Is there a difference between luxury and premium brands?

Arguably, both luxury and premium are two of the most overused words in the marketing landscape. When you can have luxury and premium cars and watches, right down to luxury and premium biscuits, the words cease to have quite the impact that aspirational marketers might hope—and may mean even less to consumers.

However, part of the issue around these terms may be that the words themselves are misunderstood and used interchangeably. What exactly is the difference between the two concepts?

Premium, it seems, comes with a reference point—as it’s rooted in a sector and a category with values relative based on price points and features. So you can easily navigate and understand why one television is better than another television. There is a rational element to products that might be considered premium. Often, manufacturers will make a range of products to help navigate this—from entry level to high end.

But when you get to luxury, rationality goes out the window and it’s about emotion. All bets are off. Price is irrelevant. Luxury is a purely emotional concept. A Mercedez or a BMW could easily be argued to be a premium car. There are engineering advantages that mean you could, in some way, make a rational argument for owning one.

But no one could make the same argument for a Ferrari, a Rolls Royce or a Bentley. These are objects of beauty and lust. Absolutely, the engineering of these brands is beyond top quality. But it’s also beyond what could rationally be argued as necessary, even by the most discerning driver (or at this level, maybe chauffeur). The cars are desired for the messages they convey, for the image they create and for the romance they’ve probably evoked for you since you were a small kid obsessed with fast cars.

Food is an interesting category—and one in which luxury is always the preferred term, rather than premium. Why? Because food is very emotional—we eat because we’re hungry, or because we’re feeling a certain way. There’s comfort in a chocolate Digestive, but a packet of Choco Liebniz or a giant squishy cookie from Marks & Spencer is an indulgent, luxury purchase.

Luxury brands do tend to share some common traits: a memorable founder with a great story; an uncompromising attitude to design and creation, etc. Champagne, cars, watch brands, all generally have a fantastic heritage and luxury. But then so does Ben and Jerry’s, and Marks & Spencer.

Apple is a great example of a company that understands the luxury/premium puzzle. You can justify an iPhone over some of its cheaper competitors. Yes, it’s a premium product, but for some, the service you get with the product and engineering behind it mean that it’s justifiable. However, when it comes to shiny gold Apple Watches—there’s no logical premium argument you can make. It’s a luxury purchase, pure and simple.

At the other end of the spectrum, when things become commodities, their provenance and story and background are irrelevant.

However, at the end of the day, the person who really decides what works as a luxury or a premium product is the consumer. For some consumers, ice cream of any type is a luxury purchase, a treat. For avid fans of ice cream, only the finest will do. Ultimately, if you want to position yourself as a luxury or premium brand, it will be your consumers who decide if you really warrant the label.

About the Author

Chris Lumsden_expert profile

Chris Lumsden is the Co-founder and managing partner at Good. He founded the agency along with business partner Keith, in 2004. As managing partner, Chris works with Keith on the running, development and growth of Good.

During his career, Chris has worked on brands as diverse as Coca Cola, Harper Collins and BT. Prior to founding Good, Chris worked with Keith at 999 Design Consultants, and prior to that, was at BD Network and Swordfish London.

Today Good is one of the UK’s most effective design consultancies, with client experience on brands including Bacardi, Ford, Scottish Power, Angostura, Land Securities and more.