Discussions of premiumisation as a concept are often rooted in perceptions from the late 1990s and early 2000s, when many markets saw a surge in demand for products offering a upgrade in terms of price, quality, and sophistication. However, the global financial crisis and the smartphone revolution permanently altered many of the rules of play for premium strategies. This report examines the historical evolution of premiumisation, in order to chart a course for the next 10 years.
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The post-global financial crisis landscape has permanently altered the rules of premiumisation, as consumers seek higher levels of service, personalisation and connection.
With mid-tier product segments under pressure, more brands face a choice between commoditisation or premiumisation. Premiumisation is as much about value preservation as creation.
The rise of Amazon, Google and Facebook have created new opportunities for driving consumer engagement at the cost of growing commoditisation for brands unable to adapt. Those that will be able to retain their premium perception are those which continue to drive direct consumer engagement.
Demand for greater personalisation and integration requires massive amounts of data to meet. Every brand must carefully consider which “nodes” of connection can be leveraged, from in-store experience, to user interface, to post-purchase community.
As a new internet retailing environment creates opportunities for even small start-ups to achieve region-wide or nationwide distribution and product awareness, brands must find new means of differentiation. This will give rise to new forms of vertical integration, from sourcing to manufacturing to retailing, as distribution, logistics and mass marketing become increasingly commoditised.