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Shoppers leave a Target store. (Spencer Platt/SPENCER PLATT/GETTY IMAGES)
Shoppers leave a Target store. (Spencer Platt/SPENCER PLATT/GETTY IMAGES)

REPORT ON SMALL BUSINESS MAGAZINE

A sweet spot between luxury and price Add to ...

Blow-dry bars are just one menu item in a buffet of what marketers call masstige.

They’re part of the “new luxury” market that has developed for the growing, undefined middle-class, who have shown themselves willing to splurge on some products and services that give them an emotional boost, even though those same buyers may happily shop at Costco for other items.

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The term masstige – mass plus prestige – was popularized in a 2003 book by Neil Fiske and Michael Silverstein called Trading Up. But the label is now used to define everything from Target (which tries to attract middle-class buyers who want a deal but like the hint of designer chic) to the Porsche Boxster, which is a discount version of a much more expensive product – a toy for someone who can’t afford a Lamborghini but wouldn’t be caught dead in a Honda Civic.

The payoff for those selling masstige is that usually they make more profit than those operating in the worlds of super-discount or top-end luxury. At the bottom end of the market, profit margins are slim and rely on volume; at the top end, profits are reasonably good per item, but there’s not a lot of volume.

Masstige products and services, on the other hand, sell at relatively high volumes, with buyers willing to pay a premium – anywhere from 20 per cent to 200 per cent, according to Mr. Fiske and Mr. Silverstein – for something that has an aura of class.

It’s been the foundation of profits for dozens of familiar products and chains, including Williams-Sonoma, Ralph Lauren, Restoration Hardware and Coach.

Special to The Globe and Mail

This article originally appeared in the December issue of Report on Small Business magazine.

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