The Hindu Business Line : The premium path

Harley Davidson, the macho bike with a cult following, seems to be losing its premiumness with Victory and other brands registering growth in the same segment. It was interesting to see iPhone launch itself as a super premium brand and slash its pric es within about three months of its launch. Closer home, how does a brand like Titan maintain its premium range? How can a brand like Fiama Di Wills sustain its premiumness in a highly competitive shampoo market?

Creating and sustaining premiumness is one of the topical challenges for marketers in today’s context of brand warfare. In several categories, the premium sub-category is growing faster than the economy category and hence marketers need to plan for sustaining the premiumness of brands.

What is premiumness?

At the outset, premiumness needs to be specified before premium offerings are considered. Premiumness can range from branded sugar to a customised Rolls Royce. A premium offering has the following characteristics – it is priced higher than mass market brands, it has excellent quality in terms of product-related attributes and conveys a symbolic appeal whenever the category is amenable to social value (meaning it can impart a sense of belonging, pride or represent an emotional proposition). Even in mundane fast moving consumer goods, a premium offering has a packaging that is distinctively different from the other offerings. Taj Mahal flavoured tea, Colgate Sensitive tooth brush and Celebrations and Temptation from Cadbury are examples.

Onida TV was one of the earliest brands in the consumer durables category to signal a premium with its high price and the line ‘Neighbour’s envy, owner’s pride’ when the category of television was getting diffused as a result of TV network expansion. Hero Honda entered the Indian context with its four-stroke motorcycle charging a slight premium (considering that the brand delivered a mileage that was considerably much higher than its competitive brands at that point in time).

Due to the fact that symbolic value conveys premiumness, several brands necessarily need to focus on marketing communication to communicate the premium associated with them (there are a few exceptions like brands that become known through word of mouth or a distribution channel based on word of mouth).

Functional and symbolic differentiation

Sustaining the premium character, especially when it comes to higher-end brands, has become a major challenge for marketers. Primarily, the challenge has emerged due to two reasons – there is a need to build in an aspirational appeal to motivate consumers at the lower end of the market too, and marketers need to balance the symbolic appeal as well as the price-value equation in a specific product line that has a string of offerings covering several segments in the market. Both these aspects deal with understanding and managing the perception of consumers with regard to brand offerings. For example, if an apparel company is present in both segments (economy and premium), the traditional approach is through price at the lower end and a symbolic appeal in the case of the higher need offerings.

Given the proliferation of brands and brand proposition, there is a need in today’s context to create a symbolic appeal at both ends of the market. In addition, there may be two premium brands as well in the product line of the company. Besides, to add to the complexity, lifestyle and symbolic appeals are used in several categories.

For instance, Madura Garments had successfully introduced Peter England as the “Honest Shirt” and now it has the Elite sub-brand in the same brand. The company also has Van Heusen and Louis Philippe with symbolic appeals at the higher end. Product categories such as watches, two-wheelers, coffee, tea, biscuits, soft drinks, detergents, chocolates and mobile phones, to name a few, have all done this. In the case of mobile phones with the category diffusing radically in a short period of time, brands have introduced phones with symbolic appeals under the Rs 5,000-mark. The fundamental differentiation of symbolic appeal will play a key role in defining the premium nature.

Functional attributes that reflect the price-benefit aspects of a brand need to be considered while a brand attempts to be premium. In products like television and mobiles, the categories are dynamic and they undergo radical changes within a short time. Mobile phones with features that are conspicuous signal a premium offering and these features undergo changes in the dynamic market. The camera-based mobile phones that used to cost around Rs 25,000 when they were introduced now cost almost one-fourth that price in a span of two years. The current premium phones such as the ones introduced by Nokia have advanced features like global positioning system and even mobile banking services.

A brand needs to balance its product line to ensure there are always offerings at the top (premium end) and also the lower end, and this balance requires features as well as focused marketing communication that conveys the premium involved.

The design of a television (Black Pearl TV from LG) or the unique aspects of the Ecodrive watch add to the premium associated with the brand. Scorpio, the passenger vehicle from Mahindra & Mahindra, conveyed it (in the respective passenger car segment) by a combination of functional and symbolic appeal.

The design and features were reinforced by its advertising that mentioned the self-esteem aspects of the offering. In consumable categories too features and benefits command a premium and they need to be reflected by marketing communication. Dove is a premium brand and its advertising explains the benefits of its moisturiser and how the offering is different from the conventional soaps. Saffola cooking oil, with its features of cholesterol control and the resultant benefits, commands a premium in the market that is highly price-sensitive. The brand also has atta mix with the same benefits. Mach 3 from Gillette details the features that backs up the premium image based on the price of the offering. Colgate Total with its multiple benefits and ‘12 hour’ protection provides the reasoning for the premium.

Managing Premiumness

Premiumness in today’s market of price proliferation (in several categories) need not necessarily be at the higher end of the market. Premiumness in a price-fragmented market is always in the respective segment. This is important as different price points appear on a continuous spectrum rather than in price slots that are wide apart. This is evident in the case of passenger cars and soap categories. Over a period of time, the market develops and price points too get spread out. In such a situation, the respective segments within the market should be considered for premiumness rather than the top end of the market (which anyway will be there in most categories)

Two decades ago, the car market had one brand of entry level car, a mid-priced one and a premium one. Today, the entry-level car segment (Maruti 800) has several layers of price ranges above it and there are premium priced ones in the range of Rs 5-12 lakhs. While the premium itself may not be as high as a typical Mercedes, the trend indicates the preferences of consumers in upgrading to a better offering and also the choices of premium offerings that are available to consumers.

Titan has several offerings catering to several segments and each has a premium end within. The economy Sonata range has high-priced watches under its brand. Titan has a number of premium offerings. Raaga for women has premium offerings.Fastrack for the urban, fun-loving youngsters with trendy designs also has premium offerings.

The premium price in each of these segments refers to offerings that are priced over the average price paid by a buyer in the Indian market. Premiumness also gets defined by the fact that the unorganised market for assembled watches is perhaps bigger than that for branded ones. It is also interesting to note that Titan has distinctive celebrities for each of the brands, adding to the symbolic appeal relevant to the respective segment. Besides, the company also has the Nebula and Heritage sub-brands as premium offerings in the Rs 3,000-crore watch market where about 20 per cent of offerings are premium ones. (BrandLine dated November 15, 2007)

Product line management is just not about launching product offerings. Profitability and brand associations have to be nurtured. And premium brands contribute significantly to these objectives.

(S. Ramesh Kumar is Professor of Marketing, IIM, Bangalore.)

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