Diminishing margin of grace

Diminishing margin of grace

thomas September 3, 2010

(First appeared in The Hindu Business Line, September 3, 2010)

Is the customer looking for it anymore?

The 13th loaf was the baker’s margin of grace to cover for any shortage in weight when selling a dozen loafs.

Whatever happened to the baker’s dozen? Why is it that except in star hotels and dhabas, onion slices are not part of the deal anymore?

The 13th loaf was the baker’s margin of grace to cover for any shortage in weight when selling a dozen loafs – the practice is now extinct but for the dictionary. Meanwhile, onion slices have moved into the menu card, as part of vegetable salad.

The grain merchant always threw in more than a fistful extra and the milkman some extra milk, presumably to cover for any shortage or spillage. Milk is now sold in sachets, grains in plastic bags, all pre-measured and labelled. Any extra content would be a waste – no customer will notice the difference.

In order to protect labour rights in Kerala’s paddy fields, flags are hoisted to signal start and stop of work. The flags, and not the task, have become the determinant of work hours. Labour knows the landlord has to pay minimum wages for any work. The landlord considers the wages too high. Lost in the transition is the grace of free lunches and tiffin. With all its faults, and in no way wishing for its return, feudalism had room for discretion, and therefore generosity. Clearly, mandatory rigidities and rights have pushed discretion out of transactions.
The working hours displayed on office boards were once the minimum assured business hours. Today, they are the outer limit, eaten away by the reverse margin of grace for late-coming and personal work.

At wage and bonus negotiations in industries, both sides know the eventual figure, based on historic data. But there is, equally, enough historic evidence to know that, much like the foreign secretaries of neighbouring countries resolving border disputes, each will first pitch the flag deep into the opposite territory. The buffers created, for surrender during negotiations, are the exact opposite of the mutual margins of grace. Whereas to bargain is human, the margins for negotiation have grown so much that you clinch the deal for a third of what the shopkeeper in Karol Baug first quoted for the jacket – and yet cannot stop wondering how much you have overpaid.

Road rage is an example of zero margin of grace. A spin-off of increasing awareness of rights and equality is the diminishing margin of concessions and considerations in gender interfaces, visibly in queues and in buses. Generosity among equals is a casualty in the rough-and-tumble of work-a-day scramble. In homes, even spouses are drawn between the matter-of-fact and the matter-of-heart. When pocket money is seen as a child’s right, it is demanded and conceded.

Choosing products
The Plimsoll line drawn by legality is increasingly becoming the acceptable standard for commerce. The contents of the balm are printed on the tin container. So how does it matter that under the bubble-shaped lid, the balm is a concave slice, rather thin in the centre and shaped like lenses for the acutely myopic? What if the content is less than what is perceived?

Store shelves with price labels have taken the place of the shopkeeper and his assistant. So we have impersonal tokens of grace like 50 gm extra at the same old price, or bundling a free soap with every yellow tooth paste. But the aftertaste is not the same. The customer sees it as a product with a temporary, sweetened price tag. She compares the prices of the white, blue and red toothpastes, and the soaps in the next shelf, though 65 gm and 145 gm soap cakes do not make mental mathematics easy. Her rusty faculties exposed, the customer exercises her option to choose and moves to the cash counter with no great sense of elation or brand endearment. Add-ons, bundling and discounts are already factored into the purchasing decision. There are no unexpected post-purchase delights.

Margin of safety
Forget margin of grace, even margin of safety is under threat. Do we blame competitiveness for the diminishing margin of safety when private buses pass each other, worse still overtake, on narrow winding roads outside towns? Margin of safety is also under periodic attacks from value engineering – when 10 mm can take the weight, why waste 2 mm by using the 12 mm plate? It makes a difference on the balance sheet. When a single stitch can turn the cloth to a ready-made shirt, why do a double stitch? The value proposition is complete, with the buttons barely staying on the shirt with the minimum thread.

Economy products
Economy products have less responsibility for the margin of grace because customers least expect it. The elation of an upgrade to ready-mades with some money saved, is by itself a lasting aftertaste. Same with the ground-to-the-skies upgrade in budget airlines, at marginally higher cost. Expectedly, budget airlines have discovered new highs in value engineering. They have cut frills, manpower – and with less to load – the turnaround time at airports, improving punctuality. But once you take your seat, the angry passenger in front of you turns back and glares at you and you realise that your knees have intruded into the seat he has paid for. It becomes clear that nearly 3 cm has been saved in each of the 28 rows, to create a bonus row of six seats. That is, over 3 per cent of extra revenue without proportionate extra cost, and therefore neat profit. The 3 cm saved constitute a vital margin of freedom for the knees at a time when people are getting taller. So what? The product still delivers on its promise: a seat that takes you from one city to another.

This is different from the Ginger hotel’s model of functional rooms sans room service: sprightly settings, insightful amenities and friendly, multitasking staff – all this at incredibly low room rates, lower if booked online. A room in Delhi for Rs 1,000 is a brand statement, like Laxman’s common man caricature and the one-rupee ticket for Air Deccan. Having rested the night at less than a one-twentieth of what it would have cost your company in a star hotel, you feel guilt-free, almost saintly.

Where Ginger scores is in not cutting corners of what its defined customer group considers essential and desirable. Smart frugality becomes the single-minded brand proposition – in product and pricing. Honesty is a strong brand value, especially tailor-made for low-priced products. Peter England made it through the “honest shirt” proposition. The clincher was, at least for those who read it, a news report that Madura Garments were cross-subsidising Peter England with the help of its more remunerative, premium brands.

The budget airlines have an opportunity here, not just in branding but in the core customer experience. Currently, for whatever reasons, the difficult seats are palmed off first at the check-in counter. If the airlines were to let customers make informed choices, and honestly tell the latecomers that what are available are no-push-back seats, then the early birds now flying frozen like wooden chairs will not feel done in – and thanks to the fear of punitive seats for late check-ins, flights will be ready for takeoff even faster. Economic, honest, punctual – who is then bothered about the margin of grace?

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