Some days ago, I went to a new customer and a remarkable thing happened which I would like to share with you in this article.
Most of my job consists in a direct comparison with customers and with the market.
No, we don’t remain closed in a office realizing packaging which we like, but we spent much time to pick accurate and useful briefings to transform customer’s vision to a concrete solution (functional packaging for sales with Italian style).
What is the italian style for us? It is the magic and the inspiration which only Italians are able to put in design
Comparing with the market and customers means deepening concepts and aspects which can be object of different interpretations, for this reason is good to find an agreement with the customer during the briefing in order to not arrive at the presentation hearing the magic words “we honestly thought to something different…”.
On the importance of briefing I have already written, but today I am speaking about a tangible briefing because speaking to a customer about the restyling of a line our comparison has immediately focused on a topic in particular: a subtle but very important concept on which we had not exactly the same interpretation.
Speaking about the price it had to have the product concerned in store (I state that the customer was the undisputed leader in its category). We had a long debate about the meaning and the difference between Premium Price and Quality Price.
Essentially, despite being the most important product and the best seller in large retailers (and not only), my customer considered the product as Premium Price, but my opinion was different: it was, without any doubt, a Quality Price product and not a Premium one.
Are these things important to be defined during the briefing? Did we need to invest a couple of hours of our time? Isn’t that enough to make a creative design packaging and sell it then?
Obviously not! The talk was very useful to clarify the idea about the real meaning of Quality Price and Premium Price. This allowed us to proceed making coherent choices with customer’s vision on product, market and target.
I have understood that some topics are not so clear and obvious, not even if you work with a customer with great experience (as I told you previously it was an historical Italian brand and leader in its category), the nuances and the differences can be very subtle.
Like in the game “spot the difference” making a mistake is very easy and when it happens this is detrimental of the product itself, making a mistake about the positioning means making less sales.
Do you know the difference between Premium and Quality Price?
As we saw the difference is not about the price, in fact the receipt is not enough to qualify a product. It is certainly a useful datum, measurable and objective, but it is not the only one.
We need to understand what justifies the price to position the product in the correct way and consequently taking the more fitting choices about the packaging.
It is reasonable, for example, that a Premium Price product uses a Luxury Pack solution (in some cases it is the Luxury Pack itself to lead a product into Premium Price category).
A Quality Price product has got, instead, other cards to play and other messages to transmit.
What we mean for Quality Price
When a higher price than the average is applied to a product (usually the highest although not necessarily) because this has got objective characteristics recognized by the customer and by the market, we are in front of a Quality Price product.
Therefore, what we pay is the result of selected ingredients, of finest quality, of an extra work, of a particular method…of something that the customer recognizes and understands rationally.
There are a lot of examples and food sector is full of them.
A clear example to everybody is the products of Alce Nero. In this case the price finds its motivation in accurate choices made by the company toward the direction of a product with bio and sustainable characteristics.
Therefore ingredients, conservation, origin and provenance are elements which contribute to justify the price just for its recognized and measurable quality.
This is not certainly a Premium or Luxury product, in fact it finds in its packaging completely different components and logics.
Other examples in the food sector are easily recognizable and associated to objective characteristics. For example, a cheese or a ham with a longer seasoning than the average (24/36 months), or the origin of the product (mountain).
It is obvious that a work of communication which remarks these peculiarities is necessary to make immediately clear to the customer what justifies the price.
Therefore, it is not a quality expressed with words “ours is a product of quality”, but it is detailed from precise characteristics that the customer appreciates. In the food sector it is often confirmed from brands and awards which are synonymous of quality (DOP, DOC, DOCG…).
What we mean for Premium Price
The Premium (or Prestige) Price consists in fixing prices in the highest price range for the treated category. The customers are willing to buy products with the Premium Price because they think it indicates a higher level of quality, or because it corresponds to a product which confers status (Wikipedia source).
In other cases, a higher price doesn’t have rational reasons, and the price for kilogram is not a parameter that affects the purchase evaluation, in fact it is more the perception of exclusivity and the capacity to evoke sensations to affect on the final choice.
Let’s try to think about Champagne – which brings together 634 municipalities – it is composed of two zones: the zone of winemaking and the zone of vine cultivation.
Over 4.700 bottlers, are the Moët et Chandon or the Dom Pérignon really the best products for quality/price?
Otherwise, has the LVMH group (Moët et Chandon – Dom Pérignon) with a revenue of around 24 billion euros got the best marketing and an excellent Premium price politics?
I let the answer to you.
There are products and producers that bet everything on this, dealing with a profitable niche with very expensive products and enormous margins.
Often there is a brand work which precedes the packaging – the brand is recognized as prestigious – but in the store is the choice of packaging to confer prestige and exclusivity to the product, playing on the perceptions which justify the price and which motivate the final purchase by the customer.
In 1996 enters in the world of marketing, in 1999 founded Ardigia Marketing Funzionale (Ardigia Functional Marketing), in 2013 founded Packaging in Italy, Design Agency for Packaging Positioning™