Premium Brand Strategy: From Ordinary to Extraordinary

Are you looking for new ways to differentiate? Discover how a premium brand strategy elevates your business–better customers, higher prices, lasting success.

POST UPDATED:

March 30, 2024

Premium brand strategy

Today's marketplace is crowded. It's becoming more complex for businesses to stand out. A premium brand strategy can be a way to differentiate and increase profit.

This post aims to answer one question: Could this strategy be a good fit for your business?

And if it is, what must your organization do to join the ranks of brands like Patagonia, YETI, and Williams Sonoma?

Read on to find out.

Table of Contents

    The case for a premium transformation

    The potential of premium branding is undeniable. Consider these statistics:

    Millennials and Gen Z will represent 50 percent of the luxury market by 2030.

    60 percent of consumers are willing to pay more for sustainable and ethically sourced products (Source: McKinsey & Company).

    The premium market experienced a consistent 6 percent CAGR between 2003-2022, demonstrating sustained, profitable growth.

    Checklist: Could your company benefit from a premium brand strategy?

    • Established reputation: Do you have a positive brand reputation and loyal customer base?
    • Differentiation potential: Can you provide unique features, superior performance, or exceptional service?
    • Target market fit: Can you find a market segment willing to pay more for your value proposition?
    • Operational readiness: Can you maintain consistent quality and elevate your customer experience?

    If you answered "yes" to most of these questions, a premium brand strategy could present opportunities for increased profitability, stronger brand equity, and a competitive edge.

    Note: This is a simplified checklist. We recommend a comprehensive analysis of your market, capabilities, and competitors before making a strategic shift.

    Premium vs. Luxury: The mindset shift that matters

    Though premium and luxury brands are different, business leaders need to understand the necessary mindset required when aiming for either category.

    Common misconceptions:

    • "Premium is just expensive." Premium brands justify higher prices with superior value—quality, craftsmanship, service, or unique experiences.
    • "Premium is unattainable for our market." Don't underestimate the rise of "affordable luxury." Brands in diverse sectors are finding success by offering high-quality, aspirational products or experiences at accessible prices.
    • "We can easily transition our brand to premium." The entire organization must think differently to make the transition to premium. Brands must have a relentless focus on quality, innovation, and the ability to understand a discerning customer base.

    The essential question: Beyond labels, ask yourself: What level of value are we prepared to deliver, and is a market willing to pay for it? This question requires objectivity and lays the foundation for your brand strategy, regardless of whether the goal is "premium" or "luxury."

    What is a premium brand?

    A premium brand is an individual, company, product, or service generally perceived to have exceptional value in the target market's mind.

    Premium brand strategy: Key pillars for success

    This section will explore the core components of a successful premium brand strategy.

    Higher perceived value based on superior quality

    To execute a premium brand strategy, companies must create a perception of unparalleled quality. But businesses must also have a plan to emphasize quality in every aspect of the brand identity.

    Organizations must also provide evidence to support their claims of superior quality. Most companies say they provide high quality but little or no proof. To back their claims, premium brands often reveal specific (but limited) details about their processes, materials, or actions to increase the value of their product.

    Consumer expectations of a premium brand

    Premium pricing

    A premium pricing strategy includes more than the price tag. Businesses must use a combination of factors to increase the product's perceived value.

    Support premium pricing with product performance

    A premium product must offer exceptional features and performance that set it apart. Companies do this using the best materials, superb craftsmanship, and innovative design.

    Master brand marketing

    Businesses transitioning to premium must have a brand identity that reflects exclusivity. Every touchpoint should reinforce the premium image, from the logo to messaging and social media. Marketing campaigns should focus on creating the aspirational lifestyle the brand represents instead of product features.

    Target the right audience

    Not everyone will pay higher prices. So, premium brands should focus on targeting niche markets that are less price-sensitive and appreciate their unique value. In-depth market research, including income levels, pain points, buying motivations, and channel preferences can help companies idedentify target customer segments.

    Deliver a flawless customer experience

    A flawless customer experience helps justify premium prices. The experience is designed specifically for the ideal customer. For example, a company might provide seamless purchasing processes, packaging that adds excitement to unboxing, and exceptional after-sales support. Every interaction with the brand should reaffirm the customer's decision to invest in the higher-priced offering.

    Optimal Price Point
    Optimal Price Point

    Understanding your target audience: Effective customer analysis strategies

    Brands must understand the buying motivations and behaviors of premium consumers to capture this lucrative market. These customers make choices driven by a complex mix of practical and emotional factors.

    Here are key strategies used to analyze and engage customers:

    Purchasing history: Customer purchasing histories reveal patterns. Preferred brands and categories, frequency of purchases, and spending averages are examples. These indicate which products are in demand and their price points.

    Demographics and psychographics: Customer demographics are age, income, and location. Examples of psychographics are values, interests, and lifestyles. These characteristics paint a complete picture of the customer and what makes them tick.

    Engagement segmentation: Businesses can divide a customer base into segments. Several categories are used to segment, such as spending habits, product preferences, or motivations. Companies can use this information to create marketing campaigns with higher conversion potential.

    Websites and social listening: Analyzing website behavior, social media interactions, and online reviews provides clues about customer preferences, pain points, and brand sentiment.

    Loyalty program intelligence: This data can identify customers with the highest value potential. Businesses should review buying habits and loyalty drivers to develop rewards programs.

    Going deeper:

    • Surveys and interviews: These tools reveal why people buy premium products and how they perceive brands.
    • Focus groups: These settings start discussions that reveal the customer's experiences and expectations.
    • Customer stories: Study individual customer success stories to understand their decision-making process.
    Audience Targeting Strategies Mindmap (Click to expand)

    The challenges of a premium brand strategy

    In this section, we will review the most common challenges of transitioning to premium.

    Balancing exclusivity with accessibility

    Companies must avoid the trap of seeming too exclusive. Brands can maintain a high-end image while being approachable by offering varied levels of service. For instance, a hotel can cater to VIPs with unique experiences while providing excellent service for all guests. These tactics would broaden their appeal without damaging their status.

    Building trust and authenticity

    Today's consumers value the ethics behind products. Being transparent about sourcing and production processes can distinguish a brand. For example, a premium coffee brand that shares its ethical sourcing practices might attract potential customers passionate about environmental concerns.

    Maintaining consistency

    It's critical to adapt and have contingency plans when problems arise. For example, a fashion brand can maintain timely deliveries by planning for logistical hurdles in advance.

    Future-proofing your brand: Data and engagement strategies

    The marketplace is constantly evolving. Here are some tactics premium brands use to remain competitive and in touch with customers.

    Use data

    Research shows that 80 percent of businesses report revenue growth from real-time analytics. This statistic highlights the critical role of data in shaping a successful premium brand strategy. Thriving brands constantly analyze customer behavior, measure marketing efforts and forecast trends. Insights like these help company leadership make decisions with more confidence.

    Incorporate interactive elements

    Premium brands go beyond standard content marketing by integrating interactive features tailored to their audience. Quizzes, templates, or calculators are popular tools designed to engage users. These tools potentially increase customers' interactions with the brand to generate interest and desire.

     

    (CLICK TO EXPAND) Areas with the most use for data-driven marketing, according to marketers worldwide (as of August 2022)

    Navigating the evolving landscape of premium branding

    Here are three key trends in the premium brand sector that are making the most impact right now:

    Affordable luxury

    "Affordable luxury" brings high-quality products and experiences to customers at more accessible prices. The goal is to appeal to a broader audience, including budget-conscious shoppers and younger consumers. Brands like Michael Kors and Coach are at the forefront of this trend, offering style and quality without the high price tag.

    Technology in brand strategy

    Technology is transforming the world of branding. For example, fashion brands now offer virtual try-ons and augmented reality to create immersive shopping experiences. This strategy blends online convenience with the thrill of in-store shopping.

    Here are some other ways technology is transforming the marketplace:

    Websites and in-apps have detailed 3D models. They let customers rotate, zoom, and interact with products to give consumers a more engaging online shopping experience.

    Advanced algorithms analyze browsing and purchase behavior. As a result, companies can offer relevant product suggestions and improve the shopping experience.

    Real-time inventory management ensures that popular items are always in stock, preventing lost sales and improving customer satisfaction.

    Premium powerhouses: Success stories

    A select few brands rise above the crowd. These diverse "premium powerhouses" have cracked the code of creating customer loyalty.

    Patagonia: More than jackets

    Forget rugged performance. Patagonia weaves environmental activism into its DNA, offering repair services. The brand also leads climate campaigns, which attract eco-conscious consumers.

    YETI: From coolers to cult status

    YETI doesn't sell coolers. It sells status symbols. The company's customers obsess over extreme durability and materials (think bear-resistant and stainless steel). YETI coolers have become coveted possessions among outdoor enthusiasts. Limited-edition collaborations and influencer partnerships further fuel customer desire.

    Casper: Disrupting sleep, delivering dreams

    Casper revolutionized the mattress industry with its direct-to-consumer model. But the focus on luxury, comfort, and convenience sets them apart. Hassle-free delivery, generous trial periods, and white-glove installation services create a frictionless experience.

    These brands go beyond their products' functions. Their success hinges on three key pillars:

    • Authenticity: They connect deeply with their target audience's values. (Environmentalism, adventure, or ultimate comfort).
    • Quality: These companies highlight materials and craftsmanship to justify their price points and build trust.
    • Unique experiences: They go beyond the product, exceeding expectations.

    Examples of up-and-coming premium brands

    Finally, let's look at some lesser-known brands that are successfully making their mark in the premium sector.

    Fashion and accessories

    Cuyana is a women's fashion brand focusing on minimalist designs, high-quality materials, and ethical production. They have been gaining popularity due to their "fewer, better things" philosophy, which resonates with consumers looking for a more conscious approach to fashion and are willing to invest in pieces that last.

    Home goods

    Hawkins New York focuses on timeless and functional homewares with elevated design aesthetics. They prioritize craftsmanship and natural materials. Hawkins is a good example of accessible luxury, attracting design-savvy customers who want well-made products without the luxury brand price.

    Tech accessories

    Native Union offers stylish and functional charging cables, phone cases, and other tech accessories. Their products blend high-end materials like leather and marble with smart design. Native Union appeals to a discerning consumer who wants their tech to look as good as it functions.

    Beauty

    Merit Beauty is a recent contender in the clean beauty space. With a minimalist approach, they offer multi-use products that simplify makeup routines. Merit's sleek branding, luxurious packaging, and effortless beauty focus align with premium consumer preferences.

    Your premium brand journey starts here

    The Brand Auditors can partner with you to create a powerful strategy that elevates your brand and positions you for long-term success.

    To learn how, contact us today for a free consultation.

    Brand Strategist | Managing Director

    Chris has over 15 years of experience in brand development and marketing. He has designed strategies across various industries, such as technology, B2B services, and healthcare. His areas of expertise include brand positioning, competitive analysis, content marketing, and web development.

    Are you ready to find out how a brand audit can transform your business?

    Our brand audit process is a comprehensive analysis designed to help companies optimize performance.

    • Increase ROI on lead generation and sales conversions.
    • Reduce marketing expenses.
    • Strengthen brand positioning to become more competitive.

    We guarantee satisfaction or get your money back! Schedule a discovery call with a brand auditor to find out more.

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