The pricing conundrum: Moderator Suhel Seth flanked by C.K. Ranganathan (left) and Rajeev karwal

The business today Crossfire in Chennai, held at the Taj Coromandel, was kicked off by moderator Suhel Seth with the same sponsor, Royal Challenge, and the same ground rules-and an exhortation to get to blows.

"Can Indian consumers be wooed by pricing alone?" was the vexed issue over which that was to be achieved. Rajeev Karwal, Managing Director of Electrolux, was to argue for the motion, and C.K. Ranganathan, founder, CavinKare, against. Yes, against.

Karwal began pithily. "Pricing is actually everything," he declared, before launching into the hundreds of price propositions being dangled before Indian consumers. Jet Airways' super-cheaper business class, Maruti Alto's gold offer and even Yamaha's 'Suhana mausam aaya, sunehra offer laaya.'

Even the morning's paper was packed with price offers, he noted, and Hindustan Lever's so-called 'power brands' were no different. Power, even for these, was little other than price, apparently. And how could anyone forget Akai's Kabir Mulchandani, who "rewrote the history of consumer electronics in this country" with his replacement TV offers that sent prices into a downward spiral and volumes soaring? "As the prices fell from Rs 18,000 for a 21-inch colour TV to Rs 8,990, the market grew from 1.7 million units in 1995 to 7.2 million in 2002." Or take the VCD market, where the upstart Oscar was selling 100,000 players a month, about half the market-priced at a steal.

"Ultimately, it is the price and price alone that makes the market," Karwal asserted, citing the value consumers see in the Rs 5 Coke, the diesel Indica, the Maruti 800, the Nirula's pizza, the seven-rupee McDonald's softie and the Ghadi suds pack (which is "doing to Nirma what Nirma did to Surf"). And then there's Barista the self-claimed experience brand. "Why is it reducing prices today?" he demanded, leaving his rhetoric to the floor.

"Ultimately, it is the price and the price alone that makes the market" Rajeev Karwal, Managing Director, Electrolux

Next was Ranganathan's turn, and he began by clarifying that CavinKare, contrary to media belief, was not really a price player-and was busy winning marketshare with brands such as Fairever, priced at a premium to the fairness cream market leader. In fact, Chik shampoo was his only real price aggressor. What he was objecting to, first off, was the 'Indian' part of the motion -because discounts on brands are common worldwide. Secondly, agreeing to the motion would be to mock the Indian consumer's appreciation of quality. "If pricing alone is the purchase criterion," he said, "it questions the very existence of brands." Everything would be a commodity. But that's not the case. From salt to soap, loose products command less money than branded ones. "Obviously people see value, and value is normally equal to performance divided by price." And when they bite 'special offer' baits, they merely go for 'incremental value' per rupee, not 'price' in isolation. Complex minds, discerning minds, are at work. "Consumers are intelligent. Only we marketers think that pricing is playing the trick," he said.

That was temptation enough for Seth to fling David Ogilvy's 'The consumer is not a moron, she's your wife' admonition into the ring, before inciting Karwal to hit right back. Who did too, by raking up the low-priced Chik as his opponent's biggest success, and reminding everyone of the correlation of onion prices with government longevity.

"If pricing alone is the purchase criterion, it questions the very existence of brands" C.K. Ranganathan, Founder, CavinKare

Value is fine, Karwal argued, but 'value' is driven by price. Ranganathan shook his head, outlined his 'value for money' thesis again-the entire equation-and called his opponent's price fixation the result of an illusion.

What about the 'bargain' mindset, asked Seth, was that price or value seeking behaviour-in a country where disposable lighters get refuelled? Price obviously, said Karwal, this being a money-deprived country "where condoms are being reused". Value, said Ranganathan, this being a country where housewives actually go from vendor to vendor looking for vegetables of acceptable quality to cook.

But Akai is dead, piped up someone, and so were price-cutters doomed to failure? "Wal-Mart is on top of the Fortune 500," replied Karwal, "and its basic proposition is 'Every day, lower price'." Akai's another story, he said. "I think the demise of Akai was because of many other factors, and not just pricing. But the pricing brought the company almost to an 18 per cent marketshare."

Sure, said Ranganathan, but consumers' consciousness revolves more around the value being derived from the purchase, not the cash being shelled out-so one cannot woo consumers with price, price, price alone.