Though the opportunity for premium brands exists in almost every product category, a company must answer several questions to determine if the pursuit of the opportunity is consistent with its capabilities. Are the revenue and profit potential significant, relative to current financial performance? Will the organization kill the brand with an overinvested push strategy? Is it better to build a premium-plus brand, as Jim Koch did with Sam Adams, or acquire it, as Bacardi did with Grey Goose? Finally, and most importantly, does the company have the capabilities — the technical skill to create a differentiated product, channel access, and consumer savvy — required to support a successful superpremium launch?
With superpremium vodkas successfully launching two or three times a decade, and with premium-plus gasoline brands retaining their pull and profitability more than 75 years after their introduction, it’s clear that consumers’ appetite for the high end is insatiable — and marketers’ chance for profit equivalently grand. In today’s low-growth, low-margin environment, that means consumer products companies must break every rule of mass marketing — in a very structured way.
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Leslie H. Moeller ([email protected]) is a vice president with Booz Allen Hamilton in Cleveland. He specializes in the development of growth strategies, especially for packaged-goods and retailing companies.
Nick Hodson ([email protected]) is a vice president with Booz Allen Hamilton in San Francisco. He concentrates on strategy and transformation in consumer-facing industries.
Brad Wolfsen ([email protected]) is a principal with Booz Allen Hamilton in San Francisco. He focuses on customer-facing strategy and marketing issues across industries.
Research assistance for this article was contributed by Michelle van de Braak, an associate in Booz Allen’s San Francisco office.