In the late 1970s, the chicken company Mike Helgeson's grandfather founded faced two choices. The family-owned St. Cloud, Minnesota, enterprise could continue to compete in a middle market that was becoming crowded with chicken from low-cost producers. Or it could go after the higher-end market.
After much thought, the company decided to develop its own brand, Gold'n Plump, and position itself as the high-quality alternative to store brands and other low-priced options. "I think it's been successful," says Helgeson, CEO of Gold'n Plump Poultry Inc., of the strategy. "We've doubled [revenues] in the last five years."
Today, companies in a variety of industries are pondering similar choices, thanks to the growing influence of a concept called two-tier marketing. Its premise is that, beginning about the time Gold'n Plump was making its move in the late '70s, American society began separating itself into haves and have-nots. At the same time, the middle class--long the growth engine of mass marketers of all stripes--was becoming less influential.
For marketers in search of large and growing markets, this usually means deciding whether to shoot for the upper tier, the lower tier--or both. "Any company that used to be in the middle has to go in one direction or the other," says Paul Leinberger, senior vice president with market research firm Roper Starch Worldwide Inc. in Newport Beach, California.
"Does it mean the end of mass marketing?" asks Myra Stark, director of knowledge management for Saatchi & Saatchi Advertising Worldwide in New York City. "You could make a good argument that it does."