Strategic Marketing invites your participation.
I am a regular reader of Strategic Marketing. Of late, I have observed a surprising trend in the market place.
A 300 ml bottle of Pepsi that was available in the market @ Rs. 10 for the last few years is now available in the market at a chilling price of Rs. 6. Last month, a 500 gm packet of TIDE was available at Rs. 43 in the market, but now the same is available at Rs. 23 only.
And this is the case with few other products. What’s going on in the marketplace? Are these companies taking the concept of “Corporate Social Responsibility” so seriously that they are ready to compromise upon their profits? Not really. After cold drinks, detergents and toothpastes, the next round of price-cuts is in the Shampoo market. HLL is offering a bottle free on every purchase of Clinic Plus and Sunsilk. Let’s see why this might be happening:
In these days of extreme competition, marketers are finding new ways to outshine their competitors. The ability of a marketer to add new features to his product has a limit and when this limit matures, then the only option left with the marketer to compete on price. For example, TOPS, a famous regional brand in pickles & Tomato Sauce is competing with Nestle [Maggi] and Heinz purely on the basis of price.
If the entry-level price of your product/service is not reasonable, then you risk losing the entire population, which belongs to the bottom of the pyramid (BOP). Therefore, marketers are ensuring that the entry-level price of their products is within the reach of all income groups.
Focus on BOTTOM-TO-ALL STRATEGY [BTA]: BTA means your product’s price is targeting the BOP, but your product is catering to the needs of all the income groups. For example, Reliance India Mobile at an entry level price of Rs. 500
Another reason behind price-cuts is the marketer’s focus on increasing the market-share instead of profits and revenues. A little compromise on your profits can help you get a major chunk of market share. HLL, in order to maintain its market-share, announced the price reduction to the tune of 43 per cent on its detergent brands. HLL’s margins will squeeze in the short-term, as the impact of the price-cuts are felt on the bottom line. In order to tackle this price-led competition, HLL is trying to exploit its research-skills to reduce its costs.
From Marketer’s point of view, price-cuts in the case of few brands would result in cannibalization of other brands in the same category. It would also give stiff competition to the regional brands that compete on price advantage.
However, the customer is benefiting from these marketing moves and anything that helps customers ultimately helps the marketers. Hopefully, we will see many more renowned brands cutting their prices in future. Happy Buying!

Varun Mishra
Senior Executive [Service Development]
Drishtee Dotcom Ltd.
Noida-20101