Brands and Profits

The effect of brands in the minds of consumers, in particular reference to FMCG products is mind-boggling.

I took a popular brand of a toothpaste, and from the contents given in the pack, calculated the value of the materials and it worked out to Rs. 240/- a Kg. The material simply consisted of Silica and a little amount of medical oil. Silica given even in the finest form as used in the toothpaste, and with the medicinal oil added would not even form 1/10th of the cost that you pay for your toothpaste. What we are paying for is something, which is not based on the material cost of the contents of the toothpaste. We pay fro the BRAND.

Because, Brands mean TRUST and CONFIDENCE in the product. One pays for convenience, comfort, Quality etc. for which the customer is prepared pay even more! It is amazing to see how brands add value to the products.

An instant coffee brand can be sold at, much higher prices, because of the convenience, but it can fetch even better prices than that because of the brand value.

The first level of prices that a product can demand in the market seems to come from the functional aspects. The second level of prices, higher than the first comes from felt benefits, and the third higher level comes from the BRNDING, which is a reflection of the tastes of the person buying the product.

Every brand is trying to go up in this value chain to get the best profits for their products. Brands as perceived and hence human psychology and behavioral science have a role to play in the advertising of the brands. Psychology as a science can help Marketing function by study of the consumer psychology, and making the dreams of the consumers and marketing people to come true.