How can a brand that focuses on low prices gain premium space through brand upgrading?

In recent years, with the development of mobile Internet , the richness of consumer brands and categories has increased unprecedentedly. The pressure from brands and KPI assessment indicators force them to think about how to strengthen their brand's position in the minds of consumers. Under such circumstances, "brand upgrading" has become a way for many brands to solve the problem.
Looking around, almost all brands are upgrading their brands. The most direct benefit of brand upgrading is that it brings higher premium ability to the brand. This has also led to a strange phenomenon, that is, as long as the product/brand is upgraded, it will reappear with a higher average order value.

A few days ago, I passed by a Taiwanese hot pot restaurant called "Xiabu Xiabu" which attracted consumers with its single-person meals and low prices. This small hot pot brand was once very popular in Beijing, Shanghai and other regions. But this time when I passed by, I found that the store was much quieter. The menu has become much richer, and the average customer spending has also increased. The original price of the small hotpot was 50 yuan per person, but it suddenly increased to 130 yuan per person.

For Xiabu Xiabu, the menu is richer, the hot pot elements are more diverse, and a takeaway service that keeps pace with the times is provided. The products have indeed been upgraded, and the average customer spending has doubled as a result of the upgrade, but it has lowered the brand's position in the minds of consumers.

This made me sigh and think:
If a brand initially attracted consumers with low prices, how should it upgrade its brand so as to both retain the minds of consumers and improve its premium ability?

Demand is the basis of all brand upgrades

Whether it is a brand or a product in its birth stage, it is inseparable from the consideration of one issue, that is, demand. The birth of all brands and products is based on meeting consumer needs. Similarly, the first step in brand upgrading is to consider needs. Any brand upgrade that is not needed is a fake upgrade.

Only brand upgrades based on consumer demand can add points to the brand, strengthen its image and increase its premium in the competitive market.
There are many kinds of consumer demands, and low price is just one of them. If it is a product upgrade for low-price demand, it means that the brand should upgrade the product in the form of a combination of demand.
Product upgrades should not be a one-sided attempt to satisfy some needs, but should be a combination of focusing on brand effects and delivering a combination of responses to consumer needs.

Taking Xiabu Xiabu as an example, I offer the following solution:

Step One: Top Ten Requirements Determine Upgrade Dimensions

On the first day of the 14-day change plan, Li Jiaoshou introduced the top ten consumer demand templates. Any product that can occupy the minds of consumers for a period of time is because the product meets a certain need of the user.
In the process of brand upgrading, the brand must first determine what the dimensions of the upgrade are and from which demand angles the upgrade can be carried out based on demand.

Through the list of 10 major needs, we can actually summarize the dimensions of brand upgrading that Xiabu Xiabu can consider:

1. Upgrading the consumption environment to meet consumers’ process experience and high-end needs;

2. The flexibility of dishes and the diversity of seasonings meet consumers' needs for novelty and customization;

3. Increase the supply of mild drinks such as heat-reducing drinks in the store to meet consumers' needs for performance and risk reduction;

4. Enrich takeaway business and convenient hot pot business to meet consumers' needs for portability and accessibility

4. Comprehensively enhance the brand image, and reach the needs of consumers’ ideal selves by offering the following: Even if one person eats alone, it does not have to be perfunctory.

Step Two: Self-check requirements and upgrade combination

Li Jiaoshou said that a product can meet many needs. Most of the needs do exist, but they are not suitable for advertising. You have to find the need that can be used for advertising.

Similarly, you need to find the brand upgrade demand (combination) that consumers will pay for from various demands.

Before that, let’s review why the brand upgrade of Xiabu Xiabu, which is now in a slump, failed to meet the needs of consumers:
The consumer portrait of this type of original Xiabu Xiabu consumers should be as follows:

A group of people who like to eat hotpot may be alone today and cannot eat a big pot of hotpot. It may also be because the average customer spending at Xiabu Xiabu is lower, so it is more cost-effective to eat with friends, so they choose Xiabu Xiabu.

1. Are we doing what they desire?
[This is a group of people who like to eat hot pot. They need a rich variety of dishes and a variety of hot pot flavors.]

2. What choices did the consumer have before purchasing my product? What dissatisfaction did he have?
[Before Xiabu Xiabu upgraded, as a former consumer, my biggest dissatisfactions were: the taste was not authentic enough, the seasoning was not rich enough, and the environment was not good enough. However, because the average customer spending was low, these dissatisfactions could be curbed.]

3. When a consumer becomes dissatisfied, is he/she willing to make changes to address such dissatisfaction?
[When consumers encounter the above dissatisfaction, if they are willing to give up the low price demand and are willing to pay more, they will make changes and choose a big pot hot pot restaurant with good service, good taste and good environment (now many big pot hot pot restaurants also offer single-person dining services)]

4. When a consumer intends to make changes to address such dissatisfaction, are you his first choice?
[As described above, if consumers are willing to make changes to address their dissatisfaction, the upgraded Xiabu Xiabu with a high average order value will not be their first choice.]

5. Do consumers face huge risks when purchasing your products?
[Xiabu Xiabu used to have a high cost-performance ratio, but when the average customer spending increases and the product performance does not improve, consuming Xiabu Xiabu becomes risky]

6. When consumers really choose your product, have you made the best use of your strengths and avoided your weaknesses?
[Xiabu Xiabu's biggest attraction to consumers was its low price and single-person meals. Now that it has given up on low prices, it is actually giving up on the brand's biggest selling point and failing to maximize its strengths and minimize its weaknesses.]

Through the six questions of self-examination of needs, we can actually see that the upgraded Xiabu Xiabu has only done one thing: in the process of brand upgrading, it gave up its original advantages and made consumers give up their original default choice.

For consumers, their default choice is the low-priced Xiabu Xiabu. Product upgrades must first ensure that the original low-priced products remain low-priced products. On this basis, we will upgrade the areas where consumers are dissatisfied:

For example, solving the problem of crowded and noisy consumption environment and providing a more comfortable and better consumption environment;

Such as improving the richness, flexibility and novelty of dishes and seasonings;

For example, we can increase the variety of drinks, add mild and heat-reducing teas and milk drinks, etc.

Maintaining low prices and improving performance is a more reasonable and effective brand upgrade combination for Xiabu Xiabu. In this process, the brand's premium ability is not reflected in selling the original low-priced products at a high price, but in allowing the performance-improved part to generate premium ability.

Minimal consumer behavior change is the criterion for all brand upgrades

Let’s take Xiabu Xiabu as an example and then think about it in the context of a larger consumer market:

How can a brand that attracts consumers with low prices upgrade its brand and generate a premium?

My answer is: to take the smallest change in consumer behavior as the most core criterion, and to meet consumer needs as the only goal of brand upgrading. Only when consumers’ needs are met can the brand’s position in consumers’ minds be guaranteed, and only then can the brand have a chance to survive in the long run and have the opportunity to negotiate a premium.

For brands that enter the market by satisfying consumer demand at low prices, maintaining the original low prices is in line with the principle of minimal change in consumer behavior.
When it comes to brand upgrades, the categories that can be upgraded are far more than just price, and it must not be just price. Maintain the original low price of the low-priced parts, ensure the advantages of the original brand, and ensure that consumers' original consumption behavior is not affected. However, there can be many categories and directions for brand upgrading, and there are many needs for brand upgrading. What we need to do is to improve the brand's premium ability by upgrading other dimensions.

Take Xiaomi as an example. Xiaomi initially entered the market with low-priced mobile phones. All along, the Xiaomi brand has been building a product positioning: high cost performance and low price.
As Xiaomi's ecological chain gradually improves, consumers have already tacitly regarded other products in the Xiaomi ecological chain: bracelets, electric fans, televisions and other daily necessities, as representatives of high cost performance.
Nowadays, even if there are other products with lower prices than Xiaomi in consumer choices, most consumers still prefer Xiaomi's products, thinking that Xiaomi is a high-performance, low-priced, high-quality product. In fact, Xiaomi did not disappoint most consumers, and its brand has captured consumers' minds more and more firmly.

In fact, this is a brand with low price demand, and it is the best example of how brand upgrading can generate premium.

For a brand to generate a premium, it does not necessarily have to generate a premium on the original low-priced product. The categories of brand upgrading are by no means limited to the upgrade and transformation of existing products.
The process of brand upgrading is the process of expanding the dimensions of products and making products cater to and embrace more consumer needs. Keeping low prices as the brand's selling point and competitiveness, and fully upgrading other dimensions to embrace other unmet consumer demands, this is the effective and longer-term way to upgrade the premium of low-price demand brands.