How they rip you off in the USA? As an MBA from a top business school in India I had been taught and accepted it as axiomatic that it was the American management gurus who had discovered the great Marketing ideas like CUSTOMER IS KING .

I have been doing research in this aspect of American management wisdom along the same lines as my research into Indian traditional wisdom—the latter will be featured in my forthcoming book CAN INDIANS THINK ?

I have yet to start work on my book detailing my findings on U.S management wisdom but let me give you a glimpse of what is in store. I decided to experiment with purchase of a simple gadget –after all the U.S is the home of many innovations in gadgetry.I have a big collection of music cassettes which I wanted to convert into music CD’s. I read about a gadget that would help me do just that in a magazine called SKYMALL that is an in-flight magazine. The cost $149.95 , a tidy sum.

I decided to do some research into this. The gadget consists of a box like thing that lets you transfer your music from a cassette to your PC. Thereafter you can download the stored music into a CD sounds great. But what about the cost ?

I went into an electronics goods shop where I saw a substitute product that cost $ 140. I then went into that Mecca of shoppers where I was told that they did not stock the product but the helpful sales guy told me $ 140 was a rip off and I should try on Amazon or Ebay.

At AMAZON I noticed that the product cost $ 137 after a discount, Was that fine ? I saw a product review right below this item on Amazon and what did I find? An irate customer who had bought the item had got disgusted at being cheated. Not only did the product not do its job well but he said that the job could have been done easily by a ‘ Y’ connector and a stereo plug The cost $ 15.

Presto. My ‘ project cost’ de escalated from $ 149.95 to $ 15.
I learnt a classic lesson in marketing fit for inclusion in my book ‘ WHAT THEY DO NOT TEACH IN MBA CLASS’.

The interesting trick that marketing geniuses in the U.S apply is still more interesting—sell a product at ridiculously low cost even give it away free . Make money on accessories !

My diabetic readers will agree with this . Companies are ever eager to give away glucometers free and they advertise this as if they are concerned about your health . Once you get a meter free you realize that you have been tricked. The strips that you are encouraged to use thrice a day cost a small fortune !What the pharma companies give with one hand they snatch away more than that with another hand .

Pharma companies here are the most innovative. First they ‘discover’ a molecule of some interest. Then they lobby with Congress to amend the laws to facilitate the introduction of the drug and with FDA to approve the drug with perfunctory tests. Then they come up with very innovative ads that seek to convince you that you have an ailment that HAS to be addressed immediately. The ad says that you ought to ‘ ask your doctor if XXX medicine is right for you’.

Meanwhile the doctor community has been lavished with gifts so that they are ready with prescriptions for XXX when you show up at their clinics. !

Years later you see many ads this time from lawyers who tell you that if at any time in the past you had taken xxx and if you now have some adverse symptoms then help is at hand. The lawyers will launch a class action suit .Hurry up !

By the way of you though that selling toys like Barbie was child’s play you may be right This toy is bought from China for less than a dollar and sold in the U.S for at ,least $ 25. Sometimes you are offered a ‘generoous’ discount and your kid can yell with joy to play with Barbie for only $12, If you send in a coupon you can get it for an even lower price of $ 10. On Christmas day you can get it at a bargain price of $ 9. ! It’s a steal. You bet.
Why are they cheating customers in this fashion?. My answer is —THEY ARE NOT CHEATING

Markets are not about morality. They are about profits. One of the techniques of pricing is –what the market is willing to pay . Customers are willing to pay $ 20 for a Barbie .That’s justification enough .Why are they willing to pay ?

Here is where the traditional U.S wisdom comes into play It says there is a sucker born every minute. I almost became one. By the way a survey was done on whom Americans hated most. The general hate objects ? First Investment bankers Then pharma guys ! What is India’s contribution to management wisdom ? In God we trust. Rest strictly in cash. Watch this space for more.
K.R.RAVI .