To Study and Arrive at the Pricing and Product Offering for OMLs PRODUCT X.
Pricing and Product Offering for OMLs PRODUCT X: Market research and study of consumer behavior and patterns.
Under the guidance of
Mr.Shreyas SrinivasanMs.Susmi RoutrayDirectorAssociate Professor I.TOnly Much Louder (OML)IMT GhaziabadLower Parel, Mumbai
Certificate of Approval
The following Summer Project Report titled "To Study and Figure the Pricing and Product Offering for OMLS PRODUCT X" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Diploma in Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted.
Summer Project Report Examination Committee for evaluation of Summer Project Report
1. Faculty Examiner_______________________ ___________________
2. PG Summer Project Co-coordinator_______________________ ___________________
Certificate from Summer Project Guides
This is to certify that Mr. Srinivas Kartik, a student of the Post-Graduate Diploma in Management, has worked under our guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer project, monograph, report or book.
Ms.Susmi RoutrayMr.Shreyas SrinivasanAssociate Professor I.TDirectorIMT GhaziabadOnly Much Louder (OML)Date:Date:Sign:Sign:
Working at Only Much Louder(OML) was a great learning experience in my life. There are a number of people here that I would like to express my gratitude to, so bear with this writer in this moment of attachment.
To Mr.Shreyas Srinivasan, for believing in me and giving me the opportunity to work on THE INSIDER with him. It was incredible to have been a part of something I believe has the power to be a game changer. Id like to thank Ms.Heli Shah who worked me on THE INSIDER, for despite being an expert in her field, she took the time out to patiently explain to me the bigger picture behind this project, and for motivating me when I felt Id missed out on some insight and for helping me settle into the role. To Ms.Tulika, for her inputs into the competition research. To Ms.Deepti Bansal who was instrumental in me getting the opportunity to learn about consumption of culture from the masses by letting me work with her on her projects in artist management. To Mr.Neehar Venugopal, who helped me mine data and for his obvious, infectious passion for football. To Ms.Sharanya Subramanian for her inputs on responses from THE INSIDERs stakeholders. I am eternally grateful to these individuals for their proactive inputs, and for helping me understand the nuances in the fields of experiential marketing, artist management fields that I had had very little knowledge of before.It was the passion and belief that these individuals had in THE INSIDER that enabled me to grasp the higher purpose of my role at OML and Team INSIDER.
OML is an incredible organization which allows each individual to express himself or herself. There is an openness at the workplace which allows an individual to put out his ideas with a great degree of freedom.
I am also grateful for the advice that I received from my IMT faculty mentor Ms.Sousmi Routray, who was kind enough to accept what can be best described as a research proposal that barely met the standards prescribed. Her guidance was available when asked for and the degree of freedom given to me has helped to bring a sense of responsibility to my work. This is characteristic of IMT Ghaziabad, one of the few Indian institutes that encourage students to take affirmative action by themselves. I am fortunate to be part of this great institute.
Finally, I would like to thank my family and friends. My family has always given me the freedom to make my own choices. My friends confidence in my abilities and potential enabled me to take up the challenge of working at an organization that firmly believes in the independent movement and self expression. My parents are an inspiration and I can someday hope to repay their kindness that they unconditionally extend to help me follow my pursuits and entertain my every whim.
All these persons have made this project possible and it is hoped that I have lived up to their expectations by presenting this work. For their time, contributions and inputs, I am forever grateful.
Abstract To Study and Figure the Pricing and Product Offering for OMLs Product X
Roll No: 1302-166
This paper attempts to arrive at the right pricing and product offering for OMLs new, ambitious project. This paper involved studying consumer behavior in detail, and to make use of insights obtained from research on buying patterns, decision making points, target audience and from industry experts.
Only Much Louder (OML) is an entity that operates in the intersection of youth, brands and counter culture. OML has several divisions. The INSIDER is an endeavor that makes full use of its strong foothold in the live entertainment and counter culture industry.
The INSIDER was to be a subscription service that would enable consumers to unlock the best experiences at the best prices. Entertainment was classified as: Movies, Live events, Shopping and F&B. This subscription service would give the members special privileges special queues at events, special prices for products for members, after parties at events, free tickets to movies and events. All of this for a fixed fee.
However, it was crucial to find out how much would be a good price for this incredible service. How much are consumers willing to pay? For this reason, I began to study consumers behavior. Our target audience was people between the ages of 17-35.
Table of Contents
PageAcknowledgement5Abstract (maximum two pages)6Table of Contents7List of FiguresList of Abbreviations
List of Figures
TG : Target GroupTA : Target AudienceFGD : Focus Group DiscussionPI : Personal InterviewF&B : Food and Bevergaes
The nuances of pricing in todays integrated world are complex and in most cases, highly subjective. Advancements in technology, particularly the introduction of disruptive technologies, have brought about an era of free flow of information. This information is available to consumers as well as to businesses which transact with each other and, as a result, has made pricing a complex issue.
But is it only pricing that is the be-all-end-all of conducting business and in becoming an industry leader? Thanks to this writers time spent studying consumer behavior and reactions to pricing, communication, product offering, and from the literature review conducted on this topic, it emerged that consumers consider other non price metrics such as customer support, loyalty programmes, brand connection and engagement too.Price is an important factor. Price it low, and you may lose out on potential profits, and in certain cases even lose out on customers, who perceive price to be indicative of quality.Price it high, and you will lose out on consumers who are not willing to pay as much.
Pricing a product is easy. But what if one needs to price an experience? A service?Having had the opportunity to work on OMLs THE INSDER, was an enriching experience. I learnt consumer behavior is economics, science and social factors at work.
About Only Much Louder (OML)
OML is an organization that works in the intersection of brands, youth and counter culture. It works in the fields of music, comedy, live entertainment, shows and uses all of this to carry out experiential marketing to brands that focus on youth. OML owns several properties in live entertainment. It owns NH7 Weekender- Indias happiest music festival that attracts 30000 people in 4 cities. It owns Royal Turds, Pajama Festival properties in stand up comedy. It manages some of Indias best bands and popular artists.OML has done experiential marketing for several clients which include Puma, Converse, Bacardi, MTV among others.OML operates as a diverse company that handles specific departments. OMLs BabbleFish productions is the content development division that produces documentaries, TV shows, music videos among others. Counter Culture Records is an independent record label started by OML, mainly to release the music produced by the artists they managed.
THE INSIDER Program:Today there are a multitude of options available for entertainment. People can go out for dinner with family, go for a movie with friends and to a dance club or spa with their spouses or partners. We broadly classified the entertainment as the following: Movies Shopping F&B (restaurants, pubs, bars) Live entertainment (Music concerts, festivals, stand up comedy, among others)
From experience doing events for the youth that for several hundred thousand people all over the country, we found that people spend a lot of money on these activities. We wanted to make these activities more affordable which would enable the audiences to then do more of the things they want to do. Affordable, hence more accessible.
THE INSIDER would be a subscription based program, that would provide the customer with a host of benefits. These benefits would include:1) 15% discount on shopping with certain partner brands.2) 15% discount on F&B3) Free movie tickets4) 15% discounts on event tickets
My Role:The INSIDER is the brain child of Mr.Shreyas Srinivasan. He had prepared an initial product offering and pricing structure for The INSIDER. I was to use all and any means needed, and to figure out the best possible pricing and product offering for this proposition.The channel, medium and tone of communication are very important. They play a huge role in positioning of the offering.
The INSIDER was a unique service, in that, it worked in several verticals.
APPROACH:We decided to do Focus Group Discussions with our target audiences in Mumbai, Bangalore and Delhi
REQUIRED OUTCOME FROM FGD:1) To define pricing and positioning for The INSIDER2) To find out if they are interested in the service3) To find out where/how/when/why they spend their money.
We defined 5 options/packages. Each of these options catered to a different kind of TG. We defined the packages as follows:
We conducted FGDs with the same proposition in Mumbai, Delhi and Bangalore.
MUMBAI FGD:Number of participants: 12
Focus on: Primarily functional value. That is, the participants were explained the monetary benefits, savings they could make if they bought the proposition. The special privileges were not emphasized.
DELHI FGD:Number of participants: 11
Focus on: The moderator explained both the functional value and the special privileges and benefits that consumers could avail. An equal amount of importance was given to functional and qualitative value.
BANGALORE FGD:Number of participants: 8
Focus on: The moderator emphasized heavily on the special benefits and privileges of The INSIDER. A lot of classy visuals were used, the tone of communication was extravagant while explaining these benefits. The functional value was not emphasized at all.
SUMMARY OF PRICES ACROSS THE 3 CITIES:
OPTION A across Mumbai, Delhi and Bangalore:
Option B across Mumbai, Delhi and Bangalore:
Option C across Mumbai, Delhi and Bangalore:
Option D across Mumbai, Delhi and Bangalore:
Option E across Mumbai, Delhi and Bangalore:
For 6 months.
For 12 Months.
Personal interviews of over 30 people were taken. These interviews included 17 individuals between the ages of 17-27, and 14 of between the ages of 28-35.
Individuals between the ages of 17-27:1) Were very influenced by the communication employed to explain to them this Product X. This was reflected in their high prices.2) Were excited by the special privileges and were willing to pay extra for it.3) Purchase decisions were taken by the majority in the group. Going out meant spending time with friends. Which is why we decided we would give away cards for free for the members friends.Individuals between the ages of 28-35:1) Were not very influenced by the communication and visuals used.2) Were not willing to pay extra for special privileges, as they did not attach any value to it.3) Were willing to pay extra for features that would save them time.4) Purchase decisions were not pre-dominantly made by the group.
INSIGHTS:1) Price Dilution Effect:We wanted to provide the customers with added benefits for the price they were paying. However, this led to a price dilution effect.EXAMPLE: For 10000 INR, we were offering Option A. For 10000 INR, they were getting value of over 15000 INR. However, each customer is unique. Customer X did not shop for brands, and he did not eat out. Hence, he was subtracting these costs from 10000 INR, even though these benefits are Free- of- Cost added benefits. Thus, in the consumers mind, he reduced the costs of the benefits he thought were useless to him. He therefore felt he was being overcharged and would therefore price this option at 8000 INR.
Solution:We decided to put up the added Free-of-Cost benefits as optional. That is, the cosumer could choose any 2 out of 3 benefits- Discounts on shopping, discounts on F&B and discounts on events and movies.
2) Tone of Communication:The tone of communication used to highlight the product offering had an immense impact on the amount of money the participants in our FGDs were willing to pay.EXAMPLE: In Bangalore, the average prices for each of the options was the highest. It was almost twice as much as in Mumbai. The reason for this was, that the Moderator in Bangalore had used a very classy presentation. The visuals were stimulating and showcased positive happy emotions. The Moderator came across as very enthusiastic, very motivated and passionate about the benefits being offered. The special privileges such as a Special Bar for INSIDERS at events, Special Queue for Members etc, had an impact on the prices, which were much higher than in other cities.
Solution: The tone would have to be classy and appealing to the senses. It would highlight positive emotions and stories. It would focus on the special privileges i.e the qualitative benefits of the INSIDER.
3) Too many options is confusing:We found that when we offered the 5 options/packages to the participants, often several participants had difficulty coming up with prices. This was because it was difficult for them to attach values to each offering in each package a certain value. Consumers often use anchors to determine value. In our case of 5 options, they were unable to find a common anchor and thus were finding it difficult. This was aided by the way the packages were presented. Initially, they were all presented together on the same slide. This caused issues for participants in attaching value.
Solution: It is important to keep things simple. Fewer options is the solution. Fewer options enables the consumers to use a single anchor to determine value for all packages. It gets easier for the consumer to evaluate his options.
4) Decoy package:In order to help consumers make a decision faster, and to get them to choose an option that we want them to choose, we can choose a decoy package tactic. EXAMPLE: We provide 2 options for consumers to choose from for popcorn at a movie theatre.Small popcorn: 3$Large popcorn: 7$.In this case, over 70% customers chose Small Popcorn priced at 3$.
Now, we offered 3 options.Small popcorn: 3$Medium popcorn: 6.50 $Large popcorn: 7 $
Now, over 60% consumers chose Large Popcorn priced at 7$.
We noticed this tactic worked brilliantly with our participants.
5) Women are the decision makers.We found from our Personal Interviews, surveys and FGDs that when in a relationship or a group of friends, women make the decision when it comes to shopping and F&B.When marketing the discounts on restaurants and F&B, the communication should be targeted at women.
6) Giving everything for free is not a good strategy.People fail to attach value to the free add-ons. Therefore, instead of making them free, we provide our consumers an option to choose the add-ons they want.7) Difference in threshold price for music concerts and festivals.We found that people are willing to pay upto 2000 for a concert, and upto 3500 for a festival. On average, these values were the default values for our participants. So, if we wanted to market The INSIDERs Festival Package, we would have to arrange our prices and communication such that this issue would be addressed.
8) Women prefered to have cards and men preferred to have a Mobile App for the INSIDER. College going students and young professionals also seemed to prefer an INSIDER card over an app, as it gave them bragging rights.
Communication Working with the design team, some samples of communication were tested.The INSIDER would be a Mobile App. This app would be used to discover offers and events.
OMLs Product X would be an access card that would unlock experiences. It would make the consumers entertainment more affordable and thus more accessible. From our FGDs and personal interviews we found that while some want to use an actual physical object, while some others would prefer to use a mobile app. While a whopping 68% of women said they would prefer an app, only 36% of men said they would prefer to use the app. The card, we found, would provide bragging rights.
This is what the application would like. We deliberated over the physical form and design of the card. Some of us felt positively about making a physical key instead of a card, however, we were unable to find a vendor who could do this, and for then, this idea was dropped.
The communication had to be classy. It had to convey functional and qualitative value. From our research, we had found that the people over the age of 27-28 did not care about the qualitative value as much. Many felt that they were now over that stage. This crowd cared more about the functional value and the monetary savings it would provide. For this kind of an audience it was important that our communication spoke clearly about the numbers how much money it would help them save, extra deals and discounts. The younger crowd cared more about the special privileges that would come with being a member of Product X.
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