The price you pay sometimes is the biggest feature of the product or service. There are so many instances where higher the price translates into higher customer satisfaction.
A INR 1,00,000/- watch has the same accuracy & features as a 200/- watch. A 1,000/- mobile phone often has the better cell tower reception & battery life than a 30,000/- smart phone. A foreign vacation is no better than a domestic travel/road drive. Same is true with bags, shoes, cars and so many products… yet we buy them.
Neo-rich do an ostentatious display of wealth through solid gold jewelry & flashy/gaudy accessories. ‘Khandani Raseesh” (who inherited wealth) might not be flashing their price tags, but they let their brand, logos and club membership to speak for them.
Human beings have a herd mentality and always want to be part of that inner-circle. They would go to any lengths to showcase that they belong to that most coveted exclusive club. In today’s capitalistic society that is often determined by the price tag. More the price of the product, the more exclusive it becomes. Sometimes the price-tag & exclusivity supersedes everything else. I guess no wonder any company (including the pharmaceuticals) have a higher branding budget than R&D.
You might like my older post here.
This week’s economist had a wonderful article
To sum up, India has created a cess-pool where wealth is not created by ideas, innovative products & services but through crony capitalism. The recipe for success in today’s India is licenses, government contracts & concessions. If you don’t believe me, google the name of the successful businessmen and their growth engine.
After the IT boom, the wealth has been created in areas of mining, telecom or areas with heavy government involvement/contracts. Many of these involved questionable means, process & pricing. Many businessmen are moving operations abroad (Flipkart, Mittal group, sterlite etc.). Many of the heads are even trading Indian citizenship in favor of lesser stress countries. (heads of Tata, Jet etc.)
Traffic jams for office commute, arranging for water, LPG & electricity are eating so much of our time that we are sucked out of our creative juices. Blaming the politicians are easy… but remember its we who elect them. They respond only to the aspirations & pulse of the nation.
I was reading this news about india borrowing an additional $518 million from World Bank. Now my question is:
1. Eternal debt has already led to Pakistani currency being rated as a junk currency. Indian currency has a BB rating and any additional debt would only force Moody’s or S&P to further lower it.
2. India already has a huge forex reserve (251 USD) why does india not use it? Anyways that cash is lying idle and not earning as much interest.
If India wants to play a bigger part in the global economy, it should help World bank and other international agencies help countries suffering from stagflation, and not borrow from this pool.