Does cheaper always sell better? Not necessarily

A few days ago, over dinner with a senior in the industry, I heard a really interesting case. It's all second-hand and I haven't had time to fact-check it, but it was so thought-provoking that I wanted to share it.

More than ten years ago, the leader of Malaysia's diaper market was Drypers, which had held the top spot for years. Then Japan's MamyPoko wanted to come in. When it first entered, people in the industry didn't rate its chances:

• Reason one: double the price. MamyPoko cost twice as much as Drypers. For a fast-moving, use-and-throw product, everyone assumed consumers wouldn't pay.

• Reason two: users can't complain. Babies can't say a diaper is uncomfortable, so quality differences aren't easily "expressed directly".

But the market developed in a way nobody expected.

Parents found that with Drypers, they had to change diapers three times a night, while one MamyPoko lasted until morning. The result? Within three years, MamyPoko went from "unfancied" straight to the top, taking first place in the market.

(To be clear, this isn't sponsored. In recent years Drypers has also invested more in R&D and improved its quality a lot. This is also a story from decades ago.)

Pricier, yet it sells better?

This story reminds me of a common misconception:

Many people think "the cheaper it is, the better it sells", especially for fast-moving consumer goods. But for some products, the pricier they are, the better they sell.

Why?

1. User pain beats price sensitivity

A mother getting up three times in the middle of the night to change diapers is a very real pain point. MamyPoko made "one diaper till morning" its value proposition and hit that pain directly. The price difference is nothing next to "a good night's sleep".

2. Perceived value and utility

Cheap Drypers, in economic terms, is "low cost but low utility". MamyPoko's higher price brings "higher marginal utility": better sleep for parents, more comfort for the baby. In their mental accounts, users magnify that value.

3. The "premium entry" strategy for consumer goods

MamyPoko didn't choose a price war with Drypers. It entered the market with a "premium positioning", built differentiation on high quality, and then gradually moved down-market. It's exactly the same playbook as Nespresso in coffee and Dyson in home appliances.

A price war ≠ a winning formula

When making a product, "cheap" is definitely not a universal weapon. The real key is understanding users' habits, finding the pain point, and solving it.

A price war can only buy short-term market share. The long-term market leaders are usually the brands that genuinely improve user experience and utility.