Two Cases of Price Hikes! How it matters?

Price changes in business are inevitable. However how the companies make their price hike without offending the customer is critical part of business approach which the article highlights

People resist change.

Acclaimed ace investor Warren Buffet once said, “You can determine the strength of a business over time by the amount of agony they go through in raising prices”.

Gradual and small changes may not be noticed by the consumers.

Being an ardent small data fan and marketing enthusiast, I observe these changes and how they impact consumer behavior and came across two interesting case of price hike a couple of months back – One product with monthly subscription (cable service provider which we will call Cable TV) and other a FMCG company with a staple bread as product (which we will call Tasty bread).

Cable TV increased the pack price of its services from Rs 350 to Rs 400 while Tasty bread increased its prices from Rs 35 to Rs 40. A price hike of exact 14.3% in both cases.

So how the two companies introduced the price hike in the market?

Cable TV never messaged about the price increase as shocker for many came at the time of recharge. They would have used other modes too like SMS.

On the other hand, Tasty bread while increasing the price offered a free pack of another product (worth Rs 10) with the bread. It continued for more than a fortnight and finally after it the freebie was withdrawn, while the new prices got established into the consumer mind.

We have seen multiple cases of price hike around us in various product categories be it increase in recharge packs, consumer durable or services. How the customer responded to the increase in product prices after online companies slashed their discounts is known.  

The customers’ response to price hikes will vary. It will depend on the nature of product, price point (low or high), frequency (purchase and usage cycle), nature of usage and need or criticality of product in the life of customer and the way product is consumed (personal or shared product).

While it may be critical for company top-line, the above factors need to be evaluated. With customer psychology of seeking pleasure and avoiding pain, the product manager needs to evaluate how the price hike will be taken by customer. Do customer have other competitive product or substitute to switch and what is the total cost of switch also need to be evaluated?

In the case of Cable TV, being in a gated community, the freedom to install our own satellite dish was prohibited. With limited choice what psychologist called the principle of autonomy and reactance got applied. Despite the agony of one-sided case of price increase the option was to stick to the service provider. While with Tasty bread, with multiple option available in the market and gradual process of conditioning with freebies, the price increase was accepted happily.

In both the price hike cases, the final decision was to stay with the price increase however it created a diverse affection for both brands, one positive and one negative.

The Marketing of Shame and Guilt

As the world goes digital, it has implication on two key human emotions: shame and guilt. The article highlights how a marketer use these key emotions to their advantage.

As the world goes more digital, communication will be more complicated - masked as well as harsh. Trolling has become a common phenomenon as people shamelessly put derogatory comments and views which are off-topic.

I foresee, shame which is a self-conscious emotion will wane as the rise of social media catapults us to be celebrity constantly seeking attention of people. Secondly the veil of technology prevents a face to face conversation which psychologically make us more provocative.

It is been observed that digital exposures are leading to what psychologist says is Narcissistic Personality Disorder (NPD). It is an abnormal behaviour which is characterized by exaggerated feelings of self-importance, excessive need for admiration, and a lack of empathy. Social media is adding fuel to the fire as society and individuals become more self-centred.

The change in behaviour may pose challenge for marketers who have successfully used two key emotions - shame and guilt to get a desired behaviour from customers.  

While both are internal feeling, guilt is more self-driven based on self-consciousness of having done something wrong while shame is more driven by society, peer and family. The key for you is to understand what is more relevant for your product or brand, guilt or shame.

One brand which I recall (I got in-depth insights on it while doing a MBA project with them) that used it very effectively for years is Krack foot cream which was from Paras Pharmaceuticals stable (now owned by ReckittBenckiser). The brand pushes and encashed on sense of shame (not guilt) with its punchline “Shakkal se maharani aur paron se naukrani” (translates to face like a queen but feet like a maid). Amitabh Bachchan starrer Swachh Bharat ad campaign on open defecation used guilt as emotions apart from humility.

Various categories especially those which are related to personal product such as toothpaste, deodorant, shampoo etc use both guilt and shame effectively. Services targeting individuals as diet plans and fitness promoting gym use it often. Off-beat categories are also using guilt and shame together. A recent case is for a cockroach spray brand Hit where family is being asked to introspect on the reason for illness (cockroach) at home rather than blaming family doctors.

As mentioned the context of guilt and shame will change with increasing self-centredness, consumerism, personalisation and digitalisation. Thus, you as a marketer need to quickly grasp below pointers to effectively market these emotions:

• Humour is good for brands looking for recall, but to drive action use guilt or shame (It’s another equivalent in digital world is that humour is good for CPM but if you want CTR use shame or guilt)
• Digital media with its reach and personalisation will make your task more complex. Deeply understand the use case for your brand or product and see what degree of shame or guilt in your communication will drive the behaviour rather than anger or humiliation.
• It will take time to master it as overuse of the emotion may turn against your brand while lower side of it may dilute your message.
• The communication and tone should not cross the limit which make message look like public shaming or bullying, especially if your brand pages in social forums of media such as Facebook, twitter etc.

For your feedback and suggestions, do write to me at sunilsinghrana@yahoo.com