A certain bag at Prada was once the fastest selling product and gave Prada the bulk of its profits. The then management decided to, at the peak of its success, increase the price of that product by 3 times the original price! Most people disagreed with the step and called it an immature decision. But it was implemented and the sales, by volumes increased by leaps and bound...so one can imagine what would’ve happened to the revenue.
... My take on this...
This may seem over-ambitious and impulsive to some, but to me it seems like the most sensible and thought through strategy. It is based on the principle of one of the most basic human needs, lust. Just like in a man-woman relationship, when you know that someone loves you... the harder you play to get, the more you are desired and the other person will try and do anything to have you. Or in the case of a child... you show him a candy, let him taste it and then take it away and ask him to finish his/her homework. Even if s/he hates it, they will finish their homework and do whatever you want to be able to have that candy.
In exactly the same way, the Prada bag, had reached a stage where it was loved by all and people really really wanted it. In such a scenario, when you know that people want you, if you hike up the cost, and play hard to get, it will entice the consumer even more. The consumer will then stop at nothing to have you. Because when the product seems unattainable, it’s even more desirable. There’s a saying in India... “magarmach ko khoon chatana”... it means that you let the crocodile taste your blood and then try to run away...well, there’s no way the crocodile will let you go! The Prada bag was blood that people has tasted, and now, they weren’t going to let it get out of their hands!
Hence, people will now spend even more to get that bag and if need be, will justify to themselves the price, by compromising a bit on some other purchase, in a different category. But this emotion of greed at a moment like this, is far more powerful than any rational justification and hence, price ceases to become a barrier.
I would say Prada was one of the lucky few -- I can give you multiple examples where such a move caused havoc with the sales -- the gaming industry ... Sony PS3 was delayed and its price was considerable higher than its previous versions: it caused Sony to loose dominance in the gaming industry to Xbox and Nintendo Wii.. Another Example is the Automotive Industry, Cadillacs, pontiacs, GM vehicles was always the most pricey and always the most sought after and they had near dominance over the entire automative industry.. but out of nowhere came Toyota , honda.. and ate up all the sales of GM.. which has led to the current bankruptcy ..its facing... I can list out many.. but as I said.. I am glad it worked for Prada.. because they were just LUCKY.....
ReplyDeletehi
ReplyDeletesonal,
this is perfect marketing strag expample, however its never replicated in all luxury front.
you can check it with a case of LVMH and dior.
anyway, it its great efforts and keep posting.
thanks
mukesh jha
Thank you!! :-)
ReplyDeleteYes I agree that it hasn't been replicated... And I also agree that Luck had a very large role to play in the success of this strategy... However, my point is that at a psychological level, the strategy was bang on! It triggered a sub-conscious desire which is very difficult for most people to resist... But I don't deny the risk involved with something like this... Sometimes, we may perceive the value of our product to be a lot more than what the consumers perceive it as... in that case, it's not going to work.. Hence, the risk being soo high, the strategy may never have been replicated in terms of pricing,in the exact same way..! However, the concept of creating scarcity has been used by several Luxury brands and typically works on a similar psychological principle...
good rebuttal...Agree!!
ReplyDeleteWell, honestly this strategy works if your brand has acquired a lovemark in the minds of its audience. By that I mean, it needs to be truly loved not just for its offerings. Also, this works if the competition is not throwing candy to your starving audience. Because then,people will not think twice about switching.
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