Green Kitchen – https://g.co/kgs/XU7XfLz
So there is a concept of Poli Bhaji Kendra (PBK) that is thriving in the prosperous, western districts of Maharashtra!
These are shops which sell normal everyday home food at extremely cheap prices.
And there’s so much competition, that the prices and margins are in a perpetual downward bidding like any other free market business.
But this one, The Green Kitchen PBK is a monopoly among the PBKs!
So how did they build this Monopoly?
- Pricing Startegy
So, all PBKs are compared based on the price of the Chapatis and Bhakris. In the mind of the customer, whoever sells the cheapest Chapatis and Bhakris is the best PBK.
So, Green Kitchen decided to price them cheapest.
Green Kitchen sells Chapatis for 8 Rs and Bhakris for 10 Rs.
While everyone else sells Chapatis for 10 and Bhakris for 15 Rs.
Just like everyone goes to Dmart because Dmart sells the Maggie Noodles at a discount. (While it may be the case that Dmart sells Spices and Dry Fruits at much high margins than your local retailer)!
Then how does the Green Kitchen make money if it sells the main products for cheaper prices than everyone?
By selling other higher margin products!
Green Kitchen sells a 100 grams cup of Koshimbir (raita / salad) for Rs. 25 each! I see a 200% margin in that product.
And while people come into the shop to purchase the cheaper Chapatis and Bhakris, they end up buying the higher margin Raita and Rice products.
But the trick here is that people don’t “feel” that the place is expensive even though they end up spending much more here than at other PBKs! All this because of the Chapati pricing.