“Premiumisation”- Is It The Ultimate Retail Strategy?
Thursday, 28 March, 2019
Even if the word ‘premiumisation’ might be relatively new, certainly at some point in life, consumers must have expressed an urge or curiosity to go for the premium products. Starting from a small kirana store to a global giant like Walmart, every retail outlet is following this trend to keep in pace with the changing consumer preferences to choose luxury products and premium segment when given a choice. Premiumisation trend is very common nowadays, starting from basic necessities like salt to luxury beauty products like hair serum. This trend has infiltrated not only in the FMCG categories but also in beauty, wellness, fashion and hospitality sectors too.
‘Premiumisation’ is a fancy word used to describe the brand’s efforts to establish superior quality and value proposition of the products that are being sold under a particular category. It is a strategy to bridge the gap between the desirability of the luxury world and the functional necessity of the mass market. It is an attempt to make luxury more exclusive and ecstatic. One of the ways of doing it is to enhance the features and speciality by charging a premium price. This is aided by the increasing disposable income that people possess nowadays. It is very closely associated with “Modernisation. Consumers are now very well informed as every information is available at their disposal. Thanks to the digital era that we are in. The millennials and Generation Z are now getting more advanced and modern. The consumer satisfaction is no longer linked to how well the basic utility purpose is being met but how closely the product resembles the consumer’s personality and status. Consumer durables are no longer viewed as a necessity but as a matter of luxury and status.
The term was initially coined in the Nineties to pave way for a special type of Alcohol and beverages to cater to a special class of the aristocrats. However, over the course of time and evolution, this term is being adopted by almost every kind of product or service. The availability of a wide variety of products and the leverage to choose from a variety of brands is the main motivation for consumers to upgrade their tastes and preferences. Retail industry has a lot of future scope to flourish through premiumising the offerings since the consumer pattern has drastically changed over a period of time. But the main concern is about losing out the focus on the mass market which is still quite untapped. On one hand, there is a segment of consumers who would associate social class, status and reputation with the buying decisions that they make and on the other hand there are consumers who are very price-sensitive as they strive to make ends meet. Brands need to overcome this dilemma and position righly to escape the risk of brand dilution and gradually tampering the brand’s identity.
Premiumisation is not just about value creation but at the same time it is about value preservation. The catch lies in the brand’s success to associate emotional touch with the products which are being offered. Sometimes customization and personalisation are the two ways by which a brand can achieve the goal of premium offerings. The best example can be the Beauty and Wellness industry. Certain beauty products are customized according to a particular skin type and complexion. Even the consultant offers wellness programs and advice to use cosmetics of a certain brand. Customization is also about the quantity of products that is being purchased. Several retail outlets offer different packages of the same product to cater to the differential quantified needs of various consumers. The challenge faced by brands is to master their individual specialness and explore their horizons in a way that connects back to the core of the brand by creating a new magic. The top end of the pyramid contributes to a lot of profits that is being earned by different brands.
There are various examples of premium product launches by brands from the FMCG sector which are a proof that there is a substantial shift of focus towards premium segment. These products are not just doing well but significantly attracting a major chunk of consumers to upgrade their tastes and preferences. Cadbury launched its premium product “Dairy Milk silk” which is a huge hit and people definitely fell for it. In 2010 Loreal which is one of the market leaders in the Skincare and Beauty segment launched its premium product “Kiehl’s and a wide range of skin and hair care products. During the same time, Olay come up with “Olay White Radiance” and “Olay Regenerist”. In 2011, GSK launched Sensodyne which was projected as a solution of sensitivity. Colgate gave a tough fight to GSK and launched Colgate Sensitive Pro-Relief which was a frontal attack on its competitor GSK.
The question still remains the same. Who would win the game? The brand which focuses on premium segments or the one which keeps its grip stronger on the mass markets. Well, it would be very difficult from a brand’s perspective to choose a side. However, a trade off between the two extremities could be one of the solutions. Middle of the road approach is when a brand focuses on both categories and positions its products accurately. Positioning and targeting the right demographic consumers will solve this dilemma to a greater extent.
MAPPRR- India's Only Product Discovery and Local Delivery App helps the customers to shop for both premium products as well as basic utility products. It leverages the consumers to shop from their favourite store and delivers everything ordered in just 60 minutes. Starting from Groceries, Medicines to Beauty and Healthcare, everything is available on this App. All you need to do is choose from the various options and place the order. The beauty segment has every kind of premium product that is suitable to your type. There are products of brands like LAKME, NYKAA, LOREAL. MAPPRR is revolutionising the shopping experience and catering to both the mass market needs and Premium desires of the customers.
To get amazing quality products of your preferred choice, download the MAPPRR App and start experiencing premiumisation.