I entered into a heated discussion with my friend a while back on a seemingly silly topic. We were discussing whether it's actually worth one's money to pay a huge premium for something that is available somewhere else at a lower price (much lower). Can a brand command an insane premium for things starting from movie tickets to clothes?I realized later that we were discussing or rather arguing about the wrong essence of the topic. You can say that we were trying to kill a fly with a hand grenade.
A product's price (at a premium) is not a company's call alone. The customer has an equally responsible role. If a majority of my customers are willing to pay me insane margins and think that it's their money's worth, then why not charge them such a margin. It's an individual's perspective that decides whether he sees a Rs 2000 shirt as "expensive" or as "value for money".
So yes, I accept that probably the approach to the discussion was incorrect, but the conclusion was worth the heat.
There is a saying in finance:
"A company will charge a premium 'cause it knows that the consumer will pay it"
How just it is on the company's part to charge an insane premium? That's a controversial question...I leave that for you to answer...
6 comments:
thats amazing story.
Thanks...
A customers decision to opt for a policy dependends on his ability and decision to pay a particular premium. All The best
thats true saahil..but the metropolitan youngster has ample money to impress his girlfriend...thats the major premium for him which supercedes the premium price.
It depends on the financial abilities of an individual and his yearn for a particular brand that makes him purchase a brand. If a brand appeals to the consumer, then he/she will buy it. whether it is expensive or value for money is the sole call of the buyer.
If I am the company and if you are the consumer and you need my product badly, I will make you pay through the nose. If you dont want to pay I am going to charge less. The ability of the comoany to charge deoends mostly on its ability to bring out extra ordinary products which will make the consumer shell out money and still be happy. (Off the record I will support the 'new joinee' in this argument.)
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