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What makes a premium brand premium?

I was thinking the other day about the DNA of premium brands.

One thing is certain -- it's a relative idea. For example, Hyatt is not a premium brand if you're used to staying at a W or a Ritz Carlton. But if your vacations to date have been holed up in a Holiday Inn, then by all means a stay in a Hyatt is a premium experience.

Another thing is certain -- a brand is considered premium only when we believe it is worth the price. And that's where we can dig deeper. Why are we willing to pay more for a product when there are others that provide the same service or function at a lesser price?

I have spent a good part of my marketing career developing strategies and ideas for a wide range of  premium brands, including American Express, Sony, Callaway Golf, Hilton, Jaguar, Land Rover – even the Toyota Prius.  Through these experiences I have come to believe that a premium brand is built upon specific tangible and intangible attributes that give it a sense worth:
  • Sensual – It arouses our senses and feels indulgent.  It is an experience.  We want to touch it; we enjoy looking at it.  (Think about Steve Jobs' obsession on how a iPhone should feel in your hand, or how Jet Blue orchestrates a total sensory experience – from snacks to entertainment – to set itself above the fray in a fiercely competitive category.) 
  • Mysterious – It draws us in deeper and reveals more to us over time.  We are intrigued to learn its back story.  (Witness how Land Rover cultivates its image as a global trekker to set it apart from the herd of grocery-hauling SUVs.
  • Rare – It represents a discerning choice, intriguing because it is uncommon.  (Audi has cultivated this particularly well – the thinking person's alternative to BMW and Mercedes.)
  • Confident – It projects a feeling of intrinsic worth.  (Burberry didn't ask permission to transcend its classic trench coat.  It confidently asserted its plaid on to a wide portfolio of products and dared us to question its right to do so.)
  • Authentic – It knows its "true north" and remains committed to this ideal.  (Ritz Carlton's premium experience is a direct result of its mission statement – "ladies and gentlemen serving ladies and gentlemen. " With this simple ethic, the hotel's employees know exactly the business they are in and how they should serve customers. )
  • Quality – It is consistent and shows obsessive attention to detail.  (Tiffany understands the premium cues conveyed by a detail as simple as a white bow on a blue box.)
Managing a premium brand is one of the most difficult challenges in marketing. Like any business, premium brands must pursue growth strategies. However, unlike many mainstream businesses, premium brands must do so in a way that doesn't dilute the brand's image or the user's sense of exclusivity and pride. Certain strategies are off-limits. Brand managers for premium brands must know when it is best to pass on short-term growth opportunities that could tarnish the brand's long-term health.

Marketing a premium brand demands that we think through every facet of the brand experience.  Packaging matters.  The choice of materials and lighting in the lobby matters.  Attentive customer service matters.  And within the company itself, culture matters.  Culture is often the alpha and omega of successful brands – particularly in the case of premium brands.


NOTE:  This is updated from an earlier post.

Comments

Jan Sitar said…
Very useful post. I would be pleased if you could recommend me sourcesi of information on premium brands.

I would like to go into deeper into:

- connection between buyers indentitiy and identity of brand
- how to define buyer of premium brand

Best Regards,
Jan
Anonymous said…
nice post. What's the difference between a luxury brand and a premium brand?
Riima said…
Can premium be only defined by price? Why do shopper segment the brands intheir head based on price when their is no imagery around it? I may be wrong but i strongly feel that price definetly play an important role in positioning a brand at premium segment.
Unknown said…
there will be also an other question "what makes a regular brand premium?". cool colors? pure layouts? sophisticated communication messages? i think there is a new need of brands like "to be premium", also they are low brands.
Anonymous said…
You might want to rethink BMW being a premium brand. As a whole it has been totally diluted by the introduction of the smaller, cheaper models aimed at making it more affordable to the masses and also BMW is now considered a volume manufacturer. On the other hand, Jaguar is now considered a premium niche brand with only 3 models in it's range and an entry price of £30k with production numbers more akin to Porsche (appx 60k units per annum world wide. I know its been a couple of years since the post but i only just stumbled across it today.
Xty said…
very useful! thanks
Unknown said…
Are premium brands launced as premium initially or brands are grown into premium?
Greg Hill said…
I think the other filter you could apply is Aspiration: it provides a map and model for my value system. As you note, there is no absolute definition of a premium brand, it's a relative thing. And since a premium brand virtually always requires paying more than another option might, premium purchases are conscious choices that speak to pride, self-definition and managing external perceptions of self. They are made to help me define where I want to go in life.
Anonymous said…
Thanks a lot!
neeraj said…
This is nice post...
Mizz Dee said…
There is a thin line between a premium brand and a luxury brand. However,
I believe the difference lies in the need!
Eventhough a premium brand is of high quality and price it is still needed and therefore I am willing to make a sacrifice to pay for it. A luxury brand is not 'needed' and I will only buy it if I feel I really like it, have surplus money to spend and it does not call for a sacrifice at all.
Mizz Dee said…
There is a thin line between a premium brand and a luxury brand. However,
I believe the difference lies in the need!
Eventhough a premium brand is of high quality and price it is still needed and therefore I am willing to make a sacrifice to pay for it. A luxury brand is not 'needed' and I will only buy it if I feel I really like it, have surplus money to spend and it does not call for a sacrifice at all.

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