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The 'God knows how they came up with it?' pricing model

Tuesday, December 26, 2006

When I studied marketing during my MBA, we were taught the funda of psychological pricing. We have all seen it in our daily lives. Goods or services priced below what the seller determines is the psychological price line of resistance, beyond which the customer would not buy or would think twice, before buying a product/service. So if that price line is deemed to be Rs. 100, the seller will price it at (say) Rs. 99, and so on.

BATA shoes pricing strategy is based almost exclusively on this concept and is almost legend in marketing circles to the extent they take it- shoes priced at (say) Rs. 499.99/-, for example. So much so, that Bata's pricing has become the butt of many a joke.

But now I have found a tough competitor for Bata, and this entity not only believes and practices psychological pricing, it also follows 'the god knows how they come up with that' pricing model. You guessed it right. Whenever anything can be described as 'God knows how...'- it has to be the Indian Government !

Some examples of inane pricing I recently encountered :

- Scene : Mumbai-Pune expressway; Status : A serpentine queue of vehicles at the toll booth; Price of one way coupon: Rs. 118/-. Nice and round isn't it? Not Rs. 100/-, not Rs110/-, not even Rs. 115/-...arre, 120 hi le lo yaar...! The result is the inevitable time taken to give correct change or collect return change.

- Scene : Govt. glidinng school, Hadapsar, Pune; Status: a 1 hour mandatory wait to take a joyride on Sunday; Pricing: Rs. 188/- per 10 minute ride; Question to the administrator: Why Rs.188/-, why not Rs. 190 or even Rs.200? Answer : A blank stare. The implication: Abe Ch***** , that's why we are a Govt. agency.

- Scene: Pune-Satara expressway; Status:A serpentine queue of vehicles at the toll booth; Pricing : Rs.11/-

And I can go on and on...but you get the point.

My theory is that some Sarkaari Babu must have spent quite some time doing complex calculations based on a pre-determined time when they would have to break even. Then based on the expected volume loads & costs, the price required to be charged must have been calculated. So if that price came to Rs. 118/-, that is what needs to be charged and not a penny more or a penny less. If he does, who knows, what sort of inquiry commission might be set up to investigate this 'irregularity'?

But then we must take solace in John F. Kennedy's observation- "“My experience in government is that when things are non-controversial and beautifully coordinated, there is not much going on”. If that truly be the case, I would happily pay the exact change for Rs. 118/-, every time, for the rest of my life!

Labels: SurvivingIndia

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Insane opposition to Helmets in India

Monday, December 25, 2006

If some one was trying to save your life, would you protest against that person, for doing it without your permission? Would you go so far as to file a case against her/him in a court of law?

You think that someone doing so, would be crazy?

Well, would you call able minded, educated people like students of a well known law college, local members of the legislative assembly, an eminent sports medicine doctor and the Akhil Bharatiya Grahak Panchayat crazy? Yet, these are the very people, who have opposed tooth and nail, the imposition of the rule sought to be implemented by the local authorities, to make wearing of helmets by two wheeler riders compulsory.

The evidence for helmets saving lives due to prevention of head injuries is irrefutable. According to research reports quoted by The Hindu,"in a mishap, this protective headgear is estimated to lower the likelihood of death by a significant 40 per cent and risk and severity of injury by as much as 70 per cent. When Thailand passed laws making helmets compulsory,the same newspaper reports that the country recorded a 40 per cent drop in head injuries and 24 per cent fewer deaths in motorcycle accidents." Helmets are compulsory in almost all developed and many developing countries. When Taiwan and Italy, where the number of two wheelers is significant, like us, made helmets compulsory, they could achieve a remarkable reduction in deaths and serious injury from accidents.

But in India, opposition to the imposition of helmets remains fierce, among some.The problem is that these silly sods have successfully derailed the imposition of helmets in Pune and now they are trying to do the same in Gulbarga.They object that this rule shouldn't be imposed on people. They want people to have a choice as to whether or not they would like to wear a helmet. But experience with people being given the choice, in this regard,has shown that people invariably end up not wearing helmets, despite being aware of their benefits. One only has to walk about any major Indian city where helmets are not compulsory to know that hardly 1-5% of the people choose to wear them, by choice.

The other objection that protesters came with, in Pune, was more serious. They claimed that helmets did not improve the chances of preventing mortality, as was being claimed by researchers all over the world. They paraded the opinion of a leading sports medicine doctor in Pune, who agreed with them. One does not know what ground breaking research this doctor came up with to come up with these fantastic conclusions, but he might be interested to know that even an apex organisation like the W.H.O, has endorsed the positive benefits of helmets and is trying to persuade countries to adopt this rule.

But when politicos, petty self-interests or plain stupidity takes over, can some one help you? Forget W.H.O, not even the Government of India, can help people when they won't allow themselves and others to be helped. And then these same people turn around and accuse the Govt.of doing nothing to improve road safety!

The opposition to the helmet rule in Pune and some other Indian cities serves as an excellent example of the self defeatist and crab mentality that some Indians possess, and would even be comic, had it not been so tragic and even, murderous. Like when yesterday afternoon, I saw a scooter driver dead near the RCF building in Chembur, Mumbai, with severe injuries to his head. Had he been wearing an helmet, he could have survived.

Vinashkaale Viparit Buddhi!

Labels: SurvivingIndia