The Escape of Mediocrity : A theoretical analysis of a given market condition

Sammanfattning: Previously, the rich customers bought expensive luxury goods, the impoverished customers bought cheap low quality merchandise and the middle class customers stayed true and loyal to the middle market. However, today there has been a change in the customer shopping behaviour, especially among the middle class customers who no longer want to be stuck in mediocrity. Either the customers “trade up”, which means that they buy goods with higher price and quality; or they “trade down”, which means that they buy cheaper low quality goods. This has created a change, which means that around the world, premium and no-frills products are squeezing middle-of-the-road products and services. Sales in the middle market are pressed while sales on both the top end and the bottom end of the market are rapidly growing. The market conditions are changing and this thesis is written with the purpose to analyse the given market situation - giving companies, primarily in the fashion industry, an opportunity to overview the possibilities for positioning on a market where the gap between discount and premium brands is getting bigger. Obviously, the phenomenon of market polarization will continue and the pressure on the companies to change will increase. This thesis discus therefore how a company can position and reposition itself in the emerging and ever changing environment. Three companies have been researched – Helly Hansen, Pennyblack and Nova Star. The choice of the companies have been made on the basis of all being active on the Scandinavian middle market practicing in three different parts of the fashion industry, which gives this study a broader approach. The study is qualitative and based on interviews with representatives from each company. After conducting the interviews and analysing the empirical framework, the conclusions suggest that the most beneficial way for a company to position itself on the current saturated market is by differentiating themselves, providing something that the competitors cannot offer. Nevertheless, the differentiation has nowadays become more complex and convoluted. This happened since the saturation has made attributes that previously have been seen as unique - such as for example, superior quality and design, to be mainly common. The saturated market leads to more and more tough competition between the companies. The study shows that this actually is the reason making the companies to try to make profit everywhere, attempting to reach people that should not fall within their targeted segment. On the contrary, it is more beneficial to target as narrowly as possible, specifically aiming at the consumers that would actually benefit form the products a company offers. Lastly, the results indicate that the International brands attempting to enter the Scandinavian market should be prepared to adjust their strategies, since the Scandinavian market seems to be different from the rest of the world.