And why it won’t work.

As this election cycle comes to an end, and barring a major reversal of fortunes, Donald Trump will not be the next president of the United States.  Rather than exit with some modicum of dignity, he has elected to up the ante, trashing anyone and everyone who has abandoned his “crusade.”  Pundits attribute this to energizing his base of die-hard supporters.  However, is it more likely he views his constituents as potential consumers rather than voters?

Why do I say this?  A recent article in Fortune magazine reports there has been a 16 percent drop in business at Trump hotels, resorts and golf courses.  The target market for these properties is consistent with the demographics of business and political leaders who have publicly pulled their support for Trump.  His most ardent supporters are not the typical Trump property patrons.  Therefore, if the Trump family wants to capitalize financially on his electoral base after November 8, one should expect a number of new Trump branded products which are more likely to appear in discount stores than in Nordstrom’s or Tiffany’s.

So the question is, “Will people who were willing to spend their hard-earned money on ‘Make America Great Again’ baseball caps and t-shirts eat at a fast-food chain called TrumpBurgers and purchase low-priced, Chinese manufactured Trump clothing at Walmart?”  If 50 million Trump voters can be converted into 50 million customers, one might argue this may actually be one of the family’s most brilliant business ventures.

There’s just one potential problem.  When companies introduce new product lines, a concern is that the new items will ‘cannibalize’ the revenues from currently offered goods and services.  Now I must admit, I would not expect patrons of the new Trump International Hotel and Trump Doral Golf Club to stop going there because they are spending discretionary income on TrumpBurgers.  But there is historical precedence of what happens when a company with high-end products tries to enter a lower-income market.

In the 1970s, Rolex decided that they had an opportunity to expand their customer base by offering their watches at a discount through membership stores such as Fedco and Gemco (precursors of Costco and Sam’s Club).  The experiment failed dramatically.  Sales at the new outlets did not materialize.  More importantly, Rolex’s traditional market declined as high-end consumers felt the brand had been compromised.

One might expect the same thing to happen if the Trump organization starts catering to its carry-forward (pun intended) constituents targeted during the final 28 days of the presidential campaign.  Per the Fortune article, people most likely to plop down $780/night at Trump International are already indicating they may not want to be associated with the owner’s name.  That trend can only be expected to accelerate if the brand, once synonymous with luxury and wealth, is further compromised by appearing on mass-market goods.  And it takes a lot of low-margin discount goods to make up for the profits from one $780/night hotel room.

For what it’s worth.
Dr. ESP