Highs & Lows

Like any marketer, a two-tier marketer must find a need and then design a way to fill it. The difference is that, instead of looking at satisfying the mass market in the middle, you look up, down or both ways.

Most firms go after the upper end of the market, Stewart notes. However, the lower end can be a good choice, too, as the phenomenal success of Wal-Mart's discount stores proves. In some industries, so many have gone upscale that there is a major opportunity at the low end, says Stewart. One example, he says, is financial services. So many banks are targeting wealthier customers that the growth of check-cashing centers, pawnshops and other low-end lenders is booming.

Going both ways, with different products tailored to upper-end and lower-end consumers, requires having a product line, as opposed to a single product. That rules out two-tier strategies for one-product companies--unless they're willing to broaden their offerings.

If you have a product already aimed at an upscale market, going two-tier can be as simple as bringing out a generic, low-cost version of your existing product. Developing a branded, higher-priced product is more complicated, requiring advertising to introduce and support it.

This article was originally published in the October 1997 print edition of Entrepreneur with the headline: Highs & Lows.