Premiumisation

Brand Premiumisation …and The Second Law of Thermodynamics

“Change in inevitable. Change is constant” wrote Benjamin Disraeli. And more famously, Charles Darwin penned the now classic lines, “It is not the strongest of the species that survives, nor the most intelligent… It is the one that is most adaptable to change”. And ‘Change Management’ is almost a field in its own right nowadays, with ISO standards, higher education and degree courses, specialist training consultancies – the lot.

Second ThermodynmicsIt’s a shame about all those cheesy Pinterest Quotations, or the pseudo-motivational nonsense that does the rounds on LinkedIn, because change is fundamental – really fundamental (for alas, ‘fundamental’ is also a word over-used in these days of corporate claptrap). Ultimately, change is constant, and it’s described by the Second Law of Thermodynamics, which says – stay with me here – that any natural system effectively breaks down further and further, ultimately reaching (or attempting to reach) a steady state – or the highest state of entropy. A complex system – a building say, ultimately will become dust and dirt and component elements again if it isn’t nurtured. Living beings, ultimately die and are recycled. Change truly is inevitable – you cannot run and you cannot hide. So, as a brand marketeer we can only conclude that how brands are born, how they’re used, perceived, and finally how they die, is in fact, all to do with quantum physics. Don’t let anyone tell you that marketing isn’t science.

What the Second Law means for brands is that highly complex systems (brands) will undertake irreversible processes that will move them towards a state of higher entropy (counter-intuitively, this means simpler, more basic, more steady – in the course of time, more dead). Unlike pure natural systems though, the life path for brands, from creation to death, isn’t linear – witness the product life cycle. Through the intervention of sentient beings – us – we can influence and direct the life path of a brand.  They will crumble back to dust eventually, but not without some fireworks and fancy dance moves wearing spangly dresses along the way.

The question therefore is how to respond to change. Effectively, what any brand stewards should be aiming to do during their tenure is to increase the complexity of the brand. To be clear, in no way does this mean to do complex stuff – but rather, broaden, strengthen and deepen the network of positive mental pathways and holloways in the target consumers’ brains. Create new sparks between those precious brand-related synapses in the old grey matter. Build, in effect, brand fortifications that can resist the denuding effect of time and other influences. To protect the brand ‘entropy’.

What’s important here is that a brand’s strategic response is not limited to one strategy or one set of options. It’s not limited to premiumisation. True, you’d be forgiven from thinking that it was given how often the term is mentioned in brand plans and around the planning table, but rather there’s a range of responses that are rooted in the brand’s current state and its desired future*. That relationship between past and future is the critical one: too often, in the rarefied and rather whiffy air of office political machinations, huge strategic leaps seem eminently possible: today’s commoditised brand is tomorrow’s luxury marque. That’s a real watch out: brands exist in the mind, and how far you can credibly move them from where they are now will be a large determinant of future success. The more established it is, the more effort, energy, money and time will be needed to shift it.

Broadly, there seem to be four primary tasks to protect a brand’s entropy:

Retain specialness: if the brand is positioned as premium but may be in risk of losing its sheen, then a specialness strategy is appropriate. Premiumise all the touchpoints; remind consumers of the underlying product truth; invest in a consistent experience. Give the brand a tune up, and a good spit and polish.

Retain distinctiveness: if your brand is a mainstream brand (you know, the sort of brand that consumers really like but the Board keep on banging on about premiumising the damn thing), then actually, your strategy is more likely need to focus on articulating distinctiveness. This could be from core brand values, from personality or tone of voice, from the central positioning or even from the insight that connects the audience to your brand. Whatever it is, you’ll need to find the hot spots and ensure that activity is built on something really interesting and compelling. Don’t try and please everyone.

Rebuild differentiation: commoditisation in increasingly common when we live in such tough competitive times. Commoditisation of course is very much a process of a change in entropy – it’s you feeling the effect of your brand being eroded. For everyday brands, that are struggling to balance their added value features in a competitive world, strategies should focus on your points of difference; squaring off your corners, proudly sticking out your shoulders and saying ‘look at me, here’s how I’m different, here’s how I’m better’.  New product development can help here: reminding people about the difference at the heart of the brand family – even if that innovation is sacrificial to prompt core brand re-appraisal.

Retain cost or price advantage: it’s incredible how often a budget positioned brand is touted as tomorrow’s premium brand. And of course, it could happen, but frankly it’s unlikely unless consumers adopt and take it there themselves (Pabst Blue Riband, perhaps?). More realistic is to consider how a price advantage strategy can be leveraged to the brand’s advantage. What are the essential points of brand value that need to be bolted on and what is non-essential. This is not about being lowest cost, there’s own label for that, but it is about understanding what functions or services are the tie-breakers that a brand can offer better.

If your brand is faced with change – and it will be – don’t knee-jerk to premiumisation. Think about its current state today; where your target market actually map and it, and where it’s desirable, and possible, to move to. You may not be able to change the laws of Physics, but perhaps you can delay the inevitable by a few hundred years.

 

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 david@thecrowflies.co.uk or call on +44 (0) 1283 246260.   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). Or just send a carrier pigeon and we’ll intercept mid-air. © The Crow Flies, 2017

 

 *In fact, in a pleasant circularity, concepts such as past, present and future are also described by the Second Law of Thermodynamics. Effectively time is asymmetrical – what’s happened in the past cannot be reversed and everything will keep on trucking on until we reach a total steady state in the Universe (it is argued). I don’t think we’ll be worrying about premiumisation strategies too much then.

Why does everything need to premiumise?

Harry RedknappGravity 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.

* See: http://www.marketingweek.co.uk/sectors/food-and-drink/news/carlings-laddish-marketing-lifts-sales/4010429.article

IMG_1067David 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 david@thecrowflies.co.uk 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