The greatest strategists claim that in ten years’ time, only two types of companies will exist, aside from those catering to the luxury market. Those positioned in the low cost market, and those positioned in the premium one. Those businesses positioned in the mid-range will probably be gone, leaving only two choices. Go towards low cost, but that requires substantial financial resources since large volumes need to be reached in order to compensate for low margins. Or, move towards premium where price is no longer the purchasing customer’s deciding factor, as the value he perceives of the good or service takes center stage. But what is a premium brand in today’s context? And how can AI help companies to go permium? I have found that three main criteria come into play:
AI Helps with Hyper-Personalisation
The “tailor-made” or ultra-personalization. This is a good or service that matches the customer’s specific needs, and is therefore unique, literally incomparable. That’s the way the Schmitt Groupe went from being an outsider to becoming an interior design market leader. Without AI and automation, tailoring is too expensive and the company finds itself locked into a niche market.
One to One Customer Service
Exceptional one-to-one service ensures that the customer experience doesn’t include any product or service imperfection. Without the ability of AI to reason and write individualized communications, the cost of customer service explodes and profitability falters.
AI Can Help Companies Make Their Products Easy for the Buyer to Buy
The product or service is so easy to buy that the customer has no doubt it suits his needs. This is the most important concept: Instead of making offers that are easy to sell, make offers that are easy for the customer to buy. This is what Steve Jobs did with his iPhone. There are few option choices, an intuitive user interface, and no need to read any documentation to use an iPhone. That is how he eclipsed his competitor BlackBerry at the time, even though their device was technically more powerful. This is also Jeff Bezos’ driving rhetoric. In 2020, he is the richest man in the world, who went from rags to riches over 26 years.
Adopting a premium pricing strategy requires making choices. At Schmidt Groupe, they created a separate brand (Cuisinella) to keep a foot in the low-cost market.
I find the democratization of the premium market thanks to artificial intelligence fascinating, and develop this strategic point in my lectures and in my latest book, “The Rise of the Cobot”, available on Amazon.