Low Cost Pricing

Low cost pricing is a type of pricing strategy in which the firm offers the products at low price.
Specific to the rural market firms produces units of their product in in Schacht of rupee 1,2 ,5 or
10 etc. The major focus is on reducing the cost of the product such that they can create demand
among the consumer and deliver their products at a price point, at which consumer can afford it.
 Reduction of cost through-:

• Bringing up smaller SKU’s

• low cost packaging

 Low cost pricing

A rural customer is price-sensitive mainly because of his

relatively low level of income and unit price of a product will
have an impact on sales. Pricing the product at a lower price
really attracts rural population for trying the products.
Though rural incomes have grown in the past decade, the
money earned by the average rural consumer is still much
lower than that of his urban counterpart.
A large part of the income is spent on the basic necessities,
leaving a smaller portion for other consumer goods.
 LOW-COST PACKAGING
The cost of a product can be brought down by using low cost packaging materials that
are durable and aesthetic. The packaging need not be very sophisticated as rural
people may not be willing to pay higher prices for fancy external appearances. Since
they are more interested in the sturdiness and utility of the product, simple packaging
can be adopted.

A good example is of Britannia's Tiger biscuit, which is doing good business in rural
markets because of its packaging especially designed for rural consumers. mall
affordable
 PRODUCT-SHARING SERVICES

Many rural consumers cannot afford high-value products even if they need them. Enterprising customers
cooperate to purchase the product, and then share the benefits with each other. Companies have
themselves developed another alternative to this problem of affordability by setting up ventures for shared
services of their products.

For example HPCL Rasoi Ghar Model

PRODUCT-SHARING SERVICES
Many rural consumers cannot afford high-value products even if they need them. Enterprising customers
cooperate to purchase the product, and then share the benefits with each other. Companies have themselves
developed another alternative to this problem of affordability by setting up ventures for shared services of their
products. A good example of this is the HPCL Rasoi Ghar model. A community kitchen is set up in smaller
villages where women come and cook. The local Panchayat contributes à room (10 x10 or bigger) for the
kitchen; HPCL contributes cooking stoves, LPG cylinders, utensils, a cooking counter, and water connection. One
SHG member is appointed the caretaker. Women bring raw materials and take cooked food home. They pay INR
2 per half hour of gas usage. The caretaker collects the money, which is used to order refill cylinders, and she
keeps the premises clean. Her monthly stipend is also paid out of this collection. The model is self-sustaining
and scalable. Non-users (the BOP segment) experience the advantages of a clean, convenient, safe, and healthy
LPG without having to buy a connection. Once they are satisfied, many decide to buy individual connections. It
is a win-win model for all. Poor women get to cook food under clean, convenient, and safe conditions, HPCL gets
new consumers as and when these women decide to buy their own connections, and the panchayat gets a good
name in the community.