India Thought Leadership | Premiumization
Large population of young people drives rapid rise of social media
But Marketers need to justify the premium
By Mythili Chandrasekar
Executive Planning Director
Senior Vice President
As Indian consumers climb the ladder of aspiration, the marketing communications targeted at them evolves from penetration strategies (use shampoo instead of shikakai, the traditional herbal hair cleaner) to consumption strategies (use shampoo three times a week) to premiumization strategies (choose the costlier shampoo).
Indian marketers need to answer a fundamental question. What will make consumers believe that it’s worth paying more for their brands, products and services? The classic JWT brand ladder is a useful tool for answering this question. It provides possibilities for brand propositions that justify greater price premiums as consumers ascend the ladder.
A brand proposition that justifies a premium for a product or service can be constructed with components such as these:
Crafting the brand story
- Who makes it: Extol the benefit of heritage or provenance.
- What it’s made from: Focus on differentiating or quality ingredients.
- How it’s made: Special production or sourcing can be important.
Segmenting by audience
- What it’s for: This is the rational benefit and may relate to occasion.
- How it makes you feel: This is the emotional benefit, which can be critical.
- What kind of person it helps you to be: This is about user imagery.
- What values people associate with it: This is about aligning consumer and brand.
Who makes it, what it’s made from, how it’s made
These components are about marketers crafting a story around the product philosophy. Examples include Chipotle, which emphasizes quality ingredients in a fast food Mexican restaurant setting, or Body Shop, known for ethical sourcing. Similarly, Fabindia, markets quality traditional products sourced from local communities that benefit from the production. Brand philosophy also drives the entire genre of high end Ayurveda, herbal, natural products and services. Roam the shop shelves and you’ll find organic India ghee, a kind of butter made from tension free cows, charging more, and Keggs eggs charging more for being produced by free range poultry.
Brands also derive strength from their place of origin, a factor that drives imported brands in India. Sourcing and quality production can justify a premium, as exemplified by Horlicks roasted or baked namkeens, because these snack foods are usually fried. In fact, just think of a regular restaurant menu where you pay more depending on whether you are ordering a roti, naan, paratha, lachcha or rumali! It’s all bread. It’s all made from the same atta, or flour, just the cooking process and the form of the end product are different.
Recasting ingredients creates premium possibilities for products such as mixed seed edible oils, double refined sugars, multigrain atta, bread and even water when it’s flavored or from a spring or other special source. And premium pricing isn’t just about adding ingredients. Even removing something – oil, fat, sodium, sugar, gluten – may let us charge more.
Packaging alone may justify charging a premium by associating the pack design with other premium products or concepts. Marketers can borrow the packaging that signifies premium in another category to overcome consumer preconceptions in their own category. For example, a chips brand may borrow the premium design coding of an alcohol brand. In fact, even removal of packaging – like soaps have done – can produce a premium perception!
What it is for, how it makes you feel, how it helps personal image, brand value
This is the playing field of segmentation. Consumers usually are willing to pay more for products perceived as tailor made for the needs of their specific demographic group. Among the myriad examples of these groups are: mothers, expectant mothers, athletes, diabetics or others with particular dietary requirements.
Key to this approach in India is crafting the benefit proposition. The benefit depends on the product category. In personal care the benefit could be about softness or shine, damage control or beauty enhancement. In paints the benefit could be about durability for exterior paint and texture for interior paint. Most important, the benefit needs to be clearly understood. Indian consumers look for rational explanations to justify their purchases.
Occasions – day or night, casual or formal, office or party, regular or festival – are part of this benefit set. At the top end of this set are feelings that rich sensorial experiences evoke. Think of molten chocolate, extra cheesy pizzas, exotic ice creams, silken skin or walls, experiential décor or designer jewelry. User imagery also fits here. The aspiring CEO concerned about the image he or she projects is more likely to pay a premium for the apparel that provides a higher level of self assurance.
Finally, the permission to charge a premium price also is related to brand value, the consumer’s perception of what the brand stands for, its philosophy beyond function, belief and badge beyond the rational.
Brands that create a high level of desire in the minds of consumer have the opportunity to offer the costlier hotel, the costlier airline, the costlier chips or the costlier shampoo. Indian consumers will indeed climb their own ladders of aspiration. The question is, are our brand ladders ready to assist their assent?