Brand Premiumization – What to Consider in the Renewable Energy Sector?

Changing consumer preferences

In recent years, consumer preferences have begun to change. New trends are emerging, younger generations are joining the ranks of buyers, and society is becoming increasingly affluent. Customers expect more from brands than just a product, and price has long ceased to be the deciding factor when choosing goods or services. Companies’ response to changing consumer expectations requires a new look at their own strategy and communication. What once worked perfectly, for example with older generations, will not necessarily appeal to young consumers. Looking for inspiration, companies are increasingly turning their attention to premium and luxury brands, observing their business model, financial results, and way of operating.

Resilience of the luxury goods sector to crises

The luxury goods sector is perceived as more crisis-resistant. This was observable during the COVID-19 pandemic, when many companies recorded significant declines, while luxury brands continued to enjoy sales growth. This happens because customers of premium and luxury brands are well-off, wealthy individuals who do not limit their purchases due to rising inflation or economic fluctuations. In Poland, we have been observing a regular increase in the number of affluent people for several years. And it is these people who constitute the main group of luxury goods buyers. In the KPMG report “Luxury Goods Market in Poland | 15th Edition,” we see that in 2023, the number of people earning at least 120,000 PLN gross annually exceeded 2.5 million. This represents an increase of 34 percent compared to 2022.

Without a doubt, the luxury and premium goods market is becoming increasingly stronger and more desirable for consumers. Consumers are increasingly choosing quality products and are more aware of their choices. They are also increasingly willing to pay more for higher quality, authenticity, experiences, and emotions they seek. Especially Millennials and Generation Z look for something more in products than just practical solutions. They pay attention to brand values and its history. They expect the brand to build relationships with them. It should be noted that younger generations constitute an increasingly large group of luxury goods buyers, and the age limit of luxury consumers is constantly decreasing.

Premiumization strategy

Inspired by luxury brands, companies develop premiumization strategies, which involve increasing the value of products and services. Importantly, this cannot be based solely on raising the price. It should be remembered that it is not price that defines luxury, but luxury that defines price. Premiumization will therefore involve adding additional values, such as higher quality, unique experience, higher customer service standards, storytelling, and emotions. This is a trend that we can observe in many industries.

Current image of the renewable energy industry

The image of brands in the renewable energy sources (OZE) industry is developing very dynamically. On one hand, it is positive, which is the result of both growing social awareness and legislative, technological, and market changes. On the other hand, however, we have this “dark side,” which is associated with aggressive marketing and questionable sales practices. This is especially visible in the area of photovoltaics, where some companies (or intermediaries) use sales techniques bordering on manipulation, e.g., exerting time pressure like “funding available only today,” etc. Unfortunately, such actions negatively affect the perception of the entire industry. There is also the problem of greenwashing, as many companies are accused of building an ecological image without a real impact on emission reduction.

So, does the OZE sector have the possibility to implement a premiumization strategy? Definitely yes, but it will certainly require rearranging the business strategy and readiness for greater transparency.

Companies from the OZE sector are already increasingly using communication strategies that combine substantive issues and understanding of industry specifics with innovative marketing solutions. For example, educational campaigns explaining the benefits of using specific technologies are becoming more and more popular. Although the premiumization strategy is demanding, it can bring many benefits in the long run. It will help increase brand value, differentiate in a very competitive market, and build relationships with customers. A well-implemented strategy will also justify a higher service price.

There are several principles of luxury brands that OZE sector companies can apply to themselves.

Customer service as a key element of a premium brand

Customer service is a key element. This is where relationships with the brand are formed and customer experience is built. Unfortunately, aggressive marketing and cold calling are the antithesis of luxury. Luxury brands do not desperately seek out customers. It is the customer who seeks them out and wants to enter their world. Marketing is subtle, not pushy.

Online, one can find negative comments related to customer service at virtually all stages. There are allegations related to after-sales service, especially when the installation process has already ended. Customers also point out long response times and complicated complaint procedures. Additionally, information about unethical sales practices regularly appears. On social media, one can find groups where users share their negative experiences. Hidden costs, unclear contracts, deliberately misleading customers regarding warranty conditions and the possibility of withdrawing from the contract are the most common problems.

If a brand from the OZE industry would like to move towards premiumization, it should definitely start with an audit of customer service quality and employee training. Salespeople should transform into individual customer advisors who will be able to establish a bond with them, listen to their needs, and propose a solution based on this. Post-sales activities will also be key here. The customer should feel that they have their own caretaker who wants to provide them with the best possible service. After all, the company presumably wants returning and loyal customers. Not everything can be predicted, and sometimes something will not work, and a complaint will appear because something went wrong. Contrary to appearances, a customer complaint is not our enemy. On the contrary. There is no better moment to build a real, authentic relationship, gain trust, and gain a loyal customer who may even become a brand ambassador. Everything depends on the approach and level of service. The customer should receive as much information as possible about what stage their case is at, what will happen next, and when they can expect contact. The person handling the report should show empathy and understanding.

Storytelling and communicating values

Another element that connects with building customer relationships is storytelling and talking about values.

Luxury brands tell stories and invite you into their world. In this world, of course, the brand’s products await, but they are part of the story. It is worth noting here that one of the main trends cited by the KPMG report is the growing ecological awareness of consumers. ESG issues are becoming increasingly important to them. They also pay more and more attention to ecological, environmental, and social aspects. This shows that consumers want to enter this world, they just need the right invitation. A narrative about low price and technical parameters is not something that will build engagement and evoke emotions. Companies from the OZE industry can talk about the aesthetics of sustainable living and a better, cleaner future. The recipient must feel that they are participating in something bigger, in building the future. Products and services from the OZE area will often involve a one-time significant financial investment. Instead of playing on “funding” and discounts, it would be worth pointing out the real advantages of using a given solution in the long term. A potential customer will be more interested in what their children can get from it in a dozen or so years than in the fact that they will currently save a dozen or so percent. Instead of parameters and numbers, show a lifestyle. The entire communication can be built in this direction. The world is moving so fast that the “slow life” style, which allows one to stop and be here and now, is increasingly appreciated. This philosophy is in harmony with nature, so it can perfectly fit into the story told by OZE companies.

Marketing communication and brand message

Heading towards a premium brand, one should generally look at how the brand communicates and what its main message is. In the OZE industry, competitive advantage is often meant to be mass availability and low price. Slogans that can be found in promotional materials include “cheapest,” “fastest,” “with funding.” Luxury is not fast, and certainly not cheap. It focuses on quality, uniqueness, and precision, which is why it is not afraid to be time-consuming and more expensive than the competition. This is an element that cannot be ignored, as all price messages, especially those that emphasize low price, destroy the aura of uniqueness.

Another problem may be focusing on technical parameters from the very beginning. Undoubtedly, technical parameters can testify to high quality and real benefits, but they do not tell a story. It is an important element, but it should not constitute the first layer of communication. Luxury brands do not educate about parameters, they sell experiences, narratives, and lifestyle. Companies that sell, for example, luxury cars or yachts, first draw attention to how the customer will feel, what emotions a given investment will provide them with. Are parameters important here? Absolutely. But this topic appears only later. It appears when the recipient is emotionally ready for the purchase.

Aesthetics and visual layer

A luxury brand cares about aesthetics, visual layer, and all tangible points of contact with the customer. You only make a first impression once, and visually refined promotional materials, campaigns, and ultimately products certainly have an impact on how the brand is perceived. In practice, companies from the OZE industry focus so much on technical aspects (which are of course key) that they forget about design. Constructions can be unaesthetic, cables or cheaply looking mounting elements are noticeable. Luxury brands design even packaging to be a small work of art. Undeniably, aesthetically refined products will increase production costs and raise prices, but one cannot forget that consumers expect this and will be able to pay for higher quality and better visual finishing.

When discussing issues related to aesthetics, one cannot forget about collaborations with artists. Art branding is a tool that companies, including those from the OZE industry, are increasingly willing to use. Artists can be engaged to create limited product lines, installations, educational campaigns. One can also support an existing initiative. A good idea may also be to establish cooperation with architects and interior designers on “green residence” projects.

Coherent brand identity

Regardless of the aesthetic direction the brand decides on, a coherent brand identity will be key. In the premium and luxury sector, there is no place for chaotic logos, inconsistent typography, and random marketing slogans. Luxury brands build strong and coherent brand DNA, which they present on every level. Brand values cannot just be written on the wall. They must be felt in communication. Importantly, this applies not only to customers but also to employees. Luxury brands do everything to treat their employees as well as their customers. They have extensive diversity policies, ESG policies, training programs, and internships. It is the employees who have direct contact with the customer. They must believe in what they are selling for the product to be considered premium.

Challenges in implementing premiumization strategy

If an OZE company aspires to the premium world, it should definitely give up mass communication of low price, focus on high-level customer service, individualized approach, and emotional message. It should also stop treating energy-related issues only as products and start looking at it more broadly, as a lifestyle.

Everything in theory usually looks perfect, but implementing changes is not always as simple as it might seem. Before deciding on a complete change of strategy, it is worth considering what changes we can afford and whether we will be able to consistently implement everything. Premiumization is not about selective ad hoc activities. It must constitute a coherent strategy that will be realistic to implement. If we already have a defined product portfolio within which it will be difficult to introduce such changes, then perhaps it is worth considering creating an additional brand that will be a premium brand. Then it will be possible to build appropriate communication from the beginning without introducing a revolution in the company structures.

It should be remembered that a luxury and premium brand is not for everyone. Not everyone is looking for experiences and emotions, and not everyone will be able to pay a higher price. This is exactly how it should be. A luxury brand does not want to be for everyone. If it were, it would lose its shine by losing the element of exclusivity. So one has to ask oneself whether we are ready to stop being available to the masses. It must be a conscious and well-thought-out decision.

It is worth keeping in mind that premiumization will not always mean one-to-one mapping of luxury brand activities. Premiumization will be a consistent pursuit of higher quality, authenticity, and exceptional experience. Step by step, but coherently.

Sources:

KPMG Report: https://kpmg.com/pl/pl/home/insights/2024/12/rynek-dobr-luksusowych-w-polsce-edycja-xv.html