America’s middle-market consumers are trading up to higher levels of quality and taste. The members of the 47 million households that constitute the middle market (those earning $50,000 and above in annual income) are broadly educated and well traveled as never before, and they have around $3.5 trillion of disposable income.1 As a result, they are willing to pay premiums of 20% to 200% for the kinds of well-designed, well-engineered, and well-crafted goods—often possessing the artisanal touches of traditional luxury goods—not before found in the mass middle market. Most important, even when they address basic necessities, such goods evoke and engage consumers’ emotions while feeding their aspirations for a better life. We call these new-luxury goods. Unlike old-luxury goods, they can generate high volumes despite their relatively high prices.
Luxury for the Masses
Middle-market consumers are trading up, going from Chevys to Beamers, from Bud to Sam Adams. Understanding their desires offers an immense opportunity for profit.
A version of this article appeared in the April 2003 issue of Harvard Business Review.
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