One of the problems of the modern era of marketing is that there is competition everywhere. Go to any industry you want, you will see small and big players already existing in the industry. All of them are trying to get a market share for themselves. In such a hustle and bustle, achieving a premium positioning sounds difficult but is very much possible.
Many brands, especially the ones who want to go niche and want to have a targeted approach, target premium positioning. They target premium positioning because
- They do not have a large manufacturing capacity
- They know they will not survive if price cuts are the only mechanism to expand.
- They want to differentiate their product and want a niche market rather then selling to the masses.
The above does not mean that premium positioning is only achieved by niche products and not mass products. Brands like Gucci, Armani, Apple, Audi etc have proved that you can be both – A mass product and yet a premium product.
You just need to balance both of them so that you don’t target too niche a market and at the same time, you are not affordable by the complete market. Tough balance isn’t it?
That is why we came up with these 7 steps for premium positioning which can be used to position a brand or a product as a premium item. Note that if your item is luxury and not premium, then we already have an article on how to market a luxury product or brand.
Lets dive into the Steps of Premium positioning for a brand or a product.
1. It starts with segmentation and targeting
The number 1 thing you need to do is target properly. If you want to target the premium crowd, everything changes. Even amongst the premium crowd, what are the people you want to target? Audi has a complete product portfolio right from the Q1 to Q5 and different series.
We can safely say that even the start up line of Audi is premium. But this does not mean that Audi has a single segmentation. Even Audi has come up with different segments and different target markets to target. In that manner, i really respect Volkswagen because of the complete product line they have right from Skoda, Audi, beetle and many others.
If you want to have premium positioning, within the premium positioning segments you need to have the correct target markets in mind. You need to run this exercise to determine the profile of your customer – whom you are going to target. Only then you can come up with the right strategy.
2. Technological Advantage
A feature and top characteristic of premium products is that they have a huge technological advantage over their competitors. They are far ahead of their crowd. Some names which come in mind are Siemens, Bosch, Caterpillar, Nvidia and several others.
Siemens is a company which is known for their industrial medical as well as consumer products. Bosch too, markets the fact that their technology is far ahead then competitors. Ify you are into gaming, you will not find a better Graphics processor then Nvidia. The same goes for processing power. Intel is far ahead of any of its competitors because of its technological advantage over others. The list can go on and on.
In general, if you desire a premium positioning for your product or brand, and if your product has any chance at a technological advantage, then you need to use that advantage. It shows in the long run that technologically your product is superior then competitors. It comes up in internet forums, fans will fight for your products and people will back you up.
3. Design Superiority
Did you know? Absolut is one of the most known brands for the design of its bottles. In fact, there are sites dedicate to purchasing and selling the bottles of Absolut. Weird comparison isn’t it? What role does a bottle have in consuming vodka?. But look where the design of the bottle has brought the brand – Absolut.
In fact, Absolut has certain bottles which are collectibles and people pay a huge premium for the same. As a result, the brand itself is seen as a premium brand in the Vodka and spirits industry. There are other, more premium vodka as well, but not at the mass levels of distribution and brand equity which Absolut has.
The same goes for Gucci, Armani or even Zara. Ever seen Zara advertise? I bet you haven’t. While Gucci and Armani might be classified as Luxury items, Zara actually falls under the premium category. And did that just on the basis of their designs. No advertising, no gimmicks, just by giving new and exciting designs to their customers every month.
4. The Marketing Mix
The marketing mix plays a crucial role in the premium positioning of a product. The marketing mix is very dynamic in nature and hence, all the different P’s change with a change in even one P of the marketing mix. The various elements of the marketing mix determine premium positioning as follows.
Product – The product design needs to be spot on. It needs to be either a technologically advanced product, or a well designed product or a product which is diversified (more on it ahead)
Promotional mix – The promotions are the main factor to drive the positioning of a brand or a product. Placement in premium media vehicles, premium magazines with high quality advertising and communications is what drives the premium positioning of the brand. Both – ATL and BTL methods need to be used for the proper positioning.
Premium placement – Not only promotions, even the placement of the product needs to be premium. Most premium brands have outlets only in the premium sections of cities. Naturally, the costs in such areas are high which are covered by the high profit margin in the premium segment. However, without premium placement, it becomes very difficult to convince customers that it is a premium brand. For a reference, just look at the distribution strategy of Apple.
People – Accenture is probably the best example i can give of a premium consulting firm which has the appearance of being premium because of the people it hires. Even Apple hired a group of engineers at the Apple genius bar who were known as Geniuses and could solve any Apple related problems immediately. This was a superb hit and was known as a great idea in retailing.
Notice that i mention price differently and have not involved it in the marketing mix. This is because price alone, is one of the strongest drivers of premium positioning. There are multiple reasons that the price of a premium product needs to be high.
- The cost of the manufacturing is high because of the design and technological advancement of the product.
- The company wants that the consumer perceive the brand as premium and hence the price has been kept high
- The price covers the high cost of operations mainly because the product will not move as fast in the market as a mass level product. Liquidity of a premium product is low and you need to hold inventory for longer times.
- A higher price means a higher perception of quality of the product.
Due to the above reasons, one of the first things you need to do is keep the price high for your product as compared to competitors. It is one of the most driving forces behind premium positioning.
Warning: By keeping the price high, you are convincing the customer that they are buying an excellent product. If your marketing mix and communications or the product quality does not Reinforce that thought process, then the customer will start bad mouthing your product, resulting in a far greater loss to brand equity. Be especially careful in the era of social media and E-commerce where reviews are checked by everyone.
6. Consistency and brand promise
All the factors above contribute towards the premium positioning of a brand. However, if a brand wants to remain premium, then consistency is the key. It becomes premium by being consistent in what it does.
The best example can be understood by brand personification. Imagine a brand as an individual rather then a business entity. You have various individuals in front of you, each of which represents a brand. You are more likely to be friends with an individual who is reliable at all times, rather then an individual who keeps changing with time. You are more likely to be warm and consistent with the individual who is warm and consistent in turn with you.
Whatever applies to individuals, also applies to brand building. A brand is considered a premium brand when it delivers a consistent set of premium features over a long period of time. Lamborghini, Rolls Royce, Cross pens are all premium brands which have remained premium for eternity. You know that even 50 years down the line, these brands will be manufacturing top of the line products.
This concept can also be called as a brand promise. If a brand promises you something (technological advancement, design superiority, psychological advantages) then it needs to maintain these promises for a long period of time. If it breaks the promise, you wont trust the brand much longer and hence it wont be treated as a premium brand for much longer.
7. Value creation
The truth is, the more value you cram against a given product, the more you are capable of getting the premium and raising the prices. Once you raise the prices and it looks like an acceptable value delivery even against the high price of the brand, you have achieved premium positioning.
If you want premium positioning, diversification is one of the major tools in your hands for value creation even at a high price. The more creatively you diversify, the more likelihood there is to demand a premium. This is why innovative companies like Apple, Google and others are leaders in the market. This is because they keep doing value addition for new as well as existing customers.
Google for instance encourages creativity across all its locations. It has specifically given creative time to all its engineers to develop their own projects. This ways, the engineers get a platform to be creative and because the company supported them, they generate more valuable projects which in turn increases the value of the company and the products. Thus, google is a premium positioned company in the sector that it operates in.
The above are the 7 detailed steps for premium positioning of a brand or a product.
To do a practical exercise just take each step one by one and write down what your company can do in that step to improve the positioning of the company.