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The Price is Right

By: Linda TischlerWed Dec 19, 2007 at 12:44 AM
Sure, everybody loves a bargain. But smart companies know we'll also happily pay a premium for products we really love. These "new luxuries" aren't always what you'd expect, either.

Folks who drive BMWs tend to be Type A, time-stressed, driven people, says Jim McDowell, vice president of marketing for BMW of North America. So why, then, do they often take the long way home from work? "They just love to drive," he says. "They tell us the happiest hour of their day is the time they spend driving to and from work--especially if they can find a more interesting route than the highway."

That's why BMW owners are passionate about their "ultimate driving machines." More than other upscale vehicles, BMW emphasizes performance. So engineers build in a little engine noise (even though they're perfectly capable of making a quieter engine) to give drivers the thrill of the roar, and design steering wheels to provide more feedback, giving BMWs entertainment value, as well as sensory satisfaction.

As a consequence, the company says its moderately priced 3 Series cars, which start at $27,800, attracts a younger group of buyers than the Mercedes C-class or the Lexus IS series. "They may live in a one-bedroom apartment, but the BMW is a car that they will voluntarily stretch for at an earlier age," McDowell says.

And when BMW researchers asked the hard-traveling buyers of their cars when they knew they were home from a business trip, many of them said it wasn't when their spouses, children, or pets greeted them at the door. It was when they spotted their car in the airport parking lot.

Sidebar: A Work Plan for a New-Luxury Product

  1. Create a Vision
    Target a category, then become a master sleuth to determine its shortcomings. Understand what consumers in that category dream of having, and design a product that captures their imaginations.
  2. Move From Abstract to Tangible
    Develop a prototype and field test it with expert users. It's your job--not the consumers'--to translate their dreams into workable ideas.
  3. Roll Out Flawlessly
    Invent a retail system that allows you to deliver that product consistently and perfectly. Use word of mouth to help spread the buzz.
  4. Repeat
    Engage in continuous research, knowing that if you're successful, imitators are sure to follow. Focus on core customers for signs of a shifting market and ideas for next-generation products and features.

Linda Tischler (ltischler@fastcompany.com) is a Fast Company senior writer. She trades up in coffee and shoes, but never shops at Linens 'n Things without a coupon.

From Issue 76 | November 2003

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