Would you pay $100K for a bottled water? A lesson in premium branding.
Denny Kurien, RGD
Premium & Luxury Branding ???? Co-Founder & Creative Director, Rayvn Design
I've always been fascinated by expensive things. Not because I can afford to buy such luxuries. But rather I'm fascinated behind the motivation of someone who wants to spend $100,000 on something as utilitarian as a bottled water.
The Beverly Hills 9OH20 Luxy Collection Diamond Edition is selling for $100,000 per bottle.
Beverly Hills has always hailed itself as the champagne of water due to its great tasting water sourced from northern California’s mountain springs. The company has outdone itself this time as this edition, which is touted to be “the ultimate in water,” is sourced from the Sierra Nevada Mountains and was instilled with minerals, potassium, calcium, and minerals to enhance its taste and nutrients.
Now I'm no water connoisseur - I probably couldn't tell the difference between a $100K Beverly Hills 9OH20 water and tap water which costs $0
One thing I will point out though that contributes to the expensive price tag, is the Luxy Collection Diamond Edition’s bottle itself which was designed by jeweler Mario Padilla, and comes with a white gold cap encrusted with 14-karat gold comprising of?over 250 black diamonds and 600 G/VS white diamonds.
Only nine bottles were ever made, and purchasing one will net you a one-year supply of the Beverly Hills 9OH2O Lifestyle Collection.
Now going back to my original question, would YOU pay $100K for a bottled water?
Why would anyone in their right mind pay more for something that is a commoditized as water just because it has a fancy logo on it or is packaged in a glass bottle topped with diamonds?
Certainly, all that fluff can’t justify a price tag three, five, or even ten times above average, can it?
Yet people gladly hand over their hard-earned dollars for these higher-priced products and services, with very few questions asked. So how is it that some businesses can charge much more than their competitors who are selling the same products and services down the street for less?
Because luxury & premium products and services are not at all like the ones sold by their competitors down the street for less.
Confused yet?
Don’t worry, it will all make sense by the time you finish reading this article.
What Makes a Brand “Premium”?
I run a branding & design agency in Toronto, called "Rayvn Design". Our design agency's positioning statement has always been, "We create 'premium' brands for knowledge-based business, so that they can attract high-paying clients".
Now you may be asking yourself, what is it that makes these businesses want a 'premium' brand? Well for one, they are able to charge a lot more for their services than what their competitors are charging.
For example, an accountant that offer concierge-style services to high-end clientele in the real-estate investment space, giving them the feeling of having a personal bookkeeper.
Or a video production studio that specializes in creating bespoke mini-documentaries and legacy video of founders of large organizations. See below branding work we did for them:
So what comes to mind when you think of?premium?products and services?
“A higher price” is the most common answer given by consumers when asked. Other responses are “exceptional quality”, “excellent service”, and “better value”.
The real answer?
All of the above — and more.
While it is ultimately up to each individual to determine what a premium product or service is to them, the elite brands have identifiable characteristics and traits that make them superior in the eyes of the majority.
Premium Brands Summarized
What premium brands must have:
These alone do not make a brand premium:
Price as an Indicator of Quality
Though price is the most tangible characteristic of premium products and services, simply charging more for it doesn’t elevate it to premium brand status. Businesses that want to command higher prices for their products and services must follow a strategy that will enable them to do so.
The amount by which a product’s price exceeds the baseline — its average price — is known as the?price premium. The margin of price premium varies from industry to industry and serves as an indicator when comparing brands to one another.
This is important because consumers will usually attempt to compare products or services when making a purchasing decision. If you want to command a higher price premium for your product or service, you must be able to justify it.
Interestingly, price also serves as an indicator of quality. Using brain surgery as an example (which I will admit is a bit extreme, but makes the point), if a brain surgeon told you he would perform the operation for $10,000, you may question his qualifications. Likewise, if the price was $250,000, you would probably be more convinced of his ability to perform the operation successfully.
As simple as this sounds, many small businesses do not price their products and services on real data, which leads to underpricing in most cases.?According the Small Business Administration, 80% of small businesses fail. Underpricing is one of the major reasons.
Do not set prices arbitrarily. Avoid pricing your products and services based on what your competitors are charging or what you think the market can stand. While competitive pricing directly impacts your price structure, there are ways to combat the problem. You may have to change your target audience or product positioning, but there are strategies you can employ to mitigate price pressure.
The Primary Characteristics of a Premium Brand
Elite brands leverage quality, value, and mindset to build a price premium around their products and services. This brand strategy has been proven to work across many industries, no matter how commoditized they may appear.
Mindset
It has been said that success begins in the mind. I believe this is true for all of us and is certainly the case for premium brands. After all, if you don’t?believe?you provide the best product or service on the market, why should anyone else?
For business owners who want to implement a premium brand strategy, success starts with how they think of their business, products, and services. If you believe you must compete on price, you will find yourself in an ongoing price war with competitors, constantly discounting and undercutting to get the next sale. But if you believe your products and services are worth more than market average, you will find a way to succeed.
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Quality
Quality itself is subjective. People do not always agree on what defines it. Therefore, it is not enough for premium brands to simply make claims of superiority. So rather than attempting to convince prospective customers what quality is, premium brands focus on creating the?perception?of it.
The traits of quality for a physical product differ from that of a service. For products, quality is determined by its performance, exceptional features, and reliability. Premium status can be achieved by emphasizing the superiority of ingredients, materials, and manufacturing processes.
For service industries,?expertise?is the gauge for quality. After all, if people truly believe you are the best at what you do, they are less likely to challenge your price. Again, using a previous example, if you needed brain surgery, you would probably want the surgeon most qualified to perform the operation. Would you really care about how much it costs?
Value
Everyone wants to get the biggest bang for their buck. That is the essence of value. In order for premium brands to charge higher prices, they must justify the purchase by convincing the customer that they are getting more value for the dollars paid.
But like quality, value is often debatable. For example, some people purchase a car for its safety specifications while others buy it because it is American made. Both people bought the same car, but for different reasons.
It is common for business owners to theorize why customers find value in their products and services. However, these reasons are usually presumptions and are not based on real data — essentially, they guess. This problem stems from the “pain-solution” method commonly used by marketing professionals.
Using this method, the business owner or marketing team will attempt to put themselves in the shoes of prospective customers to come up with problems those customers have (the pain) in order to position the business’s product or service as the solution to that problem. This approach is better than nothing if you have no data. But if at all possible, you want to rely less on guesswork and collect feedback from your current customer base to determine how they define value as it pertains to the products and services you sell.
Premium brands take a comprehensive approach to this process. They invest time and resources to understand what their customers want and expect from their products and services. Then they use this information to deliver on multiple levels — functional, technical, and emotional.
The Premium Brand Trifecta
In their quest to provide exceptional quality and value, premium brands build a narrative around the functional, technical, and emotional benefits of their products and services.
Functional benefits?refer the ability of a product or service to satisfy a need. For example, a car’s function is to transport someone from point A to point B. An accountant’s function is to help people file their taxes.
Technical benefits of a product or service are related its features and performance. This is also its ability to deliver with consistency, at an exceptional level, without errors, glitches, or other issues that may cause inconvenience or delays. For instance, a car may be designed for better gas mileage or an accountant may have specific industry designations or certifications that allow them to specialize in taxes for small businesses.
Finally, premium products and services deliver?emotionally. Emotion is the driving force behind purchasing decisions, not logic. Unfortunately, most business owners approach the sale from a logical perspective, thinking the prospect will buy based on rational thinking.
As an example of emotional benefits, a certain car may make a person feel special or having attained a higher social status by driving it. And in the case of the accountant, like I mentioned about - one that offers concierge-style services to high-end clientele (in a particular industry) giving them the feeling of having a personal bookkeeper.
Premium Brands Are on a Mission
Why does your business exist? If you want to transform yours into a premium brand, you’ll need an in-depth answer to this question.
Most businesses post their “mission and vision” on a page of their website but few create a narrative around it. Developing your brand’s story is powerful way to connect with current customers and prospects alike.
Can you remember why you started your business? For most entrepreneurs, the passion that drove them to strike out on their own often remains buried inside them. But rather than keeping this vision to themselves, premium brands make it the focal point of all they do.
The key is to find a connection between what your customers want — the solutions they are looking for — and your business’s mission. This may sound idealistic to some, but premium brands are masters at striking a balance between the two.
The brand story has become a popular marketing tactic. Unfortunately, most of them aren’t real stories but are instead customer-driven pitches. The reason many “brand stories” don’t work is because overemphasis on the customer ends up making most of them sound too good to be true.
A true brand story — or narrative — immerses the customer in the business’s purpose and makes a connection between why the business exists (that is, how they help their customers) and for whom (the target customer).
Below is an examples of personal branding we did for Sarah Carlson at Fulcrum Financial Group - a Financial Advisor that specialized in helping female entrepreneurs who gone through trauma in their personal life (divorce / widow / physical debilitation). The reason why Sarah can relate to these women is because she herself has gone through similar challenges, and so her brand story, narrative and the advice she offers on social media with regards to her personal brand is genuine and authentic).
Studies show that 89% of customers stay loyal to brands that share their values and 94% are highly likely recommend a brand they are emotionally engaged with.
The brand narrative opens the door for businesses to establish a deeper connection with people. Sharing their purpose, mission, and vision is a big part of that story.
Premium Brands Create a Memorable Experience
Brand experience is defined as?sensations, feelings, cognitions, and behavioral responses evoked by brand-related stimuli that are part of a brand’s design and identity, packaging, communications, and environments.
Put another way, it is what people feel — physically, emotionally, and mentally — before, during, and after having come into contact with a business.
For many businesses, the relationship with the customer starts with the purchase. But premium brands begin the process much sooner — long before a buying decision is ever made. They create touch points (experiences) for consumers that introduce them to the brand, its purpose, values, philosophies, and core beliefs.
This is accomplished through a variety of media and platforms, is not limited to digital communication, and includes personal interaction. The goal is to establish affinity, credibility, and trust with like-minded people who will eventually become customers.
Exceeding customer expectations is also part of the brand experience. Everyone makes promises — only a minority actually follow through on what they say they will do. But for premium brands, exceeding expectations is more than making sure they have a product in stock, that the driver shows up on time, or that nothing is broken.
In order to exceed their customers’ expectations, premium brands manage those expectations by incorporating them into the brand experience, beginning with the first contact and continuing well beyond the sale.
Premium Brands are…Different
One thing alone does not define a business as a premium brand,?but rather a collection of things. It is an image or feeling you get when the brand comes to mind. It is a sense that these companies are unique. Their name, philosophy, and personality resonate with you as soon as you come into contact with them.
It is possible for any small business to employ a premium brand strategy. And no, you don't need to sell bottled water at $100K to be considered premium. Rather be genuine, and offer your customers a combination of supreme quality, value, purpose in purchase, and an unforgettable buying experience. Remember, premium brands have always existed and always will.
And you can be one of them.
Need help in creating your premium brand?
Hi, I'm Denny Kurien, and I run a branding & design studio in Toronto called?Rayvn Design. Our strength has always been in working directly with the founders of startups and small businesses, in helping them materialize their vision for their brand.
If you want to elevate your service-based business, attract high-paying clients, and create a waitlist worthy brand experience, then check out?our prices, and if that works within your budget — then?book a 15 minute consultation?with me to see if we are a good fit to work together.