There was a CEO of a large FMCG comapany making a statement that "Indians are willing to pay extra if the product offers value. It is not the price that impacts the decision of consumer in today's world"
Minutes later came one more interview with yet another CEO of a retail chain. He went on saying " the success of his retail stores is in discounts and offers that it offers. "Indian consumer is very price conscious"
Within ten minutes I heard two CEOs who head very large companies saying completely contradictory statements, both backed by their logic and experience.
Are they contradicting... yes but still both of them seem to be correct.
Any organisation builds it's strategy based on market research and logic. Powerful theories supported by huge data base are made and presented to the boards.
Let us see if whether Indian consumer is price conscious or value conscious.. (from my subhiksha retail experience)
Godrej sells Rs 10 per packet hair dye, whereas Garnier sells Rs 100 pack. Godrej has it's own market and Garnier too.
People spend good amount of money when they buy formal shoes. But seldom they spend on socks. Most of the indians buy cheaper socks and costly shoes.
Most consumers buy shampoo sachets in bulk rather than buying a bottle. But don't bother about money when they buy over priced detergent powder.
People become value conscious when choosing an LCD tv but become price conscious the next moment when they buy a voltage stabilizer for the same.
I feel that we can not categorize customers as value conscious or price conscious. A customer can be value conscious as well as price conscious in different occasions. One can also see the behavior of customer becoming more price conscious during month ends.
The point that I would like to make is, while companies try to analyze different theories before they formulate a strategy it is more important to spend more time on which strategy suits, than which strategy is correct.
Even Garnier can enter the Rs 10 sachet market and still can capture market share that is dominated by Godrej. But the company needs to ask itself whether the change in the strategy can be implemented profitably. In other words every company has it's own strengths. If the new strategy or the new segment that the company is evaluating is going to further strengthen the same then it can go ahead.
As small car and mid sized segments are growing, even Mercedec Benz also can view entering this budget segment and can be profitable too. But the Benz DNA is different. It would give more returns for the company if it spends more time and money on it's strength and innovate.
EVALUATE THE STRATEGY BUT KEEP AN EYE ON THE DNA OF THE COMPANY BEFORE YOU TAKE A DECISION.
A cricketer can play foot ball too if he puts effort. But the question is "is it worth doing that"
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