The bottom of the hourglass

modern economyAt Reuters, Peter Rudegeair writes:

What’s a retailer to do with a widening gap between rich and poor customers? Starbucks is the latest chain to target America’s “hourglass economy.” By cutting 10% off its grocery-store coffee bags while keeping in place the price hikes it put in place in its cafés last year, Starbucks is simultaneously pushing both its discount and premium products.

It’s a sensible strategy: low-wage occupations have dominated new jobs in the last few years, even as high-earners captured 121% of the income gains of the economic recovery. In 2011, the WSJ noted Procter & Gamble’s “high and low” approach to consumers by promoting its expensive Olay and Gillette products, while introducing a bargain dish soap for the first time in 38 years. The shrinking of the middle class “required us to think differently about our product portfolio and how to please the high-end and lower-end markets,” a P&G executive told the WSJ. “That’s frankly where a lot of the growth is happening.” Frito-Lay, Anheuser-Busch InBev, and ConAgra have also developed or expanded their offerings at both ends of their product lineups, according to LEK Consulting.

Last week I posted about selling at differential quality levels, noting that nonprofits might be reluctant to sell to the bottom half of the hourglass, with staff using their influence to direct the organization to produce the highest quality that the market will bear, even where there is a market for a lower-cost-medium-quality production. This is certainly evident in the sector that is my day job – higher education – although some lawmakers have asked why we cannot offer a degree that won’t put students and families deep into debt. And I would suggest it is true for nonprofit health care as well.

So let me put it out there for discussion: how well do you think the nonprofit arts sector does at selling to the bottom half of the hourglass? Here I don’t mean very wealthy institutions that can afford to do outreach and free days and such, subsidized by its donors and full-fare paying patrons. But rather nonprofit entrepreneurs who have tried to capture a niche of low-budget affordable performances or exhibitions, with the intention of staying that way, rather than growing into something more elite. Have the arts done better than other nonprofit sectors in this respect?


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