Is there such a thing as 'premium luxury'? Can a brand fall into two categories? Yes. According to me, a luxury brand is by default attached to a premium, however a premium brand is not attached to luxury if it was it would be termed 'luxury' not 'premium'.
This was the argument I entered into with a senior HR executive, who was interviewing me for handling an international label.
According to her, the brand, for which her company was the exclusive licensee, was a 'premium luxury' brand which was known thus and hence the same image was being carried forward in India, so what could I bring to the table which could enhance their efforts. At the risk of getting rejected, I nodded my head the wrong way.
Here is my part of the dialogue verbatim - "First and foremost there is no such thing as a 'premium luxury' brand. There is either premium or luxury. Get your basics right. You could define your brand as new luxury - but not luxury. Secondly and most importantly, your brand is not a luxury brand. It is a premium brand. World over it is known as a premium brand and this is how you should be taking it forward in India as well. By building an image which is not in sync with how you are known worldwide, you are breaking the deal and actually leading to a decline in your sales. You sound too loud to those who generally buy you and too snobbish to those who could potentially buy you. So its a lost case either way."
She was aghast, and with an effort to regain her composure asked me to define what luxury is and what is premium. My answer to that was - Luxury is something which is incredibly high-priced, scarce and gives the buyer a feeling of being unique not common. In the Indian context a luxury brand would start its absolute basic at say Rs.10,000. Premium on the other hand is something priced at a premium over average goods and one which capitalises on the rising levels of disposable income among the middle class. Again in the Indian context this would ideally start at something like Rs. 1000-1500. Your brand falls in the second category because your starting range is Rs. 1295, something very easily afforded by a person earning Rs. 25,000/month and if you...she cut me very abruptly here and asked, "Ok forget the pricing and range, what else can you tell me about us and our competitors".
When I walked out post interview, I knew one thing, she had not taken very kindly to my outburst. But I was not really bothered about that. Having lived abroad and in India, there was one question which had me thinking hard. Why do some marketers in India think that they can position an international brand as 'Wow' and the masses and classes in India would lap it up? Why don't they cater to their audience right? Why do they try to portray themselves as something they are not and try to live up a facade? Don't they realize when the curtain falls, its always -The End? But then, what if I was wrong? What if there is such a thing as Premium Luxury? So I sat and contemplated.
Luxury or Premium?
To get that right, one needs to understand which one is which. Luxury is defined by some as a sensation that can only be bought not sold. For a few others luxury is about sheer indulgence and extravagance. Also it is important to note that one person’s luxury is another person’s commodity. In the current world, luxury is more of a necessity and seen more as an opportunity to widen, deepen, and redefine the experience of life. However one may choose to define it though, one thing is certain today; luxury is now commonplace and affordable.
How? Its because we now have something called as 'New Luxury' or in other words 'Premium'. For those who are not aware - 'New Luxury' has been defined by the Boston Consulting Group as better goods priced at 20 – 200% price premiums to average goods, consumed by middle class consumers with incomes of US$50 to 150,000. This development could be due to the fact that disposable income has risen dramatically over past 30 years.
So what's the problem? The problem is the confusion. As Seth Godin says in his blog, "Plenty of brands are in trouble right now because they're not sure which one they represent ". As the notion of luxury is itself changing, marketers are fighting hard to find answers to this changing scenario. Turns out, I was right - the brand was confused and was fighting hard for answers. But in the wrong war!
According to me, the answers would lie in a very long, hard look inward as well as outward. It is important to understand where the brand is going wrong. You could either look first at whom do you want to cater to, then look at the needs of your target, look at fulfilling those needs and communicate the whole thing right. Or you could look at what you have right now, research which genre of the market would it be best for, what kind of people cater to that genre, and then only release those products which would please that genre and then communicate that right as well. Point to note - Not just communicate, but communicate right.
Whether a brand is luxury, premium or new luxury, it first needs to get its positioning right. See where it fits in and with whom. It has to look at satisfying the needs of expression and individuality among its target audience while weaving innovation into its brand image whether via the product range or through the services provided or through the experience. And only if this is achieved, the brand will be on its way to the perfect balance of Volume versus Elite.
In case you are wondering, no, I did not get called again by that HR lady, nor did I expect to. But somehow, I felt proud for speaking out and not letting the situation overrule me. Absolutely gratifying. I may have lost the job, but I still feel like I won.
This was the argument I entered into with a senior HR executive, who was interviewing me for handling an international label.
According to her, the brand, for which her company was the exclusive licensee, was a 'premium luxury' brand which was known thus and hence the same image was being carried forward in India, so what could I bring to the table which could enhance their efforts. At the risk of getting rejected, I nodded my head the wrong way.
Here is my part of the dialogue verbatim - "First and foremost there is no such thing as a 'premium luxury' brand. There is either premium or luxury. Get your basics right. You could define your brand as new luxury - but not luxury. Secondly and most importantly, your brand is not a luxury brand. It is a premium brand. World over it is known as a premium brand and this is how you should be taking it forward in India as well. By building an image which is not in sync with how you are known worldwide, you are breaking the deal and actually leading to a decline in your sales. You sound too loud to those who generally buy you and too snobbish to those who could potentially buy you. So its a lost case either way."
She was aghast, and with an effort to regain her composure asked me to define what luxury is and what is premium. My answer to that was - Luxury is something which is incredibly high-priced, scarce and gives the buyer a feeling of being unique not common. In the Indian context a luxury brand would start its absolute basic at say Rs.10,000. Premium on the other hand is something priced at a premium over average goods and one which capitalises on the rising levels of disposable income among the middle class. Again in the Indian context this would ideally start at something like Rs. 1000-1500. Your brand falls in the second category because your starting range is Rs. 1295, something very easily afforded by a person earning Rs. 25,000/month and if you...she cut me very abruptly here and asked, "Ok forget the pricing and range, what else can you tell me about us and our competitors".
When I walked out post interview, I knew one thing, she had not taken very kindly to my outburst. But I was not really bothered about that. Having lived abroad and in India, there was one question which had me thinking hard. Why do some marketers in India think that they can position an international brand as 'Wow' and the masses and classes in India would lap it up? Why don't they cater to their audience right? Why do they try to portray themselves as something they are not and try to live up a facade? Don't they realize when the curtain falls, its always -The End? But then, what if I was wrong? What if there is such a thing as Premium Luxury? So I sat and contemplated.
Luxury or Premium?
How? Its because we now have something called as 'New Luxury' or in other words 'Premium'. For those who are not aware - 'New Luxury' has been defined by the Boston Consulting Group as better goods priced at 20 – 200% price premiums to average goods, consumed by middle class consumers with incomes of US$50 to 150,000. This development could be due to the fact that disposable income has risen dramatically over past 30 years.
So what's the problem? The problem is the confusion. As Seth Godin says in his blog, "Plenty of brands are in trouble right now because they're not sure which one they represent ". As the notion of luxury is itself changing, marketers are fighting hard to find answers to this changing scenario. Turns out, I was right - the brand was confused and was fighting hard for answers. But in the wrong war!
According to me, the answers would lie in a very long, hard look inward as well as outward. It is important to understand where the brand is going wrong. You could either look first at whom do you want to cater to, then look at the needs of your target, look at fulfilling those needs and communicate the whole thing right. Or you could look at what you have right now, research which genre of the market would it be best for, what kind of people cater to that genre, and then only release those products which would please that genre and then communicate that right as well. Point to note - Not just communicate, but communicate right.
Whether a brand is luxury, premium or new luxury, it first needs to get its positioning right. See where it fits in and with whom. It has to look at satisfying the needs of expression and individuality among its target audience while weaving innovation into its brand image whether via the product range or through the services provided or through the experience. And only if this is achieved, the brand will be on its way to the perfect balance of Volume versus Elite.
In case you are wondering, no, I did not get called again by that HR lady, nor did I expect to. But somehow, I felt proud for speaking out and not letting the situation overrule me. Absolutely gratifying. I may have lost the job, but I still feel like I won.
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