Low Pricing @ What Cost ?
WEEKEND MUSINGS
Hi, I am Hima Bindu. Me and my team of women entrepreneurs seek to create a brand in the goat meat industry, where traditionally our male counterparts have called the shots. Just as the week draws to a close, I wish to share my experiences, hypothesis, learnings from my day-to-day work life, from the board room to the field with all of you, through my fortnightly articles titled “Weekend Musings”. Whether you agree or strongly disagree, lets have a friendly exchange of ideas and experience. ??????????????????????????????????????
HOW MUCH?
One aspect of business that has always intrigued me is “Pricing”. As the founder of a startup, I had relatively easier decisions to make regarding other aspects of business. But when it comes to pricing, it is always tough. After endless calculations and excel sheet sessions, just when we believe that we have hit the right mark, our Sales teams come back to us and say “They are getting it at 10% lower than what we are offering “. What 10%? How is that possible? Especially in the livestock sector where there is absence of production technology or factory techniques and most organized rearing is more or less the same (except when reared in scale).?If you have got my drift, you would know that this blog explores a cliched relationship between price and quality.?
Determined to find out how we could price better we decided to run a more detailed study of our competitors pricing strategy. And what better place to start than the product? First stop a HORECA client who was sourcing goat meat from a vendor @ 10% lesser than what we offered. We request him to hand over a sample of the carcass that he sourced. And it didn’t take much time to realize why he had a pricing advantage over us.?
Almost 20-25% of the weight was manipulated by injecting water into the carcass. All in all, while our client assumed he made a 10% saving he was actually paying 25% more. He feigned ignorance when we demonstrated this to him, however we were convinced that it was not possible that he would not have noticed this. Why did he not react? Was it because he wanted to negotiate with us for a better price. Or was it because psychologically price is a figure that ticks in our mind, which gets us to overlook other aspects of a product. For example, how many of us would know the difference or say the quality ingredients used in a biscuit selling at Rs.5/- and a biscuit of the same quantity and make, selling at Rs.10/- a pack in the market. Maybe that’s why they call it an impulse category, no time taken to assess the decision and it’s in such categories that pricing is one of the sole criteria on which purchase decisions are taken. However, such consumption has long term implications for our health.
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Cut to client 2, also a hotel but this time it was a fine dine. More chefs, more sourcing personnel meaning more screening of purchases. Water injection techniques here are of no use. Here we were Rs.30/- per kg costlier than the shortlisted vendor. Sample of meat showed no signs of water injection, weight manipulation or other malpractices.?On a more careful examination we found out that the bone meat ratio which in goat meat is a crucial factor, was on the higher side. Which means the carcass had a higher bone density when compared to meat. In the goat meat industry local techniques grade meat under 3 categories. Grade A (Higher meat density compared to bones), Grade B (Average or equal bone to meat ratio), Grade C (Relatively lower meat to bone ratio). The Fine Dine was sourcing Grade B meat which we could offer at Rs.10/- lesser than what he was sourcing it at. An educated debate with the Manager and 10 minutes later he bought our point.?
Numerous other instances and malpractices such as ageing meat, unsold stock not properly stored leading to rotting and being sold at lesser prices in the market, dead & diseased goat meat sold at a fraction of market prices etc. have come to our notice. There is wide coverage of such instances in the media as well. Product compromises are how low-price operators manage the market. The goat meat industry is dominated by unregulated markets and spaces where hygiene and quality are traded for price wins. And we as consumers are part of the problem because our consumption pattern revolves around pricing.?
Video 2??
Hopefully an organized meat industry with professionals at the helm could help solve most of these issues. That for one is our endeavor as well and we hope to succeed.?
I would conclude by not stating the obvious Price, Quality etc., my point here is that we as consumers should be more serious about what we consume. Our lifestyle disorders are mostly based on our intake and I guess food products should no longer be an Impulse category, let’s make it an Informed Category.?
!!!! LOOK BEFORE YOU EAT !!! ?
Regards
Hima Bindu Danthuri
CEO & Founder Kethi Goat Private Limited