The economic storm battering banks, governments and entire countries appears to be pounding the edifices of upmarket brands. As belts tighten, consumers will ask two questions of brands, especially those demanding premium prices: “Are you worth it?” and “Why? “While true prestige brands tend to survive a recession relatively unscathed, so-called premium brands are likely to take the hardest battering, having often been built on less-solid foundations.
Premium brands can learn a great deal from the true luxury brands on how to continue to be deemed “worth it”. Picture the luxury brand as constructed on three pillars. One is the product story: they are beautiful, unique and precious, clearly better than their mass alternatives. The second pillar is the brand soul: the history, character and emotion that engages the consumer with its story. And third, there is cultural presence: they strive for relevance, to be of the moment and thus a “must have” item.
Luxury (and to a lesser extent premium) brands are bought through desire rather than need. What clinches the sale is generally the brand factor – heart winning over head. Aptly, therefore, luxury brands are essentially two-thirds brand and one-third product or two-thirds emotion and one-third function. The brand really needs to offer something to justify its (significant) price premium. A thorough understanding of this emotional dimension is therefore essential.
Premium brands need to have a similar understanding: what is the feeling the consumer seeks to have that we need to deliver? How can we build emotional brand engagement so we can continue to charge a premium price? Some premium brands are indeed on these sound footings despite being widely accessible to the many.
But premium brands which enjoyed prosperity without investing in the three pillars are about to find the going tough as consumers evaluate what is actually worth paying more for.
Premium high street fashion brands such as Karen Millen, Reiss and Jigsaw command a significant price premium for high street fashion but do they have the story, the soul or the enduring cultural presence to help them convincingly answer the consumer’s question? TopShop, by comparison, has developed a strong product story (Kate Moss, Unique, etc), generated far more cultural presence in doing so and built a strong emotional brand engagement with consumers. And it doesn’t charge a premium for all this. Which brand looks more worth it now?Many of the bigger mainstream businesses which have built premium brands in mass market sectors will also feel the pinch because the price premium on top of their standard lines is greater than the perceived benefit in return, both functional and emotional.
Luxury brands, often built on small-scale personal service, acquire an intimate understanding of their core customers, which, again, premium brands can aspire to. Luxury brands make their customers feel incredibly special. To the premium brands, usually built on the mass market model, how much love and understanding are you showing your core consumers?This is especially important for communications, perhaps the easiest opportunity to convey the brand feeling or emotion. In choosing a premium brand over a standard one the consumer is also making a statement to those observing. What is that message your particular premium brand is sending out? How well does it match how your consumer wants to feel? This is the measure of your cultural presence.
Consistency and discipline is another hallmark of the luxury brand. Successful luxury brands are disciplined in making every element of the experience consistently high. Premium brands too often try to premium-ise some elements while cutting corners (and cost) on others. Judging where to invest and where one can compromise is vital for premium brands which may not be able to afford to be consistently premium throughout their mix.
What makes a premium brand worth it will inevitably vary from person to person but, by following the basics of luxury branding, they can increase their chances of weathering the economic storm.
Melanie Skotadis, brand director & head of prestige brands team at Added Value