Premium brands: Are they really different?

Posted by Oliver Koll on Nov 15, 2016

shampoo“Premium brands command higher loyalty and are predominantly bought by affluent consumers” – these are two popular beliefs on brand premiumization, a branding strategy to differentiate via superior value and high price. An analysis of some personal care brands across many countries (beyond the shampoo example in China shown here), however, providesĀ a different picture:

1) Premium brands typically have a limited number of buyers since they often rely on specialist channels like drugstores or online retailers in this case. Therefore they depend more on repertoire buyers and are often bought in combination with brands from other price segments. Very few consumers are exclusively loyal to premium.

2) It is true that affluent shoppers are more important for premium brands, but middle and lower income groups should not be ignored as they represent large parts of premium brands’ customer bases as well. Premium brands, thus, have to maintain a balance between being aspirational but still accessible to many.