The Curious Case Of Traditional Subji Walas & Mushrooming Of Indian Start-ups

The Curious Case of Subji Walas & Rise of Indian Start UPs:

Aalooo(Potato) 12 Rupaye Kilo
Aaloo(Potato) 10 Rupaye Kilo
Aaloo(Potato) 8 Rupaye Kilo

These are often the sounds that knock at our eardrums when we visit the Subji Mandi (Vegetable Markets), but if we look closely, the frequency of these sounds are much lesser in the morning and daytime and much higher at the fag end of the day.

Why? is needless to answer, yet we learn an important lesson of Branding i.e. that seasoned subji wala wants to ensure a brand consistency & avoids brand dilution by cutting costs & his margins, so he can ensure a fresher stock and a consistent quality delivery to his regular clients.

He delivers freebies such as ‘dhaniya and adrak’ and other things that don’t cost him much and essentially it helps the customers not having to purchase them separately.

Notice: The freebies that he offers don’t have a tangible price tag associated with it and quite often he refuses to ask money even if a newbie customer tries to offer.
Now one may think, why does he do so? Losing out an opportunity to earn a couple of extra bucks when each buck counts.

And once again the Principles of Psychology come to our rescue:

  1. The Goodwill that he earns is far higher in worth than he would have earned by charging some amount.
  2. He inspires loyalty.
  3. He ensures that there is no price tag attached to his service so that customers often have an emotional reason to stick to him & not a rational comparable tangible reason!

Because, the tangible reason (i.e. Core Monetary Discounts) often can be matched by a new competitor but it’s the irrational, emotional
and the intangible reasons that often can’t be measured and matched by a new entrant and therefore he is less likely to lose a customer to a competitor or a new entrant.

And not to forget, a large fraction of us humans are risk averse, so if we are getting a satisfactory level of delight/service, we often tend to avoid taking a chance upon new entry until and unless that new player is offering something completely extraordinary.

(Reference: Michael Porter’s 5 Forces)

Consumer Buying Behaviour:

  1. Brand Difference Significant & High Involvement: 5 Stage Decision Model
  2. And when Brand Difference is Low & High Involvement, then customers opt for Dissonance Reduction behaviour.
  3. When Brand Differences are Significant & Involvement is Low: Customers often go for Variety Seeking Behaviour
  4.  When Brand Differences are Low & Involvement is low as well: Customers go for Random Picking

Now in the Business World-

There are 4 main strategies:

  1. Existing Markets Existing Products: Market Penetration Strategy
  2. New Markets Existing Products: Market Development Strategy
  3. Existing Markets New Products: Product Development Strategy
  4. New Markets New Products: Diversification Strategy

Marketing Theories & Models are often relegated to a backseat. But as and when we observe the evolution of Indian E-Commerce & Start Up Scenario
We realize that All those theories & models are not as much of common sense & redundant as people often underrate them to be.

(Classic Example: Amazon despite being the latest one among E-Commerce Giant has already built a large base of Loyal Customers, solely by Strictly adhering to its core values its brand essence and putting Customers first and delivering a superior customer experience rather than just focussing upon the discount race)

A Classic Marketing Theory Says:
Discounts are often for either:

  1. Finishing up the old/perishable stock to bring new stock
  2. Induce Trials in the Non Users to reduce their risk perception

But when we currently observe the Mad Race in the Indian Start Up zone, we are compelled to think? Is it truly sustainable?
Do all those start ups really believe that Discounts is the end and be all of Marketing?

What about, Customer Experience, What about Superior Product, What About Delivery Times, What about Responsive Customer Care & What about all other possible aspects that make a customer feel the brand difference against the competitor offerings.

When Essentially the E-Commerce, The Food Tech, The Hotel Reservations & Other such mushrooming sectors are offering: Service Convenience. Then Shouldn’t the focus be on offering Extraordinary Service Convenience,  than offering repeated discounts to a customer who has already availed your services and is well aware of the cost vs benefit analysis of your offerings?

Perhaps the metrics currently is solely to get the Maximum App Downloads or Maximum Visitors?

But the time is not far when the Investor Matrix will turn to:

  1. Show us How you are different from any other player in the sector
  2. What all did you do to acquire these many customers apart from Giving loads of discounts from previous round of Funding?
  3. What is the total Revenue & How much profit and how soon do you expect it?
  4. Of the X no. of Customer base that you have, How much % of those will stay loyal to you when you start charging 15-20% higher markup from the cost it incurs to deliver your services?
  5. Do the Customers have the paying capacity on a regular basis for the services/products that you are offering? If Yes, How much & how much profit do you expect from that regular user base? (for example a hypothetical 10 Lakh regular users is far better than 30 Lakh 40% discount Promotion flocking users)
    Do the Indian Urban masses who has the paucity of time have the paying capacity to become dependent upon you in the longer run?
  6. Convince us that what you are offering has become an essential part of your current user base and they will not go back to the traditional routes even if you become one of the few last standing players?

Perhaps it’s time to go organic or rather even going the Intangible the emotional the self expressive & irrational immeasurable way to make the customers feel special and valued and not the ‘Paise Fek Tamasha Dekh’ method’

Perhaps it is,
Time to Think!
Time to Revisit the Good Old Strategy & Marketing Books, & It’s time to take a few leaves from the books of Companies that are known to walk the extra mile and now enjoy a wide base of utterly loyal customers.

Nikhil Mukhija

Life makes a Good Manager out of us. .. ...