brand like Starbucks, BMW or Apple is at the top of their industry because they offer high-quality, well-engineered products – and not just because they have a suitable brand image.
Additionally, these brands have built a lot of trust with existing consumers, which is leading to positive word of mouth. Given that over 90% of consumers trust suggestions from family and friends more than advertising, this is important.
For example, these days Apple doesn’t have to appeal to consumers with constant commercials and billboards – instead, they can trust their loyal brand advocates to take the heavy weight (just think of the jokes you find on Twitter when you search for “green bubbles” ” which means a non-Apple user).
Suggestions from friends and family are the second strong reason a consumer will act. Perhaps you never thought about buying a peloton until you heard your friends rave about the product.
Friends will only suggest a product if it is really high quality and meets their needs before any other competitor on the market.
For this reason, you ultimately need both a strong brand and a high performing product or service so that consumers feel like they are trading the “status quo product” that exists in your industry.
Next, let’s examine what it means for a consumer to act in your business in particular.
Trade within a company’s suite of products.
The second context for trading is within a company and is also known as an upgrade.
For example, let’s say you sell a starter version of your software but have just released a new professional version with more advanced features. When your customers upgrade to the new version of your product, they are “traded”.
In many ways, this reflects the first definition. You can think of your starter version as a used car and your professional version as the latest model of this year.
In order to encourage consumers to act, you want to show how powerful and necessary your product’s new features are – not just “nice to have” but “must have”.
For more information, see Cross-Selling and Upselling: The Ultimate Guide.
Trading in Marketing
Now that we’ve examined what acting means to a consumer, let’s examine what it means as a marketer.
Knowing the reasons a consumer might trade can help you use your brand and products to make consumers feel like they are trading when they buy your product or service.
How? Through good brand awareness (and of course a high quality product).
While I’ve used some big brands in my examples, you don’t have to be a big company for consumers to feel like you are trading. For example, consider my new favorite café, the Bittersweet Shoppe, on Newbury Street. The cozy cafe is full of sunflowers and has fantastic customer service – now when I go it feels like I’m trading from Starbucks. Ultimately, I like the experience of walking into their cafe, which is what good branding is about.
If you work for a small business, there are many strategies you can implement to create a strong brand, including creating a branding strategy, prioritizing consistency, and using a strong mission statement or vision to guide all of your decisions conduct.
Additionally, encouraging consumers to trade or upgrade within your suite of products requires strong messaging, sales and marketing alignment, and a thorough understanding of what your consumers need and how your newer version can handle those challenges, especially when consumers grow your first product.
Ultimately, people don’t trade in brands and products they love. Make sure you meet your consumers’ needs through both your brand and your products and they will let their friends and family know. Before long, you will be the brand people are trading for.
Just remember: I’ve owned an iPhone for six years with no interest in panning. That is the power of a good brand and a strong product.