Consider all P’s of Marketing Product, Price, Place & Promotion. Which do you think is most important? I think pricing is the most important and all other P’s revolve around it. Today consumers give more importance to pricing. Pricing is a direct result of competition. This low cost or low price idea is to target consumers at the bottom of pyramid.
“Most dramatic consumer changes in the recent past has occurred not because of new tech or a service idea, but as a result of pricing innovations” says, Mr. Harish Bhat COO, Titan Industries. Pricing innovation has helped companies to bring new product or re-establish their brand. Innovation in Pricing has many times led to great business success. Consider Low cost carriers. South West Airlines first started it and other competitors then followed it. The idea is just to provide no-frills, charge even for a bottle of water and offer low cost. Consumers liked this idea and many shifted from other modes to air travel.
Low cost housing in India is another example. After introduction of TATA Nano (low cost family car) their next target is to provide low cost housing in costliest suburbs of Mumbai. TATA Housing Development Co. (unlisted company of TATA group) will invest up to 1 billion rupees in a 1,200-unit township at Boisar, in the outskirts of Mumbai, and will sell apartments at prices ranging between 390,000 rupees and 670,000 rupees. The company will hold a lottery to allot flats and will sell application forms at 200 rupees each.
Reliance Life Insurance is planning to come out with Unit Linked Insurance Plan with premium as little as Rs. 50/month. It is mainly targeted to people in rural market and the urban population who mainly live on daily wages. Not only this company also guarantees returns to them initially. Consider the Cola-wars they lately boiled down to pricing after much of advertising war. Buy any cola for Rs. 5/- from retailer. This not only gave opportunity to consumers to buy at low cost but also helped brands to attract new customer. Anyone would spent 5 Rs. to try cola.
Most famous and hot pricing war is seen in our mobile industry today. Earlier the demand for mobile telephony was too low. Once the free incoming was introduced this changed the way the people communicated, a subscriber growth zoomed. A sudden shift from land lines to cell phones. This pricing innovation perhaps single-handedly liberated the telecom sector in India from its initial sluggishness. It gave consumers complete control of their telephony expenses.
In the same industry, introduction of “per second” pricing has changed the face of industry. Telecom companies added millions of subscriber in a months time. A new numbering plan was required because India’s mobile subscriber base has grown at a faster pace than expected. In 2003, DoT had come out with a 30-year numbering plan, but five years down the line there’s a need for review. This time, DoT wants to ensure that the solution is for a much longer term. Mobile telephony has been witnessing tremendous growth. All this is a direct result of Pricing Innovations.
Thus Power of Pricing Innovation led us to 11 Digits…. Just add 9 to your existing number come January 2010…
