Julian Chokkattu/Digital Trends
You want a premium product, don’t you? Why? Because premium equals not just good, but the best things can get. It’s not just premium materials — glass, metal, ceramic, or titanium — out there to tempt us, but premium features, and even a premium ownership experience too. Premium is used to sell everything from smartphones — which we’ll be mostly talking about here — to cars, and even to hotel stays. Premium sells, or more accurately, premium upsells, as we happily pay more for the pleasure of feeling like a million bucks while we splash out.
It works because who wants to settle for something substandard? We’re not going to say, “No thanks, I’ll have the mediocre experience, please.” Except, what does premium actually mean? Why are we so constantly bombarded with the word, and what is the current obsession with promoting everything with it? Perhaps, by understanding this we will become more discerning buyers, look closer at what we really want from our phones, and not be swayed by clever marketing.
Let’s start with some definitions. Merriam-Webster defines premium, when used as an adjective, as, “of exceptional quality or amount,” with the very relevant addendum, “Also: higher priced” underneath. For smartphones, there is a more precise definition. Counterpoint Research states the premium segment is anything above $400, with $400 to $600 being affordable premium, and ultra-premium starting above $800.
The iPhone XS Max and Samsung Galaxy S10 Plus Julian Chokkattu/Digital Trends
As Merriam-Webster points out, it’s the higher price that usually identifies something as premium, and the smartphone buying public is in love with buying this type of device. Research from GfK said 12 percent of phones sold in 2018 cost more than $800, up from nine percent in 2017. Global sales of phones with a price higher than $400 grew by 18 percent in 2018, according to Counterpoint Research, a time when smartphone sales overall fell by two percent. We clearly cannot get enough of premium products.
Describing something as premium directly ties it to price, and therefore perception of a product or brand.
“Everyone should experience the benefits of technology advancements not just the lucky few.”
“The best way to position a product as a premium brand is with a high price,” wrote Laura Ries, the co-founder of Rise & Ries consulting firm, in an article for Entrepreneur. “Price sends a psychological message related to value: Things that cost more are assumed to be of higher value. Things that cost less are assumed to be of lower value.”
We asked Mark Ritson, marketing professor at Melbourne Business School in Australia, what premium as a concept really means.
“You make a few less [products], charge a lot more, restrict distribution but emphasize origins and heritage,” he told Digital Trends in an email. “Gross margins go up, unit sales are only slightly (if at all) disturbed, and you make a lot more money.”
Put like this, it’s not hard to see why it’s such a popular a term to use.
Andy Boxall/Digital Trends
Premium tech without the premium price
Does a premium product always have a high price? No. HMD Global, the company that holds the licence to the Nokia smartphone brand name, told Digital Trends in an email:
“Premium isn’t something that should be limited to flagship smartphones, and the consumers who want to spend the money to buy them. Premium should be accessible to all.”
Semiconductor company MediaTek is a prime example, and uses the word premium to emphasize value, without sacrificing features. According to the company, its Helio chips are used in devices “with high-end features at affordable prices.” It calls this the “New Premium,” a strategy it introduced in mid-2018.
GfK found people today prefer to own fewer, higher quality products, and value experiences over possessions.
“Everyone should experience the benefits of technology advancements not just the lucky few,” MediaTek told Digital Trends in an email. “When cutting-edge devices are affordable, consumers are more comfortable taking risks on new brands, new features, and new form-factors, creating an incentive for companies to think outside the box.”
This is how it promotes processors like the Helio P70 and Helio P90, which will be found in devices that don’t cost a fortune, while still offering “premium” features. Take the Helio P70-powered Realme 3 as an example — a $150 smartphone that has artificial intelligence features inside the camera, for a better experience than one would expect at this price.
The Realme 3 Andy Boxall/Digital Trends
Pushing a premium experience without the premium price enhances value-driven products, and is used by various companies, not just MediaTek. It’s also the same approach taken by car manufacturer Kia. Marketing Director David Hilbert said the brand would shed its low-cost reputation in the U.K. with the Stinger, an attractive car directly competing with premium brands that charge more for extras which come standard on Kia’s car.
Premium means being first
Qualcomm hasn’t missed out on the opportunity to push a premium experience either, and even uses the same New Premium phrase as MediaTek, but it is not talking about value or price. Take a look at its new marketing for the Snapdragon 855 processor — the chip found in most expensive flagship phones of 2019 — and you’ll come across the phrase, “First is the new premium.” The implication being that when you have the fastest chip in your phone and 5G connectivity, then you’re getting a premium experience — fast equals first, which equals premium in Qualcomm’s book.
“First is the New Premium is Qualcomm’s campaign to take credit for bringing best, differentiated mobile experiences to people, first,” Penny Baldwin, senior vice president and chief marketing officer at Qualcomm, told Digital Trends in an email. Baldwin went on to add 5G and HDR gaming on a smartphone as examples of what premium means to Qualcomm.
Check out the promotional video, and see how it’s built around what you can do, rather than what you pay. Research firm GfK found people today prefer to own fewer, higher quality products, and value experiences over possessions. It’s this trend Qualcomm is exploiting, along with premium experts Apple.
Although it doesn’t really use the phrase in its marketing often, the word premium is constantly used in relation to Apple and its products. Like Qualcomm, Apple isn’t concerned with price, and arguably invented the ultra-premium segment with the launch of the iPhone X. In addition to fitting Ritson’s definition above almost too perfectly, it takes (often existing) features and ties them in with experiences to appeal to people.
When it starts to be meaningless
Even if you need to squint a bit, it’s obvious how MediaTek and Qualcomm use the word premium, how they differ, and what it means to you. The problem emerges when everyone starts using the word, often without good reason. Look hard, and premium is everywhere, often without any facts to back the claim up.
The Sony Xperia XZ2 Julian Chokkattu/Digital Trends
Examples? The Three UK network launched a new marketing campaign to redefine the brand at the end of 2018, saying it needed to be “both premium and playful” in an interview with Marketing Week. Nubia calls the Red Magic Mars smartphone a premium gaming smartphone without the premium price tag, and Sony actually incorporated the word into the name of its last flagship — the Xperia XZ2 Premium.
Beyond this, there is a phenomenon called “Advertising up,” where non-premium brands try to emulate premium brand advertising to increase the effectiveness of their own adverts, and boost the brand’s equity, according to a study published by Science Direct at the end of 2018.
It seems in addition to struggling to understand the premium connection, we can’t always trust premium to mean premium.
Should we pay attention?
If the word premium has been overused to the point where its true meaning has been obfuscated — and even when we do understand it, it turns out to mean both high value and high costs — should we pay any attention to the word at all, or ignore it as best we can?
Julian Chokkattu/Digital Trends
Easier said than done, especially as it’s not going away anytime soon. The era of smartphones that cost twice that of the iPhone X — the first ultra-premium phone — is here, and brands continue to adapt premium as way to make us part with even more money. In an interview with Digital Trends at the most recent Galaxy Unpacked event, Samsung’s Daniel Benjamin talked about the Galaxy Fold’s $1,980 price, saying it will, “Hit a super-premium category,” before adding that in mobile, premium is the fastest growing segment in the U.K..
Premium is not only here to stay then, but it’s evolving. Mark Ritson sums up why we should not fall into the marketing exec’s trap, even as it becomes more prevalent.
“Saying a product or service is premium is akin to saying a meat is ‘natural,’” he said. “At first it appears appealing but on closer inspection it signifies nothing. It sounds good and fills the page without actually communicating anything other than a vague whiff of superiority.”
More than ever, we need to think carefully about what device will fit in with our needs, how long we’re going to keep it, and how much we’re really prepared to pay. Not just pick the newest so-called premium phone and hand over our cash.
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