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Reaching the ‘premium’ consumer

29 June 2010
Reaching the ‘premium’ consumer

Premium brand advertisers are putting the effectiveness of their campaigns at risk by incorrectly using demographic targeting to reach potential audiences, according to new research from Microsoft Advertising.

Unlike brands in the luxury sector – such as Bentley or Armani – premium brands are more easily within the grasp of ordinary consumers. Premium brands are considered by consumers to be those which are “one better than the norm, but still affordable”, such as a BMW or a Sony TV.

The Defining the Premium Consumer in a Digital World study found that over 40% of consumers purchase premium goods at some point and they are not necessarily wealthy, with the average income of a premium consumer being €39,000.

Using traditional demographic targeting, more than 50% of premium consumers would not be considered affluent, therefore if a premium advertiser is solely targeting an affluent audience they are missing nearly half their potential consumers.

The confusion over who these consumers are and what they purchase can possibly be attributed to the numerous names that planners and marketers have been using to categorise the premium sector. During the qualitative phase of the research – which was conducted at the end of 2009 - Nick Drew, research manager, EMEA, Microsoft Advertising came across numerous names for the category.

“There is definitely confusion with labels, various planners and marketers talk about ‘masstige’ [a combination of ‘mass’ and ‘prestige’] or ‘luxury for the masses’ and others talk about ‘new luxury’ and they are all talking about premium goods,” said Drew. “They are also thinking ‘upmarket’, which is not the case.”

While marketers might be confused on what a premium brand is and who consumes them, premium consumers are the polar opposite; they are about being certain in their purchasing decisions and if anything premium and can classified as a mindset.

The premium mindset is one that is driven by knowledge (73% admit to doing a lot of research before a purchase) and practicality (they look for value in their purchases and need to see the tangible benefits of spending more on a product).

Among premium consumers there is a heavy reliance of online research, 54% of premium TV buyers use the internet to inform a purchase compared to 41% in the non-premium category. Nearly 60% enjoy ‘being an expert’ about a particular product or category and 63% have made the time to investigate the product categories that interest them.

The heavy reliance on online research and the desire to be an expert demonstrates the influence of word-of-mouth on this group of consumers.

“Word-of-mouth is harder to control and the instances of it are fairly common with this category. It does open up the idea of bought, owned and earned media,” stated Drew. “However, brands can have a role in helping them access information easily and helping them to become experts.”

Considering the fact that premium consumers put a high importance on the value that they are getting from a product they purchase, and take longer to decide on committing to a purchase, it could be argued that a proportion of advertising dollars could be repurposed to developing products that ‘speak for themselves’ – which it is clear these consumers want.

The Microsoft study was conducted in seven markets across Europe and took in the views of more than 4,000 individuals who buy premium products.

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Martina Lacey, London

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