For mass-market brands in India, premiumization is a gradual process. Instead of trying to convert a consumer from a ₹10 product to a ₹200 one, the successful strategy is to create a slightly better, slightly more expensive version (e.g., ₹15). This incremental approach is more effective than trying to force a large jump in price point.
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Don't try to force customers to adopt new behaviors, like a boot-buyer purchasing sandals. Instead, focus on encouraging them to buy a second pair, a newer model, or an upgraded version of the product they already love. This audience-focused approach builds on existing loyalty and is far more effective.
People gravitate toward the middle option when given three choices, a bias known as extremeness aversion. To sell more of a specific product, frame it as the middle choice by introducing a more expensive, super-premium 'decoy' option. Its role is not to sell, but to make the target option look like a reasonable compromise.
The Indian fragrance market is bifurcated, with mass-market dupes at the low end and expensive luxury imports at the high end. This leaves a significant 'white space' for brands to capture the aspirational-yet-value-conscious consumer in the ₹1,000 to ₹10,000 price segment, which is currently underserved.
For beauty brands, India is a crucial market for miniature or 'mini' sized products. These minis act as a vital bridge for a value-conscious consumer base, allowing them to trial premium or prestige products at a lower price point before committing to a full-size purchase, thereby de-risking the adoption of new brands.
To sell more of a $300 package instead of a $200 one, introduce a $500 option. Most won't buy the decoy, but its presence shifts the customer's reference point, making the $300 package appear more reasonable and valuable by comparison.
A blanket price increase is a mistake. Instead, segment your customers. For those deriving high value, use the increase as a trigger for an upsell conversation to a better product. For price-sensitive customers, consider deferring the hike while you work to better demonstrate your value.
When a new KFC premium product wasn't selling, they doubled the price instead of discounting it. This aligned the price with consumer expectations for a premium item, signaling quality and causing sales to soar. Low prices can imply low quality for high-end goods.
Achieving a brand status that commands a premium price is not a short-term project. It demands years, often decades, of consistent messaging and marketing investment to build the necessary emotional connection with customers. Most companies lack the patience and long-term vision for this.
Counter-intuitively, for price-sensitive markets, decreasing average order value (AOV) is a key growth lever. A lower entry price point unlocks a larger segment of the population, increasing transaction frequency, building habits, and ultimately driving higher lifetime value.
AI analyzes sales, operations, and media data to identify price elasticity across product bands. Brands can then increase prices on premium items where consumers are less sensitive, while keeping prices flat on essentials, thus protecting margins without alienating the entire customer base.
