Premium Consumers: Who Are They?
Premium consumers are those who will pay a little more for something they expect from your brand. It is possible that they may switch brands if they are able to meet those expectations at a lower price. If your brand fails to meet their expectations, they will look elsewhere.
Premium Consumers: False Assumptions
Because premium consumers are willing to spend more on certain products, it's easy to assume they earn more. Most households, regardless of income level, are willing to pay more for quality products.
False assumption #2: Luxury consumers and premium consumers are the same.
It is common for luxury consumers to purchase items that are perceived as indicators of status, regardless of whether they actually need them. A premium consumer is willing to pay more for an item that will perform as expected.
False assumption #3: The behavior of premium consumers is consistent across products and categories.
There is no such thing as a predictable human being, despite what we might wish to be the case. It is possible for consumers to be premium in some categories but not in others. A family may choose organic produce for health reasons, but opt for the least expensive shampoo. Along with quality and experience, premium purchases are a mixture of values and expectations.
A premium consumer's characteristics
Factor #1: An increased willingness to pay
A person who makes $250,000 a year, for example, may consistently buy cheap toilet paper; he or she has little expectation from the product and isn't willing to pay for extra fluff. Conversely, a lower-income person may see toilet paper as an affordable mini-luxury, so they're willing to pay $1.75 for four rolls in a pack.
Lower-income households are the premium consumers in this instance, as opposed to high-income households that view toilet paper as only delivering rational benefits.
Factor #2: Differentiated features
In most cases, consumers will choose the least expensive option when all things are equal. Alternatively, if they can't identify why they're paying more for a product, they may not be willing to do so. Premium consumers are only willing to pay more for benefits they can identify. A brand that is unable to distinguish itself from less-expensive competition should not be considered premium.
For example, premium consumers, for instance, will pay more for toothpaste that alleviates tooth sensitivity rather than toothpaste that only promises whitening power. If extra legroom and faster deplaning appeal to a premium consumer, they are willing to pay more for first class seats on an airplane. There are distinct differences between them.
Factor #3: The expectations and concessions of both parties
Furthermore, premium consumers evaluate the "premium-ness" of a brand based on their own expectations and concessions. Despite the fact that a less expensive alternative may present itself, premium consumers will continue to pay a little more if a brand consistently provides the expected differentiator. However, if a brand does not meet the expectations of a premium consumer, they will likely purchase from a competitor.
We're Here to Help
If you need more context around this topic, please reach out to our team at email@example.com