What comes to your mind when you hear the word ‘cheap’? Is the word negative? Do you think it would appeal to the poor? If no human would like to be branded as being cheap, do you think a ‘cheap’ brand would be successful in the market? Why not ride with me as we delve into this important issue in brand strategy.
Touted as the world’s cheapest car, Nano was launched into the Indian automobile market in 2009. Tata had launched the Nano in 2009 and sought to conquer the car market as the company aimed to cater for the middle class’ dream of owning a ‘cheap’ car. In fact, a research firm reported in 2009 that the low cost of the car will make it affordable to an additional 14 million families, including a section of the 58 million two-wheeler owners.
However, the performance of the model has been terribly underwhelming over the years. Nano sales plummeted about 27 percent in 2012-2013 and now the company largely depends on the sales of luxury brands Jaguar and Land Rover. This compares with the initial estimates that the car will enhance the car market by 65 percent. The company has unsuccessfully tried many times to change the image of the Nano by adding new features.
In as much as it is an over statement to say that several factors are responsible for a brand success in the market, it is not to say that ‘cheap’ brands are likely to hit the rock if strategic steps are not taken. In other words, why factors such as quality, branding, good distribution system and promotion play significant roles in brand’s success, price inevitably plays more than a significant role in either shooting a brand into the sky or abysmally hauling it down.
One of the reasons why a cheap product is likely to flop is that reduced-price- advertising tactic kills surprise and emotion. Countless research has shown that people buy on emotion. In fact, a brand expert once claimed that making a purchase decision is a right-brained, emotional exercise. Price based ads are about numbers and require left-brained thinking. Little wonder, brands that have successfully appealed to the emotions of its target are up there.
In the same vein, how the potential customers perceive a product is very important. Many brands have failed to realize that brand conscious consumers will pay for a nicely designed packaged product because of the sense of quality and status it conveys. For example, how much more do we pay for brand names in over-the-counter drugs?
Most of us know it’s the same stuff in the other sachet but we’ll pay extra for the brand name. My grandma once requested for a sachet of Paracetamol brand. She insisted despite my letting her know that the brand like other analgesic contains Paracetamol. She’s used to the nice packaging and shape of the brand. To her, the brand must be a quality one and she’s ready to pay more to get it.
Another reason why a cheap brand is likely to miscarry is that low price implies low quality. Consumers are quick to connect the cost of a brand to the value they place on it. Consumer judgment of the quality may change based on other factors, but the actual cost is indeed an important factor in influencing the perception of quality.
In my opinion, the G-Wagon brand of Mercedes is ugly, overpriced, but it’s perceived by many as a high-quality automobile. In other words, it’s almost impossible to separate the value of a product from the actual cost in our minds. We immediately assume that the lowest-priced item is of least quality, and that the most expensive is of the best quality.
Worst yet, cheap doesn’t feel good. This reminds me of my undergraduate days when I would clandestinely go to the popular ‘Kantagora Market’ at Abule-Egba side of Lagos, Nigeria where extremely cheap clothing materials were sold. I couldn’t just withstand the shame to be caught by a fellow student who might have been seeing the ‘big boy’ on campus now picking fairly used shirts and trousers at the market for the ‘poor’.
In other words, my status was sure to plunge if they knew where I was picking my stuffs from. I knew I shouldn’t be seen in that kind of market had it been I was cash-loaded. In a poverty stricken nation like ours, the poor aspires to be rich. No poor man would want to buy ‘poor’ product. In fact, tell a poor man that you have a cheap product for him and watch his reaction.
Besides the automobile’s case earlier cited, you would agree with me that even in Nigeria, people don’t want a ‘Chinko’ phone, which their neighbours can see. There’s a prestige thing about buying a phone. Most Nigerians would save their last kobo to buy expensive phones. I’ve seen people who could barely afford three-square meals using Apple’s products. In other words, cheap products may not necessitate purchase from the poor.
It’s high time our brand managers knew that low-price strategy isn’t about the product’s intrinsic value. It’s merely a desperate attempt to lower people’s level of disgust. ‘Cheap’ has a deleterious effect on brand. In fact, advertising at a lower price turns off loyal customers. To crown it all, lowering prices signals a lack of confidence.
Having said all these, it is vital to say that positioning is the key to selling a product. Positioning helps create an image for a product or brand or even company. A key strategic tool in this regard is pricing. If you’ve assiduously developed a right product, that’s rightly distributed with an appropriate promotional strategy but gets your pricing wrong, only good luck will come to your rescue. And if your product seems to be for every Dick, Tom and Harry, why not say it’s affordable rather than ‘cheap’.