What Is a Premium Brand?
A combination of high quality and exceptional value puts elite brands in a category of their own.
May 17, 2023
Introduction
Have you ever bought something because of how it made you feel?
I have.
Ray-Ban sunglasses are an example.
I’m not sure what it was about Ray-Ban that got my attention. Maybe those publicity shots of Dean Martin sporting a pair of Wayfarers throughout the 1950s had something to do with it. Or it could have been when the Blues Brothers made them part of their trademark look in 1980, or when Tom Cruise made Aviators famous six years later.
It doesn’t matter. I’m a lifer. I like them for several reasons. But most of all, I like the way I feel when I wear them.
Now, I know wearing a pair of Ray-Bans won’t make me as cool as Dean Martin or Tom Cruise, but…
My affinity for Ray-Bans is the essence of the premium brand.
So how do certain products and services actually make us feel something when we buy them? And what can you learn from these brands that will help you build a unique brand of your own?
In this article, you'll learn:
What makes a brand premium
The secret behind premium products and services that makes us want them
Three layers of benefits premium brands offer
How to implement a premium brand strategy
What Makes a Brand “Premium”?
Defining what a premium brand is can be difficult because it depends on whom you ask. Each individual has their own definition of "premium". Thus, what matters to one person may not matter to another.
A premium brand is an individual, company, product, or service generally perceived to have exceptional value in the target market’s mind.
Premium brands offer a combination of supreme quality, value, purpose, and exceptional experience.
When asked, most people associate premium with a higher price compared to other brands. But the price is not the only characteristic that makes a brand “premium”.
Here are some others:
- They outsell competitors on a per-unit basis (sales volume)
- Higher customer satisfaction ratings (i.e., 5-star reviews)
- Higher customer retention rates and repeat buyers
- A customer base that promotes the brand (also called brand advocacy)
Premium brands share specific characteristics and traits that make them appear superior. Since it can be tricky to articulate exactly what a premium brand is, I will use an example to illustrate.
In the United States, water is a commodity. (Sadly, this isn’t the case everywhere.)
Almost anyone in America can walk over to the kitchen sink, turn on the faucet, and get their fill. Yet, the demand for premium H2O continues to grow in the United States and abroad.
When they first came to market, premium water brands claimed bottled water was safer to drink. But no one could agree. So, rather than sell “safety” as a benefit, premium water brands promoted other reasons to buy.
Convenience became a primary selling point. For instance, bottled water is easier to carry and store. Place of origin has become another popular quality marker for bottled water. There is a theory that water harvested from particular locations is cleaner and tastes better. But, of course, there is no way to prove or disprove this theory.
Premium water brands found yet another way to enhance their value. Market research revealed that a specific segment would pay more for particular health benefits. So, premium water brands claimed their product provided those benefits and targeted the consumers that wanted them.
The irony of it all?
Most people didn’t know the health benefits of premium water until the water brands told them. At that point, bottled water became much more than just water—it became something more.
Want proof?
Believe it or not, a company produces bottled water that sells for as much as $60,000.
I doubt either of us will be paying thousands for a bottle of water any time soon. But we have likely both paid a few bucks for one at a local convenience store.
A Premium Brand Is Not a Luxury Brand
Though there are some similarities, there are differences between a premium brand and a luxury brand.
While luxury consumers prioritize the status associated with a particular brand over the function of the product itself, premium consumers seek a quality brand they can rely on to perform well. They expect the product to function at a relatively high level and are willing to pay extra for the quality and features it provides. However, premium brands can't become luxury brands simply by raising their prices.
Luxury brands (also called prestige brands) are typically priced higher and aren't required to justify their price point. The extra value associated with luxury products is attached to the brand itself, whereas premium products are priced near the top of the market based on their quality and features.
Why We Will Pay More for Premium Brands
Looking back over the premium water example, we can see the elite H2O brands became successful by:
- Promoting certain benefit claims valued by a specific target audience
- Making claims of product superiority while providing evidence to support those claims
- Demonstrating how their water harvesting process is superior to others
- Teaching consumers how to compare bottled water brands while promoting their brand as the standard for comparison
These companies also did something many of us would think impossible—they sold water at a premium to an audience with plenty of water.
They tapped into their audience’s desire to be smart and healthy. Of course, status played a role as well. Starbucks has followed a similar model using coffee.
Premium brands position their products or services in a way that makes them more valuable. People want to feel competent, desired, even envied by others. If a product or service can help them experience these feelings, they will value it more—and pay more for it.
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Attributes of a Premium Brand
For a brand to become “premium”, it must possess specific characteristics. These traits make it superior in the target market’s eyes.
Let’s look at each one.
Quality
Quality itself is subjective. People don’t always agree on how to do it. So, it isn’t enough for a premium brand to claim superiority; they must prove it.
Most consumers assess the quality of a physical product based on its performance, exceptional features, and reliability. Better ingredients, materials, and innovative manufacturing processes are examples of traits consumers use to make these judgments.
For service industries, assessing quality is a much different process. Expertise is the primary quality marker for service providers.
If people believe you are among the best at what you do, they are more likely to pay your price. Service providers can demonstrate their expertise through content, such as blogs, books, and courses. Building authority, while time-consuming, is an effective way for service providers to earn trust.
Price
Ironically, consumers use price as an indicator of quality.
In their minds, there is a correlation between the quality of a product or service and its price. Likewise, if the price doesn’t align with their view of premium, they will see the item or service as too expensive.
For example, the price of a new Mercedes S-Class Sedan is around $94,000. But if someone offered to sell you a new Mercedes S-Class for $30,000, you better make sure it isn’t stolen. It makes no sense that you could buy a new Mercedes for less than half its market price.
The psychology here is that if it is too good to be true, it probably is.
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Value
Everyone wants the biggest bang for the buck.
To charge more, customers must believe the value they are getting exceeds what they pay. But like quality, value is often debatable.
For example, one person may buy a car for its safety features. Another may buy it because it is American-made. Both people bought the same car but valued it for different reasons.
Many businesses assume they know why customers value their products and services. But a premium brand invests time and resources to understand what their customers want and expect. Then, they use this information to deliver multiple layers of benefits, not just a few.
The Premium Trifecta
Product or service benefits are one trait that separates premium brands from all the others. But many companies, and even individual consultants and freelancers, struggle to establish unique benefits that set them apart from the competition.
Businesses focus on the most obvious reasons to buy, such as “we take care of our customers” and “we’re good at what we do”.
But those convince anyone to buy because every company makes those same claims.
A premium brand digs deeper to deliver three specific types of benefits: functional, technical, and emotional.
Functional benefits refer to a product’s or service’s ability to meet a need. For example, a car’s function is to get someone from one place to another. An accountant’s function is to help people file their taxes.
Technical benefits relate to features and performance. These benefits show customers why one choice is better than another, such as consistent delivery and free of errors, glitches, or other issues.
An excellent way to communicate technical benefits is to educate your audience on what matters in your industry. For example, remember the water brands in the section above? They helped their target market understand the technical benefits of bottled water and why they should care.
Educating your audience builds authority too.
Finally, a premium brand delivers emotional benefits. Emotion is the driving force behind purchasing decisions, not logic. As a result, people buy the transformation that your product or service will help them make.
As you build emotional benefits, try to deliver them over the short- and long-term. Total transformations tend to take a long time. Most people won’t be willing to wait. If they think it will take too long to achieve the change, they may not buy.
Delivering a short-term benefit will reinforce their decision to move forward. This time frame could be days or weeks but should be no more than a few months.
Premium Brands Are on a Mission
Most businesses have a “mission and vision” on their website, but few know how to create a narrative around it. Developing a brand story is a powerful way to connect with your customers.
Most business owners keep their passion and vision to themselves. And customers are more interested in what you can do for them than your business’s mission—at first.
While they may not necessarily care about why you are in business, they care about your business’s purpose. Recent research shows that people are at least four times more likely to buy from mission-driven companies.
To develop an engaging brand story, connect your customers’ desires to your business’s mission. Then, create a narrative that makes your customers part of the journey.
A brand narrative is ongoing. Use it to share experiences that will build interest in your organization. For example, tell your audience about the innovative processes you have developed and share customer successes.
Let them in on the obstacles you face and how you are overcoming them. They will appreciate your willingness to show them you are human too. Often, they will rally around you as you fight the good fight.
Premium Brands Create a Memorable Experience
Brand experience describes the sensations, feelings, cognitions, and behavioral responses people have while interacting with a brand.
In other words, it is what people feel before, during, and after the sale.
For many businesses, the relationship with the customer starts with the sale. But a premium brand begins the process much sooner, long before a customer buys their product. They use multiple touchpoints to communicate with customers in each phase of the buying journey. The goal is to lead them through the customer journey.
The customer journey is an ongoing process that never ends.
Exceeding customer expectations is also part of the brand experience. Everyone makes promises—only a few follow through. A premium brand creates an experience based on what their customers want, and they deliver it consistently.
Conclusion
Premium brands don’t happen by accident. They have the desire, boldness, and discipline to stand apart from the crowd. But, most of all, they have a plan.
Any small business can become a premium brand, including yours.
Do you want to attract customers who appreciate the value you offer and increase profit?
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