Premium products reflect one's status<\/p>\n
Jacky Mussry, Contributor, Jakarta<\/p>\n
One Saturday on an uncrowded street in Jakarta, a flashy,
\nsporty red car caught my eye. The waist-high vehicle was none
\nother than a Ferrari.<\/p>\n
My enjoyment lasted only a few seconds before it accelerated
\nout of sight. I caught a glimpse of tremendous satisfaction
\npainted all over the driver's face. Who wouldn't be elated
\npulling away in a Rp 3.5-billion dream car in Indonesia?<\/p>\n
However, what made me reflective the next second was the fact
\nthat this was happening not in a rich country, but right here in
\nIndonesia, where, according to the World Bank's data for 2002 the
\nannual income per capita is just US$710.<\/p>\n
In neighboring countries, meanwhile, such as Thailand, which
\nhas recovered from its economic crisis, the per capita income is
\nUS$1,980, and in Malaysia it is US$3,540. Brunei's and
\nSingapore's figures are, of course, much higher: about US$
\n20,000.<\/p>\n
The super-rich in Indonesia, who can afford premium products
\nlike Ferraris, are estimated at less than 70,000 people in total.
\nHaving the purchasing power does not automatically mean they are
\nwilling to buy. Hence, it is not surprising Ferrari's sales
\ntarget is 10 to 15 vehicles annually. However, this illustrates
\nthe hugeness of their purchasing power.<\/p>\n
The functional benefits of a Ferrari are, in fact, the same as
\nthose of a Toyota Kijang -- the favorite of many in Indonesia.
\nEssentially, both are vehicles for your various transportation
\nneeds. The feeling or the emotional benefit, in the marketing
\njargon, is totally different. The owner of a Ferrari, if asked
\nhow he or she feels when driving it, would probably say: \"I feel
\ngood!\" just like that song by world-famous soul singer James
\nBrown.<\/p>\n
Likewise, a Rolex watch, costing hundreds of millions of
\nrupiah, tells the time just as accurately as a Rp 200,000 Casio.
\nAgain, the confidence it emanates is far greater when it is on
\nyour wrist during a grand cocktail party attended by celebrities.<\/p>\n
In a way, your stature is perfected and you earn recognition.<\/p>\n
Of course, a Ferrari can be driven at more than 300 kilometers
\nper hour. But in Indonesia, with heavy traffic, twisty roads and
\nundisciplined drivers, who would perform such a daring act? And a
\nRolex, among its durability features, can be taken to a depth of
\n200 meters underwater. How often would you dive while wearing a
\nRolex?<\/p>\n
A question is often asked why certain products are extremely
\nexpensive. Pine and Gilmore in their bestselling book Experience
\nEconomy wrote that the greater the differentiation of a product,
\nboth functionally and emotionally, the higher the possibility for
\nsetting a high price by the maker. Indeed the differentiation has
\nto be relevant and match consumer needs, or even surpass them.<\/p>\n
Products without distinct differentiation, or \"me-too\"
\nproducts in advertising jargon, are simply degraded into
\ncommodities. They do not have the \"right\" to set a special price
\ntag, as the market dictates their price and status. They are
\nmerely \"price-takers\" unlike those with superior differentiation
\nand values, which are \"price-makers.\"<\/p>\n
Today, with differentiation of concrete, functional benefits
\nbecoming more difficult to establish, major businesses are
\nconcentrating on the abstract or context in their products and
\nservices.<\/p>\n
Content-wise, Hard Rock Cafe and Planet Hollywood, for
\nexample, may be similar. Both are restaurants with quality food
\nand beverages. The mouth-watering steak served there may be
\nimported from the same sources in the United States or New
\nZealand.<\/p>\n
What makes the two places different is the ambience, which
\neventually creates a unique experience for their respective
\ncustomers. At Hard Rock Cafe, part of the ambience is the
\ninformal look of its waiters, who wear jeans and scarves on their
\nheads, a la rockers.<\/p>\n
The interior is enriched with memorabilia in the form of
\nmusical instruments belonging to renowned musicians. Planet
\nHollywood, as its name implies, offers \"dining in Hollywood\" with
\nvideo and television screens showing Hollywood celebrities. In
\nline with its theme, the walls are adorned with memorabilia of
\nmovie stars, both from yesteryear and today.<\/p>\n
Both these places are not exclusively categorized in the
\npremium product section. Though considered luxury eating places,
\nto many Indonesians they are still affordable. Evidently, for the
\npeople of this country, premium products are divided into two
\nsubcategories: the truly expensive for the very few and ones that
\nare still affordable, relatively, that is. Take Dji Sam Soe
\ncigarettes, for instance. Though, for years, this brand has
\nenjoyed premium positioning along with its premium pricing, Dji
\nSam Soe cigarettes have remained within the reach of many
\nIndonesians, even those in the low-income bracket.<\/p>\n
Due to their affordability for many Indonesian city residents,
\nStarbucks and Coffee Bean products -- also within the premium
\nproducts category -- are enjoying huge sales, although a single
\ncup of cappuccino carries a price tag of some Rp 20,000. The BMW
\n3-series, priced at around Rp 500 million, can be seen
\ncrisscrossing the streets of most of Indonesia's major cities.
\nAgain, these premium cars still fall within the pseudo-mass
\nsubcategory.<\/p>\n
To enlarge the market, even Donna Karan has launched a second
\nline series of products using the DKNY label to differentiate its
\nbrand positioning in the minds of its consumers.<\/p>\n
Not every person with enormous financial strength is a
\npurchaser of premium products. These extremely wealthy people are
\nbasically grouped in three psychographic categories: price-
\noriented, value-oriented and quality-oriented.<\/p>\n
The price-oriented would probably opt for a no-frills airline.
\nFor them service is number two, while arriving at the destination
\non time matters most.<\/p>\n
The value- and quality-oriented -- almost overlapping each
\nother -- would not worry about the tuition fee when they send
\ntheir children to be educated, mostly abroad. Quality of products
\nand services, plus the other inherent values offered by the
\nseller, are their top priority. Ambience, style and all the
\nspecial extra tidbits make a whole world of difference to them.<\/p>\n
The super-rich of Indonesia -- a tiny percentage of its
\npopulation -- are growing, albeit slowly. To maintain this niche
\nfrom becoming saturated, marketers of premium products have to be
\ncautious. One example is from the automotive industry. Luxury
\ncars, costing over one billion rupiah, are not enjoying any
\nsignificant increase in sales this year compared with the boom
\nperiod of 2000 to 2002.<\/p>\n
Many manufacturers of premium products still view the country
\nas having great potential, although some marketers estimate that
\nthe 2004 general elections may dampen the buying spirit of the
\ncreme de la creme of Indonesian society.<\/p>\n
With the implementation of regional autonomy, it will not be
\nsurprising to find new billionaires outside Jakarta. Rolex
\nwatches and Mercedes-Benz S600, for example, are enjoying huge
\nsales in many large cities of Indonesia, such as Solo and
\nSemarang, Central Java, as well as Medan, Makassar and Surabaya.
\nReports from other cities are in very similar tone.<\/p>\n
Premium products indeed reflect one's status, one's
\nachievements in life, taste and values. Some people buy them for
\nother reasons, known only to them. In societies that are growing
\nmore materialistic, as in many Indonesian cities, it seems that
\nevaluation or parameters are based on \"exterior elements\": that
\nwhich is purchased, worn or used. --- The writer is partner and
\nhead of consulting division at MarkPlus&Co<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/premium-products-reflect-ones-status-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}