The Hindu Business Line : When cheap and free spelt mega value

MISSED the stock market rally? Take heart. If you are a consumer of branded products or services, there are still plenty of reasons to pop the champagne at the end of 2003. It was a year in which marketers, eager to lure new consumers into their fold, adopted `value-for-money' as their new mantra. This has meant lower selling prices, expanding choices, more innovative products and any number of attractive deals. In short, `better value', no matter what you set out to buy.

Value through price cuts

Take fast-moving consumer goods. The price war in the detergent segment, which began last year, continued into 2003. As a result, prices of high-end detergent powders such as Surf Excel, Ariel Compact and Tide have dropped by around 13-15 per cent in 2003. In the latest round of the detergent wars, both HLL and P&G slashed the prices of the sachet packs of Ariel Compact and Surf Excel, by half, to Rs 1.50. Prices of lower-end products such as detergent bars have also been cut.

The year also saw price cuts of 15-17 per cent on leading toothpaste brands. And if you were scouting for even better bargains, you had regional brands such as Ajanta and Babool offering 50 g toothpaste packs priced at just Rs 6 and Rs 5. Makers of higher-end products also took another look at their `value equation' and rejigged prices and pack sizes in shampoos, fairness creams, and shaving razors. Soft drink makers too followed suit, with the Cokes and the Pepsis now cheaper by between 15-16 per cent, compared with 2002.

Durable prices cool off

Marketers of consumer durables also continued to hack prices to drive sales, with the LGs and the Samsungs leading from the front. After a series of price cuts this summer, you could acquire a one-tonne window AC for much less than Rs 20,000. The room AC segment also saw a slew of new launches, designed to fit the middle-class consumer's purse. Prices of higher-end washing machines also drifted down, as marketers tried to infuse some verve into the sluggish category. Offers, `festival' discounts and freebies were ubiquitous, both in durables and FMCGs, as retailers and dealers joined the manufacturers in rolling out special promotions to bring more footfalls into their stores.

Loans for a song

In cars and two-wheelers too, it was the `offer' season, with free gifts (gold rings and microwave ovens came free with bikes) and impromptu discounts holding sway. Price reductions apart, big-ticket purchases were made much easier this year, by the downward drift in interest rates and the easy loan regime. Both manufacturers and finance companies practically queued up at your doorstep, to offer consumer and vehicle loans at all-time low interest rates of between 10 per cent and 12 per cent.

Services cheaper too

Year 2003 also saw marketers across categories pull out all stops to grab a larger share of the consumer's wallet. So price cuts, freebies and offers were not restricted to consumer goods alone, but were very evident in services as well. Domestic air travel was well within reach this year, thanks to the `apex fare' schemes, which were run throughout the year by both Indian Airlines and the private players.

Talking to your cousin in the US got infinitely cheaper, with both mobile talktime rates and STD/ISD rates plumbing new lows. Travel packages tailored to fit the smallest budget were marketed aggressively.

Yet, it was also a year of contrasts. While branded and `lifestyle' products were more affordable, you were likely to have shelled out much more for your basic needs. With commodity prices trending up, price tags on staples such as rice, atta sugar climbed by between 10 per cent and 13 per cent in 2003, making a hole in your grocery budget. Your local telephone and electricity bills probably swelled in 2003.

Gold prices also played spoilsport, rising by 11 per cent over the year, recently breaching the Rs 6,000 per 10 g mark.

But 2003 has still brought in much competition in every segment, even in the mundane ones such as groceries and the basic utilities. So you can be sure that even if marketers do peg up their prices in 2004 in response to rising input costs, they will be pretty careful not to upset the hard won `price-value' equation.