There is a lot of talk as to whether premium and luxury brands are weathering the financial climate better than most. The ‘immunity’ of the super rich may be in part be bolstering luxury segments, but there are more societal and behavioural trends driving a move to premium. It is these, rather than the specifics of category distinction, which demand a different response from brand owners.
The debate on the difference between premium and luxury is one well documented, by no lesser heavyweight than Seth Godin, so there is little point in repeating here. The difference between the mass and premium is less well represented, and this is pretty important with many brands employing both step-up and step-down recession busting strategies.
To summarise, luxury products by definition are something that is unnecessary. Very nice, but unnecessary. Opulence for its own sake, and there is nothing wrong with that if you can afford it. Luxury brands are unreachable by most and this is the very essence of their desirability.
But premium is different. They are not follies but necessities, at least by today’s lifestyle standards. The premium comes from the fact that we attach some additional value to them. Real or perceived. And this extra value is worth paying extra for. This value might be exclusivity as with luxury brands but is more likely to be about quality, trust, longevity, efficiency or sustainability.
The mass market sees brands competing on pretty similar terms, with pretty similar products, offering pretty similar benefits. It is the similarity that defines the segment, our choices are less conscious or at least less considered, when asked many find it hard to give a reason for selection.
What has become clear is that it is far more complex than a linear scale based largely on price, ranging from budget through to mass and premium up to super luxury. It is as much an audience as a market dynamic construct, and one that goes beyond the relativity suggestion that one person’s premium is another’s luxury. If this were all true it would be possible for a brand or product to be both luxury AND premium, rendering the notion of a distinction meaningless.
For me it’s about the nature of competition and the marketing job to be done:
- Luxury brands or products, compete on exclusivity, playing on egotistic and aspiration lifestyle emotions. The job is to create demand for something that is just not needed.
- Premium brands or products compete on margin playing to emotions of trust. The job is to demonstrate value.
- Mass brands or products compete on market-share playing on emotions of preference. The job is to capture share of mind.
Luxury and mass brands need the traditional mass media of TV, press and PR. The former to create the aspirational lifestyle associations, the latter to reach as many people as possible with largely promotional messaging. Premium brands have a more awkward relationship. They’re not in the media numbers game. The audience know they are there, and the onus is more on the mass brands to satisfy consumers that it’s OK not to trade-up. Whilst needing to maintain a brand presence these traditional mechanics are not best for the task of demonstrating value.
In times dominated by more digital and social media a different picture emerges. Mass brands use social as another outlet for grabbing share of mind, despite some very creative attempts, few have managed to establish long-term followings. The exclusivity of luxury brands is just at odds with the whole open nature of the social network and they are reduced to using social media to reinforce celebrity and life-style associations. Premium brands can use social content to communicate value, and to build deeper and more meaningful relationships.
So are premium brands winning out as budget tightening forces more discretionary purchasing. There are certainly a number of consumer trends driving this conclusion:
De-clutter. The trend is to buy less, but of higher quality. To save for things we really value rather than having lots, right now – a kick back against debt-fueled mass consumerism. This is different from the thrift of ‘buying to last’, which has little resonance in fast moving fashion for example, and more to do with the pleasure and self-satisfaction of de-cluttering our lives.
Organised Waste. We are just more aware of the impact of our consumerism, after all do we really need more plastic products that will be obsolete in 6 months, or yet another top we’ll only wear once? Seth Godin describes the luxury segment as ‘organised waste’, and we know that this is just not sustainable. It’s a conscious move away from the social signalling of ‘conspicuous consumption’ to ‘conscious consumption’ Authenticity. The studies of Hood and Bloom prove that we are hard-wired for authenticity. It’s why buying a fake just isn’t the same. But this has moved on to be about valuing ‘real’, a desire for honesty, trust and integrity in the brands we choose. We get behind things that we believe in, that have real meaning to us. It means there is no hiding behind a veil of premium simply through heritage, pricing or product feature, it has to be proved by behaviour here and now.
So what is the challenge for premium brand owners (or those that aspire to be)?
- Understand value. The brand doesn’t get to decide what value is. Consumers decide what premium they are willing to attribute in a particular category. And that means listening to them, talking to them, understanding what value means to them and delivering it.
- Segment. The result of gaining this level of insight is that brands can segment according to value. The brand needs to be consistent first, but the conversations can shift and change to address a specific segment based on where they value premium.
- Demonstrate value. Don’t say it, do it. Prove it. Show it. Social video, animations, reviews, research, surveys. Interact with the audience, make it engaging but above all show where the value is added
- Do it across the full experience. It’s not just about the purchase point. It is about the whole experience of dealing with the brand. The Brand needs to be consistent, clear and honest at all touch points and stages in the life-cycle.
By definition not everyone in the category can be premium, but there is certainly value in achieving it. Those wishing to hold on to it need to continue to listen, to innovate and behave with integrity. What is clear is that it is far easier to lose premium status, than gain it. It’s a long way back up.
