The middle market is that great area where customers on the low end of the income scale aspire to shop, and where high-end spenders fear to fall. Think Sears, T.J. Maxx, and Applebee’s as prototype mid-market players.
Harvard Business School marketing professor John Quelch thinks the middle market is actually high ground when it comes to retail and service strategy — a space where smart companies can set prices up and down the line, defeat competitors, fund bets in other markets, and make a lot of money to boot.
He compares controlling the mid-market to soccer players controlling midfield. Unless your players control that area, your team will have a difficult time scoring on one end and defending on the other.
He points to Toyota as controlling the midfield of the auto market, displacing GM and Ford in so doing.
It’s not that Toyota only sells in the middle market. Far from it. They sell to all segments (except the luxury segment which they address with Lexus). But midfield is where the Bell-curve distribution of auto buyers by price of car reaches its peak. Sales of midfield product are a bellwether for dealers and consumers alike. The other products in the line – and their relative prices – hinge on the midfield entry.
More difficult, but not impossible, is to control the middle segment by only playing in the middle, without other lines to leverage. To do so businesses must deliver a “precise and persuasive value proposition,” Quelch believes.
(Soccer image by Jason Gulledge, CC 2.0)
