Why do we buy what we buy?

January 16, 2012

(The views expressed in this column are the author’s own and do not represent those of Reuters)

Let’s cut out all the marketing jargon and adspeak. Consumers (that means people, you and me) try to buy rationally, on price – it’s cheaper, on quality – it lasts longer, on service – they won’t let you down when things go wrong. And sometimes it is genuinely possible to make rational choices when we buy things. Mostly though it isn’t anymore, because products and services are increasingly similar in their rational characteristics. If they are poorer quality or more expensive than a direct competitor, they die.

What’s the difference between the fuel from Bharat Petroleum, Indian Oil and Hindustan Petroleum, in price, quality and service? There isn’t any. So the only rational choice for us is which is the most convenient fuel station.

With fuel, you don’t even get the illusion of rational choice, but in most sectors there is a bit of an effort. Mobile phone operators fight over price, so-called levels of service and special offers of equipment all mixed up with tariffs. And we consumers jump from one to another in a rather dissatisfied kind of way.

In cars, it’s pretty much the same. Price for price, at each level of the market, there is not much difference between Maruti Suzuki, Honda and the rest of them. They look pretty much the same. They perform in the same way — doing the job quite well. Service from dealers is pretty similar. And discounts matter a lot. So apart from going to the dealer who gives me the best margin, how do I choose?

Well, how about emotion? Do I like the car better? The higher up the value chain you go — the more important ‘Do I like it?’ becomes. Do I want to be seen in it? What does it do for me? How does it affect my image?

Let’s not pretend these emotions don’t matter, we all know they do — for all of us. So how would it work?

Let’s just stick to cars for a moment more. In Europe, the top German manufacturers fight head to head in every price and size category. BMW, Mercedes and Audi are all excellent. On rational factors there is nothing to choose between them. They know that. And they also know that they have to offer something different from each other to customers, something which isn’t rational but is emotional, so that they can stay in competition with each other and avoid fighting each other to death on price. A price war would lead to their mutual destruction.

So they each offer something emotionally exclusive and different which appeals to different kinds of customer sensibilities. BMW talks about fun, enjoying life, showing off. Audi talks about the best technology money can buy. Just to emphasise that they say it in German, even in Great Britain – ‘Vorsprung durch Technik’.

These manufacturers carry this through in everything they do; car design, showrooms, naming, advertising, marketing policy, the lot. And that’s why you’ll hardly ever see a BMW taxi in Europe — because it’s not fun. It’s not part of BMW’s marketing policy to sell taxis. It would hurt the image. These highly successful and admired German car companies have developed an emotional as well as a rational appeal to their marketplace which they have thought through and use everywhere.

It’s called branding. Maybe some Indian car company should try it.

One comment

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I think we Indians are extremely value-conscious. We somehow don’t see a point in buying something for a premium; I suppose finding and getting the best deal kinda gives us a kick. We somehow take great pride in our no-nonsense attitude to making our purchases – from vegetables in the bazaar to cars in glitzy showrooms.

I remember taking a friend (supposedly “expert” in cars) with me to a car showroom in Mumbai. I set my heart on a sexy sedan the moment I saw it. My friend then studiously compared that sedan with a small car on various features such as engine power and mileage and leg room and floor height (or something of that sort) and so on and concluded that the small car would give me more value for money in the long run. Besides, he claimed, it would be a pain to park my sedan in Mumbai. When I finally decided to buy the small car, he proudly declared that I just saved myself from looking like a fool!

That’s the typical middle-class Indian consumer for you. Pragmatic, sensible, no-nonsense… That’s the lesson car manufacturers, especially the foreign ones, must learn if they want to compete successfully in the Indian market.

Posted by AshishDeodhar | Report as abusive