Marketing Queries

Soumya: How does a brand increase its price and yet manage to retain its customers in the market when it really would not be able to add more value for the price it charges? Like for example, what I am asking is since the prices of all commodities are on a rise, how does the company increase the product price and yet manage to maintain its consumer? Also I just wanted to also get it clarified, isn’t a price sensitive customers value perceptions driven primarily by price? Isn’t the definition of value also based on price? Like good quality at affordable prices?

Ray: If a brand is forced to raise prices due to increases in input (read, commodity) prices, surely the customer wouldn’t be too happy about the same. But remember, this price rise, one, may be seen as a justified act by the customer, and two, there would be an all round price rise amongst all brands that category.

But I have another recommendation based on the concept of ‘Just Noticeable Difference’. I would recommend brands alter those stimuli, whose changes aren't easily noticed by consumers. Because they fall within the JND. Like for example, weight. So I would say, if the biscuit company’s forced to raise prices as the price of flour has rocketed, I would recommend they keep the Retail price intact, but drop on the weight of the pack. Of course, again, remember no decision isolated. It has its fallouts. For example, a drop in weight may require package sizes to be altered. That costs money. So the relative benefits have to be kept in mind while taking the decision to drop weight. Plus, factor in consumer perceptions about the company’s move. If consumers were to notice the weight drop, would they take too kindly to that? Or would they even perceive it as unethical?

Oh Yes, price plays an important part in value perceptions. A low price may even get you the first buy. But post the first buy, remember, consumers have a hold on reality. And then the landscape alters. Value perceptions now will be driven by factors such as performance. For example, the low price may get me to buy the shirt. But if I see that its color runs, the next time around I wouldn’t touch it with a bargepole despite the low price.

Deepesh: In such a scenario, where Jet has no control over the happenings, what could Jet have done in these couple of days in order to ensure that their customers do not face any inconvenience? Could they have collaborated with other airlines and transfer their passengers to them at the same fare?

As mentioned earlier customers have short term memory, they would forget this incident and in an industry like aviation, customers are loyal only to the prices offered and not to any airline per say. What could have Jet done in such a situation?

Ray: Yes, Jet should have helped their flyers find suitable alternatives. If there would be a fare rise that their customers suffered, due to a competitor’s higher priced ticket, Jet should make up for it by discounting the affected passenger’s flight in the future.

Notice, now that the Jet strike is over, they have gone on a discounted offer on flights till Friday forcing others to follow suit. My recommendation would be to ensure all their affected passengers are compensated by discounts in the future.

Deeptaman: I have a question and that is a bit different from the context you wrote about; but it revolves around individualism and teamwork. This happens especially in the corporate world - Why is it that praises come for the entire team and failures are blamed on the individual?

Ray: Note the saying, ‘Success has many fathers but failure is an orphan’

([1942 G. Ciano Diary 9 Sept. (1946) II. 196] La vittoria trova cento padri, e nessuno vuole riconoscere l'insuccesso. Victory has a hundred fathers, and no one acknowledges a failure).

There are many claimants to success because inherently it’s part of a need hierarchy that’s deeply embedded within us. Winning brings with it acknowledgement and recognition from others. That’s fulfilling our need for esteem. Are most people starved for esteem from the outside world? You bet. Should it then be surprising to see many clamoring for ‘praises’? Or is it again surprising if management passes the praise around to a team knowing well that it’s a tool they can wield to motivate?

Failure is unacceptable to most, not because of failure per se, but for its fallouts. Failure brings it with judgments. Judgments of incompetence. Now, who’s a willing taker to such judgments? Almost none. In fact such judgments drop you like a stone on any social or organizational hierarchy. You’re seen as a loser. How nice is that?

For more on success and failure and its effects on us, watch what Alian De Botton has to say, here.

Fareed: I am very keen to research on any field of marketing but I am facing some difficulty in choosing a topic for the research. Can you please help me to choose a very confined and to the point research topic?

Ray: I can help you find one, though in the end it must be a topic YOU zero in on.

The world of Marketing is fascinating. The entities and acts that make up this world are all subjects of research. For example, are consumers an entity you can study? Yes. Can you study an act like Supply Chain which is a critical function within marketing? Again, you can.

So first and foremost, you must figure out your areas of interest. It could be Consumer Behaviour, it could Marketing Communication or CRM, and so on. It could even be Industry specific. One you know what you’re interested in, you should immerse yourself into that 'specific world' by reading about it from secondary sources and mulling over issues that pertain to it. For example take consumer Behaviour and Pricing. That latest Jet strike fiasco throws up ample opportunities for research. For example, you can research on whether consumer loyalty, in the first place, exists in price sensitive markets. If it does, you can research on what parameters drive this loyalty. What causes consumers to switch? You can map switching patterns among price sensitive consumers within specific time periods. You may even do this study within the Aviation Industry.

The scope for research in Marketing is enormous. All it requires is for you to zero in on your interest, immerse yourself into that world, and mull over what you come across. Voila, you will conjure up topics that are specific, that you can then research. And your research results would contribute to enhancing our understanding of the world of Marketing.

Maybe, I will even take it to my classrooms for further discussions.
:)

Comments

nikhil said…
as consumer always judge price and value by comparing it with competitor's price.
so i think when competitor increase price due to increase in input cost at that time you can get away by increasing your price.
and of course j.n.d and weight reduction are best methods.
nikhil said…
jet should give discount only to those passenger who suffered during strike.
because customer always compare prices even with people who bought the same product or service.


I think that customer dissonance is very high for customer who booked one day before as compare to customer who booked 15 days before at half price.
sure, opportunity cost is there but so much increase is not justified.

airlines are losing premium customer due to this dissonance who are ready to pay higher prices. though this is a research topic but my gut feel says it is correct.
sir, what's your opinion on this?
Sir, Thank you for your detailed explanation.

The wait was indeed worth it.

Most appreciate your efforts :)

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