BRAND PRICE WISE
BY JAGDEEP KAPOOR
In these competitive times, many brand marketeers resort to indiscriminate price-cutting which is neither good for the company nor for the brand nor for the market. A price cut, to my mind is like pressing of a nuclear button. It should be used only as a last resort only after all the other options have been exhausted. It cannot be used as the first resort as a reactionary way to counter competition. In fact one needs to be pricewise for the mutual benefit of both the consumer and the brand.
Recently there have been a number of instances where prices have been dropped even to the extent of 50% only to regret later. I am not advocating that you should overcharge the consumer. But what I am definitely suggesting is that don’t reduce prices only to reduce quality or compromise services such that ultimately the consumer is shortchanged. Infact a consumer buys benefits from a brand and not only price. If the consumers benefits are hampered, in the long run the brand would suffer and may even close down, thus depriving the consumer of enjoying the brand and benefiting from it. Therefore a sense of balance between benefits provided and price charged should be accomplished.
Consumers buy perceived value. The perception component is made up of intangibles which speak to the heart. The value component is made up of a balance between quality and price which builds up the tangible point and appeals to the mind. Both put together achieve a good balance of perceived value, which is what the consumer buys. Hence, it would be prudent for brand marketeers to develop ‘perceived value points’ rather than ‘price points’.
To be Brand Price Wise, I have laid down 9 elements of pricing which could be opted for different circumstances, which in to my opinion as to what could be appropriate. I call this Module the Samsika Brand Price Wise Module™. It is important for brand marketeers to understand that in the ultimate analysis the consumer looks for perceived value which would improve the quality of life of the consumer.
The first option is Dice Price. This is like gambling and not at all recommended by me. Infact this may be appropriate in some commodities but definitely not appropriate for brands. This kind of pricing is highly fluctuating and depends on demand and supply, always keeping the consumer on tenterhooks. Infact, if price goes up and down and you would compare it with an unsteady heart beat, it could cause a heart attack to the consumer and the brand.
The second option is Price Price. Here the brand marketeer is trying to sell prices rather than benefits and values. All along the brand marketeer is obsessed with price and price and thinks that the consumers are also obsessed with price. This is not true. The consumer wants perceived value and benefits. Yes, the consumer does appreciate the lowest price but along with it he does not want the lowest quality or lowest service. The lowest price cannot be a sustainable competitive edge and many brands which tried following that strategy have closed down and do not exist.
The third option is Nice Price. In the case of Nice Prize, affordability for different segments is different. Therefore Nice Price for different segments will be different.
The fourth option is Size Price. The best example is the shampoo sachets, which balances between size and price. For bulk packets there is an economy price. So at different sizes you can have different prices. But in the case of diamonds, it is the reverse. The larger the diamond, higher the price. So different industries will have to balance the price with the size.
The fifth option is Rise Price. In this case you plan in advance that over the next few years you will be increasing the price, phase by phase. You begin with Rs. 5 and then Rs.15 and so on. So as we grow for the next 3 years a plan is made.
The sixth option is Choice Price. Here you give a choice to the consumers. It means you can have segregated pricing or you can have consolidated prices For example – Hotel stay, either you pay only for your stay or you pay for stay and breakfast and dinner or you pay for 3 nights package all inclusive. This is what I call Choice Price. In simple terms, it is like buffet versus Ala Carte.
The seventh option is Thrice Price. This should be for the super supreme products. For example a valuable watch, you could be thrice priced for anyone else, but you have chosen to have the super premium product.
The eighth option is Vice Price. Vice is the opposite of virtue. Vice price means it is not good for the company and for the consumers. It means high price with low value. It is cheating.
The ninth option is Wise Price. Wise price is done on perceived value of the consumers and the benefit that the consumer gets not only based on the cost of the product. It means that there must be a win-win situation between the consumers and brand marketeers. Consumer must benefit and the company must profit.
Finally if you look at all the elements of pricing you can become Brand Price wise.
The author is Brand Guru Jagdeep Kapoor, Managing Director of the successful Samsika Marketing Consultancy
Pvt. Ltd. Tel: 022 28597700/7701
Copyright © 2007 All rights reserved with Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants Pvt. Ltd.
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