This is how Brands bend the rules of pricing with premium products
Premiumization to Give more value in increase the price

This is how Brands bend the rules of pricing with premium products


So you get water from a tap and in my country its clean enough to drink. Then you get bottled water and on top of that you get water bottled with nicer packaging and nice labels with minerals that your body does not even absorb because you body only use organic materials. Not only do people pay for water – which is freely available to most households – but they pay two to five times more for premium variants of water. So they find that just by making variants of water available and just adding flavors they can sell freely available water and captured premium margins through understanding how customers perceive value. Premiumization

We will help you to see the method of making premium products We will help provide a framework to price products that bends the traditional rules of pricing and enables you to overcome premiums.

Premiumization – the action or process of attempting to make a brand or product appeal to consumers by emphasizing its superior quality and exclusivity.

Problems and issues

There are many problems how companies manipulate prices based on creating more value and the problem is how they create these value and not the value itself.

Over reliance on price elasticity and willingness-to-pay methods. Relying on price elasticity –The measure of creating demand for a product based on its availability. At the time of launch availability determines the starting price, That will cause the company to boost the amount of sales and the value of the product. Putting that product in a different price range that it normal would be in.

Objective vs. perceived value. (Solution: Remember that value is perceived.) While we know customers pay for value, we rarely create, design, innovate or quantify how customers perceive value. To fully account for the value customers perceive, we must incorporate the influences that drive value perception. In the past people would have put value in Quality and functionality as the way to measure value . But that have changed and that is where the customer must be carfull not to make the mistake.

Pricing is not in a vacuum. (Solution: Remember that pricing is dynamic.) Consumers never have a predefined price in mind when looking for a product and the amount they will pay is only determined after looking at different aspects in the market. With the help of the internet and social media the prices will be determined arriving at a sufficiently acceptable price throughout the decision-making process. Pricing strategies should thus not only try to predetermine willingness to pay but should also aggressively focus on identifying any means that can enlarge consumers’ price acceptance, broadening the lens of value by utilizing the five paths to premiumization.

Narrow view 

The way they get customers to look at the value of a product without adding real value in the way of feature and benefits. By creating less features in the new product they save money in the production poses and a lower cost in production.

Premiumization to push products to higher price point.
Premiumization to push products to higher price point.

There are reasons why people will pay for products:

  1. Consumers will pay more to feel a product is reliable and safe. We have an evolutionary need to have reliable experiences and feel safe with our purchases. The safe bet is the easy way to shop.
  2. The easy buy the quick buy. It’s built into our biology to conserve energy and it turns out that consumers will also pay more to expend less energy. That is whey companies create more stores and online shopping is becoming very trendy.
  3. Trend are the future and the bigger the Brand the better the so cold quality. They will pay tree times as much for certain Brands and its not because its better. They buy the brand. Reinventing the world around them by adding, changing, innovating and improving. As brands and products advance, people advance. I will pay for something because it’s that brand and I will only were that shirt with that brand logo on it.  
  4. It’s not the nead but the want. The psychological sciences have demonstrated our need for pleasure and when the opportunity arises, people will even pay for it. The Brand that create products that has no function and no purpose, but the need is there in the wanting that product. That is were the value goes up.
  5. Wanting to be seen with the product. We have a social need to not only fit in but also stand out amongst our peers and so consumers will pay more to look good. Its in the clothing we ware and the laptop we carry and the car we drive. Status is every thing. The water bottle people see in my hand, the dish soap people see on my counter – all can unlock price values.

Key insight: Premiumization bends the traditional rules of pricing by broadening the concept of value. To unlock, first identify untapped paths to premiumization for your products that consumers value, especially those your competition has not yet identified. Next, position your product along the value dimension.

Comparison to an alternative

Then we need to understand what companies do to sell more products. They create more variants of the same product, so the choice is not which Laptop to buy but which lenovo in the range to buy. They create a cheap one and a premium one so the choice is not yes or no it Yes or yes. They sell which ever one you choose. They even creat more varient in between to make sure you choose their product.

What is interesting about reference points is that they are unstable, dynamically shifting based on the situation and context and they can be quantified and influenced. The scary thing is thay make you choose what you are going to but.

One of the most robust findings in behavioral science is that consumers use reference points in making choices. A reference price, an internal standard against which observed prices are compared. The Brands influence us to make choices we would not have done years ago. Over time they changed you perception and they created the world into a buying environment for their products success.  

Change positioning. Value perception is centrally linked to the product offering, which means better products are perceived to be of high value. By changing the positioning, we can alter the reference for value perception. Many legacy brands have trusted-and-loved products but could use a more relevant positioning to drive price premiums. By making just a few changes they can reposition the product amongs the competition and the better influance the consumer.

What premium positioning can command a higher price point?


Change packaging. By just spending just spending small amounts on the packaging and making the product look better on the shelf they sell more and make the customer believe the product is better. They also mention some new, so called features that always existed in that product.

What package designs can command a higher price point?

Change context. When You move to a higher class area you find that the store charge you more for products even on online stores. During holiday season goods in holiday areas go up in season as well as accommodation. Aerosols are moving from the air care aisle to home décor to more easily command premiums as average selling prices in this category as a whole are higher. 

Which premium location can command a higher price point (new store, new aisle, higher shelf, middle shelf, online)?

Change comparisons. Left to their own devices, consumers will typically compare with their past purchases or with what’s in the immediate environment. So they let you thing frozen pizzas prices are good compared to the ready to eat ones at Pizzahut. That they are the same and they are not. They have less cheese they need to be heated and they are not as fresh.

Which premium comparisons can we seed to command a higher price point?

Key insight: To bend the rules of pricing, we must change the reference points to enhance the willingness of customers to pay more for your products. Reference points are not static comparisons to competitors’ prices but are constantly evolving based on the situational context and decision dynamics. By architecting the reference points, we can drive a higher willingness to pay.

What real comparison can we as consumers make to have a real picture of what we really need to buy.

Premiumization to make brand gain higher status in the market
Premiumization to make brand gain higher status in the market.

“Money can’t buy happiness, but it can make you awfully comfortable while you’re being miserable.”

― Clare Boothe Luce

How to make better choices when buying. 

By knoing the abouve point we can already see waht the companies and brands are donig th make us buy. I know we as consumers do need most of these product. But knowing can make as much wiser in ou buying.

  • Don”t just buy the first product you see.
  • Read the labels carefully and make sure a promise or feature is real.
  • Make sure a special is real and not just a promo without reduction. Promo is a everyday price with promo ticket.
  • Find a knowledgeable sales man and ask a lot of questions
  • Look for the real features.
  • The cheapest is not always the one to buy. ( Go up a step or two.)
  • Use internet reviews if it is a consumer electronics.
  • Don’t trust comparison sites. Products are not always identical.
  • Compare all the features.
  • I you can do internet research about product. It help to know what your looking for in the product.

As consumers we can not overcome everything the companies are doing, but we can be wiser and make better choices

Vincent Online

With 30 years in the retail sales experience, in the electronics field makes me experienced enough, to be able to give you the best advice in the form of this website and the information supplied by me.

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