Carrying forward from the last post, there are two diametrically opposing views on this matter. One believes that consumers are really smart and will call your bluff the moment your product takes them for a ride. Examples include consumers dumping American made electronics and cars in favor of Japanese ones.
On the other hand, some believe that consumers are gullible and will willingly buy a golden noose only if you knew how to sell. Examples include Coke and credit cards. There was no "need" for cola. Someone made up with a drink and transformed it into a habit. If Fair and Lovely really worked, half of us in India would be swans now. Yet, the product continues to mint money for HUL, and has spawned a market for fairness creams.
How does one reconcile these two observations? The popular notion of succesful businesses is a neatly laid out set of numbers, projections and valuations, but any business is incomplete without the understanding of human psychology, which provides the most crucial insights. Mr Charles Revson, co-founder of Revlon famously said, “In our factory we make cosmetics. In the store we sell hope”. That's the key. What you are making and selling are often two different things.
Even in case of more mundane products like ball pens, consumers are buying expectations not products. And if the performance doesnt meet the expectations, well, you are screwed. And these expectations can stem from totally irrational notions. Chinese products are presumed cheap so its really tough for a Chinese manufacturer to sell premium products. In such situations, the solution is not in the 4Ps but rather in the other often neglected P - the Psychology of consumers.
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