Premium Brands – Should We Raise Voice for Overcharging?

If you google price of Patek Phillippe watches then Google will show a price range and first of all is $52500!! What do you think? Is it worthy for customer? Let see what they say in their ad “You never actually own Patek Phillipe, You merely look after it for the next generation.”

Actually, when customers buy it, they pass it to their next generation and So on. They feel proud to have a Patek Phillippe. When the company manages servicing of their watches very smoothly even it is 100 years old watches.

In 175th anniversary of Patek, there were wide collection of watches. After that some watches were trading on the secondary market for higher prices. Sometimes Patek watches are sold at double price than retail price at secondary market. it is dream for a group to own a Patek Phillippe watches for him or her and to pass that for generation to generation.

Patek Philippe watches are so costly because they produce in limited numbers. They are more focusing on variety of models rather large quantity, for example there are more than 200 models in regular production.

When a person thinks to buy a shopping goods like book or t-shirt or watches he or she is not bound to buy with higher price from premium brand outlet. He or she has freedom of choice to buy an alternative with lower price from other places. For Example, a shirts can be bought at tk.300 beside Dhaka College gate and another shirt can be bought from a prestigious branded shop range tk.2200 to 5000.

Here another example of luxury transaction I am writing about Japan’s crockery brand “Noritek” made cookeries with 22 carat gold and platinum which price was Rs. 1.5 Crore and it was exclusively made for Nita Ambani of Reliance group. Thus we have seen the news that cost of Nita Ambani’s tea is Rs.3 Lakh. Actually Noritek is one of the oldest brand in Japan for cookeries. They maintain exclusivity. Noritek was started by Morimura VI when each piece was hand-painted to ensure the highest quality in 1876. Still it is maintaining its goodwill as premium brand.
It is the choice of customers that they will purchase from normal store or premium brand store. It’s all about lifestyle and choice of a customer that provoke them to buy a premium brand items.

It is general perception that production cost is a single factor for pricing or cost of an items. But so many factors are involved here, including marketing and others experience we received from them.

High pricing may involve to have good experience inside the shop, even premium brand consider that customers get smile face at the checkout counter, thus they trained their employees. These are matter of premium brand.

Let’s see what Patek do for their customer, the Patek Phillippe employs more than 200 specialist craftsmen, whose job is to ensure that every component is assembled with exact precision. Patek Philippe places the highest standards on employee training – from the watchmaker to the salesperson, including customer support that extends from sales to service. Like Patek, other brands claim they are premium brand because of their exclusive product.
Hence, pricing of premium brand items involves various value addition. It is not all about production cost versus price issue. it is brand or perceived value that rectifies higher price. Customers using premium brand enjoy some emotional and expressional value in addition to functional value. Thus it can be said that seller has the right to offer a premium range products for his brand.

On the other hand, a marketer is full responsible to create value besides setting higher price. Famous writer Jack Trout told in his book (Positioning – is a battle of mind) that higher price indicates higher quality. As a good marketer we have to care about quality including supply chain and others value addition as like as international brand such as Apple, or brand mentioned above.

If marketers change the price frequently or give the less quality products or fail to give greater value they don’t have the right to claim premium brand. In our society, it is perceived by customer that price of an items is only depends on production cost and Premium brands that are charging more without any logic. Besides, some marketers think that only charging higher price can make their brand as premium. But it is not about only high production cost. It is the blend of quality, service and price with others variables. It is not logical to claim that we are premium brand by giving more price for same or lower quality items.

So it’s not very natural that there will be some premium quality brand and they will charge high price to meet the upper class demand. Because there is a demand of higher growing income people. A survey shows, India accounts for only 0.5% of the global luxury market, China accounts for 10% of the global market. If we think about our country, number of customers are interested to boost up their expenditure and trade up to high value products. According to Boston Consultancy Group report of 2015, our MAC (Medium and affluent class) population having average monthly income of $401, is increasing by 65% within 2025. At present MAC rate is 11.7% of total population and will be 19.3% with 33 MAC cities like Dhaka, Chattogram. So there will be number of brands who won’t play as cost leader or penetrate by lower price SKU. There will be premium brand with high price range for this middle class and affluent customers.

When customers are asked to mention reason behind buying premium brand items, they told its give them proper value, brand name, security even more social acceptance and attention. So let’s forget about the social media voice of reducing price of premium brand items and think about how to build a premium brand for upcoming years. It’s all about defining value, exclusiveness, prices with right Image and value, and overall experience on the decision making process to post purchase evolution and so on which leads to us premium brand building.


Deputy Brand Manager, PRAN Group
BBA & MBA from University of Dhaka


This article was published in the publication of Bangladesh Marketing Day 2019. 


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