What do you want to rent?


Where?




Trading Up Keeps Going With Rental  Rodger August 15

Michael Silverstein wrote a great book “Trading Up: Why Consumers Want New Luxury Goods”, a description of the growing market of New Luxury items of $4 lattes, subzero appliances, premium liquors and varied other New Luxury items.

Quality plays a part in this exploding market, but aspiration is also a huge motivation.

There may always be a group of people that never wants to rent, usually the super-affluent.  There will be some things too personal we will never want to rent.

The corollary to Trading Up is Trading Down, where you will trade down on goods that are of little importance to you, thereby you will trade down to generic goods, oft times of similar quality to more expensive brand name goods.

You can keep trading up in a great and growing number of high-end categories with rental: jewelry, handbags, high fashion, high-end cars, vacation homes, photography equipment, more.

There’s an occasional stigma attached to rental that equates it to trading down, using someone else’s dirty stuff.

But I also think that stigma’s really going to be starkly reduced, simply because there’s very little rationally that is too personal to be reused.  Absent this stigma, rentals become very attractive to a great many people.

When it does, trading up may be well turn out to be the greater of the two motivators for choosing renting over buying.

- Rodger


 

Steep Decline In Second Cycle Value  Rodger August 7

SeaWorld is a San Diego favorite. But when you’ve seen Shamu once, you’ve seen him a million times. A one day ticket is $57, a two day ticket is the EXACT same price and a 2007 pass is just $6 more at $63. That’s not just a steep decline - that’s a decline to ZERO! And nearly ZERO for rest of the days in 2007.

Most things (not all) decline steeply on the second cycle.

And my bet is that more and more, value placed on the second cycle will continue to drop. We’re in the ADD generation, where there is unlimited media, unlimited content, unlimited travel, unlimited goods, unlimited experiences, unlimited expectations. With saturation, comes discontent, impatience and, ultimately, wasted cycles when goods are purchased in an attention deficit society.

Here’s the value proposition I’ve begun to notice for such goods with steep declines. If you can offer nearly all (80 to 90% PLUS) of the value derived from a good for 20% or less of the cost, you’ve got a blockbuster offer and a blockbuster business. Even if you mess up and want to reuse a good, the cost is so low that you can always go and re-experience it.

But even if you require increasing your price to 50% or less of the cost, you’re still going to find a smaller market but still a market. In a world with steeply declining second cycle values, there are opportunities across the entire spectrum.