Out of the Premium Box
Strategic market restructuring and the new premium
Strategic changes are taking place in all sectors of the economy, and we can definitively state say that they are all tied to 2020. It has never been so important for decision-makers to step out of their particular “box” and dare to think originally. This year will be a year of new strategies, and whether you like it or not, it will be most evident in the premium product market!
Nothing new under the sun
Many businesspeople shrug when they hear these sentences. So what? Real managers should always do this, right? Yes, actually, they should, but very few do. Depending on the size, companies between five and fifty people struggle to change the strategic mindset and follow the changes in the market. Colleagues will talk for hours, days, or weeks, but let’s be honest. When there’s no external, coercive force, the vast majority of people just talk about big changes but not execute any plans. Of course, some managers are constantly monitoring trends, improving their surroundings, and coming up with new ideas on how to move forward. Have you been looking around these days? How many desperate, hasty managers can you see? And how many professionals can be found who are electrified, bubbly, and dynamic? They are few and far between. Why is it that this “pushes down” decision-makers around the world so much? And now, let’s not dwell on the fact that yes, this pandemic has a very grave, private-life-threatening, often worst-case scenario effect. We cannot put these thoughts aside, and we must not forget them, but to be a successful decision-maker, we need to find the time and environment when we can think about what comes next! In those moments, it becomes clear who truly deserves the title of “manager”. The crisis is a clear opportunity for truly successful decision-makers, which they must seize as soon as possible and as vigorously as possible. Yet very few articles, interviews, or comments are about this side of the crisis. There is a growing tension between the two imaginary camps. Proactive professionals are increasingly “condemning” their colleagues who lick their wounds and are unable to change. Of course, every person has habits, a personality, but in this situation, it doesn’t matter. Now, you must win because passiveness can have grave consequences!
Let’s look around!
No crisis has ever closed every opportunity for businesspeople. Even the biggest collapse cannot wipe out an entire economic sector. There are always new businesses forming, existing players who are transforming, and of course, even the most prominent players can drop out of the market. This is the predatory law of economic life. Just because a particular manager is currently operating in a specific sector of the economy doesn’t mean they should stay there. If they do get stuck there, it’s their fault. After all, successful people know when to leave and in what new direction to go. That makes them skilled decision-makers. Other managers usually call them “lucky”, and within a few years, everyone will only see luck behind their success. Few will remember that in a critical situation, they were the ones who could make timely decisions. But there is nothing wrong with that, as luck always favours the prepared. And even if this statement is not always true, it is an excellent answer to sceptics.
What needs to be done now, towards the end of 2020? You have to look around your sector, very decisively and thoroughly! Why do we have to do this? Because by now, the strategic trends that will dictate the market’s next few years have become clear. Many people say that we have become accustomed to the fact that we have to reckon with some impossible economic situation every 10-12 years. Under this theory, we are now building up for the next decade. Or we’re just ruining it. Sure, it’s not necessarily easy to read the signs showing in which direction the business world is going to go, but again, that’s just another hallmark of successful decision-makers. Many times, they just feel it, they cannot even explain it, and then some find the lucrative path by knowing specific data.
There are several clear signs of which a decision-maker should be aware. But the strongest of which is that solvency at the societal level will not necessarily change, but its structure will change drastically. Far fewer people will be able to be consumers in the markets for non-essential goods and services, but there will be others who will be able to spend more money than ever before. To put it in strategic language, the trajectory of the premium and the mass markets has clearly formed, and the chasm that already exists between them is growing even wider. If certain businesspeople had hoped for the survival of “crossover” products and services, they should forget that hope, permanently.
Many respond to this with a shrug, saying they are selling a “premium” product, but unfortunately, in most cases, they have no idea what the word really means amid such a solvency transformation. The content of the word “premium” must always be determined from the point of view of the most solvent potential customers. This is precisely because every target group created based on solvency, generation, or personality has its own unique premium expectations. And these are often wildly different. So, the biggest challenge now is that every company needs to define its potential customer base. Not just in the usual way, by merely spouting inflated, rehashed phrases. But specifically. If we have that, then we need to articulate what we mean by premium from their point of view. With this articulation, decision-makers have to be very brave and self-critical to evaluate their own products/services.
Two strong poles
If you go to a professional business strategist these days, in most cases, you will be drawn to two target groups that can provide a straightforward solution for companies to recover from the crisis. One group is a very dominant and proactive part of the current 35-50 age group, which gained ground after the Great Recession, and flourished in the years since. They achieved this because development and change are inherent in their thought processes. At the same time, the older generations were frozen – not everyone, of course, since age does not clearly define a person and their decisions. Thus, others felt that this group of managers who were in the middle of their careers before the crisis should take on the situation; they were encouraged to act. So, they stepped up. Some jumped up the ladders of multinationals, others made great strides within their own businesses, and some took advantage of that period to launch a world-class startup. They have already emerged victorious from a crisis, and there is a good chance they will climb out of this pit as well. The other important pole is the now somewhat desperate generation, the 25- to 35-year-olds, who started their careers right in the middle of the Great Recession, with obviously limited opportunities. However, those who were able to build from that low point are still ready to fight. It’s also a very proactive age group who don’t necessarily respect their older colleagues and have a burning desire to show their knowledge to the world. For the first group, “premium” means mostly international, global, innovative, and interesting solutions. Definitely something that wasn’t used to death, something new for which they could be early adopters. In the case of the second group, however, status, positions, and brand are the most essential elements. For both groups, “premium” means a product and service that is not available to everyone, has a sufficiently elevated price range, is well-designed, and has a distinctive brand. This is important to emphasise because, for many decision-makers, huge sales volume or even “perfect professional background and quality” still carry a premium feeling. Yet these qualities are not at the top of the rankings for the target group that currently has significant purchasing power. While high professional standards are an almost natural expectation for them, large sales volume eliminates the premium feeling of life, because if everyone has it, how could it possibly be premium?
This is a challenging idea for many, as company executives believe in continuous growth, and growth is usually measured in terms of quantity. Well, this is the case when we have to step out of the box and reinterpret basic concepts! If we don’t, it could be a nasty ending. It’s not a nice thing to realise that our extremely cherished product is no longer considered premium. And no one is comforted by the knowledge that it was premium twenty years ago!