Satisfaction Cost

“How much?”

“Combien?” (French)

“Cuánto” (Spanish)

“Quanto” (Italian)

“いくらですか” (ikura desu ka?) (Japanese)

No matter which language you use this is one expression that is universally important!

How to ask the price of something is an essential phrase whether you are out visiting the market or “agora” in Greek or shopping in the neighbourhood market for melons.

The significance of this question is twofold - to find out if you can afford it and to judge whether it’s worth that price. The order of these considerations changes based on various factors.

And then there’s the whole economics of price vs. supply vs. demand. There are already many books written on this topic so I won’t go into that. However, I do want to discuss the price vs. perception of quality phenomenon.

In Hindi we have a saying, “Mehnga roye ek baar, sasta roye baar baar” meaning the one who buys expensive cries once (for having to pay a high price) but the one who buys cheap cries again and again (when the thing breaks down or lets him down).

Generally, that’s the idea, something that’s more expensive is better in quality. This was based on certain factors that were true in the industrial age. The price of the item depended on the materials used, the workmanship, the machines and other manufacturer-oriented factors.

And then entered advertising into the field. If you could make the consumer want the item, the actual quality of the item could be made secondary. Readers of my blog, and my friends (and strangers) know that I don’t like iPhones and I have commented more than once that they would be alright if they were priced at about £100-£200. It’s advertising and clever marketing that allows Apple to sell them at the exorbitant price that they don’t deserve.

So, what is the real driver for the cost here? It’s Satisfaction. Companies are able to set the prices of their products based on how much a given product will satisfy the customer. You would be more satisfied carrying the likes of Samsung, LG or Sony mobile in your pocket than some unknown brand that originated in a nameless factory in a far east Asian country. The factory maybe situated down the road from the Samsung factory but the product would not give you the same pride, same assurance, same Satisfaction if you will...

Given that it’s not simple enough in these times to compare two products and judge their intrinsic quality from holding them in your hands like you could compare two earthen pitchers, it becomes necessary to take things at face value or Brand Value.

This phenomenon causes the disconnect between cost and price. Companies no longer set the prices  of items based on their cost price and overhead but based on Satisfaction Cost, what the consumer can be made to pay for that item.

[Credit to my brother Anil Goswami, for the term: Satisfaction Cost]

Vijay Mallya - Kingfisher Airlines

The expression comes to mind "Chadhte sooraj ko sab salaam karte hain." (Everybody salutes the rising Sun). There was a time when Vijay Mallya was the Man, everybody you talked to sang his praises and suddenly all you see about him is the comedy skits and people making fun of him. What happened? Nothing happened, it's just that his airline is in financial straits right now.

I am a man who deliberately stays away from news. Newspapers, TV, Radio, Internet, I don't follow news anywhere. So my news comes filtered through indirect channels like blogs, comedy shows etc. I think that gives me a unique, unbiased perspective on this man. My opinion of him is based on my contact with his business - Kingfisher Airlines.

The first time I flew Kingfisher was about 7 years ago from Poona to Delhi, a short, domestic route of 2 hours flight. I had flown that route before but with Spicejet. The ticket with Kingfisher was double of Spicejet's even in the same economy class. But I wanted to try it.

It was my hard-earned money that I spent on that ticket but I had no regrets. It was worth ever penny! The difference on tangible and intangible levels was amazing! First of all the most important part of any service industry - people. I have been told that Vijay Mallya handpicked his staff. Whether he really did or that his training program was exceptional, I can vouch personally that Kingfisher's staff was exceptional in the true sense of the word. I have never seen any airline staff so attentive and polite and my experience includes several international airlines. Kingfisher staff right from the moment you entered the terminal was always on hand, always very proactive in asking you if you needed help and very proficient in their jobs.

Being a man I don't look much at the male staff, but never forego the chance to look at the pretty airhostesses. (I have heard they are called Stewardesses now, yeah, like I care.) Kingfisher's airhostesses were always good-looking, always dressed smart and nice (attractive I'd call it, not sexy) and the behaviour from them was courteous and professional to a degree almost impossible to find in any Indian service industry.

By that time I had flown so many times that I could recite the security briefing by heart "Iss vimaan mein chaar dwaar hai....aapaatkaaleen sthiti mein.." (This aircraft has four doors...in case of emergency..) but in Kingfisher I watched this briefing with my full attention, and then I watched it in English with the same attention. Why? Because the announcement on seatback screen was done by the gorgeous model/actress Yana Gupta! Vijay Mallya appears in the video right after and promises warm hospitality by his airline and gives his personal email address to contact him directly if you have any complaints.

We all know some flunky in headoffice would be in charge of that email account but it still feels very good. The IFE was always populated with relevant programs and I was always spoilt for choice.

And they give a small gift packet to every passenger, even in economy class. It had a pair of Kingfisher branded headphones and a pen etc. but a gift is a gift. Nobody else had ever given me a gift even when I flew to US with them.

It was these touches which made my experience with Kingfisher so great that I never bought a Spicejet ticket again even though I owned stock in Spicejet.

Years later when I was looking to blow some money by buying a business-class ticket from UK to India I looked for the best business class available to get the most value for my money. You know what I found? That Kingfisher Airlines was the world's first and only 5-star business class airline! Even Virgin, Jet and British Airways are 4-stars. It made me feel a little proud that an Indian airline had that honour!

Sure enough this time I booked my flight with Kingfisher without any doubts. And the experience was memorable for life! I have no regrets.

And now that airline is in financial trouble. But like Jesus I will ask who among us has never been in financial trouble, who has never made a wrong decision when dealing with money? Maybe the beggar on the signal is exempt from this but other than that anyone who deals with money, including Baba Ramdev, makes mistakes. I cannot condemn a man for making a wrong decision in business.

Maybe I am ill-informed (I will make no attempt to fix that) but I don't look at Vijay Mallya with disdain, I think he is a very intelligent man with a flair for living life King size. All these people who were singing his praises yesterday can jeer and point fingers all they want, I for one, wish him the best and hope that he comes out of it, and Kingfisher Airlines flies again.

I may be the only one saying this but I don't care.