In the last few years, Vietnam is one of the fastest-growing markets in the region and so does the competition of this market. Every industry has witnessed the participation of several new players. In that situation, it takes many brands’ constant effort to raise its economic value and create meaningful differentiation to win in the competition, leading to the premiumization trend observed across the market.
There are multiple approaches applied by different brands to enhance the brand’s economic value and premium-ness. Below is going to mention the most common measures taken by brands.
Approach #1. Adding new and superior value/quality for the product.
It is the most common for a brand to add new and superior quality to increase its economic value. This is particularly considered by categories that are themselves commodities. Let’s take the roofing steel industry as a typical example as this is the most commoditizing category. While roofing steel product in the past was mostly expected to be durable, many steel brands nowadays have started to communicate about house decoration, insulation/heat protection, or noise reduction functions.
For categories facing the risk of being seriously commoditized, many brands must continually look for superior features to raise their values. Fabric softener is amongst the most successful category in upgrading brands as well as raising the standards from consumers. As described by its name, fabric softener was mostly known by the “softening” function. When the market became overcrowded by numerous brands delivering that same benefit, a few brands took initiative in introducing a more aspiring feature that is the superior fragrance to make it more premium and exceptional.
A similar case was observed in the detergent category. Many detergent brands must be gradually moving away from the most basic cleaning function that no longer creates any differentiation for brands, to offer new benefits to consumers such as fabric protection, anti-bacteria, safeness on skin.
The most interesting illustration of this premiumization approach could be found in the diaper category. Those who want to position themselves as premium diaper must serve more than the basic needs for diaper – the absorbency – but to meet the higher demand of consumers in ensuring the comfort for kids upon wearing the product.
Approach #2. Adding rare/ premium ingredients to produce a product
Accompanying adding new, superior features, brands tend to introduce precious ingredients to account for its high value. The instant noodle industry has observed the constant evolvement initiated by a few progressive brands. In the past, instant noodles had been long associated with inner heat. Therefore made-of-potato noodle was introduced to solve inner heat issue, appreciated for being more delicious and sold at a higher price. Similarly, instant ‘Pho’ that could only be sold at low prices for years has recently been accepted at premium price thanks to added fresh veggies and real meat topping that make it perceived more nutritious and more savory. Likewise, it is the precious source of ingredients that have recently been advertised as the drivers of a premium line of fish sauce.
Approach #3. Adjusting product features according to social trends
To become a pioneer and be meaningfully differentiated from others, brands need to regularly update the latest trends. The increased consumption of natural and organic products is a trend that has recently been well caught by dairy companies. A wide range of ‘organic’ dairy products has been launched to the market at premium prices. Similarly, many personal care products like shampoo and body wash switch to purely natural ingredients to attract green users.
Another successful story could be found in the mobile phone industry where brands that detected the selfie trend and the popularity of social media and invested in camera function on the mobile phone since the early days were enthusiastically welcomed.
Approach #4. Provoking a sense of scarcity and exclusivity
Many marketers have chosen to create a sense of scarcity and exclusivity for their brands by talking about the meticulous manufacturing process to make high-quality products. An instant coffee brand can also present its craftsmanship in every single stage of making coffee, from planting, harvesting to roasting, to deliver perfect quality coffee.
Another tactic that is often utilized by brand owners is to launch limited edition – a special version for special occasions like the lunar New Year. That action often results in temporary scarcity for the product line, enhancing the product’s values, and upgrading the brand’s imagery.
Approach #5. Creating technical barriers that could not be copied in a short time.
This is the measure most often applied by high-tech industries. All brands in this field must constantly update their products with state-of-art technology to replace highly popular versions that have been widely adopted by different manufacturers. Let take the motorcycle as another example. Idling system that is used to be considered an advanced application of premium automatic motorcycle a few years ago has recently become a must-have feature of any automatic motorcycle. Therefore, other updated functions such as the smart key or anti-theft lock must be added in to differentiate premium versions with mainstream ones
Besides approaches to change the nature of products, brands also utilized advertising tactics to upgrade a brand image:
- Premiumizing the packaging
- Using famous figures to be the brand’s ambassador
- Changing brand imagery through communication, bringing it closer to emerging social trends. For instance, an advertisement for instant noodles can illustrate the lifestyle of youngsters and their favorite recreation – traveling – rather than featuring a housewife in the kitchen corner. Fish sauce can also appear in the luxurious feast in high-class features.
- Educating consumers about the superiorities of new ingredients and creating new consumption occasions.
As a consulting research boutique, Fusion One specializes in bringing the most strategic insights to the clients by combining local wisdom with global innovative approaches to capture market movements and achieving radical solutions for the clients. Should you want to discover opportunities to premiumize a brand, we would love to hear from you.
