Business Strategies

Strategies for Selling to Upper Class American Society

Written by Gregory Steffens for Gaebler Ventures

What possesses people to buy a five dollar cup of coffee at Starbucks rather than one for a dollar at McDonalds? Why does one buy a $400 climbing jacket when he or she has no intention of ever summiting Everest?

Is your business strategy successfully targeting the Bobos of the world?

For a company to successfully target certain demographics of consumers, it must have an understanding of their consumption habits.

Through differentiation, many companies separate their products from the herd by creating unique characteristics that customers value.

This value stems from product innovations, superior quality, and superior service reinforced by advertising campaigns, building brand equity, and beneficial stakeholder relationships.

Consequently, differentiated products focus on unique value creation rather than competing on price. Conventional wisdom suggests that many differentiation strategies target the more affluent consumers of society since they have a higher probability of being repeat customers. Due to this reality, an understanding of the consumption habits of the upper-middle and upper classes is vital for companies to capitalize on their business.

David Brooks, a senior editor at The Weekly Standard, discusses in his book Bobos in Paradise the cultural underpinnings that drive a demographic of well-educated, upper-middle and upper class persons' consumption habits. He refers to this demographic as the Bobos.

This article provides a business strategy approach to the descriptions brought forth by Brooks.

One of the "rules" of the Bobos involves the acceptance of people purchasing "professional quality" products that have nothing to do with the person's profession.

The times when one is judged based on the expensiveness of his or her jewelry are past but have been replaced by judgment based on the costliness of his or her gear. People purchase hiking boots that are designed to summit the world's highest peaks, but, more often than not, they use them to do their grocery shopping.

Rather than buy a ten dollar gardening hoe, they pay sixty dollars for one at an upscale gardening store. If Bobos are going to make a purchase regarding their gear or tools, the product must be of the best quality.

Even though they may never use the product for what it is designed, Bobos either want to feel like they could or want others to think that they do.

Businesses targeting these customers need to find ways to innovate their products to offer enhanced performance or features. Moreover, their advertising and branding techniques have to reinforce the product as being of professional quality and superior performance.

In addition to gear and tools, Brooks argues that Bobos are expected to spend more on simple products that, in past decades, were considered cheap. For instance, purchasing a five-dollar cup of coffee twenty years ago was unimaginable for most people. Today, millions of people visit Starbucks locations every day.

Millions more buy four-dollar bottles of water supposedly from the cleanest springs in France.

The reason people are willing to purchase products at these inflated prices revolves around the marketing campaigns that surround them. They highlight their superior qualities or give the appearance of unique characteristics that build brand equity.

Even if the consumer does not recognize the difference between the expensive and inexpensive product, they feel like others will and conform to keep up appearances. So, instead of simply buying chicken, they go out of their way to purchase free range chicken for twice as much. Instead of being seen with McDonald's coffee, they spend five times as much to carry around a Starbucks latte.

Brooks further stipulates that Bobos value a large diversity of virtually the same product. For instance, Snapple offers more than 50 different flavors. Coffee houses offer a wide assortment of ingredients that customers can pick and choose from to make their perfect, individual blend.

Diversity allows a customer to conform yet still helps them feel unique and to feel powerful and in control of their buying process. The key to diversification is to make the customers feel like individuals by customizing the product as much as possible to their particular tastes. Doing so gives customers a sense that they are actually participating in the production process to a certain extent, a feeling that is valued by consumers.

To charge the premium prices that the differentiation strategy provides, organizations either need to offer multiple variations of the same superior product or provide a product that can be marketed to the masses but customizable to the individual.

For more information on this business strategy, we recommend you read the Bobos in Paradise book.

To be sure, understanding the nuances of selling to Bobos is a big opportunity for entrepreneurs. It would not be unrealistic for a company to adopt a Bobo-centric strategy and transform an underperforming business line into a highly profitable money maker.

Gregory Steffens is a talented writer with a strong interest in business strategy and strategic management. He is currently completing his MBA degree, with an emphasis in finance, at the University of Missouri.

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What's your take on selling to the upper class and/or those who want to feel like they are in the upper class? Are you planning on adopting this strategy or have you already done so? If so, we'd love to get your thoughts on the subject.

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