Gravity doesn’t just make your face sag with passing years. It impacts brands too. There’s more and more research, comment and gnashing of teeth about brands having to fend off commoditisation and strategies to achieve it. “To escape the curse of commoditization, a company has to be a game-changer”, wrote business author Gary Hamel in 2009. That’s a pretty big ask for most businesses whose processes, behaviours, leadership, cultures, just aren’t set up for risk taking. Last week, an article in Marketing Week faced into this very subject: it was an interesting perspective. In brief, four strategies were suggested to resist commoditization; I paraphrase and re-order them here: (i) make an emotional connection with your consumer (ii) create new pricing structures, new architectures (iii) be the first mover and (iv) consider premiumisation.
There it is, the old, hoary chestnut: premiumisation. It’s always in the mix: so obvious. So beguiling. Who doesn’t want to live the dream with a more premium brand with more premium margins, a more up-market reputation and lo! Wings on its feet? Who doesn’t want to appeal to those attractive consumers who reflect the lifestyle you aspire to? Of course. But that doesn’t make it right for your business or for your brand.
The gravitational pull towards premiumisation seems to start for a four reasons.
Following the trend. Very often the patterns in the data are clear. Take UK society say. We are getting older, wealthier, better educated – you know the story. We filter the data with our mental lenses of what we want to be true for our business to thrive. It takes bravery, discipline and time to step back from the data and be truly objective. Indeed to check that we’re looking at the right data. And there’s a check-step required too. To look at the picture from the other end. To look at the opposites. At outliers. Only by doing this can we determine whether premiumisation is appropriate for our brand.
Mirror, mirror. It’s so easy as a brand steward to forget that you are (probably) not the target consumer of your brand. Too often, “you’re not target market” is used as a backhand insult to explain why an activity even your Mum can see is a bag of old spanners is, in fact (if only you had the vision to see it), the new electricity. Applied properly though, it’s critical. You aren’t the target market and so are you in a position to judge whether a brand needs to be premiumised? I worked on the beer brand Carling for a number of years and it constantly struggled with this issue: ‘it needs to be premiumise’. Actually, as their latest strategy shows, it doesn’t need to ‘premiumise’ but actually it needed to remain fresh, topical and engaging amongst its primary drinkers* – populist not premium.
Time sag. There’s no doubt; there is a downward pressure on your brand over time. As your brand exists and thrives, there are new brand entrants, there’s private label, there are whole new categories competing for the spend made on you. It’s inevitable. Freshness is an essential strategy: keeping the critical touchpoints between your brand and your target interesting, engaging, up to date. A second will be ensuring your product, your formulation, your experience, is the best it can be. But premiumisation? It’s an option.
Loss of position. When your brand either strays from its successful position or, through the action of competitors it becomes depositioned, then you need to act. Considering the alternatives in your analysis is imperative. For example, would my brand be best served by depremiumising? You could take a highly functional positioning (say, like Ronseal). Or do I just need to refresh, contemporise and engage from where I am now (like Carling)? Or do I need to attempt to move my brand back up-market? Those italics are important. If your loss of position has seen you been dragged down into a less premium position, then your chances of regaining your old position are reasonable. If you started form a less premium position, then good luck. It’s possible, but time consuming and very, very expensive.
Keep your brand fresh, relevant, engaging: always. Premiumise? It’s an option. Some brands may need to capture that terrain back; others on the other hand, may find it almost impossible, or worse, damaging.
David Preston is founder of The Crow Flies, a research, strategy and innovation company that finds the direct route to success for categories and brands. Want to know more, then just wing over an e mail to firstname.lastname@example.org or call on +44 (0) 7885 408367. You can follow The Crow Flies on Linked In (http://www.linkedin.com/company/the-crow-flies-ltd?trk=company_name), on Facebook (https://www.facebook.com/thecrowfliesltd). Twitter, you can caw us at @crowflieshigh. Or just send a carrier pigeon – no hang on, a Turtle Dove (premiumisation in action) and we’ll intercept mid air.
© The Crow Flies, 2014