Skip to Navigation

Amitava Chattopadhyay


Amitava Chattopadhyay
Emerging Market Multinationals - Amitava Chattopadhyay


The Low Price Trap

Business Standard

Consumers buy based on perceived value. By underpricing their products or services, emerging market multinationals face the spectre of instantly lowering the perceived value

Our research suggests that starting in the low price tiers is a double-edged sword. While it allows EMNCs to leverage their strengths, the firms that started in the lowest price tier with their own brand, like Ned from Arcelik or Dopod from HTC, found it very difficult to generate margins or loyal customer bases. Such low prices and margins naturally do not create the resources to reinvest in the business (for R&D or brand building) and thus work against long-term viability: there is no takeoff to the “virtuous cycle” of higher prices, higher margins, higher quality, and stronger, sustainable brands. In fact, without such eventual building of a consumer franchise, even a “push,” channel-oriented strategy is vulnerable to failure. Unless there eventually is adequate consumer “pull” for the brand, the trade too will wither in its willingness to carry and promote it.




Read On


  Nov 12, 2012 | In the Media





SHARE




PREV


NEXT


Thoughts?

 


Recent Tweets



Sat, 25 Jun @ 08:43 am

It's so sad. America one step closer to a Christian fundamental state. That is a frightening thought. https://t.co/dBAhL9NeGX

via Twitter for Android
Sat, 25 Jun @ 08:41 am

Welcome to @IndiGo6E. All kinds of checks in system to force you to pay more! It's legal but consumer perception of… https://t.co/MHvnIC6ECl

via Twitter for Android
Sat, 25 Jun @ 08:38 am

RT @rchowdhri: I understand that cos need to be profitable, but not with unreasonable customer experience. @IndiGo6E will not allow you me…

via Twitter for Android
Sat, 25 Jun @ 08:17 am

Totally agree. This ruling simply makes it worse for poor women and families. #FundamentalismRising in @USA https://t.co/qaREOCGvIN

via Twitter for Android
Sat, 25 Jun @ 08:15 am

Holland Village branch. This wait is quite normal. The coupon really annoyed me. It's disrespectful. So rubbing sal… https://t.co/9V1AjizYdq

via Twitter for Android
Thu, 23 Jun @ 06:43 am

After waiting an hour for service at @dbsbank I was offered a $5 coupon, redeemable at Sheng Siong supermarket, to… https://t.co/jAfKVsmUzO

via Twitter for Android

  Close About Papers Cases Books Teaching Musings Media Gallery Ask Amitava