The most common myth is that high price keeps customers away from your product. It is compellingly logical, and so backed up by economists that most consider it as an absolute truth. And the sales people are almost blind believers in this' "only if we could lower our price, we could sell a ton of our stuff."
Really? If the price really mattered so much; how come …
If you do not understand your customer, or if you do not know how to create value for your customers, or if you do not know how to differentiate yourself from your competitors - in short, if you are bankrupt of marketing ideas - and if have no ideas who is your customer and how she buys your product - then yes - price is the only way you can sell!
Really? If the price really mattered so much; how come …
- You are not wearing the cheapest shirt, trouser, shoes you could find?
- Everyone is not buying generic drugs ?
- People are watching more cable and satellite channels and not doordarshan ?
- People are paying for the front seats in a stadium ?
- People are buying BOSE audio?
- Nano car is having difficulty in selling
- Cafe Coffee Days still sells a lot of coffee?
If you do not understand your customer, or if you do not know how to create value for your customers, or if you do not know how to differentiate yourself from your competitors - in short, if you are bankrupt of marketing ideas - and if have no ideas who is your customer and how she buys your product - then yes - price is the only way you can sell!
4 comments:
Dear Sir,
I could not agree more with you on this matter. Pricing should certainly be the last differentiating factor between competitors in a healthy and growing economy.
But in an economy driven more by poor form of reverse engineering and less by innovation, R & D and scant respect for intellectual property pricing is the only way out.
To put it very straight and simple words, Nano, in any other developed economy would have been a huge hit and an iconic best seller by now almost on the lines of apple iphone. But this was not so in India. The very reason for this is that TATA Motors as I have come to know as a brand relies more on its customer feed backs and less on perfecting the product in the first go. So every time you have a product from the TATA stables, it is ridden with flaws and later on we have improvised versions where the flaws are ironed out.
The onus on Innovations and R&D is very less. And the government measures and policies have done very little to encourage this.
Manu Raj WROTE
Dear Prof. Palekar,
You started the year with a big bang!
I enjoyed your short and very powerful article. Sir, most people believe that to gain competitive advantage they need more R&D and newer products. I don’t deny the merit in that direction.
But they often fail to recognize the massive opportunity to create a Decisive Competitive Edge in a very short time through a quantum improvement Due Date Performance, Lead time reduction, by eliminating shortages at the point of sale etc.
Some of my clients have been able to actually increase their prices significantly by becoming very reliable on due date performance and crashing lead time by 30-50% in comparison to competitors. And they did it without having to increase their operating expenses. Imagine the impact on their bottom line.
You are so right – price matters only when there is nothing else to compare! Thank you.
Regards,
Manu Raj,
Managing Consultant, bottomline matter
Mr.Palekar,I DO NOT agree with your blog. First of all,your first opening listing to show that why people are not bothered with price is wrong.One, watching Doordershan vs other channels has got nothing to do with Price,
Secondly,you have not supported your points with any statistics, Can U tell us the number of people buying cheaper shoes vs number buying Expensive shoes?
All points listed by you are un supported.
Now tell me if you have watched the number of people crowding the BIG BAZAAR on the day they advertise"SUB SAY SASTA DIN"? Or Why are the retail outlets like Reliance,Spencer or Easyday are putting in full page ads blowing up "the Cheapest Prices" According to your theory no one would be visiting their shops because of cheap prices. Look at their Sales on the days they put in these full page ads.
Mr.Palekar Price does matter,not only in India,or Bharat ,even in USA<. Why have the marketing companies like Cadburu.P&G Levers etc have brought in smaller packs costing Rs,5??
Because Price does matter.for more number of people than those who don't care.
Jatinder, I never said the price does not matter. All that I am saying is that "it really does not matter that much". The point being that you cannot compete for long on price but you can compete for a long time by going up the value and asking for higher price. Hope this answers.
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