Mercedes A Class, iPhone SE and Starbucks VIA all have something in common – reputable brands offering more affordable product lines to attract budget conscious customers. It seems big brands are paying more attention to the “lower end” market than ever before. Is there a catch? Can all premium brands achieve success by launching a budget friendly lineup? Let’s delve into this interesting topic today.
Individual Results May Vary – Samsung Galaxy A vs iPhone SE
In 2021, iPhone SE represents around 6% of it’s total iPhone sales while Galaxy A represents 58% of total Galaxy phone sold. Why there is such a big difference in both brand’s budget friendly lineups?
The differences in the percentage of total sales for budget friendly models like the iPhone SE and Samsung Galaxy A series can be influenced by several factors, including the size and diversity of the brand’s product lineup, their market position, and regional market preferences.
Apple typically has a smaller product lineup compared to Samsung, which means that a larger percentage of its sales are likely to be concentrated in its flagship models like the iPhone 13. Additionally, Apple has a strong brand identity and a loyal customer base that is willing to pay a premium for their products, which may make it more challenging for budget friendly models like the iPhone SE to compete for sales.
On the other hand, Samsung has a much larger and diverse product lineup, which includes several budget friendly models like the Galaxy A series. This means that budget friendly models like the Galaxy A can have a larger percentage of total sales compared to Apple’s iPhone SE. Additionally, Samsung has a strong market position in emerging markets, where price is often a major consideration for consumers, which may also contribute to the higher percentage of total sales for the Galaxy A series.
Regional market preferences can also play a role in the differences in the percentage of total sales for budget friendly models. For example, in markets where budget friendly models are particularly popular, such as India and other emerging markets, the Galaxy A series may be more appealing to consumers than the iPhone SE.
Overall, the differences in the percentage of total sales for budget friendly models like the iPhone SE and Samsung Galaxy A series can be influenced by several factors, including the size and diversity of the brand’s product lineup, their market position, and regional market preferences.
The potential downside of a premium brand goes cheap
There are some potential downsides for premium brands to release budget friendly products. One potential risk is that the introduction of a budget friendly product can dilute the brand’s image and reputation for quality and exclusivity. If consumers begin to associate the brand with cheaper, more accessible products, it may be more challenging for the brand to maintain its premium status.
Another potential risk is that the release of budget friendly products can cannibalise sales of the brand’s higher end models. If consumers are given the option to purchase a more affordable version of the product that meets their needs, they may be less likely to purchase the higher end model.
In the skincare industry, there have been some bad examples of premium brands releasing budget friendly products that have been criticised for their quality or effectiveness. For example, in 2016, luxury skincare brand La Mer introduced a budget friendly line of products called The Luminous Lifting Cushion Foundation. However, the product was widely criticised by consumers for its poor coverage and limited shade range, which was seen as inconsistent with the brand’s reputation for high quality, luxury products.
Overall, the release of budget friendly products can carry some potential risks for premium brands, including diluting their brand image and cannibalising sales of higher end models. Additionally, brands need to ensure that any budget friendly products they release maintain the same level of quality and effectiveness that consumers have come to expect from their premium offerings.
A brand did well by focusing on quality while making it affordable
The Ordinary, a Canadian skincare brand that offers a range of affordable skincare products that are designed to be effective and transparent.
The Ordinary was launched in 2016 and quickly gained a cult following for its innovative formulations and affordable prices. The brand’s products are formulated with high quality ingredients, such as hyaluronic acid, vitamin C, and retinol, but are sold at a fraction of the price of similar products from luxury skincare brands.
The brand’s minimalist packaging and straightforward approach to skincare have also resonated with consumers who are looking for affordable, no frills skincare options. The Ordinary has become known for its effective and affordable products, and many of its products have achieved cult status among skincare enthusiasts.
Overall, The Ordinary’s success demonstrates that it is possible for skincare brands to launch budget friendly product lines that are effective and well received by consumers. By focusing on high quality ingredients and transparent, minimalist branding, brands can provide consumers with affordable options that do not sacrifice quality or effectiveness.
You can be successful as long as quality and effectiveness stand as your core value
One good example is L’Oreal’s Vichy brand, which offers a range of affordable skincare products that are still formulated with high quality ingredients and marketed as premium.
In 2018, Vichy launched a new product line called “Mineral 89,” which is a budget friendly serum that is designed to hydrate and strengthen the skin’s barrier. The product contains just 11 ingredients, including Vichy’s signature mineral rich thermal water, and is free from parabens, fragrances, and other potential irritants.
Despite its affordable price point, Mineral 89 has received rave reviews from consumers and beauty editors alike. Many consumers have praised the product for its hydrating and plumping effects, and several beauty editors have included it in their roundups of the best skincare products on the market.
Vichy’s success with Mineral 89 demonstrates that it is possible for premium skincare brands to launch budget friendly product lines that are still effective and well received by consumers. By focusing on high quality ingredients and leveraging the brand’s reputation for quality and expertise, Vichy was able to create a product that appealed to a wide range of consumers, from budget conscious shoppers to skincare enthusiasts.
Key takeaways on ‘go budget friendly’
If a premium brand decides to release a budget friendly product line, there are several key strategies that it can employ to maximise success and avoid common pitfalls:
- Focus on high quality ingredients: Consumers expect premium brands to use high quality ingredients in their products, and this should be no different for budget friendly offerings. Brands should ensure that their budget friendly products still contain effective and high quality ingredients that deliver real benefits to the skin.
- Maintain brand integrity: While budget friendly products may be marketed to a different consumer segment, they should still reflect the brand’s core values and messaging. Brands should avoid diluting their brand image or compromising their core values in an effort to appeal to budget conscious consumers.
- Leverage existing brand equity: Premium brands have already established a reputation for quality and expertise in the market, and they can leverage this reputation to create a successful budget friendly product line. Brands should focus on highlighting their existing strengths and expertise to build trust and credibility with consumers.
- Invest in product development and testing: Developing effective and affordable skincare products requires significant investment in product development and testing. Brands should invest in rigorous testing and quality control processes to ensure that their budget friendly products are effective and meet the same standards of quality as their premium offerings.
- Communicate the value proposition clearly: Consumers should understand why the brand’s budget friendly products are different from other affordable skincare options on the market. Brands should clearly communicate the value proposition of their budget friendly product line, highlighting the quality of ingredients, the brand’s reputation, and any other unique selling points.
By following these strategies, a premium brand can create a successful budget friendly product line that appeals to cost conscious consumers while still maintaining the brand’s reputation for quality and expertise.