Why don’t more of us enter high-end businesses?
“Bottom of the pyramid” is all the rage these days. To make money in emerging economies, you have to find a mass-market product, says the conventional wisdom.
M-Pesa, Equity Bank, Senator beer – these are all great examples of bold innovations that captured the bottom end of the market in unprecedented ways. We take great pride in the fact that these path-breakers emerged from Kenya and the rest of the world sat up and took notice. These businesses have great social significance in addition to generating large profits.
But there is another part of the business spectrum that receives scant attention in this part of the world, and I want to focus the attention of some of you on it this Sunday.
Imagine a business where you don’t have to engage in mass-marketing – the product sells itself through self-propagated word-of-mouth. A business where a high price is not a problem – it’s a prerequisite. A business with such brand power that competitors find it very hard to breach your walls. A business in which margins can be astonishingly large.
I have just described the successful high-end, premium-brand business. Is there a local high-end market? There certainly is. Have you seen the queues going to the newly expanded Junction mall during the weekend peaks? Have you observed top Kenyans’ propensity for foreign travel? Have you seen the allure this land holds on rich foreigners? Have you studied the money-is-no-object segment?
Across all sectors, there is a viable high-end market. But there are precious few Kenyan businesses rushing in to fill it. Now some of you may think you’re a premium business, but in most cases that is a delusion. Mid-market is not premium. And I can think of only a handful of Kenyan top-end brands that have sustained their excellence.
That is because it is a particularly difficult business to get started. The clientele is picky, and always has other options. You are often up against extremely well-established brands. Business volumes can be painfully thin until you get visible and established. There is no easy way to scale up, or crank up the marketing effort.
Once you establish yourself in a luxury-brand business, however, the rest of the ride can be pure gravy. So here are some tips for the brave-hearts who might want to give it a go.
First and foremost, your product has to be of the highest quality. Your benchmarks cannot be Kenyan brands in this segment – your well-travelled customer base will compare you against the best in the world. Good enough is just not good enough in premium products – you have to produce something amazing. Whatever your offering – aliment, advice, artifact – it had better be unique. Artistry and flair is needed.
Second, the customer experience you create needs to be equally world-beating. Luxury-end customers do not tolerate surly attendants, missed deadlines, slapdash service, uncouth encounters. You have to create an ambience of polished sophistication around your product, and you have to employ the best people to deliver the customer experience.
Premium products are not for faint hearts and casual minds. They demand a combination of genuine passion and high standards. That is why so many don’t make the grade. Of course, mass-market businesses also demand those things. But premium business is art first, business second.
So are you cut out for the high-end market? Do you have enormous passion for your product, whatever it is? Are your personal standards high enough? Can you design a unique product, and make it visible to the target market? Can you deliver a flawless customer experience?
Then go for it. You’ll have to be patient, but the ultimate rewards may be unmatched.
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