MARKETING

Decide Now: Are You Neiman Marcus or Walmart?

Frito-Lay execs just came out and said it: The middle class is disappearing. Can your product strategy adapt to this new reality?
The disappearing middle class has gone from rallying cry to marketing strategy.
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Well, I guess it's official: The United States is turning into Brazil.

Frito-Lay North America president Tom Greco recently cited a "bifurcation" of American snack eaters, a remark that the company's chief marketing officer summarized as "the rich are getting richer and the poor are getting poorer."

That's what economists have been pointing out for decades, but this is the first time the head of a huge consumer goods company has basically admitted that 1) the middle class is on its way to being kaput and that 2) marketing plans should address that economic reality.

A Divided Market

Here's what that means to you.

In the foreseeable future, the growth businesses will be in 1) high-end luxury items and 2) cheap junk for the hoi polloi.

The super rich will be buying private jets, luxury cars, diamond bras, space tourism, and other kinds of personal services, while supporting small armies of assistants, dogsbodies, lawyers, toadies, and politicians.

The super poor will be buying cheap items (like low-cost, high-calorie snacks) and lowbrow mass entertainment. (Once upon a time, this strategy was called "bread and circuses.")

So while 1% of the middle class climbs into the realm of the super-rich and the remaining 99% slide down to the ranks of the super-poor, businesses that provide products and services to the middle class will falter.

Pick a Strategy

Therefore, when it comes to long-term product strategy, entrepreneurs must decide whether to target the super rich or the super poor.  Are you going to be a "Neiman Marcus?" Or are you going to be a "Walmart?"

You will eventually need to pick one or the other–because if you're a "Sears," you're basically toast.

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IMAGE: laurieofindy;keishkakeishka/Flickr
Last updated: Jun 14, 2012

GEOFFREY JAMES | Columnist

Geoffrey James is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is "Business Without the Bullsh*t: 49 Secrets and Shortcuts that You Need to Know."

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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