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It Is Much Easier to “Sell Down” Than to “Sell up”, Price-wise!

By
Services for Real Estate Pros with Napa Consultants DRE00893924

Courtesy of Tesla

Many real estate agents and firms face a challenge when they contemplate breaking into the luxury end of the market or increasing their luxury market share. The challenge is shifting the perception held by high net worth consumers about their “mid-price range” personal or company brand. One of their biggest concerns is alienating their core referral base because they do not want to be perceived as pretentious snobs or as elitists.

 

The truth from a strategic branding standpoint is that it is much harder to “sell up” than it is to “sell down” price-wise. This means it is more difficult to have a brand perception of “middle of the road” while trying to list $1M+ homes. It is easier to have a luxury brand perception and attract mid-price home sellers. 

 

The key is striking a balance of sophistication without coming across as pretentious. Apple, who hired the head of the British luxury brand, Burberry, to head their retail store division has nailed this balance.  They understand the “halo effect” of including a Hermès watchband in their offerings to attract high net worth buyers.  They may not sell many of them, but this strategy casts a glow of luxury on all the other less expensive bands and also their entire range of products.

 

Tesla just achieved the same result from the halo effect strategy.  They launched their company as a sophisticated yet not pretentious luxury brand competing with Mercedes, BMW, Audi and Lexus, but squarely in the electric car niche.

 

We happened by our Tesla dealership in Santa Barbara last week and could not believe what we saw! There was a line of customers around the block waiting to reserve a Model 3. This is their new $35K mid-price sedan capable of seating five and going 215 miles on a charge, and 0-60 mph in less than 6 seconds. It is coming out in late 2017. 

 

In just a few days over 276,000 people reserved a Tesla Model 3. That equates to an $11.6 billion backlog of orders!  It is much easier to "Sell Down" than to "Sell up", price-wise.

 

Written by Ron & Alexandra Seigel- 

ABOUT:  Napa Consultants, International is the leader in brand strategy for the luxury real estate industry.  They work exclusively with professionals who are passionate about gaining or sustaining market leadership. With an expertise in personal branding, company branding, luxury real estate website design and social media marketing they help their clients become the breakaway brand in their marketplace.

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Comments (31)

Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

This is what has kept me from really spending any time marketing to luxury home owners or buyers.  However, I am finding my average price is moving up year after year, so maybe there's hope for me yet.

Apr 05, 2016 09:55 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Chris Ann Cleland I would not for a minute doubt that you would be a stellar success.  A

Apr 05, 2016 09:57 AM
Mimi Foster
Falcon Property Company - Colorado Springs, CO
Voted Colorado Springs Best Realtor

What a wonderful concept - easier to sell down than to sell up. Tesla lived in our town for a while, and I'm a great fan of his in so many areas. 

Apr 05, 2016 10:45 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Ron and Alexandra- I read about this and it brought a smile to my face.  I've not driven a Tesla but I do like them. 

Apr 05, 2016 12:06 PM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

What I love best about this story is a reminder that humans are not really rational after all but more emotional creatures. Tesla understands this concept and designed not just a car, but an authentic car and everybody wants it! A brand is more than just a brand, it has emotional influence too!

Apr 05, 2016 12:36 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

So many people thinking they are buying the next Delorean or Cobra and presuming appreciation will make it well worth it.

Apr 05, 2016 01:03 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning A & R. Wow, that is a serious backlog in future orders, they must be doing a lot of things right.

Apr 05, 2016 07:43 PM
James Dray
Fathom Realty - Bentonville, AR

Good morning A.  IMHO it is all about achieving balance.  Those that achieve that balance will be successful, those that don't....

Apr 05, 2016 08:25 PM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Ron and Alexandra, after reading the post and all the comments, I scrolled up and was surprised when I didn't see that Gold Star. Definitely a feature worthy post. When I lived in NY, I would notice people carrying "Big Brown Bag" or "Small Brown Bag" with Kmart purchased in it.

Apr 06, 2016 08:07 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

I am impressed with the stats and projections for this model. I never want to be one of the first ones and wait until it has a few kinks worked out.

Apr 06, 2016 12:15 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Kathy Streib now that we have a dealership in town, we are going to test one out. A

Apr 06, 2016 02:27 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Ed Silva  I don't think so.  I think they want an electric car and the Tesla name has a good name.  It is not a Toyota, it is a Tesla..not that there is anything wrong about the Prius...I am just teling you how most people think.  A

Apr 06, 2016 02:30 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Beth Atalay Thank you for your nice words, and I have noticed similar things when we lived in LA lurking in the Neiman Marcus bags.  LOL  A

Apr 06, 2016 02:31 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Ron and Alexandra Seigel ,

Excellent observation and enjoyed reading the comments from all ..I think the AR gods are sleeping or are temporally out of gold stars

Apr 06, 2016 09:53 PM
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

Yowza, that's some marketing and some amazing numbers too!

Apr 07, 2016 02:01 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Alexandra, I find it very interesting sadly TESLA has issues with their Transmission, and as of this evening their Seats... a class action lawsuit waiting to happen, Endre

Apr 11, 2016 03:00 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Endre Barath, Jr. I find it interesting how the media loves to tear down those who are avant garde minded and want to progress and innovate.  The whole car industry as we know it hates Tesla because it challenges their lack of innovation and old fashioned way of doing business...

Class action lawsuits are worthless in my opinion.  The only ones who benefit are the attorneys, the classes get $5-10 bucks each in the settlement.  Like with all the misshaps, Tesla will handle it...I never heard of law suits with all the recalls on every brand out there!  Sorry to spout off, but I like Elon Musk and his way of thinking...I think many are falling victim to their green eyed monster because their jealousy is oozing out of them.  A

Apr 11, 2016 03:08 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Alexandra interesting perspective, I agree the class action lawsuits only benefit Attorneys.... as far as Transmission problems feel free to Google it, one of my multi millionaire clients had his TESLA "S" which spent more time in the shop than on the road...just sayin...Endre

Apr 11, 2016 03:13 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Endre Barath, Jr. and all of our friends are in love with their Teslas have not had one problem, and waited for the gull wing model Suv and are raving about it.  It happens with every brand of car!  

Personally, we don't like the limited number of miles the car has and would not buy one at this point in time.  I admire the ingenuity of the man behind Tesla. Sorry to hear about your client and the problem with his "S".  I have a theory about this, and will share it with you at the meet up we are all setting up.  A

Apr 11, 2016 03:21 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Endre Barath, Jr. Our friends 4 of them love their Teslas and are now raving about the latest one.  They have not had a problem with theirs, and love their latest SUV model with the gullwings.

Every brand has had a problem like your friend is having.  I am sorry to hear about that.  Personally, we would not buy a Tesla, I hate the idea of limited miles.  I would be concerned about finding an electric station for refill.  A

Apr 11, 2016 03:25 PM