Premiumization…Insight + Brand + Aspirationals = more
The term ‘premiumization’ was coined sometime in the noughties by the ever creative big booze marketing execs at the likes of Diageo, Pernod Ricard and other notables. In doing so they yanked open a prosperous new door in the massive global alcohol and beverage market. They cleverly redefined what it meant to be top shelf by mixing aspiration with luxury and provided an avenue for consumers to demonstrate their superior style and taste for the high life to their mates. Aspirational consumers loved the new offerings and happily paid more (much more) to slurp, wear and showcase their newly purchased premium status. It was smart thinking then and it’s even smarter now. It’s an awesome strategy for earning more. That said, it isn’t easy and gaining access to the ‘premiumized’ club takes intense effort, specialist talent and lashings of proprietary expertise and knowledge. Oh, and you’ll need some serious coin too, because the investment required is significant. That’s because you’ll need a brand first, before you can premiumize it. And they cost money and take time to build.
Megalodon Booze company ABInBev say,
“Our brands are the foundation of our company, the cornerstone of our relationships with consumers, and the key to our long-term success.”
And right there, ladies and gentleman, is a very big clue for those wanting to premiumize. Words like cornerstone, relationships and long-term success are all wrapped around the critical nucleus of brand, which powers the ‘brandwidth’ of the whole strategy. Brand, brand, brand. You’re going to need one if you want to follow in the footsteps of these global thought leading giants. Unfortunately, here in New Zealand, effective investment in brands is a bit like the Moa…rare.
Premiumization requires an enormous amount of vision, confidence, commitment, self-belief and bravery. Mike Holtzer from The Retail COO Group reports,
“Premiumization is one of the most important trends in the last 5 years and has been nothing short of revolutionary. It is a concept that has created successful start-ups, catalysed the reinvention of established brands and is undoubtedly the key to success in today’s market.”
The premiumization approach is perfect for entrepreneurial New Zealand SME’s willing to invest in commercializing their ideas more deliberately, more strategically and more successfully. It will suit progressive entrepreneurs who have the vision to build scale and success in international markets and also aspire to earn higher than average returns. Why else would you take the risk?
Premiumization is everywhere. Air New Zealand’s premium economy class is a great example of encouraging aspirational fliers to move one step closer to business class and pay more. Any flier who has strived to achieve ‘elite’ status is buying into a premiumization model. And interestingly, it doesn’t always make dollars and sense. The Johnny Walker red, black, blue and green price chain is another great example of encouraging you to pay more. Hotels do it, motor vehicle manufacturers are great at it. They’re past masters of selling their customers up. Look at the difference in price between the entry model and the top of the range. Now think about what that difference really cost the manufacturers. You’re getting the idea. It’s why they originally used the Land Rover Discovery platform for the Range Rover Sport.
Here in New Zealand we’re small scale. We can’t feed the world, we can’t supply the world with bulk goods or services (Milk Powder acknowledged) and our domestic market isn’t the ideal place to market in if you want to get rich. If we can hang onto our slightly jaded ‘pure’ image and build brands that deeply connect with the aspirations and needs of wealthier consumers in export markets the future might just turn…premium.
By Jim Wilkes