Discount selling kills brands: Mahesh Murthy of SeedFund

21 Mar, 2013

Startups are killing a brand and devaluing their business by offering discounts on products, according to Mahesh Murthy, founding partner, SeedFund, a Mumbai-based early-stage investor.

Speaking on Developing World-class Product Management at a fireside chat with industry bigwigs at TechCircle's DEMO India event in Bangalore, Murthy also said Indian tech startups need to develop their own tools to address a problem existing in India rather than blindly replicating a foreign product.

"Everybody wants discounts and it is not a phenomenon that is seen only in India. In fact, you don't need to sell anything cheap in order to get customers. By doing so, you are just spoiling a chance to grow the business. You need to focus on building a brand first," he said.

Murthy urged entrepreneurs to sell products on 'freemium'. "If an entrepreneur feels that he won't get customers without offering discounts, he better introduce a fremium model where the customer will get a feel of the product and chances are that he might end up buying the product. The quality always gets precedence." 

According to Murthy, SeedFund is focusing on Indian companies whose major focus is the domestic market. 

Murthy is of a view that entrepreneurs should not allow customers to take the final call on what kind of a product a company should launch. "Apple Inc co-founder Steve Jobs never took into account a customer before designing and launching his world-class products including iPod, iPhone, iPad and Mac. The company did not compromise on pricing. Still it went on creating its own brand globally. You can also follow in his footsteps and build a successful company." 

Murthy is of a view that by giving away margins, free delivery, cash back offers etc, e-commerce companies are killing their brands. "You need to understand customers' pain points and also give a world class experience to the users," he said.

(Edited by Prem Udayabhanu)