Thanks to a booming economy, marketers keep finding new ways to separate consumers from their money with premium versions of everyday fare or upgrades on luxury products.
This is not necessarily a new trend -- designer jeans and Perrier led the way in turning ordinary objects into status symbols as early as the late 1970s. But a healthy economy, record low unemployment and the bull market have created a bumper crop of luxury wannabes.
"We're in a very vibrant economy," said Suzanne Grayson, president of consultancy Grayson Associates. "Now is the time to get the extra buck."
Faced with mature categories and little leeway for raising prices, package-goods marketers have turned to premium products to improve revenue growth, noted James Dormer, an analyst with Morgan Stanley Dean Witter & Co.
PREMIUM BRANDS AT P&G
In a meeting with Wall Street analysts last month, Procter & Gamble Co. Chairman-CEO Durk Jager identified more new premium-price brands and premium versions of existing brands as one of the engines he expects to restart stalled revenue growth. He said he's counting on this to boost P&G's revenue 1.5% to 2% annually over the next five years.
In the past year, P&G has launched new premium-price versions of Dawn liquid dishwashing detergent, Cascade automatic dishwashing detergent, Head & Shoulders shampoo, Crest toothpaste and Pampers diapers.
By late this year or early next, P&G is expected to roll its superpremium Physique haircare brand national -- and possibly global. At nearly $7 a bottle in its Wichita, Kan., and Little Rock, Ark., test markets, Physique more than doubles the previous price barrier for mass-market haircare products.
Even such seemingly mundane and low-tech products as liquid bleach are getting souped-up, pricier versions.
Clorox Advantage, a thicker, less splash-prone version of regular Clorox liquid bleach, began hitting store shelves last month at roughly a 40% per ounce premium over regular Clorox.
It's not just soap and detergents getting the upscale treatment.
Williams-Sonoma's hottest-selling item this year is the $369 Dualit Toaster, a model hand-assembled in England that keeps toast warm for 10 minutes. But a 48-inch "outdoor cooking system," once known simply as a barbecue grill, is selling for $3,195 and up, depending on such extras as additional burners.
One word -- boomers -- helps explain why marketers are able to get away with seemingly outrageous premiums, said Ken Harris, partner with Cannondale Associates, a consultancy.
"People are just more willing to spend money now when they perceive the benefit is worth it," he said.
So far, the strategy has worked spectacularly for some marketers. Two of the biggest package-goods successes of the '90s have been premium-price products: Colgate-Palmolive's Total toothpaste and Gillette Co.'s Mach3 men's razor.
Total, launched in December 1997 with a price more than 10% higher than regular Colgate toothpaste, passed $100 million in sales in its first year. Even better, it gave Colgate the push it needed to regain category leadership over P&G's Crest toothpaste for the first time in three decades.
A SMALL LUXURY
Mach3, priced at a more than 50% premium over Gillette's own Sensor Excel brand, has raised the marketer's total U.S. sales more than 30% since its rollout last July.
It's a small luxury in the overall scheme of things, said John Darman, senior VP at Gillette, who led the marketing effort.
"At the end of the day, the [Mach3] razor costs $7 for something men do 300 times a year, and that represents one movie ticket. It was not a big risk for men to try and find out whether the promises we were making were true," he said.
And what's good at home works on the road, too, as automakers respond to what could be a record sales year by adding high-end options. Even the humble pickup will get a new competitor that good ol' boys would hardly recognize.
Toyota Motor Sales USA's Lexus has been "very, very successful" with a Coach edition of its ES300 sport sedan, according to Nancy Hubbell, public relations manager. The package, priced at $4,395, includes Coach leather upholstery, walnut interior trim, an upgraded CD player and a moon roof. It also comes with two Coach bags.
Ford Motor Co.'s Lincoln Mercury Co. is finding the Cartier trim edition of its Lincoln Town Car popular with consumers.
Lincoln also plans to introduce the Blackwood luxury pickup next year. The "ultimate utility vehicle" will feature appointments such as rare African hardwood panels.
HIGH-TECH AT THE TOP END
Since other luxury automakers already have interiors of top-end products that leave little room for upgrades, they are competing by offering high-tech features.
Jaguar has an option package for the first time on its new S-Type -- voice-activated controls for the sound system, climate control and telephone, as well as a navigation system.
Not to be outdone, General Motors Corp.'s Cadillac division will introduce a night-vision system in the 2000 DeVille.
Luxury marques aren't the only ones pampering buyers with technology. GM's Oldsmobile has been running network TV spots for its top-end minivan, the Silhouette Premiere, which includes an entertainment system with a VCR, four independent headphone jacks and a videogame port.
"We expected it to be 10% [of Silhouette sales] but we hit 30%," said Joanne Rainbolt, assistant brand manager, adding: "And we've sustained 30% since the launch."
'OK TO BE WEALTHY AGAIN'
Thanks to media coverage that has made successful young CEOs into stars, "it's become OK to be wealthy again," said Daniel Phillips, president-CEO of The Robb Report, a luxury lifestyle magazine.
Whether that will last through a bear market is anybody's guess, but Mr. Phillips forecasts more mass marketers will go upscale during the next year.
True luxury consumers -- who "go to Armani and walk off 100 grand later," in Mr. Phillips' description -- will always crave luxury, but such cravings by the masses are more temporary and marketers know that, he said.
"They're riding the times," Mr. Phillips said. "You have to take your hat off to them for getting while the getting's good."