Watch out for fakes!
I have many customers walking into the store and asking me for fantastic discounts, like 40%-50%...and they look at me with those knowing eyes when I tell them it’s normally the MRP or a 5% discount for goodwill sake. The immediate analogy is the discounts they get online or with another traders. The conversation then moves to a discussion on a few aspects like:
Why does a super Indian brand like Nivia who has been around from 1930`s work so hard on detailing pricing and MRPs? Why are MRP`s around in the first place and why is it so protected by the brand itself? Haven’t their finance staff worked out the remuneration at every point from procuring to manufacture to distribution to ensure that there is a balance in business, products, competition and values? Isn’t this required to sustain a fair growth of the business and the brand in the long run? Won`t random MRPs make the products noncompetitive? Doesn't the real estate of the store make a difference to sustenance? Aren`t online and off line models different then? Phew...these are heavy points.
Disrupting consumer behavior seems to be the norm in the days of online technology and marketing. I take this as a good sign, as it makes us work towards a purpose, removes redundant or duplicated efforts and a value addition to the consumer. I feel this is progress and better distribution of capital and resources to showcase/encourage that new brand/hard worker on the block. This allows more choice to a customer in a healthy competition.
Why does someone have to travel far to pick up a ball pump for example? We can have it shipped, sure, no specialty here for a Rs 150 product. Of course, the shipping and cash on delivery may cost an additional Rs 50/-, so customers may prefer to pick up directly. However for specialty products and especially for a regular sports player a good fit is a given. Else it effects his performance and will cause discomfort or medical problems. A far more expensive proposition to save a few hundred rupees isn’t it? For example in my experience there are no standard shoe size 5 in any of the brands. They are designed of a different length width, arch in every design. Of course the weight of the shoe also makes a difference. So nothing like trying these products out, satisfying oneself that it does the job for the environment you play in. Plus, new designs factor the latest findings into the product. It may look great but may not be functional. This is where store keeper`s work for a salary and are asked to discount. Yes, and please don`t forget to include the GST.
The other way of standing out is if you have a big marketing budget. Then attract the consumer with fat discounts, show these discounts as losses and create the constant mistrust of perceived value to make the customer come back… The value stores can`t offer these short term excesses and I love these fantastic discounted sales as a consumer myself!
Most customers at this point, understand the misnomer of discounting and we conclude the discussion on giving a little bit for customer loyalty. However it is true that some companies do make a killing on distribution when they have monopoly and are used to dumping products into the Indian market. This is not the long run and Prakrida would like to stay away from them. The norm is a minimum 20-25% wholesale margin when you do the costing.
However does all these methods warrant cheating the customer in the guise of discounts?
Yes, the big threat of fakes do. Take the example of the sales staff of the manufacture who found out for himself. The top selling footballs among other products at an MRP of Rs 1200/- selling for Rs 450/-. When they tracked this down, a big counterfeit production scam was busted in Meerut. The fakes were being sold on all the prominent web portals and trader channels to make a quick buck and stay afloat. The disturbing aspect is that the economy products have not been spared in counterfeits. The same goes for footballs, jerseys, bags.....The big brands as it is have a huge challenge.
The other good example is with the football club jerseys. Football jerseys of Man United, Liverpool, FC Barcelona etc. are in demand to any die-hard fan. However considering the prices of the original in the UK and in India it is an expensive proposition to own one. With originals priced around Rs 4k per jersey, the market for fakes is thriving. Imitations sell at even Rs350-500 a jersey. Tackling this needs a different view point by the brand. The choice is to decide whether they would like to bring in a new range which is affordable or to lose out to the fakes. Fakes has caused the poor sales of originals and therefore is not a viable commercial option at Prakrida currently.
In any case, no wonder customers when they examine the products in store are surprised at the far better quality of products. Of course, because they are original.
The sources of these fakes are both inland and imported. There have been the occasional news of these these scams being busted with fake units being raided. However will it solve the problem? There have been adaptations to using technology by using chat groups, dummy trading names, etc to avoid the law. However as long as the demand for fakes remain, new methods will always thrive. It is a choice to the consumer and their awareness to what they are finally buying at that super fantastic sale.
So beware of fakes and buy from genuine retailers at genuine prices!