The vexed issue of Pricing

"If we want to sell more, we must be cheaper in price"
Now this must rank among the topmost marketing myths!

It suffers from the typical inside-out syndrome. Strangely people are almost mathematical because they buy a ratio - a formula with a numerator and a denominator. The numerator is 'Perceived Value" and the denominator is "Cost".
Why 'cost'? Why not 'price'? Well because, to the consumer it is a cost and to us it is a 'price'.
And why "perceived' value? Why not simply, 'value'? Well because people only buy perceptions, not reality.
If Dove is a good soap because it is creamy (has cream?), then why not take a bath with cream! why buy dove in the first place!
If Liril has the fragrance of lime (has lime?) and lime is fresh, then why not take a bath with lime! So why buy Liril in the first place!
Well when people bought Liril, they bought the feeling of fresh and escapist abandon, that came into being with the girl under the waterfall. (they may not realise it or confess so)
And when people bought Dove, they bought the creamy and natural skin of the model who testified to using it. They didn't buy fair skin; they bought 'creamy skin. (by the way, the model is plump!)
But people 'think' that they buy for incredibly rational reasons.
And when people bought Nirma powder, Surf was forced to counter it by increasing the 'perceived' value, this time through a form of rational appeal. Is there evidence to prove that Lalitaji is rational? Wrong question - for Lalitaji is in fact a myth, not reality. The better question is: kya surf ki kharidaari mein wakayi samajdhari hai? But no one really knows the answer to this one. And yet they buy.

Consider this: it is a reality in the marketing world that the market leader is ALWAYS more expensive.

It is also human nature to claim to be rational while simply desiring something. Have you ever heard someone say in a meeting "I don't have a strong opinion on this"? It proves that we will never confess that we bought something without much rationale. But that's how we actually buy.
Now just reflect on this: It's funny how men who are forever intoxicated by cars and discuss them in such great detail, forget entirely about the engine, the power weight ratio and the torque. It's strange how after very carefully buying a car (because it offers driving pleasure), they gift it to their chauffeur to drive!
And most of all, it is almost universal that men negotiate the hell out of a car dealer while their spouses patiently watch the display of negotiation skills and two months later (the men) do not remember the exact on-road price of the car!
Ask yourself, do you remember the exact on road price of your car? By the way, the car is perhaps the most expensive consumer durable at home! When you buy a car, you buy the brand. The product comes free.
Now think about this: Starbucks coffee is priced (sorry...'costs') many times the price of Nescafe even though you have to spend on petrol to get to their outlet! What is the main differentiation? No, it is not the product, no matter what they say. The main differentiation is in the Method- of- Sale. The former is consumed at home; the latter out of home. The latter gets a far greater opportunity to provide a brand experience. Hence it is high on experience and therefore on perceived value and therefore on price.
And now consider this: In a superstore, we buy packets and bottles of stuff even though the price is unreadable, submerged as it is, in the barcode. Yet, we claim to go there because they are running a good deal.
Or the same liquor in a five star hotel and we pay more. But this is a full subject on 'Brand Ambiance'. On this, later!