Me: What is the rate of the apple?
Fruit Vendor: Rs.200/- per kg
Me: But in the wholesale market, the rate of apples is Rs.120/- per kg
Fruit Vendor: Sir, there in the wholesale market, you have to filter the good ones but we only keep the best quality apples
And then I realized one thing. How come this person know the concepts of Marketing, yes Marketing! He is charging a premium for providing extra service. Although, he is not an MBA, he hasn’t paid lakhs of money in fees but still he knows how to sell his products at premium rates and he is doing it quite effectively. At the end of the day, he goes back to his home with an empty cart.
But, how does he know all these things? Did someone give tuition to him? In order to satisfy my curiosity, I went to the market and talked to some of the up-market vendors. Yes, that’s what they call themselves.
If you observe them carefully, they maintain a difference between themselves and vendors who sell in a wholesale market. They dress up decently. Their shop is normally located at a place where the passers-by are mostly upper class and upper middle class. They stack their fruits in a systematic manner and all the fruits are covered in order to maintain proper hygiene. The fruits also bear stickers which enhances the authenticity of the fruits being of high quality.
Whenever a customer visits, the fruit vendors attend him with eagerness unlike their counterparts in the wholesale market. They will give you time and if you are sitting in your car or on bike, you don’t have to move, instead they will come to you. No matter what happens, you can’t just win a bargain with them! Many of them also keep a small board with them and on it is written – “No Bargaining, Please”. With the help of this board, they are telling their prospective customers that we are providing you quality products, not just an average product with low price. These fruit vendors have created such an aura that their regular customers don’t even ask for the price. They simply buy and pay whatever they ask. They have imposed such a perception in their customer’s mind that asking for price is considered a low class thing. They portray themselves as Maybach or Rolls Royce of fruit market, providing you with quality, comfort, and hygiene.
Now let’s discuss how they segment the market. They segment the market on the basis of income groups and primarily target the upper class and upper middle class. Now, what value are they adding for their prospective customers? They are actually reducing the toil involved in going to the wholesale market (as these markets are mostly away from residential sectors), filtering the good quality fruits, bargaining, etc. They are also hitting on the ego of their customers: Ego in not walking as a common man among the crowd and rubbing shoulders with other people. The most important value they are providing, though, is time and health. They are saving your time so that you can utilize it better and also providing you good quality fruits to stay healthy. But wait, who gave the customers all these perceptions? Yes, these fruit vendors themselves.[sociallocker]
Earlier when the only medium of buying fruits and vegetables was the wholesale market, people were forced to go there but now because of these independent fruit vendors, the upper middle class, who can afford to pay premium, prefer to buy from them. When I talked to some of these fruit vendors, I got to know some additional valuable information. First of all, they told me that they also buy from the same distributor from where the wholesalers buy and at the same rate. Then they spend time in filtering only the good looking fruits because according to them, that’s the first characteristic which attracts the customers. This is largely because customers can’t taste them before buying. The vendor also told me that he checks for quality by tasting fruits randomly (Sampling). He then asked me that if he sells me a poor quality fruit, will I come again to buy more fruits. I was a little shocked. That person, who didn’t even pass his metric, knows how to maintain loyal customers and has also perfected the art of executing it well. He further suggested that whenever a customer comes for the second time, he addresses that customer by saying “Sir” in a manner that makes the customer feel that the vendor recognizes him. This creates a bonding between the customer and the seller increasing the probability of repeat buying in future.
He also told me that he needs to remember the advantages of various fruits. For e.g. if a woman is coming straight to him after workout, to buy some fruits, he will also tell her the benefits of watermelon, papaya, etc. for health. This gives the customer a feeling that the seller is not trying to be pushy but is telling about the benefits of fruits and increasing the probability that the customer may buy more fruits than required.
At the end, he said to me one final thing. He said that Sir, if we are offering so many services and are adding so much value to the customer’s life, then we should charge a premium price for that and that’s what we are doing. They are actually applying several marketing principles without even knowing them.
One last point, which I would like to raise is that even in the scenario of an economic crisis, the fruit vendors are at an advantage in terms of making profits and retaining customers as compared to other wholesalers. I would like to explain this with the example of Sainsbury Retail. During the 2008 economic crisis, unlike other competitors, Sainsbury didn’t lower their prices. Instead they came up with daily offers like Full Day Meal in 5 Euros, etc. The result was that after the crisis was over and the economy regained the momentum, Sainsbury was the only retail outlet which not only showed profits but was also able to retain lot more loyal customers as compared to any other retail outlet.
About the Author:
He is presently pursuing his MBA from Indian Institute of Management, Kashipur.