The Obsession To Be Premium

30 Oct,2020

 

By Avik Chattopadhyay

 

The other day I was chatting up with a Maruti Suzuki Nexa dealer. Post the expected lament on lack of footfalls and the still elusive operating profit, we got into discussing the basic Nexa model – the purpose, the promise and the delivery. After a lot of soul-searching and head scratching, he finally brought it down to the wooden flooring, fancy furniture and focused lighting as the “premium” experience being offered to a customer vis-à-vis one who walked into a Maruti Suzuki Arena!

 

Sounds preposterous? Totally believable!

Let’s just spend a few more words on this Nexa vis-à-vis Arena case. The two channels of the same Maruti Suzuki brand offer separate products to customers, hence ensuring a minimum level of footfalls in both. I cannot buy an Ignis from an Arena outlet, hence go to a Nexa. Similarly, I cannot pick up a WagonR at a Nexa, hence go to an Arena. It is not that I have a similar product portfolio in both, yet I choose a Nexa over an Arena as the entire customer promise and experience is what I associate with and aspire for.

 

There are various ways I can be premium in being a Nexa channel partner.

In my product pricing. But the Nexa offers the Baleno that is in the same price band as the Swift.

In my product positioning by addressing a different customer psychographic. But, then, the Ciaz was moved from Arena to Nexa to allow more revenues to the latter.

In my overall experience. But the service and ownership experience, as per customer feedback and dealer inputs, are the same in Nexa and Arena.

 

So, I am fundamentally undifferentiated from my less privileged channel cousin and totally confused in what I am supposed to be in the first place. Yet, I boast that I am “premium”. Not a very sustainable business model, is it?

 

Maruti Suzuki’s urge to go premium is not an oddity. It is another demonstration of the common malaise many Indian brands have – the obsession to be premium!

 

From aviation to automobiles, food to furniture, healthcare to homes, brands and businesses make proud statements in press releases and communication that they are a premium brand or aim to go premium.

 

It is as if being entry-level or mass-market is a protozoan life rid of all respect and pride. It is as if being affordable is an affront to business logic and purpose.

 

In the three decades I have spent working for a living, I have come across a handful of seniors and bosses who have also expressed this desire to ‘elevate’ the brand into a premium one. Basically, making the customer pay more money for the same product or solution. And how will that happen? Magical marketing! Spend on symbols of an elevated status like brand ambassadors, sponsorships and imagery to package the same product in a new avatar!

 

Does this not work? It does, for some time and for some people. But it is never sustainable as the brand is desperately trying to live on borrowed clothes and makeup.

 

Have I been successful in any such attempt? Not once. Have tried a few times but failed miserably. But in the process, have learnt five important lessons which I wish to share.

 

Premium vis-à-vis Expensive

These are two separate concepts. A Harley-Davidson is expensive. It is not premium. It is expensive because the Americans can just not get efficient enough. But in its home market no one buys it for its premium-ness but for its distinct imagery and culture code.

 

Mass vis-à-vis Premium

A Bic ballpen is mass. And people love it because it is so. But a special edition Bic commemorating the Black Lives Matter movement will certainly sell at a premium. Similarly, a Maruti Suzuki Swift is mass. But a 15th anniversary limited edition Swift Sport will be premium. Hence, mass and premium are not mutually exclusive concepts… in reality.

 

Premium vis-à-vis VFM

These are not conflicting at all. In fact, the better a brand is able to demonstrate value-for-money [VFM] to its target customer, the better the premium it will attract. And not extract. I once met Mr R M Dhariwal, the owner of the Manikchand Group, who told me that he bought a Maybach for his daughter on her birthday as believed for the amount of money he wanted to spend, the Maybach offered him best value for money!

 

The intangible value of a product or experience, over and above the physical value is what allows a brand to command a premium. And not just demand it.

 

Premium vis-à-vis Profit

These two are not necessary and sufficient conditions to co-exist. There are mass-market brands that make profits that many luxury brands would give both arms for. A premium offering need not make higher profits than an entry-level one. The focussed definition and delivery of its promise is what makes a brand charge a premium.

 

Response vis-à-vis Objective

This is the biggest lesson for me. Being “premium” is a desired consumer response and not a business goal or objective. It is an outcome and not the process. It is the end and not the means. This clarity of brand management happens only when the brand stays true to its intended purpose and promise.

 

We experience brands like Bata, Amul, McDonald’s and Chevrolet not because they are positioned as “premium” but because they are true to their brand DNA and carry no pretensions. As customers, we give them their due premiums when we wait for the pack of Amul Taaza milk to arrive at the store, love to see the sparkle in the eyes of our children on getting them a Happy Meal, squeal the hell out of the tyres of a gleaming Corvette or splash about in muddy puddles in the Naughty Boy shoes. Each of these experiences is what truly makes a brand “premium”!

 

 

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