Premium Chatter

It’s tough to define “premium” in absolute terms, but something must be true about premium brands, right? Certainly, a higher price should be a defining factor, but one could then argue that the same quality product at a lesser price is a better value, and therefore premium. And so the circular discussion goes nowhere. David Murphy does a great job in a post on his blog, WikiBranding, placing context around the definition of premium. To use his example, Hyatt is premium compared to Holiday Inn, but not compared to the Ritz Carlton. It depends upon the context of the consumer, which he calls a “relative idea.”

Because my firm specializes in premium brands, I’m compelled to establish a concrete definition of a premium brand (and, I’m picky about consistent terminology within our shop). By Warren Douglas standards, a premium brand has two do two things to be premium within its category.

1. Charge a category-appropriate premium—I know I just used the word “premium” to define itself, but here it literally means the higher price a consumer pays. If a brand is truly premium, its price point should reflect its value within a tolerable range of consumer acceptance, but at the high end of the comparison spectrum.
2. Meet customer expectations—This means a brand consistently delivers what the consumer expects for having paid a higher price at the point of sale. Whether the expectations are freshness, customer service, packaging innovation, or taste, a truly premium brand will prioritize the consistent delivery of meeting those expectations, lest they lose their ability to charge a higher price.

Consider a brand that does one of the above, but not both. Simply charging more without delivering on expectations won’t compel the customer to buy again at that price. Also, meeting expectations alone doesn’t make a brand premium. A private label brand might compel a consumer to expect less than it would from a name brand; it can deliver less than its competitor and still meet those lesser expectations, but it’s not premium. I think you’ve got to have both.