The relationship between a brand and its intended end user is a critical consideration made at the products’ concept level, where the strategy is conceived on how to give the existing competition a run for the money, by grabbing as much market share as possible.
Recommended Retail Price (RRP) is the particular price at which product manufacturers decide their products should sell at the final retail point of purchase. It is a rule as well as advisory; it is instructive and acts as a guide for consumer-trade exchange at the market place. RRPs are derived from the totality of the costs invested in the production of any particular product, plus a profit margin. It is recommended because at the point such prices are determined; all costs are taken care of, interestingly inclusive of the margin due to the entire trade till the point of retail purchase.
In other words, RRP can also serve as a market stabilisation instrument in a situation where the strength of a brand and its market acceptance tempt trade to aggressively amplify the tendencies to optimise profit, in disruption of the product’s personality. In this case, such products stand the risk of losing consumers’ confidence and shelf off-take, endangering its market performance. When this threat is imminent, brand managers are warned to activate RRP to protect such a brand against consumers’ odium and strengthen its competitiveness.
Unfortunately, the RRP with all its promises and influence has come under total disregard, with the direct consequence on consumers. In the years preceding the year 2000, RRPs are held sacrosanct. Brands invest huge sums of money to communicate RRP for it is worth; when such is determined are communicated, it sends signals to all stakeholders, driving warning signal to all, because it is a classical response to identified inconsistency along the chain of distribution. It is common knowledge that distributive trade chain is open to price manipulations in order to optimise profit (especially in the FAST-MOVING-CONSUMER-GOODS segment. Commonly referred to as ‘penny-market’, brands in the FMCG category sell at small prices, whereas investment outlay at the entry point for big bulk breaking is very huge.
Speaking to NATIONAL ECONOMY on this issue, a brand management consultant, Pwano Maxwell said; “down the line, trade investors earn ‘pennies’ for their huge investment. Interestingly, however, the attraction is in the big volume and speed of shelf off-take that makes for the small value of earning build-up. But there lies the temptation, among some operators; the tendency is to manipulate the recommended price at any point of the distributive process, for profit optimisation.”
“For many reasons, he continued, some of which are mentioned above, manufacturers are charged with the responsibility of price monitoring and regulation, by keenly regulating activity of trade. Sadly, growing commerce is gradually being tainted with so much manufacturer-trade indiscipline that price manipulation is threatening consumer rights protection.”
“From mobile phones airtime purchase through carbonated drink market to food seasoning, price manipulation is evident; there are many cases of same product and size selling at different prices from one place of purchase to another,” he added.
Also speaking on this development, a lecturer of Economics from Benue State University, Comrade Emmanuel Jikeme told NATIONAL ECONOMY that; “recently a mobile telephone service provider became notorious for trade-induced marginal retail cost, borne by its subscribers. It was so bad that the brand attempted an awareness campaign which achieved next to nothing, because of its evidently limited scope and its ineffective strategic support.”
According to him, “it is even not enough to communicate RRP if such consumer information is not backed by trade monitoring and sanction. Without the corporate monitoring/policing for sanction, concerned brands tend to paint the impression of either complacency or collaboration.”
“Consumers must be protected against price manipulation by the trade. Brand handlers must live up to their responsibilities to manufacturers and consumers in their business dealings. We are all equally challenged by economic downtime, and so it is only fair that rules of trade-consumer engagements be adhered to. Brands/ manufacturers must step up to their responsibilities; consumers must be protected against abuses in form of price manipulations.” he noted.
