According to a report published by Datamonitor, consumer expenditure on premium foods in the UK is on the rise – increasing annually at 27% since 2003. The economy in general is good and people are more willing to spend on quality products, in spite of higher prices.
The general perception of consumers is that higher price and better quality are synonymous. Scientists at the California Institute of Technology have proved that prices influence perceptions and consumers get more excited by products that are more expensive. According to Jeffery Young (Allegra Strategies), as discretionary income increases, demand for higher quality products grows. The food industry, for example, saw growing popularity of deli concepts, more and more people going to farmer markets, and less and less people drinking instant coffee.
The crave for premium labels in supermarkets has given new opportunities to marketers by ‘premiumising’ products. Premiumisation is about adding value to existing products and servicing and relabeling them as new but higher quality products.
Interestingly, popularity of premium products was originally pushed up by the middle classes in new economies. They are looking for confirmation of their social status, and chase for the latest trends, and giving opportunities to marketers to trade up.
Why the change in habits? In short, the world has become smaller as communication and contacts get easier. Increased travel and exposure to different cultures have broaden the visions of people and created the urge to try out new things.
Hong Kong consumers are looking for products and services with better quality too. The latest fad is to take a cruise holiday, buy foods carrying an organic, low carb, fair trade label.
Marketers – be innovative!
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