Premiumize Your Product or Service

While the news talks about falling consumer confidence, there is one area of the economy that is going strong, and that is the affluent end of the market. People in this class have money and they are willing to spend it to get the “best” and to show that they have the money to afford the best.

To take advantage of this growing trend and growing number of people in the affluent class, you should consider adding or developing a premium product or service to your business. Now, before you say, “This doesn’t apply to me,” let me hasten to add that premiumization can be found in all businesses. True, you may have to be a little more creative in some businesses to segment your product or service, but the added profits are worth it. In most scenarios, premium products have higher gross margins and buyers tend to stay with you longer if you match the premium product or serve with a continuity income program (recurring fees). The reason the affluent stay with you longer is because the price is not a factor in their decision making process. What they are interested in is the status they are gaining, be it real or imaginary.

Here are some examples of premiumized products and services:

· Water: No, we are not talking about regular Evian or Perrier; we are talking mega high-end water.

o Evian’s limited-release Palace Bottle, which is only available in high-end bars and restaurants sells for $15 to $20 a bottle and has a stainless steel coaster and a cool shape.

o Bling H20 is bottled water that comes in limited-edition, corked, 750 ml frosted glass bottles, embellished with Swarovski crystals.

o Tasmanian Rain is captured “on the pristine Northwest coast of the island of Tasmania, Australia.” The water is collected “just minutes from where the World Meteorological Organization records the world’s purest air.” The water never touches the ground so that seems to make it better.

o Carlsberg 900 was introduced this summer in Sweden. Carlsberg 900 is “brewed from refined virgin hops and selected crystal malt, and triple filtered with a longer cooler fermentation process to ensure a pure, delicate taste.” It is priced about the same as Champaign.

· Luxury marshmallows: From Dean & DeLuca’s one-pound Boulé Marshmallow sampler of lemon chiffon, passion fruit, vanilla and rose-petal flavors ($28) to Pete’s Gourmet dipped marshmallows, which are $1 each.

· Honey: New varieties are being imported from China and Argentina along with blends from many sources. Since honey’s flavor and color are determined by the source of nectar, there is a huge variety of local and exclusive types of honey, with floral sources varying from tupelo gum tree and Tasmanian leatherwood to cranberry and orange blossom. The Savannah Bee Company, for example, sells its honeycomb jars with this awe-inspiring description: “Filled with honey equaling the life’s work of two bees, each golden cell brims with the concentrated nectar of thousands of rare and remote Georgia flowers.”

· Chocolate: Chocolate companies are now charging top-dollar for wasabi-infused bonbons from San Francisco to Singapore.

While the food and beverage sector definitely leads the premiumization trend, there’s much more going on:

· The Hasbro FurReal Friends Butterscotch Pony seeks to “fulfill every little girl’s dream of having her very own pony.” From Hasbro, “Butterscotch is a miniature Shetland pony, with a fur coat and mane that feel just like a real pony. Butterscotch also has built-in sensors all over her body, which enable her to respond to children in lifelike ways. If talked to, she will cock her head toward the speaker quizzically and blink her eyes. She will also react to petting, showing her enjoyment by rubbing her head against a child, twitching her ears, and swishing her tail. At over three feet tall, Butterscotch is more than strong enough to support a rider up to 80 pounds in weight.”

· Toilet Paper is making its entry into the premium market by Renova selling its Renova Black, promoted as the first fashionable toilet paper. The toilet paper is priced at about $5 per roll. Renova Black is also available as Renova Red, Renova Orange and Renova Green.

· Air travel is hot for premiumizing its product. We are not talking just the first-class seats but true flying “apartments.” Airlines like Emirates with first-class private suites, Singapore Airlines with 12 suites on board each new Airbus 380 and Jet Airways’ Sutie in the Sky have taken first-class to new levels. You have to see these suites.

· Airline terminals are catching the premium bug as more passengers want to escape the masses and flue de jour that may be flying around. First-class terminals are being created to make life (and layovers) a little easier. Cost is going up, but so are services and convenience.

· Hauzen is Samsung’s new premium home appliance brand. Products include a washing machine, Kimchi Cooler (if you have to ask, don’t worry, you won’t like it!), refrigerator and air conditioning systems.

· Baby furniture. Combining functionality with style, not only do the next generation of parents want their babies to be comfortable, they want them to get used to style. Everything in this product area is being premiumized from strollers to cribs and rocking chairs.

· Lenovo now offers the ThinkPad Reserve Edition Laptop, encased in leather. The Reserve Edition has some decent enough stats, but the real interesting spin is that it is being sold by invitation only. Invitations increase premiumization and selectivity and, of course, exclusiveness.

And just in case you have not been convinced that all categories can be premiumized, we saved the best for last.

· Car Radiators. A British company, Feature Radiators, now produces, “The best contemporary designer radiators (including stainless steel radiators), traditional cast iron radiators, electric radiators and towel rails on the market. With over 150 radiators on display in our showroom, expert advice, unrivalled customer service and nationwide delivery, Feature Radiators has been recognized as the UK’s leading radiator specialist.” You will be happy to note their radiators are available in classic white and silver metallic.

Admittedly, we have tried to take a little extra time and give you some of the more interesting types of products and services that are moving into the premium category. We hope we have been successful in convincing you that this trend is growing both here in the United States and throughout the world. By taking the time to analyze your own product or service line up, you have the opportunity to boost your revenues and or profit margins by adding a premium product or service to your lineup.