In the last column I discussed the fundamentals of accessible premiumization. Brands such as Grey Goose vodka and Rock & Republic jeans were dissected in detail, and since then I have received a lot of feedback about other brands that fit the bill.
Godiva Chocolatier, Haagen-Dazs and Williams Sonoma are all great examples of premium products, in more-or-less commoditized categories, priced and distributed in a way that makes them a clear step up from other brands in the category, but available to the masses.
To re-cap, each of these brands shares some common fundamental characteristics:
Product: Measurably better but not fundamentally different from its competitors.
Price: In the range of two times higher in price versus the average priced product in the category.
Distribution: Widely distributed, in conventional malls, grocers, drug marts.
Packaging: Unique packaging and/or meticulous presentation.
Back story: A well-documented history of the brand, product, founder or production facility.
Production: Unique production process and product nomenclature.
Endorsement: Celebrity endorsement and celebrity use or public display.
Promotion: Niche events such as individual sports and industry parties.
The lesson is: A carefully designed combination of product, price point, distribution channel and marketing tactics create the basis for an accessible premiumization opportunity. And since the cost to produce the product is generally not proportionately higher, the win is in margin.
A logical flow from the fundamentals of accessible premiumization is a discussion around opportunity spotting or creation. Where are the remaining opportunities for accessible premium consumer products, and how can they be converted into successful offerings?
The first question to ask is which commodities, or near commodities, lack an accessible premium offering, and why. You could argue, for example, that bottled water is already saturated with accessible premium brands. But if we look at some other categories, there is still white space.
• As my friend Mark Ferrier at TraffikGroup likes to point out, there is no Grey Goose in the gin category.
• In apparel, there is no recognized and widely distributed premium brand for socks or hosiery.
• In a way, the mobile phone category lacks an accessible premium offering, at least here in North America – and it certainly lacks a true premium offering.
In the case of gin, it is not obvious why an accessible premium brand is missing. For mobile phones, in Canada and the United States, the accepted business model for carriers includes handset subsidization to drive long-term monthly contracts, which partially explains its lack of accessible premium offering.
There are many categories open to an accessible premiumization play. Does the space that you operate in qualify?
The next criterion to explore is demand and price. Will a sufficient number of consumers be willing to pay roughly twice what they have been paying for a product of slightly lesser quality and prestige?
Predicting demand and pricing with consumers is tricky business. Sometimes demand can be created with the introduction of an amazing product or brand, such as Sony Walkman. A look at comparable products may provide some clues. For example, if consumers stepped up and paid for better vodka, why not for gin? Only conjoint studies, pilot launches and market testing will really tell the tale.
Distribution is the next hurdle. Assuming there is an unoccupied category and demand or pricing runway, is mass distribution available? In the case of socks and hosiery, distribution could be a challenge as there are many options but no clear “go-to” destination for these goods, and a dedicated retail channel, such as a chain of stores, likely will not justify the investment. A partnership with a national clothing retailer built on a store-within-a-store concept might be the only way to make this opportunity work.
The final big question is whether a brand with a sufficient history or back story can be found and elevated to accessible premium status. In the case of gin, presumably there are a number of brands with superior quality and rich histories that might do the trick. In mobile phones, the space is so new this would be tougher to spin. Without some quality legitimacy based on years of craftsmanship, premium claims could fall flat.
All of the other elements can be engineered, from designing a unique package or retail presentation to creating some unique language around the product, and from incentivizing the right celebrity to finding the right event to promote. There are any number of additional marketing tactics available to properly position the product and brand. These marketing activities require a significant investment to get to scale quickly, though. Accessible premiumization is a big risk-big reward play.
JUNE 29: I’ll dig more into the typical customers of accessible premium brands, and what defines them.
Special to The Globe and Mail
Mark Healy, P.Eng, MBA, is a partner at Satov Consultants – a management consultancy with practice areas in corporate strategy, customer strategy and operations strategy. Mark’s focus areas inside the customer strategy practice include consumer insights, customer experience, innovation and go-to-market strategy. He is a regular speaker and media contributor on topics ranging from marketing to strategy, in telecom, retail and other sectors. Mark is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to Ivey and recent Ivey grads. He currently serves as chair of the Ivey Alumni Association board of directors. Mark lives with his wife Charlotte and their bulldog McDuff in Toronto.