In Praise of Boredom.

When mainstream brands want to go “premium,” there’s a good reason for it: profit margins. In saturated markets, it’s difficult to increase sales volume; due to persistent inflation, many customers are switching to cheaper store brands; and fierce competition eats into profits. And higher interest rates are putting even more pressure on net income. So off to the premium segment, where price isn’t as important to customers! That’s what they thought at Nivea, as well as at Mercedes, where “luxury” was even supposed to become a recipe for success—at least temporarily. There’s just one catch: When production capacities are designed for high volume, there are fixed costs that need to be covered, and that requires full capacity utilization—otherwise, there won’t be any profit. That’s why Nivea has to sell regular deodorants and sunscreen at fair prices, not just products with epigenetics. That’s why a (used) Mercedes has to remain reasonably affordable, unlike the G-63 AMG.

And from a brand perspective, too, it’s a major risk to more or less subtly convey to loyal customers that they’re no longer welcome. After all, they—or their children—are the foundation of the brand and often upgrade to a brand’s more expensive offerings. That might not be as exciting as attracting new, exclusive target groups. It might even be a little boring. On the other hand: How many repositioning and rebranding efforts have seen the light of day in the brand world simply because management found the brand boring? Many—far too many—when you consider that the customers of these brands have rewarded their consistency with trust and loyalty. With that in mind, we wish you a boring weekend (after all, that’s when the best ideas come to mind).

Or what do you think?

Here's the link:https://www.welt.de/wirtschaft/article6a70a4c6679e1a4a72fd0262/nivea-seit-montag-ist-schluss-mit-der-illusion-von-der-teuren-premium-marke.html