India has always been a price sensitive market. People succumb to price falls. Most of the customer’s are price conscious rather than brand conscious. This is not to say that customers in India are not brand conscious at all but significant portion of India is still price sensitive.
In today’s marketplace, competition is being fought on price grounds. One company reduces price of its brand and others follow the suit. This is how brands are caught in vicious price reduction spiral. This very logic goes against the concept of brands which are known to earn premiums.
So the big question which remains is how to make brands less susceptible to price reduction, if not impervious? I have been thinking over this issue for quiet a while now.
I think marketers have been playing this "price factor" at a very high pitch. They need to play it down. Otherwise customers will get used to it and will expect your brand to bring down its price. Any price increase may lead to rejection of your brand as your brand is seen as ‘discounted brand’. In such a situation it becomes difficult to bring the brand out of price ceiling and also becomes difficult to maintain its leadership (if your brand is leader).
Therefore marketers should consider creating an "emotional cushion" around your brand. Airtel is the one of the best examples one can give. It enjoys brand leadership in its respective category. Airtel has been least affected by price reductions. None of ads that they air, contains any price element. Ads are aired with an intention of creating "strong brand preference" which in turn will generate sales.
"TVS Gold" keyboards brand is the second example of a brand which has fought price wars with its "quality" feature. TVS gold still commands a premium price where you can get two keyboards with the price of TVS Gold keyboard. TVS Gold enjoys strong brand preference. Brand has never given way to price reduction thanks to its consistent quality.
In the end, I would like to say that price reductions are not bad if they are done with a strategic intent. Price reductions can work in short run but in long run brands are bound to loose.
In today’s marketplace, competition is being fought on price grounds. One company reduces price of its brand and others follow the suit. This is how brands are caught in vicious price reduction spiral. This very logic goes against the concept of brands which are known to earn premiums.
So the big question which remains is how to make brands less susceptible to price reduction, if not impervious? I have been thinking over this issue for quiet a while now.
I think marketers have been playing this "price factor" at a very high pitch. They need to play it down. Otherwise customers will get used to it and will expect your brand to bring down its price. Any price increase may lead to rejection of your brand as your brand is seen as ‘discounted brand’. In such a situation it becomes difficult to bring the brand out of price ceiling and also becomes difficult to maintain its leadership (if your brand is leader).
Therefore marketers should consider creating an "emotional cushion" around your brand. Airtel is the one of the best examples one can give. It enjoys brand leadership in its respective category. Airtel has been least affected by price reductions. None of ads that they air, contains any price element. Ads are aired with an intention of creating "strong brand preference" which in turn will generate sales.
"TVS Gold" keyboards brand is the second example of a brand which has fought price wars with its "quality" feature. TVS gold still commands a premium price where you can get two keyboards with the price of TVS Gold keyboard. TVS Gold enjoys strong brand preference. Brand has never given way to price reduction thanks to its consistent quality.
In the end, I would like to say that price reductions are not bad if they are done with a strategic intent. Price reductions can work in short run but in long run brands are bound to loose.