The Indian consumer enjoys more choices than ever before. Oodles of products, countless brand names, mean a plethora of choices, and yet over the last decade the rise of the dominant players is diminishing choice. Sectors not ‘dominated’ by monopolies are dominated by the duopolies i.e., two organisations own significant market share and dictate customer behaviour (think switched off ACs, cancelled rides, surge pricing, festival prices, long wait times). Many sectors are turning into two-horse races.
The choice between different consumer products is often a mirage. The choice between different retailers is equally illusionary. The pattern of diminishing choice and rising concentration reflects a profound change. Its mirroring the decades preceding the economic reforms. The top 20 companies take away over 75 per cent of corporate profit. It was only 40 per cent when the reforms were ushered in.
There is increasing evidence of the dominant players colluding both on prices and features. Monopolies have strong pricing power and a broader moat, making competition difficult. They fortify the moat by adding distinctive ‘stickiness’ features, bundling products etc. Monopolies have more, and cheaper access to capital. They use this effectively to consolidate, bankrupt competitions or acquire them eventually, improving cost synergies; and garnering market share. They price down the competitions, capture both the shelf and mind space (using data effectively, advertising efficiently), even shut others out by luring away customers and dangling freebies.
Ability & Intent to Raise Prices, Squash Competition
Diese Geschichte stammt aus der February 25, 2023-Ausgabe von Business World India.
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