Learning Business Strategy from the Streets: A Real-World Lesson in Pricing

Relearning in life comes from practical observation and learning. Take the case in point: Chinese food, which is tremendously popular in Hyderabad. In our colony, a single plate of Veg Manchuria costs around Rs 60–70 at roadside shacks, and even in small roadside restaurants it costs around  Rs 80–100. Along with a normal roti or rumali roti, a plate should be Rs 150 - 180, and it will go up to  Rs 200 with mineral water and tax.

No surprise that most eaters throng roadside shacks and not the restaurants. To learn how business is run, one needs to go to the KPHB shops near the KPHB metro station in Hyderabad. This area is a popular hangout for students, employees, and has heavy footfall.

Here, the prices are jaw-dropping. A single plate of Manchuria is sold at  Rs 30 and a double at  Rs 40. Manchuria with rumali roti is sold at  Rs 50. Chicken Manchuria with rumali roti is  priced Rs 80 and at the same place another stall sells it at  Rs 74! Chicken Manchuria is either  Rs 60 or  Rs 55. Chicken Pakodi is Rs 45 only.

This is penetration pricing at its best, high volumes, low margins, but they earn decent income per day. And all the joints are side by side, yet they remain amicable. I don’t find anyone fighting with anyone else. They all seem to have loyal customers who come for the taste not necessarily for the slightly lower cost that the next shack is offering. 

Keywords: Chinese food Hyderabad, street food pricing strategy, penetration pricing example, Hyderabad food business, roadside food stalls Hyderabad, real business lessons, pricing psychology Indian market, Manchuria price Hyderabad, KPHB food street, entrepreneurship lessons India, marketing strategy real life examples, consumer behaviour food industry, high volume low margin model, street MBA, learning business from street vendors, small business success strategies India, competitive pricing case study

Confirmed poverty or uncertain glory - the travails of entrepreneurship

One of the founders of Chaitanya Bharathi Institute of Technology Dr. Malakonda Reddy was very fond of saying “Doing a job is confirmed poverty. That is any increase in salary will be compensated with the inflation rate. Where as doing a business is uncertain glory. One might be successful or one might be a failure". Whichever way there is uncertainty.

India was and is a land of entrepreneurs. Indian traders are famed throughout the world. They are very popular and have been entrenched in places like Kenya where they control the retail trade. Mom and pop stores are everywhere and Indian cities are shining examples of micro entrepreneurship.

Every road and street in India is full of small entrepreneurs like cycle and motorcycle mechanics, small fruit sellers, tea and biscuit sellers and sellers of small and sundry products. So why is that the educated shy away from this exciting field of entrepreneurship? Let us look at the definition of an entrepreneur and that of entrepreneurship.

Definition of an entrepreneur: Entrepreneur is a person who creates something new of value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks and receiving the resulting benefits of money, satisfaction and independence.

The crux of the problem is the word risk. The entrepreneur has to take risk. Most of us are risk averse. We fear the stigma of failure. The educated middle class in India come from families who have been in service. They have been taught right from childhood that educations is the only means of living comfortably. They do not want risk. And risk is inherent with any business. So when someone ventures into a business the family is waiting with daggers drawn to say the dreaded words “I TOLD YOU SO! BUSINESS IS NOT FOR US, WHY DON’T YOU TAKE UP A STEADY JOB?”

Definition of Entrepreneurship: Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or industrial objective, in substance it is the risk taking ability of an individual broadly coupled with decision-making.

The capacity to take risk independently and individually with a view to make profit and seizing the opportunity to make more earnings in the market oriented economy is the dominant characteristic of modern entrepreneurship.

If all the Indians were conservative thinkers we would not have Dhirubhai Ambani who has given us a colossus called Reliance. Without Reliance we would not have Mukesh as the 4th richest businessman in the world (Forbes survey). And within a short period of 4 years that is by 2014 Mukesh Ambani will be the RICHEST BUSINESSMAN IN THE WORLD. Long live entrepreneurship and entrepreneurs. They do not ask for anything form us but build their empire brick by brick.