What is the Trickle-Down Effect?

The trickle-down effect is a model used in marketing, which states that fashion trends move from the higher classes to the lower classes in society. This model states that fashion sense flows vertically in the society, with each social class being influenced by the other. When these products are first supplied to the market, the prices will be higher than most can afford, but will eventually drop to the point that lower-class citizens can afford them, thus making it a trademark of the whole community. In advertisements, the trickle-down effect refers to marketing products via word of mouth or social networks, which spread like a bonfire.

How Does the Trickle-Down Effect Work?

This model presents a vertical curve which places the upper-class citizens at the top, the middle class at the middle, and the lower class at the bottom. It follows the assumption that each class is influenced by the actions of another social class, especially the ones above them. In the trickle-down effect, the higher classes tend to buy new fashions products that are expensive to differentiate themselves from the lower classes. The lower classes, on the other hand, will yearn to have those products so they can look like the upper class. This brings about fast progress in development and sales and can be seen from popular designer brands. In the 19th Century, Rudolf von Jhering wrote about cultural diffusion, highlighting how fashion moved vertically from the upper class down to the middle class, and finally stopped with the lower class. He stated that the Upper class are always compelled to find new trends almost every time as products lose value when everyone uses them. This is due to the fact that the lower class members always end up buying them. His observation and suggested concept lead to the birth of the trickle-down effect used in modern marketing. The trickle-down effect has also been integrated into Thorstein Veblens theory of conspicuous consumption in The Theory of the Leisure Class, which states that the man purpose for the purchase of luxury and expensive goods by individuals is merely to display their wealth to others. Nowadays, the trickle-down effect model has shifted focus primarily from classes to target age, demographics, and even gender, as in Culture and Consumption by Grand McCracken.

How the Trickle-Down Effect is Used in Advertising

Ads which are focused on getting the trickle-down effect to work are built to be compelling, engaging, entertaining or even humorous. This way, people are happy to share them with their family members, friends, and even coworkers. When this model works, it generates more than the planned amount of traffic and brand exposure, usually at a lower cost than initially budgeted. The trickle-down effect makes use of social networks and hopes that ads go viral as these platforms have lots of viewers, and people are more happy to share ads with a single click. This helps ads to gain enormous exposure and distribution without additional cost.

Relationship between the Trickle-Down Effect and the Trickle-Down Theory

The trickle-down theory is mostly not related to the trickle-down effect, except for a few insignificant terms. In economics, the trickle-down theory states that applying tax cuts to wealthy businessmen and firms will create a shift in the economy and greatly benefit the nation.