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As consumers look for a taste of good life, sales of products in the premium range, which constitute goods or services that cost at least 20 per cent more than the average price for the category, are growing at a rapid pace.
The premium segment is turning out to be a bright spot in a challenging retail environment, with brands consciously innovating to capitalise on the trend.
Brand consciousness
The availability of new, innovative brands is fuelling growth in the premium segment, say marketers, since fresh offerings tend to bring excitement and increased marketing spend.
Benedict Hayes, Executive Director at Ethinos Digital Marketing, said premiumisation as a trend is being led by digital and social media. “Most of these consumers are digitally savvy. The role of social and digital media in premiumisation is resulting in creating ‘experiences’ rather than products that are exclusive and convenience based,” he told BusinessLine.
Growing trend
Global market research company Euromonitor International recently revealed that premiumisation was a key megatrend influencing Indian consumers.
“With growing incomes, consumer expenditure grew 13 per cent in 2017- 2018, while discretionary spending is expected to increase by 45 per cent by 2025,” the agency said.
Rahul Jawale, consultant at Euromonitor International said many new opportunities stemming from changing consumer behaviour are often met by new, fast-growing brands or local brands with a closer connect to their consumers. And that increasing affluence has had consumers craving products that offer a total experience.
Beyond basic-need products, many consumers are making purchase decisions based on how products make them feel. Marketers insist premium products tap directly into a desire for products that provide specialised, enhanced or exclusive benefits.
And as consumers move up the economic ladder, they are attracted to aspirational brands that signal they have achieved a certain level of success.
Online sales
Online platforms, too, are gaining traction for premium products. A recent Nielsen survey showed 45 per cent of global consumers are shopping for premium products online from their home country e-retailers, whereas almost a quarter (24 per cent) are purchasing from overseas e-retailers.
The market research agency has held that consumers from developing countries like India (72 per cent), Turkey (66 per cent) and Indonesia (58 per cent) are the most likely to shop online locally for premium products.
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