Dear CMO:

Your perspective changes once you’re acclimated yourself to a new experience, doesn’t it? Much like the study of wealth, happiness, or online banking, we quickly become accustomed to “magic” very quickly and then are instantly bored with it. Lottery winners aren’t happier than low income earners any more than a late adopter with a 300 baud acoustic modem finds his connection to be slow, lacking the experience of a high speed line.

This phenomenon may have cultural or anthropological roots; it certainly resonates with most schools of Western thought. Thucydides describes the Athenian ethos in a similar fashion in The History of the Peloponnesian Wars, thusly:

“Of them alone it may be said that they possess a thing almost as soon as they have begun to desire it, so quickly with them does action follow upon decision.”

This concept hit me between the eyes the other day while waiting for an old friend to arrive at a locally famous coffee shop. It quickly became clear that Coffee Cat in Scotts Valley was the home away from home for students, business people, and locals of all types. I ordered a cappuccino and what I got can only be described as a hot, thick, coffee-flavored milkshake in a 16 ounce beer glass. I said, to no one in particular (but clearly channeling the off-line spectral presences of both Ted Mininni and John Moore), “… I never got this at Starbucks…”

Starbucks makes great coffee. Sure, sure, Peets is wonderful, Starbucks isn’t what they used to be, etc., etc. This isn’t the point. What struck me was that the old “coffee house” of yesterday has survived by leapfrogging Starbucks with a super-premium product and experience. Starbucks, as a result, is repositioned in the market as a mid-market — or dare I say, grande – brand.

As a Large is no longer a Large, Premium is no longer Premium. Once we’ve experienced it, our expectations instantly recalibrate to bigger, better, faster… venti, even.

Once we all acknowledge that the center of gravity in an industry has moved upwards and a brand new high end brand position has been created, this becomes our benchmark. In short, it becomes normal. And the insight for me is that the emergence of this new normal means there is room for a new “super-premium” to emerge. This is only possible because there is a former “premium” – now “normal” – to which the new “super-premium” can compare itself.

This new designation doesn’t throw any dirt on “the brands formerly known as premium” as these are often financially the most successful. Bringing luxury to the masses and redefining the experience in a market segment unused to an elevated experience is a pretty good strategic direction. Starbucks, iTunes/iPod, Target, Coldstone, Whole Foods, Sam Adams, Chipotle, Virgin Megastores, Jet Blue (in good weather, at least) and a host of others fit this description to one degree or another today – brands that have emerged from low involvement to “premium”, without the presence of a “super-premium” high end player.

(We need to contrast this to brands in the middle ground, often positioned as “entry level luxury”. Think of Movado in watches or Lexus/Infinity in the luxury sedan space, neither of which qualify in our example given the presence of well-entrenched super-premium players of long standing.)

So what categories have recently upgraded from mundane to premium and are ripe for explosive new high end entries? How would you super-charge the buying and consuming of music and movies with super-premium brands? What about organic food? What about the ultimate commodity experience, gasoline?


Copyright © 2007 Stephen Denny