Consumer Affordability in Tier-1, Tier-2 and Tier-3 Cities of India – An Empirical Study

Abstract

Majority of brick-and-mortar retailers in India assume that;(a) price/product/brand assortment<br> must be differentiated among stores located in different type of cities, (b) consumers cannot afford<br> to purchase high-priced products/brands in tier-2 and tier-3 cities, (c) it is easier to sell high-priced<br> products/brands to consumers in tier-1 cities. Such assumptions and misconception shave resulted<br> in increasing challenges with respect to maintaining retailer’s original and principal pricepositioning<br> across different cities in India which could possibly put consumers into a quandary.<br> Brick-and-mortar retailers need to understand the importance of overall store image, overall store<br> price image, target consumer group and its implications on the overall store profitability and<br> consumer perceptions. In this research, we have analysed twelve months actual sales data by<br> twenty price bands across tier-1, tier-2 and tier-3 city stores of a select retailer and drawn insights<br> to recommend ideal price/product/brand assortment strategies for brick-and-mortar retailers in<br> India across their stores present in tier-1, tier-2 and tier-3 cities.