Emotion drives appeal of flagship products

Paulus B. Suranto, Marketing Department Head, PT BMW Indonesia

Many say the crisis that hit Indonesia in late 1997 is irrelevant to some people. At least on the outside it does seem to be true. Take a look at the sales of some products that are considered to be premium items.

Producers seem to keep competing to launch more and more of these premium products. If we consider premium products as those that are at the top of their respective brands and are reputable, or what marketing people term as flagship products, this opinion is indeed true.

Premium products are indeed expensive if evaluated based on relativity to each segment or category. But of course we understand, based on their respective nominal values, they may not be expensive, especially when compared with other products from different categories. The price of a premium product from the cellular industry is relatively small in nominal term when compared with the price of a premium product from the automotive industry, for example.

There are at least two reasons, from producers' points of view, for introducing premium products into their product portfolio. One is to position their umbrella brand (or core brand) at a perceived high level. The other is to fulfill their customers' needs. Let's take an example from the cellular phone industry. As there is a growing demand to have a smart phone that can communicate with other digital equipment, producers have developed products that have a dual function, both as mobile phones and digital organizers.

On top of that, producers equip their new products with blue tooth technology to enable them to communicate with other digital equipment. Because of these many additional features and technologies, the products are inevitably priced higher than conventional mobile phones. Within each respective brand these new blue tooth-enabled smart phones are flagship products, or premium products.

Recently, blue tooth-enabled smart phones have come equipped with a digital camera. Producers who do not keep pace with new trends and developments will risk having their core brands perceived as second-tier.

The same phenomenon applies to the automotive industry. As people demand more comfort, looks, ease of driving, road handling, fuel economy, security, safety and power, producers keep fulfilling those needs in their product development, and eventually in their product portfolio. Obviously the more needs that can be fulfilled in a product, the more expensive the product becomes and the more premium the product will be.

Not only the development in basic automotive features keeps progressing, but additional features such as connectivity (navigation system, GPS, and internet-enabled communication systems) are also rapidly developing. Producers that cannot provide cars that meet those developing needs will have difficulty in maintaining the perception of their brand's first tier.

No less interesting is consumer behavior towards premium products. There are people who purchase premium products because they require the functions (or substance) of those products. There are also people whose decision to purchase a premium product is due to the premium status of the product itself.

The first group base their purchase decision on rationality. They wish to be connected to and be able to send e-mail to their contacts while commuting in their car, for example. They need to be continuously updated with information on stock prices while talking with their business partners over the phone in an afternoon traffic jam. They may need to immediately send a picture of an antique item to their business associates to secure a deal, etc.

The second group base their purchase decisions on emotional appeal. There are many people who have and who use their communicators but do not know how to establish a WAP connection.

There are also people who own blue tooth-enabled smart phones without even knowing what blue tooth really is. And there are people who prefer to purchase the newest V12-engined limousine to the V8-engine variant, even though they know both models will have exactly the same maximum speed of 250 km per hour (because they are calibrated that way), let alone the possibility of achieving such a speed under our road conditions.

It is clear that for the second group, they do not really need the functions provided by the products. They purchase blue tooth- enabled smart phones with built-in digital camera because these products are the flagship of their respective brands, and these people know that potentially they can send pictures with their phones even though they may not need them now, or ever. And these people certainly prefer the V12-engined limousine because it is the best in its class. They know they will never reach the maximum speed, and they probably do not need to achieve that speed level at all. It is simply not relevant to them.

The V12-engined limousine is by far more expensive than the V8. It provides more status and prestige, especially with the new i-Drive concept, and that is the relevance.

Now, given the existence of these two groups, marketers will try to leverage emotional appeal for their sales (of premium products). Why is that so...? Because the products are made in order to offer a high standard of functionality. That means the products will easily attract customers from the first group.

People who need such functions will find and buy the products that provide the functions that suit their needs. But to increase sales, marketers will have to increase the emotional appeal of a product so that people will see it as providing high status .

As there are many motives for premium product consumption, we know it cannot merely be based on the state of the economy. That fact is evident everyday here, in the midst of economic crisis, there are still tons of luxury cars such as BMW on the street.