Premium Positioning

Companies can segment their market on one/many of these categories – age, locality, gender, money spending capacity etc. And they try to target as many segments as possible to increase brand value and revenue. This is very important to remain competitive in today’s market.

But, this is not the only way to remain competitive and make money. As we can see many of the companies target only few segments of the market, and still they are more competitive and rich.

For example, Rolls-Royce

Rolls-Royce produces a finely crafted, state of the art, luxurious, premium, innovative and none the less, very expensive cars.

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Rolls Royce is in the motor car market since early 1900’s. Right from beginning company focused on craftsmanship, quality of engine, overall vehicle and comfort of the people inside. Therefore with all these premium features the only customers Rolls Royce targeted were very rich people who can pay a lot of money to such premium quality car.

Rolls Royce is major provider of Engines for ships & aeroplanes, Propellers etc, as well. But most of the people know Rolls Royce only for their motor business. This is because of the brand value, their market position, and the market segment they target.

Rolls Royce three main pillars on which their market position is based on: Quality Perfection, Engineering Excellence, and Reliability.

Take a look at this video. The umbrella in door feature is looks very simple and small feature. But the detailed craftsmanship and quality in such a small feature shows the premium quality and the worth of whole car.

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12 thoughts on “Premium Positioning

  1. Hello- interesting post.

    I must disagree with your first point. I think it is actually more common for companies to target only one segment with any particular brand. By targeting multiple segments with the same brand it can actually decrease brand value (and revenue) by altering customers perceptions of that brand.

    Companies targeting multiple segments always seem to do it with different brands such as Qantas vs Jetstar and Toyota vs Lexus. You may be interested to note that Rolls Royce is actually a subsidiary of BMW (since 1998) which also owns the “Mini” cars. So in this example the company actually does target a few segments, but not with the same brand.

    I agree with the tangible qualities (build quality, reliability etc) you have mentioned but would propose that Rolls Royce’ true position actually lays in its perceived image. On the positioning matrix, Rolls Royce definitely sits in the high end quadrant characterized by light promotion and exclusive channels.

    I would suggest that in this case, more than the tangible qualities listed the unique selling proposition is actually the exclusivity and status of the brand.

    Cheers,

    Dan

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    • its true that By targeting multiple segments with the same brand it can actually decrease brand value , but my main focus here was, Rolls Royce is focused only in the premium class market since its foundation. and they were able to go a good job with a limited number of sales (which is not too much as compared to other companies and brands). and the main reason is they are successful with this strategy is their strategy itself – that they dont make as number of cars as compared to other brands, and also the handcrafting, innovation and owner’s personal touch to every car.
      As per my understanding, no other brand follows such strategy as it is very risky strategy.

      Cheers,

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  2. Rolls Royce does exemplify luxury and quality and the exclusivity Dan mentions above. And as a brand they undoubtedly do target the high end purchasers of motor vehicles – with a price tag close to $300k that probably goes without saying. But they do reward their customers with the luxury and little extras – loved the umbrellas, very neat.

    I didn’t know Rolls Royce were a subsidiary of BMW – so I guess that is an example of how a company has brands that target all markets for car purchases – from Mini, BMW 1 series through to their high end 5 and 6 series, and right up to the highest end of the market with Rolls Royce. As a brand Rolls Royce doesn’t seem to have many competitors and one would expect the quality perfection, engineering excellence and reliability. I wonder whether part of their advertising comes from the few Rolls Royces you seen on the road – they always manage to turn my head and always exude exclusivity in my mind.

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  3. Clearly Rolls Royce position themselves in the niche market and have done so very successfully for many, many years. The Rolls Royce brand is synonymous with cars but people who travel will also be very aware that they are one of the major players in the airline engine industry. I didn’t realise they were also a big player in the shipping engine market but that does make sense. Once again, two very niche markets. Having a committed and loyal client base would be of great benefit to Rolls Royce as this would prevent the need for them to spend on extensive and expensive advertising of their products.

    Considering they only sell about 3,500 cars per year, and even though they are expensive to purchase, they are clearly beautifully made and would be expensive to produce so the profit margin may not be huge. Therefore having these other niche markets is most likely critical to the success of the Rolls Royce brand. And as stated by Dan, branching out to covertly partner with BMW and Mini also positions the company in more than one market segment so ensures the ongoing viability of the business.

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  4. Rolls Royce does position it self as a niche product targeting a specific market group, however it would be interesting to see if this position of being a high quality high price product itself is profitable? As previously mentioned, RR is a subsidiary of the BMW group, and the brand itself could be part of a wide marketing strategy to ensure that all marketing segments are catered for. Further RR’s reputation along with its distinguished history also ensures that the car maker does not have to heavily promote new vehicles or provide an extensive distribution channel. This is one of very few positioning strategies that has proven successful despite not following the traditional strategies that make ‘perfect sense’.

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  5. I agree with the above comment, and I think it would be really interesting to find out more about BMW’s strategy here. If Rolls Royce cars are a loss leader, is this ok because of the strong branding and exclusivity it creates? I imagine they are tapping into the aspirations and psyche of people. For example, if I know that the plane that I am flying on has a Rolls Royce engine, then I feel safe, because my perception is that they are “the best”. But I actually do not know anything about the quality of their plane engines – I am making this association because of the cars. So creating those 3,500 cars per year might just be a smart marketing strategy to be able to position their brand.

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  6. Thank you all of you for sharing your views. I also didnt know that Rolls Royce is a partner of BMW. @sharpym i agree with your point about the people’s mentality and beliefs about RR and its trustability.
    By putting up this topic i wanted to focus on the unconventional marketing strategy or business process RR is following for almost a century since its foundation.

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  7. I think you have picked an excellent example as to how to do segmenting, targeting and positioning in Rolls Royce. The company has made a decision to pick a segment being the very rich and they have never deviated from that strategy to cause confusion for their chosen segment.

    They have made trade offs to implement their business strategy for example they don’t mass produce and this adds strength to their marketing because it gives them a position of uniqueness which people are prepared to pay for.

    Because they don’t mass produce their chosen form of targeting and positioning has to be very light promotion, limited availability and a high sale price.

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  8. I think it’s interesting how Rolls Royce continually manage to successfully capture the top end of the car market based solely on the reputation and status of the brand. This is excellent brand positioning. They don’t have active marketing campaigns because they don’t need the publicity and the segment they target wouldn’t be considered a mass market. Most people can’t afford to buy a Rolls Royce, so as the marketing department, you wouldn’t waste money on advertising to people who aren’t in the market to buy such a luxury item.

    Rolls Royce is a great example of how a company can specifically target such a niche market. I came across an interesting article where Rolls Royce manufactured a limited edition vehicle exclusively for the Chinese market, celebrating the Year of the Dragon. The cars were branded with the “Year of the Dragon”, and came in red paintwork with gold dragons in the interior. The cars sold out in two months with a price tag of over $1.3 million AU dollars! This is clever targeting by Rolls Royce, targeting a very narrow and focused group and creating something that will appeal to them.

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  9. I agree with many of you that Mrugendra choose an excellent example using Rolls-Royce brand as a model for segmentation. It is also interesting of this blog that many of the comments were based on the fact that Rolls-Royce brand is a subsidiary of BMW and apparently this was new. I agree with the general thinking that recognizes the BMW´s successful segmentation strategy, suiting almost every medium-high income taste. However, how many of you knew that the previous owner of the Rolls-Royce brand before BMW, was the Volkswagen Group? It is probably easier for some of you to associate a luxury car like a Rolls-Royce with a BMW, rather than a Volkswagen Bettle? Nevertheless, I will like to expose the segmentation strategy briefly from VW Group, which goes from the low-income car owners, all the way to the top. Additionally, it´s amazing how they even have segmentation strategies for the very top, by targeting different niches between luxury sport and luxury elegance cars. I believe you can tell VW segmentations strategies with just listing some of their subsidiaries, and you probably can easy create the scale from low to high. The Volkswagen Group is the owner of brands such as: Škoda (Check Republic), SEAT (Spain), Volkswagen (Germany), Audi (Germany), Porsche (Germany), Bugatti (France), Lamborghini (Italy) and Bentley (UK). Additionally to Mrugendra´s blog example I wanted to share VW Group which I think it´s amazing as well.

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    • nice addition to the topic Carlos. Volkswagen Group have done a good job as well while segmenting the market. I think Volkswagen group is trying to the same thing as BMW group. But it seems Volkswagen has mainly concentrated towards sport market (considering most of the brands are known for sports cars like Porsche, Bugatti, Lamborghini, etc) and even Bentley do not have much market at the level of Rolls Royce.
      But yes. Volkswagen is also a good example to how to position the brands in the market.

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  10. Rolls Royce target market consists of multimillionaires or billionaires with high disposable income.
    Target customers must have means sufficient in order to purchase and insure the vehicle, what, in case of cheapest RR model in basic version – the Ghost – is 250k plus insurance.
    Typical RR customers are 50 year old millionaires with net worth of $20 million and annual income of $1 million. But Rolls-Royce attracts also many aristocrats, top celebrities and even criminals and dictators. In any case, there is one thing that they have in common: lots of money.
    So, since RR customers can quite differ when it comes to many things, Rolls Royce target customers are, simply, people who have lots of money and high income.

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