Is it Luxury or Premium?

‘Luxury’ and ‘Premium’. These two terms are often frivolously used as each other’s synonym, but is that correct? NO. ‘Luxury’ and ‘Premium’ goods target different audiences; however, they have been used so extensively that most of the time people think of them to be referring to the same thing.

Lately, I was looking at the different collaborations happening, of various fast fashion brands with high-end brands. One of which was the collaboration of Cover Story and the eponymous label of Karl Lagerfeld. This is when I saw the word ‘Premium’ getting popped with the collection, and then it struck me, that there is so much confusion about these two words, but when it comes to branding there is a clear difference.

Luxury consumers are interested in the brand’s history, heritage, and rich pedigree, these brands don’t explain why they are desirable, they have no need to define why they are special.

Whereas Premium consumers are interested in paying a higher price for the best features. These brands make the consumers think that it is worth paying a higher price for the quality of goods and services that they provide.

For better enhancement, these points can be considered:

1. Price

The pricing in Luxury plays an important role, we can even consider it to be the spotlight, as there is a huge difference between the intrinsic value of the materials used and the market value of the final product.

However, with Premium brands, the goods are determined by the price-quality ratio. It makes the consumer think that paying a higher value for the premium quality of the product is worth the investment.

2. Target Audience

Luxury brands target the ‘Elite’ section of the society who have a taste for finer things and have the ability to spend on such goods.

Whereas Premium brands target customers who can impel to pay higher than what they pay for an average product.

3. Manufacturing

Broadly speaking for Luxury brands, there is a natural paucity, as the materials are rare and the way of manufacturing is mostly by hand and requires an immense amount of precision and time that constraints the mass production of these goods.

The Premium brands are extremely careful in maintaining the quality of the product for the high price that it offers to the consumers, limiting the amount of production, but still having it in large quantities.

4. Advertisement

Luxury brands do not feel the need to advertise, however, certain luxury brands such as Mercedes, Rolex, do have their products’ videos played at certain places, which is extremely limited.

On the other hand, advertisement is an extremely important part of marketing for Premium brands. Their price of the products is directly related to the volume of advertisements that they do.

5. Placement

The store location of Luxury brands is mostly where the ‘Elite’ section of the society frequently visits, at Luxury hotels, and malls that are specifically designed for Luxury stores.

The Premium brands have their stores in the vicinity of such Luxury brand stores and malls but not in the same place as them.

Now that you know the difference, next time you see a brand, you’ll know whether it is ‘Luxury’ or ‘Premium’ Brand. I hope you enjoyed reading this as much as I did while writing it. Share your thoughts and views in the comment section below or on the facebook page @theuralway or on my Instagram @theuralway. Also, make sure to subscribe to my blog so that you get notified every time I post something new!

Until next time,

Love & Hugs.