Monday, November 28, 2011

Wooden Toys & Handicrafts : Disappearing

chanpattana toys
The basic logic behind segmentation is that there is heterogeneity in demand and  there would be demand for products /services across the value spectrum. But then today in many categories we can see mass manufacturing over-weighing this logic, we can see that happening in the case of traditional handicraft products, products made from clay, wooden toys.

The list is very long , and some of these products have even disappeared and for those which are still around you have to search for them as they have been substituted by cheap Chinese products. I have nothing against cheap Chinese stuff, I do realize that they do offer a value proposition for many of us. But my issue is that many retailers and even manufactures have abandoned the little high price reasonable quality (LHPRQ) platform in the market. They have started believing that only cheap (many a times low-quality) offering is the only offering which the consumer is interested in.

I also realize that with the advent of these 'cheap' products the market for the LHPRQ products must have shrunk, but if one is willing to wait out there would be a lot of consumers who would after some time look for better quality products. And in the meanwhile you would always have your loyal followers...

Wednesday, November 2, 2011

Price Discovery through Fevicol

The other day one of our Guest Speakers Mr Manoj Shelar shared a very interesting example on price discovery. He said that at one point in time many of the plywood stores would deliberately sell Fevicol at a much lower price because carpenters would use the pricing of fevicol as an indicator of how the shopkeeper would price other products. The shopkeeper in turn would deliberatley keep the price of Fevicol low and then make his profits from plywood and other products.

I have always felt the same strategy is used by the sweet shop people, where they price their samsoas very low....

This strategy is used by many other retailers too, also known as the loss leader strategy, where there would be some categories in which the retailers would not make any or only a little profit, but they would increase the traffic to the store. And once you have more walk-ins the overall sales would improve and the retailer would make profits.
 

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