Value propositions of Discount versus Exclusive stores

The shopper has a point when he says, “Why should I spend Rs3,800 for the same Reebok shoes that I can get for Rs2,400 here?” The shopper in this case is comparing prices of branded sneakers sold at an exclusive outlet with those at discounted stores.

Why are premium brands priced at a premium? The esteem appeal that a premium brand carries, built by both functional (product quality) and emotional (product appeal) factors, comes at higher costs, resulting in higher prices. Conversely, its important for the brand to be sold at higher prices to be perceived as a premium brand!

If the premium prices are justified thus, why is the shopper buying the premium brand at a discounted price at a discounted store? Isn't the answer obvious? If he were to continue paying those premium prices at exclusive stores when the same brand is available at a discounted price, he needs to have to his head examined. Or to give him credit, he does so, 'cos he has a specialised requirement; maybe a particular design, or a particular size, or he is looking for a varied product range.

This discounted price purchase behaviour of the Indian mass consumer is an interesting phenomenon, in the sense, its a reflection of them wanting to satisfy their need for 'esteem', but only at bargain prices. Its an interesting phenomenon of how rational and irrational urges of buyers have been fulfilled; effected through the purchase of premium brands at discounted prices.

Now does this sound the death knell for exclusive stores selling that very same brand at premium prices? No, if they carry merchandise that's not found at discount stores. That way they still remain 'exclusive' not in terms of the brand but in terms of the 'product'.