Premium branding

Imagine this scenario: your company owns a premium brand with a lot of history, strong local manufacturing content and positive attributes behind it.

Back in the days when consumer had fewer choices your brand was shining and charging a price premium was not an issue. People loved your brand. But then the economy became global and your customer is bombarded with offers from your competitors for apparently similar products at a much more attractive price.

If this is happening to your brand, you are not alone.

The big question becomes: how do I protect my premium brand without going bankrupt?

My recommendation: launch a new brand to successfully compete in the newly created segment.

The biggest concern that most management teams have with this strategy is the danger of cannibalizing the existing premium brand. Based on our experience, in order to be successful a few tactics should be taking into account:

  • Use a stand-alone brand name, with no obvious connection to the premium brand. Don’t go for brand extensions such as X Light, X International, X Global.  Instead go slow, but safe: choose a stand alone name. The new brand takes more time and resources to build but your risk of cannibalization is much lower.
  • Develop a positioning strategy based on attributes that are meaningful for the price sensitive segment, and not for the premium one. Usually premium brands are positioned on emotions and experiences, while value brand use a product-based positioning. Think of Toyota (reliability) versus Lexus (“The pursuit of perfection”).
  • Leverage positive attributes associated with your company. If you are known for great service, speed of delivery, exceptional sales force, you can safely promote them when launching the value brand. These are attributes attached the your company, not the premium brand.
  • Be patient. Stand alone brands are built in time, especially in today’s crowded environment.

These tactics should work in both a business to consumer and business to business environment and should greatly diminish the risk of brand cannibalization.

Do you currently manage a premium brand? What challenges do you experience?

Image credit: Credit Score Geek