This month’s Admap looks at how brands can grow via premiumisation. Having a premium offer within the portfolio is an important way for brands to drive sales growth and to engage with a wider range of consumers. It’s particularly well-suited to mature categories where it’s more difficult to grow through penetration.
We present a total of 14 articles by experts from across the globe with knowledge and advice on premiumisation. The issue considers all aspects of premiumisation including the different ways to execute a premiumisation strategy, range extension, brand repositioning, what premium and luxury brands can learn from Amazon, and identifying the packaging and design cues that resonate with today’s consumers.
Our anchor article, Premiumisation strategy as a way to grow by John Dawes, Magda Nenycz-Thiel, Charles Graham and Bruce McColl, the Ehrenberg-Bass Institute, looks at the myths of premiumisation, adding evidence to the topic by identifying the appropriate growth strategy, as well as how to manage pricing and price promotions for the premium offer. Three strategic lenses are considered when determining how to increase average purchase value: within industry, within category and within product format.
In Range extension to deliver a double whammy: Penetration and premiumisation, David Taylor, the brandgym, offers advice on driving premiumisation by smartly and strategically extending the core range to target new users, occasions and channels. Taylor also offers guidance on how to avoid cannibalisation - as the name suggests, this is the risk of an extension eating up other family members within the portfolio.
In The art of premiumisation: Stop guessing, start innovating, Nielsen’s Joanna Parman, explains how premiumisation offers brands a big opportunity not only to drive sales growth in increasingly competitive markets, but also to differentiate their product portfolio. Nielsen’s Consumer Prosperity study found peoples’ view of what makes a product premium is influenced by rational factors such as links to quality and superior performance, and emotional triggers such as how it makes them feel.
Many brands stretch upward but few luxury FMCG brands have made a transition to mainstream shopping, but Godiva Chocolate brand did just that. In Leaving the walled garden: Lessons from a luxury brand that embraced the super market shelves, David Adamson, The&Partnership, explains how since 2017, Godiva chocolate has successfully gone from ten small but perfectly formed boutiques to a patron of Sainsbury’s shopping aisles, without damaging its luxury brand cues.
Peter Matthews of Nucleus explains Why it’s hard to reposition a brand. Matthews looks at value brands, luxury brands and the most challenging space – the middle market. Middle-tier brands are most likely to need to reposition. To move up, Matthews advises brands to know their customers better, or develop a culture that breeds innovation and a business model that can continuously fund it, as consumers’ preferences don’t stand still.
In The new rules of luxury and premium branding Vicky Bullen and Elayne Read, Coley Porter Bell, note the traditional price/status hierarchy has broken down and mid-market brands – the traditional position for quality – have suffered as consumers trade both up and down. Taking inspiration from fashion, grocery, alcohol and beauty, the authors identify four key themes that embody the new codes of luxury today and the cultural and consumer movements driving these.
Alex Gordon, Sign Salad, looks at how brands can align themselves with the new cultural rendering of “premium-ness”. Due to the widespread premiumisation strategies in Western markets, consumers have grown used to the idea of “accessible luxury” – and old cues aren’t working as well any more. In Shifting signifiers of premium, and how brands can adapt, Gordon looks at an emergent narrative around the concept of “premium”, for example, brands are beginning to code premium-ness as artisan value.
In How to be premium in an age of high expectations, Andy Wardlaw, MMR Research, discusses two types of premium shopper: traditional and discerning, and two types of premium brand personality – the first is genuine, traditional and credible, while the second is challenging, free spirited and quirky.
In this opinion piece, How to build a premium brand – deliver satisfaction, not happiness, John Kenny, FCB Chicago, argues that premium brands are not built on niche appeals. Instead, they’re built by brands that engage in culture with a convincing point of view about what goals, values and expectations are worthy of pursuit. Tesla, Lululemon and Tito’s Vodka are discussed.
In On premiumisation: The paradox of Amazon vs luxury experiences, Dr Martina Olbertova states luxury brands need to adopt a strategy that puts them somewhere in the middle to embody the luxury/premium essence in ways that are seen as relevant today. They need to embrace both cultural relevance (having a strong voice and message) and contextual relevance (using the right channels in the right ways). Olbertova discusses five lessons that luxury brands can learn from Amazon to keep them competitive in a global marketplace.
Looking to Eastern markets, Kantar’s Doreen Wang explores how China's internal market has become a test bed for Chinese companies to build premium brands that satisfy the demand for consumption of luxury or premium items. In China’s premium strategy, Wang outlines the key criteria that help brands move from a value to a premium proposition.
In The new challenge of China’s emerging affluent class: Juggling it all, Tom Doctoroff, Prophet, looks at the evolving motivations of China’s emerging affluent class – primarily in their 30s and 40s – due to rising incomes and expanding lifestyle choices. Five strategies marketers can employ to maximize brand relevance are discussed.
Dave McCaughan, Bibliosexual, looks at how, across Asia, there is a rising, still fast-growing middle, and more importantly upper-middle class who want a slightly better, rarer, more unique experience. Read more in Premiumisation: An Asian norm.
Tahaab Rais, FP7 McCann MENAT, looks at The redefinition of affluence in an evolving Middle East. The author discusses the subtle cues of affluence emerging in today’s Middle East, where there is a big difference between being rich and being affluent – the latter speaks to something deeper and more meaningful.
Not enough time to read all the articles? Admap subscribers can access a deck that summarises the knowledge, evidence and guidance from all the authors, and offers key considerations on the topic.