What the Shake Shack and Pre-owned Mercedes Have in Common

3 Marketing Lessons for Premium Products

Despite the heat, there’s a line snaking from the Madison Square Park Shake Shack that translates to a minimum of half hour wait. Undeterred, people keep joining it to purchase an expensive fast food meal at an establishment run by the famous chef Danny Meyer when they could easily walk into one of the many well known chain establishments nearby, get served in minutes, and pay a fraction of the cost.

By contrast Mercedes, known for its high-end, quality driving machine, has intelligently transformed the image of its “used” cars, which bring to mind the image of a sleazy sales man trying to pull a fast one. They repositioned “Pre-owned Mercedes” into an aspiration product that still preserve their value for another class of consumers.

3 Premium product attributes

Here are three attributes that Shake Shack and Mercedes have in common as premium priced products.

  1. Are affordable luxuries as low priced line extensions from companies known for premium products. Despite being two or three times the cost of your popular fast food burger meal, the average Shake Shack check of $13 is a fraction of the cost of a prix fixed menu offered at other Danny Meyer establishments. Similarly, a pre-owned Mercedes is significantly less expensive than a shiny new Mercedes that is driven off the dealer’s lot for the first time.
  2. Retain brand mystique. Known for their premium quality, Shake Shack and Pre-owned Mercedes are experiential products that have maintained the allure of their more expensive brand siblings. For the price of a used Mercedes, automobile buyers could purchase a new car.
  3. Provide quality experience despite lower, relative price point. Without toys or  frills, a ShackBurger is a high quality meal without the additional fat content of a Burger King or McDonalds. With its simple offering, the Shake Shack remains true to its all American roots.

3 Questions to extend your premium product offering

In today’s budget-conscious market, it’s important to think in terms of products that consumers can afford but are willing to pay a premium for. While these recommendations don’t work for every product, they’re good for high-end, aspirational brands. These products provide a sense of “It’s a special treat for me!”. To help assess your product offering for potential new products, here are three areas to examine:

  1. Are there segments across you potential target market that you’re missing? In this case, both Danny Meyer and Mercedes weren’t servicing a lower end of their potential market.
  2. Can you maintain the quality perspective upon which you’ve built your reputation with this line extension, especially one that’s lower priced? For example, from a business perspective, Shake Shack has eliminated a lot of costs that exist in Danny Meyer’s other offerings such as the need for a reservations system and flowers.
  3. Will your product still yield a premium price while being an affordable luxury? According to the New York Times, the Shake Shack yields more revenue per establishment than others in the burger-flipping arena.

Regardless of the positioning of your offering, these two examples still provide a useful example of the ways to think about your brand and your offering. What can you do to expand your brand to another, higher margined market?

What do you think about this comparison? Please let me know in the comments section.

Happy marketing,
Heidi Cohen


For more background about the Shake Shack, read this New York Times article.

For another perspective on the genius of Shake Shack’s business model, read this 37 Signals article.

Related article: Ice Cream Sundaes and Starbucks Via Coffee

Photo credit: Shake Shack line by psdphil via Flickr

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  • http://www.knowledgenotebook.com/ knowledgenotebook

    affordability + mystique + quality, I LOVE it, Heidi, thanks.