Positioning Premium Brands to Thrive Even in Times of Crisis

By Enock Wandera
Chief Client Officer, Ipsos in Kenya

COVID-19 impacted individuals, businesses, and economies across the globe. The manufacturing industry is no exception.

However, recent studies have shown the pandemic hasn’t broken the pre-existing trend of prosperity for premium brands in both developed and developing markets - it has even increased though there are some geographical differences.

Ipsos tracking experts noticed a tendency for consumers to splurge on more premium brands as they were not able to eat and drink out as often as before. Premium wines, ice creams and frozen food have seen an increase in demand and have enjoyed a growth in sales. Cooking more often at home, people have tried new brands that are sometimes more expensive and different to those they would normally consider.

A long-term view of our database confirms the increasing power of premium brands to ignite consumer desire, not only in consumer goods or in developed economies, but across many categories and markets. While we can learn from some categories which have successfully created and nurtured premium brands, others seem to occupy more challenging territories in which to build and defend premium offerings.

It is evident that a premium strategy can still be successful as many consumers appear to be more willing than before to pay for such brands. Of course, many ongoing questions remain: are some consumers totally immune to scaling back their shopping habits, regardless of the wider economic situation? Should we expect long-lasting uncertainty in the global economy because of the pandemic? Will new societal norms and new consumer rituals emerge, causing people to buy differently e.g. fewer or cheaper brands? Will people adopt evolving premium shopping patterns in relation to trade disruptions (e.g. buying less but more expensive brands)

Our brand tracking work and with deeper investigation has revealed that it is possible to better understand the conditions, factors and rules that will guide premium brands to successfully win the hearts of consumers in the years to come.

This trend is clearly reflected in our database as the average number of brands purchased or considered by consumers across categories went from an average of 4.5 in January to 5.7 in May 2020 (+27%).

We also know that in times of crisis, consumers are potentially less willing to choose brands that are less familiar. People can be generally prepared to pay more for brands that they trust and are confident can deliver on their promises. Associated with greater perceived quality, premium brands paradoxically don’t pose as much of a risk when times are uncertain, even if disposable income could be under pressure

A premium position can be supported by two main pillars: perceived functional superiority and emotional value, which increase brand desire.

This can be achieved through intensive technological research and development (R&D) investments, which has led to a quick democratization of new applications and services in smartphones, voice assistants, connected objects, and so on.

Indeed, premium does well where there is potential for technical product innovation, high levels of consumer engagement, and the ability to project aspirational values.

Some people seek indulgent comforts during times of uncertainty and panic. Consumers also seem to be drawn to brands with greater perceived quality – such as premium brands – as they pose less of a risk

We believe that the combination of these different factors has contributed to the growth in desire for premium brands in some categories (going beyond the alcoholic beverages and electronics/durables as showcased in our equity database).

In short consumers have a need to purchase products for a pleasurable experience even during time of crisis. While most consumers will look to cut total spending, many will still spend on affordable indulgences. This means that premium brands positioned as affordable indulgences can not only survive but also thrive during recessionary times.