While some latecomers are still discussing if there isn’t room to live in the center of the market after all, themed “a bit cheaper than the expensive suppliers and a bit more expensive than the cheap suppliers”, new ideas are already sprouting as to what that new center could look like.

Richard Tomkins wrote in an article for the London Financial Times, published in November 2005, in regards to customer culture: “People like to save money at discount retailers to spend it on high end goods and services, leaving little enthusiasm for anything in between. The paradox, however, is that luxury goods companies moving downmarket and the like of WalMart moving up, we can see where they are meeting. It turns out that, contrary to popular belief, demand for middle market products and services is not dead; it is just sleeping, waiting for people who can produce the right combination of worth and value to wake it up.”

For us this waiting is not necessary, because market participants have shaped a new market structure through their behaviour, which we call the Waisted Rectangle©, with its four segments Luxury, Premium, PremiumEconomy and Economy, where products and brands for the satisfaction of needs and wants have found their living space. Richard Tomkins’ view of the development is true, but in a sense also somewhat in need of correction.

The manufacturers of Luxury products offer indeed, and in the future surely even more often, second product and brand lines, which they use to accelerate their mass business aside from the exclusive. We can see clear indications of this in the fashion industry where designers offer ‘ready-to-wear’ (Prêt-a-Porter) lines at the stylist level, next to their couture collections. However, this takes place in the Luxury and Premium segments, way above the dead center.

At the same time suppliers of products and brands from the Economy segment are trying to raise the value and price of their offerings. And Richard Tomkins is correct there once again. However, and this is what experience shows, for instance Hennes & Mauritz’s (H&M) ambition does not go as far as to try to advance into Premium segments where Boss and fellows have the domains of their mass business. They are content with a spot distinctly below. Last but not least because here they can make use of their market leadership, taking into consideration their brand identity, without being hard-pressed by market leaders from the Luxury and Premium world. This is also shown by our Waisted Rectangle©, with the living space PremiumEconomy.

No, the old center is not “asleep”, as Richard Tomkins assumes. It is dead. What he describes is a new picture of the market, which is already reality and in this respect the initial question, if there is a new center of the market, has been answered.

The determination of the correct positioning in the Waisted Rectangle© and the creation of a corresponding living space for products and brands is one the focal points of our consultancy work. We like to claim a top position in this field, because we were first to find and explain this new picture of the market.