Why we priced Cocoguru above other brands

In January 2015 we raised Cocoguru’s price premium over the market leader from ₹1 to ₹2. Here are the eight reasons we chose to charge more, not less.

We sell coconut oil for cooking across Dakshina Kannada district. In our market, the market leader sets the price, and other brands price their oil at the same level or below it. Two months ago we began pricing Cocoguru ₹1 above the market leader. We are now raising that premium by another rupee, to ₹2, on a 1-litre pouch that sells to retailers for about ₹150.

Why we charge more

1. Brand value. One way to measure brand value is the price premium multiplied by the extra sales the brand name brings, compared with an unbranded product. We invest in building our brand, and aim to earn from it later.
2. A signal of quality. It is hard to show how our oil differs from others. Price is one of the simplest and most trusted signals. When two shirts look alike, we assume the dearer one is better; we expect better food at a star hotel because the bill is higher.
3. The right reason to buy. People should choose our oil because they want it, not just because it is cheaper.
4. More responsibility. A higher price obliges us to keep earning our sales, through better quality, service, marketing, consistency and accountability. That in turn strengthens the brand.
5. Pride. Everyone connected with a premium brand — employees, suppliers, salespeople, distributors, retailers and consumers — takes more pride and satisfaction in it.
6. Protection from competitors. Low-priced brands are always exposed to new entrants and price cuts. Premium brands hold up better: a competitor has to build a brand of its own to win our customers.
7. No bargaining. When price is the main reason to buy, customers bargain, and a sale happens only when we give way. Give way to those who bargain, and soon those who never did will start. Bargaining every week with the same customer over an everyday product cannot last.
8. No price wars. Competing on price does not last. A price cut wins a little for a while, until competitors cut deeper, and everyone ends up worse off.

From here, we aim to widen the gap, until Cocoguru is no longer compared on price with other brands at all. Every part of our business keeps improving, and our pricing will change with it.