“Can You Do Something About the Price?”—Exploring the Indian Deal, Store-Brand and Haggling-Prone Consumer

Abstract

Organized retail stores offer discounts (price, freebies, coupons etc.) and introduce store-brands (Dhar and Hoch 1997) to attract the value conscious customers. Research done on the western consumer has studied how a deal prone customer differs from a store-brand (SB) prone customer (Lichtenstein et al. 1995; Ailawadi et al. 2001). In India, the traditional neighborhood stores use a third mechanism to attract value conscious consumers—Bargaining (or haggling). Customers haggle for a variety of reasons—ranging from economic to psychological (Jones et al. 1997; Sharma et al. 2000). Though haggling is a prevalent phenomenon in the Eastern economies, it has not been studied in the literature.

While research in the past has looked at the role of benefits and demographics (Ailawadi et al. 2001; Lichtenstein et al. 1993; Urbany et al. 1991), personality orientation has not been used to explain deal-proneness or store-brand proneness. Personality orientations have been found to impact the bargaining-proneness of consumers (Mowen 1999) and their buying behavior (Butori 2010).

This paper explores how a deal prone, store brand prone and bargaining prone customer is psychographically different from each other. We study psychological benefits—value consciousness and price mavenism, personality orientation—need for special treatment (distinctiveness and play) and demographics.

We found the Indian deal-prone consumer is value conscious and price maven. This behavior is similar to the research done on the US consumers (Ailawadi 2001). We observe a distinct departure from the US literature on SB prone customers. The Indian SB customer is not characterized by value consciousness but are price mavens. The retailers position SBs not as a cheap alternative, but introduce them in categories where the national brands are not at all present (Deloitte 2013). Traditionally, grocery products in India have been purchased from the neighborhood store (unorganized sector). The comfortable and upmarket ambiance of the stores in malls gives the customer a feeling of being ‘exclusive’ or special. This explains the positive relationship between need for special treatment (NST)—distinctiveness and the negative relationship with NST—play. Bargaining-prone customers have a positive relationship with play orientation. These consumers enjoy the process of negotiating. Indian bargaining-prone consumers are value conscious and price mavens. They consider themselves well informed on price perhaps they feel price knowledge to be a prerequisite for effective bargaining. We find that women have higher likelihood of being deal-prone. SB prone consumers are likely to be younger and have higher incomes. Interestingly, none of the demographics seem to explain bargaining-proneness.