Why customers are willing to spend a premium on some brands but not others
Why is ‘Colour-Pop’ and ‘Kylie Cosmetics’, makeup product’s produced in the same factory with nearly identical formulas, selling for entirely different prices? With a nearly identical liquid lipstick selling for $16.82 at Colour Pop and $40.13 at Kylie Cosmetics, the question is perplexing. The answer: Value beyond a product. The who behind what they do.
When a small business first enters a market, its natural practice for them to focus on the ‘what they do’ to establish themselves and their financial stability. To get themselves out of the gates and in the race, they must first market what they are going to offer.
Becoming more than just your product
As a start-up, no-one is thinking about the homestretch. However, once a business establishes itself, to cut away from the clutter of competitors, that business must do more. To move away from what they do and become who they are.
But, how does a business make customers perceive their business as offering more than just their product? Their brand.
Creating a brand
To create value beyond the characteristics of a product, a company must add meaningful associations to their brand. This is mainly because consumers now use products as a means of self-expression; a way to communicate their lifestyle or identity through using a brand that speaks the same language. But this can be a challenging task!
The challenges of creating a brand’s personality
When a company decides to think about branding they often find themselves trying to maintain its current and reliable customer base while evolving to appeal to a new customer base (with a higher willingness to spend). Luxury brands are examples of companies who have orchestrated this process really well.
According to Forbes, Nike surpassed Louis Vuitton in the ranks of the most valuable apparel brand in the world in 2016. The industry embraced high-priced athleisure as a status symbol so, Nike evolved, successfully maintaining its range of lesser expensive footwear while expanding its offerings to a higher end of the price scale. Through shifting the focus of its advertising and innovation efforts to higher-spending audiences, Nike now produces shoes from around fifty U.S dollars to special edition shoes worth tens of thousands of dollars!
Clearly creating a brand that reflects aspects people strive for in their lives is a recipe to success. If a company’s brand captures the values of their ideal customers those customers can identify with the brand in a way that reassures them they are making the right choice.
Branding can be difficult but, your choice does not have to be so hard. Talk to us for help.