The Product Premiumization Strategy
Consumers make purchasing decisions using one main criterion: value for money. The greater the value a consumer perceives in a product, the more they are willing to pay for it. The premiumization strategy is applied in one of two ways.
The First Approach: Adding More Value to Products — Or as the Customer Sees It, Making Premium-Feeling Products Accessible to Ordinary Consumers
This is done by engineering a distinctive value that surprises the consumer when they weigh what they get against the money they pay, because they initially assumed the product would be out of their reach. How can a marketing manager transform an ordinary product into one that delivers a sensory experience that captures hearts?
The cover image is a very simple example of an ice cream company that, through small touches in product design, added significant value to its products. See the source.
The Second Approach: Making Premium Products Even More Premium
This is done by adding more value to them — for example, allowing the customer to customize the product to their own specifications. For some businesses, this dimension has become the main competitive advantage that sets them apart. Can readers think of a local brand that has applied this strategy in its second form? Lomar is one example — one of hundreds of companies offering thobe tailoring services. What made it stand out? After all, every tailor tailors!
When either of these two approaches is applied, care must be taken to preserve the distinctive features inherent in the brand’s value. When successfully applied, both approaches open up new markets and attract new customers who had never previously dealt with the company — or in marketing language, were not part of the company’s target segments.
The success of this strategy is primarily tied to understanding what “premium” means and decoding it through the lens of the local culture in which the product is sold. This can only be done through qualitative and ethnographic research, and through cultural-semiotic analysis to uncover the genuine reflections of premium-ness within a given society. Applying some of these cues — whether in marketing messages, packaging, or product ingredients — may cost very little, but the impact on consumer perception can be enormous.
It’s worth noting that some marketing experts advise against applying this strategy in any country going through turbulent economic conditions, because consumer behavior in those markets tends toward austerity and price sensitivity is high.
This strategy, like others, is simply an attempt by brand owners to defend their share of a given market or capture share from competitors. I’ll close by summarizing the idea in a few words: create a noticeable difference in value while offering your customers a reasonable price at the same time.
Note: The English term Premiumization strategy — I translated it based on my own personal understanding.
← Articles MOC