Also in Premium POV
Effectively Building a Premium Brand
An Intentional Approach to Being Worth More
Knowing how premium to be—and sometimes, how premium not to be—can be a game-changing approach to achieving the results a marketer wants. In the 20+ years of my marketing career, I’ve learned a lot about the way marketing happens. Whether working in-house for a CPG brand or creating campaigns on the agency side, the objective for me was always the same: to achieve that sweet spot between volume and margin to maximize profit. But what happens when the growth comes at the cost of lowering prices too much, especially if your focus is to market a premium brand?
Why be premium?
To be a premium brand and thrive, it’s helpful to articulate why being premium is important. If your reason is “because I want to charge more,” you’d better come up with something more meaningful to consumers! Being successfully premium must be tied to a purpose that inspires the brand stewards to stand for more, deliver greater value, or delight your target beyond the expected. It must bother your organization to not be premium in the way that’s appropriate for your category. Being premium needs to be innate with the reason your brand exists in the first place. Can your customers articulate why you’re premium?
What exactly does “premium brand” mean?
“Premium” doesn’t only mean “luxury,” and it doesn’t necessarily mean “the most expensive,” either. It does, however, mean that consumers are making tradeoffs to obtain or experience a brand, even if those tradeoffs aren’t conscientious. A car brand can be premium because of better quality, fancier features, and a bigger engine (we can see this reflected in a higher Premium Brand Index score). A jar of peanut butter (with a much lower score) can also be premium within its category because of its ingredients, its brand story, and its small-batch process. Evidence of “premium-ness” will be substantiated by a premium price point (a means score measures consumer ability to do this) as well as the the repeated sales by consumers who think the brand is worth the price (a mindset score measures consumers attitude toward this).
Although both brands in the example may charge more than their competitors, and both are respectively premium, the depth of the tradeoffs consumers make to acquire the premium car are certainly costlier than the tradeoffs for the peanut butter. To leverage your brand’s premium position to its fullest potential, it’s helpful to understand these tradeoffs in a quantifiable way. Your marketing should consciously preserve or direct your tactics to bolster the premium ranking best suited for your brand within your category (i.e., high end of the middle brands vs. most exclusive) while increasing volume from a consumer who can afford it. This is where a ranking system like the Premium Brand Index helps provide some data-driven perspective. Do you know how measurably premium your brand is or is not?
Do you understand the costs?
I wish I could say that being premium meant being more profitable. A premium brand position doesn’t by any means guarantee profitability. The benefits of a premium brand come at a cost—investments made intentionally—that can reap greater rewards down the road. Costs often include being less accessible than other brands, accepting less unit velocity, and being more financially exclusive. Beneficially, though, premium brands can endure pricing games with less volatility, and they often can extend their equity into new categories and grow a product portfolio. What tradeoffs are you making that are conscious investments in your premium brand’s equity?
Next topics in this series: Deciding How Premium You Need to Be, Knowing Your Premium Brand’s Tradeoffs, and Balancing Innovation with Speed-To-Market