Posted in Marketing and Strategy Terms, Total Reads: 280
Definition: Trading Down
Trading down can be associated in 2 forms one with the customer and one with the company. For a customer switching from an expensive or branded product to a lower priced and a product of lower quality is a trade down which might be due to economic constraints or change in choice.
While for a company offering a lower quality product, by reducing number of features in order to reduce selling price so that customers prefer its product due to the lower price on offer is also a trade down.
Eg. Customers switched or traded down their cars during the economic downturn in order to reduce their debt.
Companies offer cheaper products with lesser features to compete with their competitors.