A reflection on class #2 (Tuesday, Sept 14/10):
I remember on the first day of class we were asked whether we thought it was ethical or not for companies to sell the same product for more to one type of consumers and less to another. I remembered clearly, thinking that this marketing strategy was unfair because the price was dependent on the consumer and not the product itself. But, during this class, we discussed about the Tato Nano and its introduction to the North American market. During this discussion, I found out that the retail price of the Tato was $2500cdn in India while it was hitting the market here at just under $10,000. Looking at the differences of the prices (just under 5 times more in North America than India), I wonder what the factors affecting the dramatic price difference is:
(1) Worker Wage: Without hesitation, we definitely agree that the wages in North America are a lot higher than that of India. Because of the high wages that employees benefit from here, the cost of production inflates significantly
(2) Safety precautions: It is the law that operation vehicles must be equipped with 4+ safety airbags, windshield wipers etc. The cost of these materials also inflate the price of production also.
Through this lecture, I realized that my thoughts have been biased. I only stood at the perspective of the consumer and failed to recognize both sides. The Tato Nano is considered a luxury for developing countries such as India, while the Tato may only be seen as a cheap car targeted for consumers with a low budget in North America.
For your reference: This is the current mode of travel in India
