Is Brand Premiumisation Your Best Bet?

Gen Z isn’t impressed with most customer experiences. Only half say they’re satisfied compared to more than 70% of people from other generations. So, to impress young buyers enough to make purchases, brands need to increase their perceived value. Premiumisation is one strategy that’s driving spending.

‘Better brand experiences drive sales’ has become a marketing cliche. Yet pinning down exactly what this looks like varies between businesses. For a clothing retailer, it could be opening up communications via social media. For a B2B healthcare firm, it could mean providing more self-service help along the sales funnel.

What’s the commonality between these changes? They bring value to a customer by understanding and meeting their needs. If a brand surpasses these expectations, they’re increasing their perceived value in the eyes of consumers. This, in turn, drives more sales.

Luxury brands have benefited from this knowledge for years. In particular, ‘experience-based goods’ have stayed resilient and maintained their growth, with a 10% year-on-year increase in 2023.

Non-luxury brands have uncovered this strategy and are looking to take advantage by emphasising their premium side. This article will explain how they’ve done it and outline the benefits.

What is brand premiumisation?

Brand premiumisation is a strategy that increases customers’ value perception of a business and its products or services. To do this, a brand doesn’t need to become the next Apple or Dolce and Gabanna. It needs to give buyers reasons why they should pay more for their offering.

For example, out of all the products in the bread category, why should a customer pay 50p more for brand A’s granary loaf compared to brand B’s? To find what drives buyers to pay more, brands need to understand what’s valuable to them. Are they looking for loaves with more fibre, that contain less salt or are artisan-made, for example.

As Sophie Maxell, Futures and Insight partner at Pearlfisher, says "Brands can keep themselves ahead of the demand for premiumisation by looking at how your brand can build ‘new expressions of desire’. It might mean bringing in fresh creative thinking to re-identify what drives your real point of difference and staying true to that.

“What new meanings, values and occasions can people enjoy and apply to your brand? How can you reach different audiences that might currently be aware of your brand?"

This strategy helps brands differentiate themselves in crowded markets and sell their products or services at higher profit margins.

It’s also particularly effective at targeting younger customers. Used to a wide choice in every category, Millennial and Gen Z consumers look to spend their money with brands that surpass their expectations and needs, particularly when it comes to the speed and convenience of service. Focusing on premiumisation helps meet the needs of this buyer group.

How have brands premiumised?

How each brand premiumises depends on the value they can add for their customers. Whether a business has surpassed buyers’ needs or not determines the success of a premiumisation strategy.

Walkers Sensations

Walkers is a popular UK brand and a go-to for many in the crisp category. To capture the section of the market looking to indulge themselves, they launched a premium Sensations range. Marketed as a ‘feast for the senses’, their packaging and flavours are elevated to offer something more delicious and luxurious than the typical ‘cheese and onion’.

To attract the 73% of buyers looking for premium crisp options and 89% of over-55s who like classic flavours, Walkers recently launched premium versions of standard offerings. ‘Mature cheddar and chilli chutney’ and ‘crushed sea salt and black peppercorn’ are served in stunning packaging that’s ideal for big night-in occasions.

Sipsmith Gin

Quintessentially British and quality-focused, the brand partnership between Sipsmith Gin and Wimbledon gave a huge boost to the profile of the craft spirits brand. With the matching values of craftsmanship, top-class excellence and quirky personalities, the TV ad is just one example of how they mutually benefited each other’s premium brands.

The Championship’s fame widened Sipsmith’s audience across the UK and into the US. Without losing touch with its heritage roots, the humorous character Mr Swan and clever take on the ‘Perfect Serve’ appealed to Millennial and Gen Z audiences. Plus, the specially crafted spirits and cocktails were sold courtside throughout several tournaments.

Coca-Cola Signature Mixers

After seeing the success of brands like Fever Tree and San Pellegrino, Coca-Cola launched a range of premium softs in 2019. The flavours of herbal, smoky, spicy and woody were designed to complement dark spirits and take advantage of the 32.9% category growth. The packaging reflected the brand’s heritage with small glass bottles and premium-design labels.

However, despite a fully integrated marketing campaign, including buy-in from professional mixologists, a lack of sales led the range to be dropped in 2022. This was in part due to COVID-19 but also the inability of Coca-Cola to shake off its mass-market value perception. Instead, the business shifted its focus towards Schweppes, which already had a premium reputation.

Should you ‘premiumise’ your brand?

As the above examples show, premiumisation can only work if a brand emphasises a value it can truly offer to its customers. The failure of the Coca-Cola Signature Mixer range shows that if premiumisation isn’t a natural next step for a brand, then following this strategy is unlikely to be beneficial.

However, if you do have a brand with the potential to go premium, here are some steps you can take to emphasise its luxurious side:

– Make customers desire your brand and the ‘value’ (or point of difference) it offers

– Be imaginative and original to open your brand up to new audiences

– Craft occasions which showcase your brand’s core values and meaning

– Stay true to what makes your brand special to increase customer loyalty

– Surprise and delight your customers with moments of happiness and pleasure

The exact strategy for your brand will depend on its core beliefs and the value you can offer customers. However, considering the steps above is a strong starting point for enhancing your premium qualities. To figure out your brand’s path to premiumisation, call us on 01926 754038 or drop us an email at hello@designmc.org