A chance discussion with my dad last week got me thinking. We were taking a stroll and having a conversation. Though it was early evening, the humidity was still high and we were feeling worn out within minutes. So I suggested we have tender coconut. When the vendor told me it would be 25 Rs/- I nonchalantly paid the price for two and walked up to my dad and offered him. When my dad heard the price I had paid – he was quite livid. “25 Rs/- for a tender coconut? We are not asking for a whole tree” he said characteristically. And I tried to calm him down saying “Appa, it is only 25 Rs/-“.
This however got me thinking. Paying 25 rupees for a tender coconut in South India is definitely not low price. But in today’s circumstances 25 Rs is a low ticket price for many of us. It is very important to understand there is a huge difference between the two. And our failure to understand the difference and the connect between the terms value, cost and price often allows us to be irrational consumers
You will understand this when you see yourself:
- Pick things off the supermarket shelf which you know internally you may never use only because it has a low price attraction.
- Constantly get attracted to goods which you know are of low quality, telling yourself even if it works ½ its promised lifetime, you have a deal for yourself
- Reaching out for a bundled sales, knowing the add-on is not of much use to you but you still go ahead only because you can have much more features paying just a little more – features that you will never use.
- Pick up larger quantities that create issues in storing, preserving and subsequently using – only because the larger volume comes with a comparatively lower price than a smaller volume which makes it look premium
- Pick up in your every week shopping smaller quantities of consumables only because they have low ticket price, which if you had brought a larger volume for the month you could have saved more (just the opposite of the previous)
Low Ticket Price is not necessarily the lowest price at which the goods can be priced.
The pricing strategists play on our irrationality, our notions and perceptions to create packages and pricing that are luring. I am not blaming them. That’s what they are for!
But before you gloat over your next low priced deal, you may want to just stop and think if this is really the best buy for the money you are paying?
It is often said that good and bad are inseparable! And also too much of Good is often Bad. I experienced this through a rather mundane occurrence today – which made me think: in our enthusiasm to run our business are we running it over?
I called the popular Just Dial service and requested for a service provider’s information. Interestingly before I put the phone down, I had a call on my mobile asking if I wanted some help – from another company who is into similar servicing. By the time I told them that I have already asked someone for the service, there was another provider calling me on my landline. This “call attack” continued for about 15 minutes! At some points it resembled a comedy paradox with me glued to the telephone.
Just Dial is a very helpful service, which I have used number of times. It is especially useful for local search queries and for getting a general list of providers for common services. When Just Dial started sending a bunch of numbers as an SMS to our mobile number so that we can reach out to alternate providers, I was appreciative of this value add. But today Just Dial has started forwarding our numbers to providers for a fee. There seems to be now, a good number of people who get our numbers and names. While it seems like a logical extension to servicing and also a good revenue stream for JustDial – for me as an user it is a cause of irritation (due to the ambush by so many agencies) and concern (privacy). If this continues (and it looks like it will) many people will have to think twice before calling Just Dial – considering the fact that we will be flooded with calls from vendors almost instantaneously.
While Just Dial may have thought of the value add (for organizations who enlist with them), they seemed to have missed the impact on the user (people who make the enquiries). Additionally with stiff competition for local search coming from data based on-demand search services from the likes of Yahoo! And Google, this consumer irritation / concern could hurt Just Dial, if not addressed in time.
This experience is a page out of the Just Dial approach towards business – but do we also make such decisions? Are we thinking enough on our customer acquisition and retention strategies? Does our organizational strategy think long enough on sustainability and repercussion of our choices? On whose perception are we basing the value of our initiative?
A few days back I was booking myself tickets for return to Chennai. As always I opened makemytrip.com and looked up options. Amongst the suitable options were three: Jetlite, SpiceJet, Kingfisher. All three almost offering almost the same rates! No not really – there was one exception!
Kingfisher had a figure 2000/- next to the price! While I wondered and looked up more closely if I had missed a large discount – I was startled at the offer. The message said that if the flight was cancelled, they would give back 2000/- in addition to the cost of the ticket. It was supposed to be an assurance that the flight would take-off and the 2000/- was their way of luring the passengers .The alternative to this was a paltry Rs 100/- off on SpiceJet’s flight.
My immediate reaction was to reach for the bigger value offer (!!!) Kingfisher – as my mind was weighing what my eyes were seeing: Rs 2000 Vs Rs 100. But then rationality did take over. What would it mean to book on Kingfisher? It meant I will benefit additionally if the flight does not take-off, but I pay the full price for it to take-off. But why will I not want the flight to take-off? My very essence of booking the ticket is with the belief that the flight will take-off on time and land safely.
So I booked SpiceJet, received the Rs 100/ rupees discount on the ticket and also watched the Kingfisher flight take-off with some people losing 2000/- notionally!
Isn’t this similar to so many attractive ‘cash back’ schemes – return the product if you are not happy – we will pay you the money back. Is that a rational argument to make someone buy? Why would I invest money to buy a product with the feeling that if it fails I will be financially compensated / rewarded? Except in some special cases where an absolutely new product whose use / need is not realized (that too as a test case) such schemes will help and sound rational. But in most other cases – it makes no meaning! Either we have lost our perception of value or the companies have started truly compromising on values to lure customers.
As consumers what do we look for – performance guarantee or failure compensation promises?
Are we so irrational towards value or are we being taken for a ride?
Book : Full Steam Ahead! Authors: Ken Blanchard and Jesse Stoner
There is so much spoken and written about ‘vision’ for a business. It is almost as-if a war would break out (intellectually) about what the words ‘vision’ and ‘mission’ mean and which is bigger?
This little book titled “Full Steam Ahead” is actually a book about ‘vision’ – I never thought it would be when I looked at the title. But once I started reading it, I realized that this is another little gem that Ken Blanchard and team have given us. There is a philosophical bent to the ideas presented apart from the absolutely logical build-up of the concepts. This combination along with the slight emotional connect through story-telling that the authors have achieved, has made the book un-put-down-able! You will not be able to stop once you start, till you race to the end. In fact I wouldn’t be surprised even if this beats some of the real blockbuster movies hands-down in storyline!
If not anything else, the price of the book is more than worth for just the following pages: Purpose (39), Values (63), Picture of the Future (78), Vision (80), Test of a compelling vision (82) and For Vision to become Reality (120). These six pages captures in essence the message of the book. But reading just these pages is not a substitute to reading the book!
According to the authors, vision is made up of three components (Purpose, Values and a Picture of the Future) and putting these together and implementing it in the present is what makes the difference! I strongly recommend this little book to every person even if they are just toying with the idea of creating a meaningful life – while for every entrepreneur it should be mandatory reading!