Luxury Or Overvaluation

Prakash Srinivasan

A smartphone that is priced at Rs 51,500, Samsung Galaxy S5 (as costly as a high-end laptop)

A car priced at Rs 5 crores (Bentley, costlier than a premium villa)

The list is endless….welcome to the age of overvaluation which is conveniently cloaked as “luxury.”

When I came to know that the recently launched Samsung phone is priced around Rs 50,000 I was aghast. The price and convenience of portability cannot be so much! It’s also very unethical that companies can make profits of 100-200%. The value of a brand cannot be so sky-high that it starts overpricing its products. Brands and products go through phases and once they get established and become famous, they start getting a little arrogant and then the problem begins. Its starts hoodwinking customers and overcharging them and the psychological value of the product (riding on the brand perception) makes customers fall prey to it.

There are a few brands/products which have shown that you need not charge more for giving a great quality product. That’s why the trend now is not to focus on price but value, which is the correct way. A phone costing over 50k may not give the value and the vice-versa where a low-priced product may not provide the best experience. The value products tread the middle path and they are like the unsung heroes. A wonderful example of a value product which came recently is the Moto G smartphone which is regarded as the world’s best budget smartphone. I had a chance to take a close look at it and I was stunned as to how such a cheaply priced phone (Rs 12500) can be of such great quality. It’s already a bestseller.

Many companies have shown that you can deliver great value at decent prices, Tata Nano is another

example (though it has not been a success). If you look at its features, it’s almost on-par with a car which is more costly.

Companies need to realize that customers (the middle-class who are the majority) are moving towards value rather than price (lower or higher) and they must come up with innovative products to cater to this need.