Anand Halve, is an alumnus of the Indian Institute of Management, Ahmedabad , and is one of the founder-members of chlorophyll brand & communications consultancy, Mumbai. He has extensive experience in advertising and in research for advertising, having worked in Research and Account Management at major advertising agencies including Lintas, Rediffusion and Enterprise, before chlorophyll.

He has presented research papers on Communication topics at MRSI (Marketing Research Society of India) Seminars and is a regular visiting faculty at MICA (Mudra Institute of Communications, Ahmedabad), and IIMA (Indian Institute of Management, Ahmedabad).

THE PRICE IS RIGHT (OR IS IT?) A closer look at the perils of misusing the pricing variable in the marketing mix.

All of us, in recent times, have grown used to seeing an enormous number of promotional offers, price-offs, freebies, 'festive discounts', 'Anniversary sales' and what have you.

Here are a few I picked out today, February 26, 2003 as I sat down to write this Viewpoint piece.



"A 1.5 litre bottle of Coca Cola FREE with an order of Rs. 300 or more on food"

"10% to 40% off on books at www.bestsellers.indiatimes.com"

"FREE tickets to 'Catch me if you can' at Sterling cinema, Mumbai, to be won with purchases at Planet M"

"3 Nusrat Fateh Ali Khan CDs at Rs. 428, down from Rs. 450 at www. Music.indiatimes.com"

FREE Goa holiday (4 days, 3 nights), with a Maruti WagonR"

"FREE Gold Credit Card from HSBC with Housing loans from HSBC"

"FREE Credit Card from HDFC Bank if you transfer your credit balance to the HDFC Bank Credit Card"

"Assured Indipop Cassettes, and a chance to win a holiday in Singapore, Bangkok or Kuala Lumpur, when you sign up for the BillPay Service of Times Online Money"

Nothing unusual you might say.

What if I told you that all these promotional ad messages have been taken from the single issue of The Times of India (with the Bombay Times) of today?

To my mind there is something very peculiar going on, something to which we should be paying careful attention.

Of course, several explanations can be readily offered for this cacophony of promo ads which I just described.

"The fierce competition in many categories leaves brand managers with no option"; you might hear someone explain.

Or, "In this period of demand slowdown, how else do you stimulate the market?"

Or even, "It's this new system of quarterly results that's to blame - you just have to use promotions and discounts to make the numbers"

All of which may be valid to some extent, but they seem to avoid taking a deeper look at the whole issue of pricing. I have a suspicion that too many marketers see pricing in a simplistic, linear relationship with quality, as shown in the chart below.

No wonder the average consumer walks into a shop and asks, "Arre Bhai, aaj-kal kya schemes chal rahi hain bataiye"

2. Limiting brand extensions

Another consequence of such thinking is that brands are not able to stretch far. Witness the difficulty a Maruti has competing in the premium, luxury category in cars. Or the inability of an Akai to climb out of it's low-price slot. Or the numerous hitherto high-priced brands being forced to cut price to grow.

These are the unavoidable results of pursuing a left-brained, linear price-quality view of brands and competition, which misses out on the intangible values that take a commodity and shape a Brand.

In such a case, brands have to eliminate price differences to compete. In the opposite direction, lies brand strength, where people pay the top-dollar for different brands.

Let me take the example of some 'brands' of musicians to illustrate the point. Say, we consider Kishori Amonkar and Abida Parveen and Celine Dion.

Each can sell tickets at their own price, and more importantly, the organisers of the Kishori Amonkar show don't have to drop the price from say Rs. 1000 to Rs. 600 to draw the buyers who were going to the Abida Parveen concert. Because the concert goer does not ask, "Arre Bhai, aaj kaunse concert mein free popcorn mil raha hai" !

She sees enough value in the uniqueness offered by Kishori Amonkar or Abida Parveen, to pay for it. Just as she sees enough commonalties in commodities to ask, why she should pay a difference.

Because the fact is that Lalitaji was too caught up with the 'tol mol' to complete the story. Which is that, "Achhi cheez aur achhi cheez mein bhi farq hota hai"

But creating the uniqunessess isn't easy - just ask Kishori Amonkar or Abida Parveen how much riyaaz it takes!

But who's complaining? The ad agency releasing the stuff is happy to get the billing; the effort required is minimal ("just make the 'FREE' bigger"), and best of all, the client thinks it's effective!

And of course there are all the other logical reasons; like "The fierce competition…" or, "In this period of demand slowdown…", well, you get the idea.