Premiumization Jonathan Poland

Premiumization is the strategy of offering higher-quality products or services that consumers perceive as having greater value. This is in contrast to commoditization, which involves competition to offer lower prices for a standard level of quality. Premiumization occurs in a product category, market, or industry where customers are willing to pay a premium for higher-quality products or services. Premiumization can help a company differentiate itself from its competitors and can lead to increased revenue and market share. Here are some examples.

Releasing things in small batches such that demand exceeds supply. For example, a toy manufacturer that releases 10,000 units of a limited addition collectable when demand might be 100,000 units.

Using quality parts, materials and ingredients such as a restaurant that offers artisanal foods.

Offering handmade things in an automated world.

Customer Service
Customer service that is exemplary in some way. For example, a restaurant with well dressed waiters who are unusually good with people.

Sensory Design
Superior look, feel, taste, smell and sound. For example, a pair of shoes that customers appreciate for their form and overall artistic design.

The end-to-end experience of a product or service including intangible elements such as the interior design of a restaurant.

Social status attached to a brand, product, service, ingredient or area. For example, a spa that is located in a posh shopping area such as Ginza in Tokyo.

Functionality such as a vehicle with cutting edge safety features.

A product that outperforms the competition in a measurable way.

Quality is heavily associated with durability in real world conditions. A mobile device that breaks the first time you drop it won’t be perceived as a premium item.

A superior position that is difficult for competitors to match. For example, the only hotel on a popular beach.

Attention to details such as packaging.

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