In today’s fast-moving world, consumer behaviors and sales-channel norms are constantly evolving, but economic growth and recovery is happening: GfK’s research suggests 2021 experienced $1.4 billion for the year in global sales for technology and durables alone.¹
But while some categories have remained buoyant, there also are early signs that volume demand might be slowing. Fired by a growing trend for “premiumization”—increasing the perceived value of a product along with its price—this creates a unique environment of risk and opportunity.
Here , let’s examine the two facets to brand strength: the predisposition to buy a brand (brand choice) and the willingness to pay more for it (brand premium, or premiumization).
The fact is, simply redesigning products or launching premium versions isn’t enough. Investing in authentic, compelling brand stories, supported by effective positioning and communication, is critical.
Building brand strength: choice or premium?
Companies must research what consumers care about. What do their shoppers stand for and what motivates their purchase decisions? Understanding consumers and why they buy is pivotal to building laser-focused brand growth strategies.
But finding the best strategy for today and future-proofing it for tomorrow isn’t straightforward. There are two facets to brand strength: the predisposition to buy a brand (brand choice) and the willingness to pay more for it (brand premium). At GfK, we capture both these facets and combine them into a single metric. This shows the current brand strength and informs decision-making for future growth, aligned with the company’s chosen strategy for building premium, sales volumes or both.
A one-size-fits-all approach to brand management won’t work. To rise above the competition, brands need a sophisticated approach that leverages customer insights, sales data and brand performance metrics so they can take action on what really matters.
Understanding the drivers of brand choice and brand premium, underscored by a deep knowledge of business objectives, enables brands to create winning strategies powered by actions that will effectively influence consumer buying decisions.
What are brand -premium drivers?
The premium segment is expanding quickly, with the COVID-19 pandemic and digital transformation fueling the trend. A downturn in spending on travel and experiences has led to an increase in disposable income, coupled with a growth in consumer desire to invest in premium products.
Successful premium brands can completely transform a category, carving out sizable market shares while retaining high price points. Apple and Dyson are two great examples. With more brands now joining the premium segment, competition is tough and both new and established businesses must strive to gain and retain their positions.
Earning brand attachment is fundamental to driving brand premium. Connections should always be strong and meaningful, with brands that wish to build premium focusing on how they can help consumers assert their identity, values and aspirations.
High-quality products that delight the customer with superior quality and functionality are essential. To claim a premium, brands need to deliver true excellence through design, innovation or outstanding experiences.
Brands should also seek to exceed consumer expectations while promoting the uniqueness of their products by standing out from their competitors at every touchpoint. Alignment with the right experts and celebrities is a powerful tool for creating credibility, trust and desirability. Care should be taken to ensure campaigns are genuine, salient and relevant.
What are brand-choice drivers?
For brands looking to grow sales volumes, brand attachment should focus on self-connection, reflecting the consumer’s personal identity and values. A distinctive brand image is less important, with frills and add-ons taking second place to the nuts and bolts of functionality. To effectively drive brand choice, companies must first make sure their products are accessible, affordable and easy to use.
Building trust is equally vital for success as consumers want a product or service they can rely on. Brands that let them down will lose both sales and reputation. Therefore, businesses must provide consistency of product quality, brand values and experience at every stage of the customer journey.
Success from understanding
Great brands know their customers and their own businesses inside out. This gives them the tools to create amazing brand experiences that drive sales growth, premiumization or both. Ultimately, a winning strategy is one that will future-proof the brand by attracting and retaining more customers. This can only be achieved by leveraging the right insights which must be tied back to the bottom line and, crucially, lead to actions that keep the business moving forward.
Watch our new on -demand webinar, Brands of Tomorrow, for a deeper insight into strategies that drive brand strength and success.
Sources:
¹ GfK Retails Insights T&D 2021.
"choice" - Google News
January 21, 2022 at 09:53PM
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How to effectively balance brand choice with premiumization - AdAge.com
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