Building a brand image in and of itself is a lofty goal. Knowing how to brand and market yourself, finding your customers, and advertising your message is hard work. So, how do you take it a step further and bestow yourself with the title of “premium?”
When building a premium brand, the assumption is that your brand is already a tier or two higher than the rest. Whether you’re better than the competition in quality, customer service, speed, etc. there is something that you do better than the competition.
Although there are many ways to differentiate your product and stand out from the competition, there is always one thing in common among premium brands.
The One Quality That Premium Brands Have in Common
All premium brands are priced higher than the average competitor. Yes, this intuitively makes sense, but let’s explore why this is so important. Humans equate price to quality. If something is of high price, we can assume two things.
1) This must be pricey because it is of high quality
2) Very few people must also have this item
Let’s think of a Gucci belt, for example. We can say that the reason everyone wants Gucci is because of its quality… and to some extent, this may be true. Maybe a Gucci belt does last longer than a belt from GAP. However, there is another reason why we buy it.
We know that very few others have a Gucci belt. We know that Gucci represents class and prestige. So we not only buy a premium product because we think it is of high quality, but we also buy it because we want to feel significant.
Tony Robbins came up with this theory that there are 6 human needs. These 6 human needs fundamentally affect the way we make choices.
These 6 needs are:
1. Certainty: Having assurance when doing something that you know the outcome
2. Uncertainty/Variety: The need to be excited and experience new things
3. Significance: Feeling unique and important compared to your peers
4. Connection/Love: The ability to feel close to someone or something
5. Growth: The feeling of expansion and personal development
6. Contribution: The sense of working towards something greater than yourself
As a marketer, it is essential to know the different human needs that drive behavior. One of the needs Tony points out is this need to feel significant. We all want to feel unique, important, or special. That is why we agree to spend more money on clothes and cars that may or may not perform better than a standard model. The allure of buying a Ferrari isn’t that it drives so much better than a Toyota Camry. At the end of the day, we want people to see us in a Ferrari. That’s why no one would ever buy a Ferrari, just to keep in their parking lot.
How to Create Your Premium Brand
Now that we get the psychology behind why people buy premium brands, we can now address how we go about making one. You’re actually in luck as there are many ways to establish yourself as a premium brand.
You can deliver premium customer service like Starbucks, turning your customers into loyal fans. Have your customers say venti instead of large. You can provide free wifi inside your modern interior cafe.
You can offer a premium design and source your materials from a different geographical location the same way Grey Goose did.
You can even go about it the old fashion way and just make a quality product. BMW, for example, isn’t just an expensive car that people like to be seen in. It also prides itself on providing a fantastic driving experience.
The trick isn’t just establishing your “premium factor.” It’s also deciding what price you’re going to sell your product or service at. We know that for it to be considered a premium product, it will have to be priced outside of the range of the majority of products. However, you have to make sure it isn’t priced too high so that your customers don’t run away.
If you’re entering a new market, you’re going to want to make sure you’re not the highest option to start. People have to warm up to you. You need those early adopters to use your product before the early majority starts trickling in.
Therefore, the best strategy is to price above the competition but below the total value derived.
What does this mean? Let’s use coffee, for example. I know that spending anything more than $3 for a cup of joe is expensive. Starbucks charges over $4 in some areas. So if I wanted to price my coffee, I need to think, “What is the highest amount someone is willing to pay for coffee?” The best way to get the answer to this is by looking at the most expensive coffee vendor and seeing how much they sell their product. Now you can discount from there while still being expensive.
If Starbucks sells coffee for $4 and you sell for $3.60, there is no doubt that you both sell premium coffee. However, compared to the premium brands, your customers can get more bang for their buck shopping with you than with them. So even with a high price tag, you still manage to provide value by being more affordable than the other premium alternative.
When you set out to build a premium brand, you should have the goal of being the best in class. That doesn’t always mean the best quality, though. It can be the best design, best customer service, or come from the most trusted brand.
If you take the time to truly make a great product, then you have earned the right to price it higher than your competitors. Just remember to still provide value, even with a premium price tag. It will take time for your customers to accept you as a truly premium brand. The best way to display that message is by providing exceptional value and a reasonable price.
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