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Expanding Consumer Base

Generally, a five-rupee product is packaged in attractive packaging. This compels a customer to try out new product. Since the price is only Rs.5, the customer is not too choosy when buying the product. Even if he does not like a product, what goes out of his pocket is just a five-rupee coin.
Hence, it helps in generating Brand Switchers. The five-rupee price point added 8 million customers for Cadburys. PepsiCo's Chairman Rajeev Bakshi says, "The consumer base for soft drinks increased from 160 million in 2002 to 240 million in 2003, during which the Rs.5 price point remained in force."

Content in a 5-Rupee Product

A five-rupee product has phenomenally large amount of quantity as compared to the one-rupee or a two-rupee product. A customer would rather buy a five-rupee product as it offers more quantity, and hence a customer perceives it as a better value for money, at the same time the quantity is neither more nor less.

Customer Preference

A tea-drinker at a tea stall generally goes in for snacks like namkeen or Biscuits, which are normally priced at Rs.5. That's one reason why we see different sachets fighting a space for themselves.

A youth in hurry likes to grab a quick snack and hence prefers a five-rupee product, which does not last enough and in the meantime quench his thirst or hunger. The problem with bigger packs of snacks is the fact that after one round of consumption, it needs to be carefully kept to save it from the moisture.

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* Contributed by -
Mayur Mayank,
PGP-II (2004-2006),
Bharathidasan Institute of Management, Trichy.