Advertise next to more expensive brands

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📝 Intro

Imagine you're the brand manager for an emerging clothing brand that you want to position at the premium end of the market. You’ve nailed the product, the story, the look. 

But building a premium brand takes time, especially when the category’s already dominated by established players with deep equity. Unless… you borrow some of it.

Science says where you place your ads can make you seem more prestigious and allow you to charge more premium prices.

P.S.: Learn more about where to place your ads, and how to design them for maximum results, using the Science-based Playbook of Ad Creatives.

Want hundreds more insights like these? Explore all Science Says insights here.

Proximity to high-status brands allows lower status brands to raise prices

Topics: Ads | Retail Store
For: B2C. Can be tested for B2B
Research date: November 2021
Universities: Cornell University, Yonsei University

📈 Recommendation

If you want to position your brand as more premium, try to place your products, ads, and shops next to more premium brands (e.g. in stores, billboards, and online marketplaces).

People will perceive your brand as more premium, allowing you to charge more. Only do this if your brand already has some brand equity, it won’t work if your brand is low-tier or very mass market.

🎓 Findings

• Mid-tier brands that advertise next to premium brands are perceived to have a higher status and can charge a higher price.

• As part of an analysis of ads in U.S. Vogue from 2000 to 2014 and an experiment, researchers found that:

  • Mid-tier brands were rated as 16% more prestigious when they advertised exclusively among luxury brands (vs shown alone or mixed with brands of different status)

  • Brands that advertised close to premium brands raised their prices by 6.9% on average in the following year. Mid-tier brands saw the strongest effect, with 12.3% higher prices

• The effect:

  • Weakens for a premium brand placing itself next to another premium brand

  • Disappears for weak brands and for those low in premiumness 

🧠 Why it works

• When we see brands together, we associate them with each other and think they are part of the same category (e.g. luxury).

• If we see a mid-tier brand next to a premium one, we consider the mid-tier brand more premium since they’re similar enough to be associated together.

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✋ Limitations

• The research only looked at the fashion industry, where visuals and status signals play a big role in people’s perceptions. The effect might be different in other industries (e.g. office supplies) where status is not as important.

• The study only looked at ad proximity, but did not consider how other elements like the ad copy and design, and how those might change people’s perceptions. For instance, a poor quality ad placed next to a premium brand might not have the same positive effect.

• While the research didn’t look at this, it’s likely that physically stocking products next to premium items would also yield a similar effect.

• It’s unclear how, or whether, being next to premium brands influenced purchase intentions or sales.

• While the research did find that brands raised their prices the year after placing their ads alongside those of larger brands, it’s unknown what impact that had on sales or revenue.

🏢 Companies using this

• Fashion and accessories brands often have pop-ups or temporary stores next to premium brands or in retail centers. For example, gold jewelry brand Lil Milan strategically has pop-ups in an iconic luxury department store (La Rinascente), where it appears next to stores of brands like Gucci and Bulgari.

• Online, brands often work with media to have their products and ads next to big brands. For instance, Vogue regularly has lists of top brands, placing established players like Chanel next to lesser known entrants. It’s unclear whether this is done strategically or just for exposure.

• Other B2C brands often work with retailers to participate in multi-brand packs alongside other more premium brands (e.g. Sephora’s “Sport Must Haves”  packs bundles premium brands like Sol de Janeiro with lower tier ones like Invisibobble or Respure).

• H&M collaborates with luxury fashion brands like Bulgari to create collections sold in their stores and ecommerce, in which luxury logos appear inside the shops.

Mid-tier brands like k-way and New Balance advertised on Vogue to appear next to well known luxury brands

⚡ Steps to implement

• If your brand is already well-known but you want to seem more premium, place your product and advertising alongside premium competitors. Avoid using this if your brand is unknown or very new. 

• Choose competing brands that align with your brand. For instance, don’t place your brand or product near a premium brand if you are positioning your brand as affordable.

• Place your ads, both offline and online next to premium competitors (e.g. in department stores or on the same marketplace).

• Consider sponsoring the same influencers and media outlets as your premium competitors to benefit from their premium halo.

🔍 Study type

Online experiment and market observation (analysis of U.S. Vogue magazine September issues from 2000 to 2014 for 190 fashion brands).

📖 Research

To be in Vogue: How mere proximity to high status neighbors affects aspirational pricing in  the U.S. fashion industry. Strategic Management Journal (November 2021)

🏫 Researchers

• Heeyon Kim, SC Johnson College of Business, Cornell University

• Bo Kyung Kim, Yonsei School of Business, Yonsei University

Remember: This is a scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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