Two Cases of Price Hikes! How it matters?

Price changes in business are inevitable. However how the companies make their price hike without offending the customer is critical part of business approach which the article highlights

People resist change.

Acclaimed ace investor Warren Buffet once said, “You can determine the strength of a business over time by the amount of agony they go through in raising prices”.

Gradual and small changes may not be noticed by the consumers.

Being an ardent small data fan and marketing enthusiast, I observe these changes and how they impact consumer behavior and came across two interesting case of price hike a couple of months back – One product with monthly subscription (cable service provider which we will call Cable TV) and other a FMCG company with a staple bread as product (which we will call Tasty bread).

Cable TV increased the pack price of its services from Rs 350 to Rs 400 while Tasty bread increased its prices from Rs 35 to Rs 40. A price hike of exact 14.3% in both cases.

So how the two companies introduced the price hike in the market?

Cable TV never messaged about the price increase as shocker for many came at the time of recharge. They would have used other modes too like SMS.

On the other hand, Tasty bread while increasing the price offered a free pack of another product (worth Rs 10) with the bread. It continued for more than a fortnight and finally after it the freebie was withdrawn, while the new prices got established into the consumer mind.

We have seen multiple cases of price hike around us in various product categories be it increase in recharge packs, consumer durable or services. How the customer responded to the increase in product prices after online companies slashed their discounts is known.  

The customers’ response to price hikes will vary. It will depend on the nature of product, price point (low or high), frequency (purchase and usage cycle), nature of usage and need or criticality of product in the life of customer and the way product is consumed (personal or shared product).

While it may be critical for company top-line, the above factors need to be evaluated. With customer psychology of seeking pleasure and avoiding pain, the product manager needs to evaluate how the price hike will be taken by customer. Do customer have other competitive product or substitute to switch and what is the total cost of switch also need to be evaluated?

In the case of Cable TV, being in a gated community, the freedom to install our own satellite dish was prohibited. With limited choice what psychologist called the principle of autonomy and reactance got applied. Despite the agony of one-sided case of price increase the option was to stick to the service provider. While with Tasty bread, with multiple option available in the market and gradual process of conditioning with freebies, the price increase was accepted happily.

In both the price hike cases, the final decision was to stay with the price increase however it created a diverse affection for both brands, one positive and one negative.

The Marketing of Shame and Guilt

As the world goes digital, it has implication on two key human emotions: shame and guilt. The article highlights how a marketer use these key emotions to their advantage.

As the world goes more digital, communication will be more complicated - masked as well as harsh. Trolling has become a common phenomenon as people shamelessly put derogatory comments and views which are off-topic.

I foresee, shame which is a self-conscious emotion will wane as the rise of social media catapults us to be celebrity constantly seeking attention of people. Secondly the veil of technology prevents a face to face conversation which psychologically make us more provocative.

It is been observed that digital exposures are leading to what psychologist says is Narcissistic Personality Disorder (NPD). It is an abnormal behaviour which is characterized by exaggerated feelings of self-importance, excessive need for admiration, and a lack of empathy. Social media is adding fuel to the fire as society and individuals become more self-centred.

The change in behaviour may pose challenge for marketers who have successfully used two key emotions - shame and guilt to get a desired behaviour from customers.  

While both are internal feeling, guilt is more self-driven based on self-consciousness of having done something wrong while shame is more driven by society, peer and family. The key for you is to understand what is more relevant for your product or brand, guilt or shame.

One brand which I recall (I got in-depth insights on it while doing a MBA project with them) that used it very effectively for years is Krack foot cream which was from Paras Pharmaceuticals stable (now owned by ReckittBenckiser). The brand pushes and encashed on sense of shame (not guilt) with its punchline “Shakkal se maharani aur paron se naukrani” (translates to face like a queen but feet like a maid). Amitabh Bachchan starrer Swachh Bharat ad campaign on open defecation used guilt as emotions apart from humility.

Various categories especially those which are related to personal product such as toothpaste, deodorant, shampoo etc use both guilt and shame effectively. Services targeting individuals as diet plans and fitness promoting gym use it often. Off-beat categories are also using guilt and shame together. A recent case is for a cockroach spray brand Hit where family is being asked to introspect on the reason for illness (cockroach) at home rather than blaming family doctors.

As mentioned the context of guilt and shame will change with increasing self-centredness, consumerism, personalisation and digitalisation. Thus, you as a marketer need to quickly grasp below pointers to effectively market these emotions:

• Humour is good for brands looking for recall, but to drive action use guilt or shame (It’s another equivalent in digital world is that humour is good for CPM but if you want CTR use shame or guilt)
• Digital media with its reach and personalisation will make your task more complex. Deeply understand the use case for your brand or product and see what degree of shame or guilt in your communication will drive the behaviour rather than anger or humiliation.
• It will take time to master it as overuse of the emotion may turn against your brand while lower side of it may dilute your message.
• The communication and tone should not cross the limit which make message look like public shaming or bullying, especially if your brand pages in social forums of media such as Facebook, twitter etc.

For your feedback and suggestions, do write to me at sunilsinghrana@yahoo.com

Team Management: The First Principle

In Hindu epic Ramayana, lord Rama wanted his army to cross over ocean to go to Lanka. He worshipped Varuna, the lord of ocean to give them the way. It didn’t work as Varuna was not pleased. Rama became furious, lifted his bow and aimed at sea with his divine weapons with powers enough to dry up the ocean. Then Varuna appeared and told lord Rama that his act will destroy the sea-life and its ecosystem. He told Rama, that a vaanara (monkey) in his army with name Nala (who was son of Vishwakarma, the architects of gods) has expertise to build the bridge. Finally, with the help of Nala, the fabled Ram-Setu (bridge) was build.

The above snippet from Ramayana seems a known story. Shift to the corporate world.

Can you recall, a classic interview question (even if it’s is not asked we are ready for it with answers) - What are your key strengths?

Times fly, candidate is part of our team, do we still remember his background, skills and strengths?

What about your subordinates in an organization who you get as legacy once you join it.

Remember…. you are not Lord Rama!

So, the first principle of team management - It is critical to know your team and their strengths first to get the best out of them. 

In case you got team in your new assignment, take your time, ask your human resources department  to give their resume and have an informal discussion with them to know them better.

As with mundane work-life later you may not even remember that you have Nala in your team….

Is Discounted Pricing only your arsenal?

It was my first major role change in the initial days of my career with telecom company (Fascel Limited, later Vodafone) where I was given the responsibilities for tariffing (pricing) in marketing. From that stint, I have explored and got deep understanding of the power of one of the P’s of marketing mix (which formed basics for any marketing course). 

In the new age digital business, pricing is used effectively and sometimes (very) loosely by companies. Growth hackers look to experiment with it (pricing) to mop up new subscribers. Seasoned marketers use it to retain and win loyalty. Dynamic pricing is used to push customer decisions.

Pricing is not a mere mathematical equation derived from cost plus profit equation. It should never be looked in isolation as it has lot of reference to the human psychology. As saying goes “you can't judge a book by its cover” but for products, large part of judgement is made from pricing only.

Let’s take a case of well-funded ePharmacy startups space as it has suddenly become hyperactive with above-the-line and below-the-line campaigns by players like Medlife, Netmeds, Pharmeasy and 1mg. The space is crowded one and has other marginal and regional players which vie for their share-of-pie.

But is discounted pricing the only tool available to attract?

Though the discounted pricing attracts the eye-ball share, the decision element hierarchy is three-layered as below as per me:

As expected by a marketer, a first-time customer gets attracted to discounted pricing leading to trial. Post-trial as customer experiences the product, she may still go for multiple (digital) brands and then based on her experience with them, the decision hierarchy may interchange between convenience and brand.

But what happens when your neighbourhood store or retail chain say Medplus offer you same discount (which actually happened as last week they unleashed the 20% off campaign across all stores)?

Convenience takes over the brand as the most important decision factor (discounted pricing) has been marginalized or vanished. The customer psychology research says, “familiarity drives attraction”. Despite building a digital brand, customer drift to offline may happen.

Google Bain Consulting and Omidyar Network study says 50 million online shoppers dropped out in India especially in tier-II and lower cities due to poor internet and lack of content in vernacular language. However, this also calls for case to understand the drop-in metros and urban areas. Was discounting only driver of business?

Pricing can be used as an ammunition to drive and mop up more uses, unless your conviction level puts a case where post the cool-off period of pricing war, you will be one of the survivors.

We have a classic case of Jio in telecom industry which mopped up huge customer base effectively with pricing. However, the growth for Jio is not only by driving trial but by constantly thriving to enhance the customer experience too.  But do remember people also use multiple telecom service providers, Is that the case in your industry too?

Learning: Use of discounted pricing strategy calls for understanding the business landscape of your industry and your business objective, driving-factors for customer and a strong retention plans to take the customer journey forward.  Based on your objective such as to clear inventory or drive trial, discounted pricing can be taken as short-term strategy or it can be used as long term too if you want your brand to be a price warrior. Choice is your…

Time is Money...But Yours' only?

“Time is money”, a proverb which we hear often. If it’s true then all individuals on earth are equal as each one of us get 24 hours per day, however the value of those 24 hours will be different for everyone. Take case where an article around two year ago calculated Bill Gates earning at $ 0.9 million per hour. I often come across people who find “Time management” as their biggest challenge.

A one-liner gag is doing round on social media which have deep implications. It says, Time is precious, do not waste it, unless it is “others” and not “yours” – Issued in public interest by leading social media and messaging apps.

The proverb and the sarcasm in the gag point towards a fact that while most people plan their schedules, but usually they (schedules) are ruined by “others”.  With power distance in country like India, it is common for superiors to barge into schedule of others with unplanned meetings, discussions and con-calls. However one need to remember that if time is money then while doing  rounds of unplanned meeting and discussion with their subordinates they are actually sharing their wealth (time) with others, which has higher worth based on their earning potential per day.  It is equally applicable to peers and colleagues who find several occasions and opportunities to eat up other time.

​So, while we plan our activities to manage “our time”, we also need to be sensitive while seeking “time” from others….

Playing to win, How Strategy really works

Playing to Win, How Strategy Really Works by A G Lafley and Roger Martin

Harvard Business Publishing

You talk of mass market FMCG products in India, probably Unilever (formerly Hindustan Lever Limited) will come in your mind. But when you add quality to this mass market segment, no one can beat an organization like P&G particularly in markets such as US and China. The addition of Gillette have made the brand portfolio of P&G even stronger.

Strategy per se is one of the often most misused concept in business context. Every action plan as trivial as market visit can be put into words such as Lets have strategy for tomorrow’s market visit… However, while  everyone talks of the B-word, there are few organization capable of cultivating a strategic thinking and building culture. While traditional strategy implementation starts at top and get diffused at bottom, the story of P&G and its winning framework have been captured in a very lucid manner.

The simple framework of defining winning aspirations, where to play, How to win, Building core capabilities and management systems is defined with a strategic logic flow which is crucial in the current context where the challenge lies in putting different pieces together. The framework is explained in detail in context of P&G brands. Though the framework talks of basics such as understanding the customer and channels, building core capabilities – differentiation or cost leadership, managing systems, brand building and category development, in practical business scenario it is a humongous task and require discipline, skills, knowledge and investment.

From a respected legendary business leader A G Lafley along with the expertise of Roger Martin, the book reflects the thoughts of Peter Drucker as pivotal and makes it a must read for every student of strategy.

Best regards

Sunil Singh Rana

एक कोशिश तो बनती है!

जब जीवन की शाम ढल कर, तुझे रुकने को मजबूर करती है

तब आशा की एक किरण जलकर तुझसे यह कहती है

तुझ में भी जीवन बाकी है और एक कोशिश तो बनती है।

 

सरहद के पार रहनेवाले, हर शक्स ग़ैर नही होता है

उस पार भी उम्मीदें बस्ती है उस पार भी सपने रहते है

उस ग़ैर को भी गर अपनालें बस एक कोशिश तो बनती है।

 

हर बार लड़ा फिर भी हारा, तुझमें क्या उत्साह खलता है

संघर्ष तो फिर भी जारी रख, हर रात का चाँद भी ढलता है

अपने कर्मों का फल चखने की एक कोशिश तो बनती है।

 

अपने भी संग छोड़ चले और सफर तेरा अधूरा है

हर राह भी एकदम निर्जन हो और पथ पर घनघोर अंधेरा है

अपनी परछाईं को संग लेकर चलनेकी एक कोशिश तो बनती है।

 

तु कमज़ोर नही, तु सक्षम है, तेरा भी कुछ हक बनता है

तेरे भी कुछ अरमान है जिनको जीने का सपना है

उन सपनो को साकार करे चल एक कोशिश तो बनती है।

 

- सुनील सिंह राणा