The Role of Transaction Cost in Consumer Decision Making: An Empirical Study on the Bottom of the Pyramid in India
(A2019-6308)

AUTHORS

Nanda Choudhury, IIT Kharagpur; Srabanti Mukherjee, srabanti@vgsom.iitkgp.ernet.in; Biplab Datta, bd@vgsom.iitkgp.ernet.in

KEYWORDS

Bottom of pyramid; transaction cost; constrained brand selection

ABSTRACT

The consumer decision making can be defined as the process of identifying a need and fulfilment of that need through final consumption. In this study, consumer decision making process (DMP) was taken to be tested in the Bottom of Pyramid (BOP) context. The BOP consumers exhibit distinct characteristics in terms of socioeconomic parameters compare to their counterparts, the middle and top of the pyramid. The study proposes that BOP decision making is largely affected by consumer vulnerability and transaction cost. Based on 251 sample collected from Indian villages and suburbs, the study examines the relationship between consumer vulnerability and transaction cost. The finding shows that the antecedents of transaction cost acts as moderator and leads to constrained purchase point selection. Further, the brand selection gets affected and thus leads to constrained brand consumption at the BOP.