BIG BAZAAR
FIVE ECONOMIC CONCEPT
1). ECONOMIES OF SCALE : Suppose a product is marked at Rs 100. Its manufacturing cost is Rs 50. Transportation cost is Rs 10 and company will expect amargin of Rs 10. Now if the product is sold at Rs 70, big bazaar will purchase it at Rs 70 add storage+billing cost is Rs 10. Now the final price is 80. But the MRP is Rs 100. Big bazaar will make Rs 20 as profit. Even if big bazaar gives discount of Rs 15 it will still earn Rs 5 profit.
2).ECONOMIES OF SCOPE : If big bazaar manufactures shoes it can certainly produce bags and wallets with the same leather as common input and diversified products.
3).PRICE DISCRIMINATION : It shows second degree price discrimination. They charge different prices from different customers for different sizes and quantities. We can see a single product has various sizes of it and the largest size we purchase the more discount we get.
4).MONOPOLISTIC COMPETITION : As there are product differentiation and product variation, they have close substitutes available.
5).PEOPLE RESPONSE TO INCENTIVES : When big bazaar offers discounts through various sources people are lured to buy more. The best example is THE WEDNESDAY BAZAAR when every product is relatively cheaper on that day.
No comments:
Post a Comment