Beyond treating: what's worth paying more for?

What are we getting wrong about premiumisation? The Mix busts some myths

What’s worth paying more for? It's the burning question that countless brands strive to answer, as many struggle to justify premium positioning. 

And with the cost-of-living crisis raging on, is it even the right time to ask this question? Do people want to part with their hard-earned cash for premium products in such difficult times? 

As the world tumbles from one disaster to another, you could be forgiven for thinking that people would be consistently opting for the cheaper option. Yet, this is not what’s happening.

Despite pursuing a high value, rather than low cost, message, M&S recently became the UK’s second favourite supermarket after Aldi; premium leggings company Lululemon - which charges around $168 per pair - had their biggest year in 2023; and On the Beach posted a rise of 82% in 5-star holiday sales compared with pre-Covid levels. 

Clearly, there are things that people feel are worth paying more for. The question is: what and why? 

At The Mix, we knew it was time for a rethink when it comes to understanding consumer spending. We needed to bust some myths.

To this, we held two events. One at the Groucho Club in London, the other at the Chelsea Hotel in New York. Despite the latter coming to a crashing end with the arrival of 40 firefighters and 10 fire trucks to put out a blaze at the hotel, the events helped us expose the persistent myths and outdated thinking surrounding consumer spending. 

Through this research, we unearthed a fundamental truth: consumers can find value in unexpected places. We live in an age where everything from tampons and toilet roll, to bin bags has been made desirable.

So, how do you create meaning and value? 

Fundamentally, there are three areas that need to be understood before even thinking about embarking on a premiumisation strategy:  

People are not consistent. Most people will buy premium products some of the time but the value they place on different types of goods shifts, depending on who they are and what happens around them. It’s time to ditch the old, narrow view and embrace the diverse reasons why people really spend their money on premium brands.

It’s character, not consumer. Buying premium isn’t just about buying a treat. In FMCG, we always talk about the consumer, but social media has created a highly performative new version of identity. Now, people make choices based on what it will say about them. The brands they buy help construct their identities. 

Occasionality is key. The truth is that overwhelm is causing shopping anxiety. The amount of choice people face everyday reduces exclusivity. Instead, people obsess about finding the perfect choice and end up walking away with nothing. Occasionality will cut through the noise.

The trick is understanding that people will spend more on specific baskets than they do on general ones, because they will spend more on an occasion. It taps into our earlier point: people make choices based on what it will say about them, and occasions are where they show their friends, family or colleagues who they really are. 

To learn more about what we’ve discovered through this research, watch this space or get in contact.