Differentiation Strategy: The “Me Too” Strategy Can Damage A Premium Brand

A friend of mine, the proud owner of a BMW, sent me the e-mail above. He was outraged, and rightfully so. A premium car manufacturer, having an “Employee Pricing” event, just like the 3 big American car manufacturers that almost went bankrupt last year?

A premium brand is usually built on prestige and exclusivity, which has to reflect on the messages it communicates to its target market. Marketers are often very tempted to just copy the competition, “because if they are doing it, that means it’s working”. They forget about the segment in which they compete in and the emotions that their customers invest in the brand. Although this initiative may result in an increases in sales, in the long run the brand will loose its relevance to the target audience.

A premium brand is bought in most cases for emotional reasons. Let’s take the BMW example. Owning it is all about the driving sensation and the prestige that comes with being seen in one. BMW owners want exclusivity, and no associations with the drivers of ordinary cars (Ford, GM, Toyota). This is the reason they paid a premium to drive a BMW, isn’t it?

Premium brands are usually the ones that struggle the most to provide “value”, for least two reasons: increased competition in the premium segment, and attacks from “value brands” that create new market segments. However, the communication has to differ versus the “value” brands (interestingly enough BMW does a very good job at this) :

Offer bonuses rather than price reductions. BMW offers the “Luxury package” at no extra cost.

Focus on providing premium service. BMW does that with the “4 year free maintenance’ program.

Dedicate your Marketing communication budget to continuously elevating the brand. The communication materials should reflect the points of difference versus the competition in the premium segment and, just as important,as the “value” segment.

Associate the brand with “premium”. Get to know your target market in detail, including where they eat, what they do in their free time, what magazines they read. Then create the necessary links between their “habits” and your brand through product placement, sponsorship and special events.

It’s true that customers today are more informed than ever and want more “value” for their money, no matter if they are involved in a rational or emotional purchase. The amount of information they have available puts a lot of pressure on companies to deliver more. And so your brand should, just be careful what message you communicate when trying to accomplish this goal.

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