The MRP: It’s Maximum Random Pricing

Vaatupura A. Jayaprakash

IS IT not fair to expand MRP as minimum retail price? I have felt the need for such a look at MRP many times. As I consume consumer products on a daily basis, I find every shopping a revelation. There are occasions when I found many products worth buying and many ‘not worth looking at, at all’, thanks to their price tags. Some products come with no compromise on price tags, and some come with enough leeway as to get it at prices much less than what is printed. I have wondered why there is no pricing regime in this connection. And why are shop owners given the freedom to sell certain things for prices they choose, and why some products come without any change in their attitude to prices? There may be reasons of trade and its duty bound and dirty practices. Still, as an ordinary customer I have some apprehensions about this trick of the trade.

The other day I bought a packet of a consumable. The MRP printed on it was Rs 10 and when the product code was entered in the billing, the price shown was Rs 7.70. The same way a few days back I bought a pack of tissue paper. The MRP was Rs 30.50. But I got it for Rs 20. On a third instance, I bought a bottle of 500 ml coconut oil. I checked the MRP of two-three brands and I understood that they varied considerably. One was priced at Rs 39, one at Rs 38 and another one was offered for Rs 40, but when I raised some doubts about the quality and price, the shopkeeper told me that all these brands were of good quality and they were being sold for the same price Rs 35.

Let’s juxtapose the last example with a similar instance. A 100ml parachute coconut oil is priced Rs 18, that is Rs 180 or 165 per liter, whereas 500 ml ordinary coconut oil is sold for Rs 35, that is Rs 70 or 68 per liter. But what I do not understand is this: What is the magic and mystery these parachute oil refiners infuse in their 100 ml pet bottle to make it 250 per cent more costly than what it actually costs. Is it that they get only 400ml refined oil when they process one litre raw oil, or coconut oil refining is much more costly and complicated than crude oil refining? Or, is coconut crude being imported from Saudi Arabia? This is the ugly face of manufacturing and marketing. It is daylight robbery of the finest order, which is vociferously endorsed by a consumer regime called free trade. It is free in all respects.

And see, out of this pricing, what is the margin the seller gets? What is the profit the supplier/distributor gets? What is the benefit the manufacturer gets? And finally, what is the share that goes to the farmer who produces coconuts? He may have the genuine doubt - one litre refined coconut oil costs more than Rs 170/. One coconut is sold for a maximum of seven or eight rupees.

Let’s come to the tissue paper packet. If the seller finds it profitable to sell a packet of tissue papers for Rs 20 when its MRP is Rs 30, what is the supplier’s price pattern? This is the case of an individual piece. When a retailer orders in bulk quantities, what is the price slash he gets? If MRP is Maximum Retail Price, is the seller free to sell it for MRP only? Isn’t there a fair deal in retail business? Who is the authority to determine the price of a commodity? How can a customer understand that he gets value for money or his money is undervalued every time he buys something?

We customers need to find answers to these questions. MRP needs to be proportionate to the price of the product. A retailer should not be given the ultimate freedom to decide on the prices of things. A certain percentage of the MRP can be fixed as profit and the same can be printed on the packets. Printing Rs 30 on the packet and selling it for Rs 20 is unfair business because it raises a lot of questions on the price of the product, and its distribution. It leaves the customer in a quagmire of apprehensions.

If the explanation is that the customers tend to buy things when sold for a much less price than what is printed, it is not going to work anymore. They know pretty well that MRP is more maximum random pricing than maximum retail pricing. Manufacturers and sellers need to come clean on the not-so-fair trade practice they maintain in this regard.

I have seen many supply van officers taking supply orders from shops saying, "We will get you a much higher MRP printed." There lies the onus. Manufacturers unilaterally decide on pricing. And the agents in between keep on taking their shares till it reaches the retailer. And when you and me go to the retailer, he decides what his share is. And finally you pay the whole stuff, what we call MRP.

In this context, let us see the logic behind selling a pack of hundred tissues for Rs 20. The retailer is happy, his supplier too, and the manufacturer is not unhappy either. Then what is the actual cost of producing that hundred tissues? 15 rupees? Is it ten rupees or much less than that? A little more polished and scented tissue box of the same dimension is sold for Rs 50. It’s incredible pricing indeed because these napkins have brand names like Kleenex, Cleanex, Premier etc. That is reason enough for us to pay 200 per cent more than what it actually costs.

So I request all of you shoppers to ask a question - why do you get fooled every time you buy a thing or two on the basis of maximum retail price and minimum retail price? Customer is no more king here. He is a mere pawn in the hands of business conglomerates. Our modern use-and-throw consumer culture seems to be using and throwing not only the consumables, but the consumers themselves too. Every time we buy a thing or two, we get consumed by the consumer goods conglomerates. They throw us out the moment a purchase is made.

Today, common consumers have no way out. Consume and get consumed is the order of the day. Go shopping and/or get shopped, the hunter and the hunted effect.

This is of course a dirty business world order. The only practical solution is consuming less and less, and bargaining more. If your nouveau riche ego does not let you do so, please go and get consumed for an MRP of your choice.

Tailpiece: A Business conversation for a dining table

Sir, its MRP is Rs 11,000.
But if you book it here, you will get 10 per cent discount.
You can save Rs 1,100. Plus transportation.
I mused to myself:
Am I crazy to believe this sales ploy?
Who the hell is going to pay him this discounted money?
Who will pay him for the free delivery?
Is MRP not maximum random pricing?
I know a dining table of this make will not cost more than 8,000.

Here is an exchange offer:

In another exhibition hall, a gentle salesman was offering me a discount of Rs. 1000. He was asking me to exchange my old, used gas stove for a new one with the MRP Rs. 3250.

Sir if you exchange your old gas stove you will get Rs. 1000 discount.

It was a shocking revelation for me because I bought my gas stove some three years ago for Rs. 850. Now that old stove is being offered Rs. 1000/-

In short the salesman was ready to sell the stove for Rs. 2250/- If that is the selling price, what is its actual cost. Rs. 1500/- or less than that? Do you not feel that this MRP is maximum random pricing?

A gas stove of such a make will not cost more than 1,650/- rupees. The MRP is 3250/-. Is it fair sellers?

Vaatupura A Jayaprakash

Freelance Journalist. visit me at www.merinews.com contributor. vaatupura.