Posts

Showing posts with the label retail industry

Decision Making as Output and Bounded Rationality

-
  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
Post a Comment
Read more

Formula Bollywood, Retail and Implied Demand Uncertainty

-
  The past posts have often portrayed the applications of economics in real life. To stress the obvious again, economics is far from abstract. There is inherent application of its concepts in day to day life. Often the application might be sub-conscious or maybe many a times, the applications find themselves convenient to be theorized. Theory flows from evidence and theory created has to be backed by evidence. Maybe it is a typical chicken egg problem but nevertheless, makes economics attractive. Contrary to many economists who portray a dull life for an economist, in reality, the applications of economic theories in every aspect of life can make the subject very colourful. In continuation of the past analysis, the current post too takes up a few more examples to illustrate economics in real life or what Robert Frank would call economic naturalist.   Let us take the instance of the film industry, India in particular. The Indian film industry thrives on remaking the Western films in
Post a Comment
Read more

Kiranonomics !

-
Across the world, the economy has come to a standstill. Few exceptions might exist however, indicators like declining oil prices (negative futures), decline in shipping, and restrictions on sale of non-essential goods remain in place in most parts of the world.   India too is no exception. India was one of the frontline markets for e-commerce and supermarkets. In India over the last couple of decades, there was a movement from the unorganized kirana retail outlets to an organized retail outlets comprising of super markets, hyper markets, malls among other things. In the emergent context, these super or hyper markets too were facing challenges from the rise of the online e-commerce giants including Amazon, Flipkart (acquired by Walmart) among others. The spread of the organized retail both offline and e-commerce did not confine merely to the few upper income groups and demographics in urban areas but pervaded deep into the semi-urban and rural clusters as also the urban low incom
Post a Comment
Read more

Prisoners Dilemma and Retail Promotions

-
Image
It is not unusual to get 1 kg onion free for purchases above say Rs. 250/- or half kg sugar free for purchases above say Rs. 300/- in leading retail outlets. Does this attract consumer loyalty. A study sometime back along with my students revealed certain interesting dimensions. The presentation is found here . I will delve into certain dimension here. Promotions are key element in this process and higher promotional elasticity will be driven by the increased ambiance as an output coupled with reduction in psychic costs. Researchers and strategists can use utility models to study consumer behavior and the reasons for their preference towards particular stores. In the increased emphasis on promotions, an interesting fact to note that customers continue to be loyal to firms like Nilgiris and Namdharis which are very low on promotions. At least in the initial phases, customer loyalty could not be generated in major food retailers despite excessive emphasis on promotions as the f
Post a Comment
Read more