Brian Millar of Brand Tacticians has an interesting article in Market Leader this month (Oct 2005) about Quality Curves.
Simply put, the curves plot the evolution of a product category and its brands by "quality" over time. What Brian found were two distinct groups - premium products which just keep improving in quality ( your BMWs, Michelin restaurants etc), and standard products which steadily reduce in quality in order to get cheaper over time. But the latter then hit an inflection point, a minimum price has been reached (eg KFC, McDonalds), and quality actually then starts to go up (eg EAT, Wagamama), until ultimately re-merging with the premium brand line.
The danger for many brands is that they get fixed by consumers at the point where they achieved mass-market acceptance; KFC and McDonalds will always be lowest quality/price, no matter how much they try and sell us wraps and paninis.
To get back up the curve you need to think about hygiene and motivation factors. Hygiene factors are the must haves - do them, but do them as simply and cheaply as you can. It's what we used to call value engineering - find out what features a customer really wants from a product and put your effort there - don't fret about the other stuff. Then with what additional capacity you have do the motivational things, the wow things, the things that will get your product mentioned and talked about in the market place. They may be peripheral (ice creams on airlines flights), or design/fashion/fetish orientated), but they're better value than "extra" features.
Remember though that this is a market curve - it's where the market goes whether you like it or not. So make sure you can position your brand and products, now and in the future, accordingly.
