Reasons Behind Changing Pricing Consideration & Approaches: The Indian story
With the rise in urbanization, more and more people in Indian cities are buying groceries from super marts. Many local as well as international chains are now operating in this highly competitive sector. However as a result of increasing popularity of BIG Bazaar (which is known for selling products at a heavy discount), many industry player’s have forced to reduce prices via the means of selling products under their own brand name (Smartchoice, used by Spencer’s retail etc).
In terms of market share Big Bazaar is one of the largest players in the Indian supermarket segment, it has nearly 70% of market share. Even though there are many players which have come up in recent decades, still they haven’t been able to break the stranglehold of big bazaar. Kotler 2008 mentions in competitive markets, firms which make pricing considerations that are more customer driven over product driven are more likely to grow as compared to their rivals. An example of a unique pricing approach which the Big Bazaar has come up with is “Sabse Saste Saat din” (Cheapest ever 7 days), whereby they sell products at rock bottom prices.
(http://annualreport2013.blokkerholding.nl/Household/BigBazar.aspx) Follow the link for more details
Cost Leadership Strategy & Using Celebrity Endorsements
Gulati, Jain (2010, p.15) mentions that Indian consumers as a result of becoming more well-informed, practical and demanding have become more price conscious in recent decades, they now want more value for money. Since inception in the year 2001, Big Bazaar has targeted customers via the means of keeping costs low. In a way by adopting a cost leadership strategy, the company has captured majority market share and has maintained the stranglehold over the years. As a result of rising cost of living in urban areas, more and more consumers look forward to getting more value by paying a low price.
In order to counter the threat from online shopping portals the company is spending more and more money on advertisements. Top celebrities are endorsing the product in adverts which showcase high quality at low prices, discount schemes are being launched time and again, in a way the strategy is working as consumers are availing good quality at affordable prices.
There are many factors which affect pricing consideration, one of the main ones are
- Lowering prices as a result of competition: In order to maintain market share the ones with the largest share try and focus offering high quality at low costs. With regards to this particular aspect as a result of being a market leader an knowing the growing threat from new and emerging chains Big Bazaar comes with high value offerings at low cost time and again.
- Market demand: The more the market demand the more imperative it becomes for firms to focus on pricing considerations (Kotler 2008, p.275). There is huge demand in India, Big Bazaar via the means of tying up with large scale wholesalers in different parts of the country has not only ensured that they meet the growing demand but also ensured that prices are kept under control. In a way the company is able to sell high quality products at low prices time and again. Also the effective logistics division of the company ensures fresh produce is available to customers at all point of time.
Another strategy which Big Bazaar uses in order to attract more and more customers from a price point of view is the fact that all products are sold at prices ending 99 (Rs 99.99 instead of 100). Even though the difference is only of a rupee, still from a psychological point of view it is a bargain to the customer as instead of spending Rs. 100 or above, they have spent below the mark.
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