Brand Loyalty Vs. Discounts - Understanding The Indian Consumer
I'm an ardent follower of the Indian startup scene; and when the very well (read hyper) funded companies shut their shops; I do my own analysis of what went wrong. The entire e-commerce scene in India, which is a major domain in Indian startup scene, is based on one 'belief' :
Grow consumer base at any cost, by offering discounts to build loyalty.
I guess most of the investors are prepared for the long term game that spans several years. They're ready to pump the money so that the companies can offer stuff at cheaper prices. There's nothing wrong with this strategy as I guess, it's worked very well in several of the western markets. It's obvious for the startup companies and investors to think that this will work in India as well.
But I guess, that's a WRONG assumption!
I firmly believe that Indian consumer is more driven by discounts and prices over loyalty. You might have seen this trend in your own family while making purchases. If you've been a Flipkart Fan, I'm sure you won't mind switching to Amazon to buy that book for even Rs. 20 or Rs. 30 cheaper. I personally check all the stores I can before I decide on hitting the 'buy' button and check out.
That's the reason, many of the startups who try to build their consumer base by offering discounts are unable to sustain operations in the longer run. I'm yet to know of a funded 'startup' that's making profits - which is the 'main' thing for any business' survival and growth.
I'd like to ask you - what matters to you the most: Discounts or Loyalty?
Grow consumer base at any cost, by offering discounts to build loyalty.
I guess most of the investors are prepared for the long term game that spans several years. They're ready to pump the money so that the companies can offer stuff at cheaper prices. There's nothing wrong with this strategy as I guess, it's worked very well in several of the western markets. It's obvious for the startup companies and investors to think that this will work in India as well.
But I guess, that's a WRONG assumption!
I firmly believe that Indian consumer is more driven by discounts and prices over loyalty. You might have seen this trend in your own family while making purchases. If you've been a Flipkart Fan, I'm sure you won't mind switching to Amazon to buy that book for even Rs. 20 or Rs. 30 cheaper. I personally check all the stores I can before I decide on hitting the 'buy' button and check out.
That's the reason, many of the startups who try to build their consumer base by offering discounts are unable to sustain operations in the longer run. I'm yet to know of a funded 'startup' that's making profits - which is the 'main' thing for any business' survival and growth.
I'd like to ask you - what matters to you the most: Discounts or Loyalty?
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