The Middle Market: An Unglamorous Opportunity

Last Updated Mar 26, 2008 9:14 AM EDT

The Middle Market: An Unglamorous OpportunityThe middle market is that great area where customers on the low end of the income scale aspire to shop, and where high-end spenders fear to fall. Think Sears, T.J. Maxx, and Applebee's as prototype mid-market players.

Harvard Business School marketing professor John Quelch thinks the middle market is actually high ground when it comes to retail and service strategy -- a space where smart companies can set prices up and down the line, defeat competitors, fund bets in other markets, and make a lot of money to boot.

He compares controlling the mid-market to soccer players controlling midfield. Unless your players control that area, your team will have a difficult time scoring on one end and defending on the other.

He points to Toyota as controlling the midfield of the auto market, displacing GM and Ford in so doing.

It's not that Toyota only sells in the middle market. Far from it. They sell to all segments (except the luxury segment which they address with Lexus). But midfield is where the Bell-curve distribution of auto buyers by price of car reaches its peak. Sales of midfield product are a bellwether for dealers and consumers alike. The other products in the line â€" and their relative prices â€" hinge on the midfield entry.
More difficult, but not impossible, is to control the middle segment by only playing in the middle, without other lines to leverage. To do so businesses must deliver a "precise and persuasive value proposition," Quelch believes.

(Soccer image by Jason Gulledge, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.