28 Customer tiers

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CUSTOMER TIERS

Picture a theatre. Everyone is there to see the same show, but facing the stage you have the stalls, the circle, the upper circle and balcony, nicknamed “the gods” because you’re so high up, you’re closer to heaven than earth. Some tickets might cost 10 times more than the others but everyone has bought almost the same experience. The front stalls and the circle cost more because the view and sound are better.

Brands can include more people in their market by offering their customers different tiers, different price levels for a similar experience.

The idea Fashion brands are past masters of arranging their customers in tiers. From the 1930s Paris couture houses also sold perfumes, and this proved extremely profi table by broadening their market to a much wider group of women than those who could afford the dresses.

In the 1960s Pierre Cardin broke the rules by launching a prêtà-porter (ready to wear) range and was thrown out of the couturiers’ association for his bad behaviour. Although he was soon invited back, once his former colleagues observed his fi nancial success. He’d made his designs available to a much wider audience. Those who could afford couture still felt that they were the ones with the real Pierre Cardin clothes, so he still retained that tier of customers.

In practice • This is a lot easier from the top down. You can create tiers below a well-known, luxury brand, but building upwards is harder. Honda motorcycles built upwards, from their little scooters to their superbikes, but they faced a lot of scepticism and had to prove themselves over the decades through sheer quality and reliability. • You can create tiers by extending your brand into more affordable but consistent markets. The Christian Dior couture line still does catwalk shows, but the company makes its profi ts from accessories, perfume and make up. • Know where to draw the line. Cardin’s brand extension into thousands of different licensed products weakened his fashion brand identity.