Americans are delightfully simple. If they are convinced about a concept or a line of thinking, they’ll say, “I’ll buy that!”
The language of commerce - a willingness to pay - being the definitive proof of acceptance!
However, for some time now, marketers have been in denial about this fundamental axiom.
“Give it away free” has been a popular business model backed by VC, PE and other acronymous sources, staring at teenaged geeks bursting with pimples and ideas.
The notion being that someone else (read advertisers) would pay for a product being consumed by others.
The media succeeded for several decades. In the process, they have created a monster.A consumer who now expects purchases to be subsidized.
This ‘freeloading’ attitude is why people get their knickers in a knot when asked to pay more, whether it is to watch the antics of pre-pubescent brides or post-pubescent cricketers.
The expectation from subsidies however, grows rapidly. Once fertilizer is subsidized, one expects the seeds to be subsidized. And power… and diesel… you get it.
"The price I pay is my acknowledgement of value"
‘Price’ should be the agreement on value between buyer and seller, but consumers now expect some ‘invisible benefactor’ to pick up the tab.
Consider email. What’s the worth of the email you say you love? Rs. 15 / day? (one bottle of drinking water?)Rs. 20 / week? (one McDonald’s Happy Menu meal?) Rs. 300 /month? (one home delivered pizza?)
I’ve asked dozens of people and almost no one is ready to pay anything at all for web-based services. They’d rather switch to another free service.
How many unpaid Limewire downloads do you have? Do we ever wonder who pays when we take off into the Skype, so to say?Would you limit the number of results delivered if you were charged ‘per result’ for search?
Undifferentiation via borrowed glory
However, the potentially fatal threat to branding is the number of marketers who seem to accept that ‘price’ itself is a gaseous notion, uncoupled from perceptions of value delivered.
Because it’s not just consumers who are freeloaders. So too, are marketers.
PC manufacturers allowed themselves to become undifferentiated when they cheerfully backed Windows and gleefully embraced ‘Intel Inside’, as Intel picked up part of the advertising tab.
Result? Most PCs became little more than boxes with ‘Wintel’ inside.
Non-stick cookware brands buried their differences under ‘Teflon’, when most brands started making Teflon their main claim to fame.
Commodities pretending to be brands?
Supposedly, one of the key metrics of brand equity is, "the premium a brand commands"
So how come Coca Cola, long revered by Interbrand, if not Indian consumers, can’t command any price premium over its competitors?
Conversely, one of the most critical pieces of evidence that Harley-Davidson is a great brand, is the fact that people are willing to pay a lot more for it than for a ‘common motorcycle’.
Your conviction that the Gucci name has great cachet shows when you pay hundreds of times more for it than for a handbag on Linking Road.
A product that only sells at a price identical to that of its substitute products, used to be called a ‘commodity’.
But maybe I’m just old fashioned.
“Me-too… but I have a bigger advertising budget”.
Does the world really need more ‘ayurvedic shampoos’? Or whatever.
But marketers of even completely me-too products seem to feel that with a celebrity any brand can get differentiated. So every Sunny Deol flexing his equipment in a Lux Cozi, competes with a Sunjay Dutt parading his pectorals in a Rupa!
Similarly, while the already-almost-forgotten Olympic boxer puts on his gloves for one insurance company, Tendulkar bats another. Do people really follow sport stars into a bank?
How many of us rushed out to get a BSNL connection after watching Deepika Padukone’s bizarre imitation of a classical dancer on a Kerala house-boat?
Aah, but marketers seem to buy the story.
Anand Halve is the co-founder of Chlorophyll. He can be contacted at email@example.com