Title: Implications of transaction cost on the consumer choice heuristics: a grounded theory analysis at the Indian bottom of the pyramid

Authors: Srabanti Mukherjee; Debdatta Pal

Addresses: Birla Institute of Management Technology, IDCO Plot No. 2, Godapatna, Bhubaneswar-751003, Odisha, India ' Indian Institute of Management Indore, Prabandh Shikhar, Rau – Pithampur Road, Indore 453556, Madhya Pradesh, India

Abstract: The present study traces the implications of transaction cost on the consumer choice heuristics at the bottom of the pyramid. With the help of the grounded theory approach for theory generation, the study identifies that endowments like wide-spread low literacy and lack of 4As (awareness, availability, accessibility, and affordability) prompt the subsistence customers to minimise the transaction cost of purchase by resorting to bounded rationality, opportunism and locking-in effects. Such endeavours challenge the chronology of consumer decision-making process for convenience products and lead to an automatic choice of the interlinked market at the BoP even before evaluating the functional attributes of the brands of the required convenience products. Therefore, the findings of the study suggest that the choice of interlinked market limits the process of brand choice and forms an alternative choice heuristics in the subsistence market place.

Keywords: alternative choice heuristics; transaction costs; bounded rationality; opportunism; inter-locking effect; interlinked markets; staples; consumer choice; grounded theory; India; bottom of the pyramid; BoP; brand choice; literacy; awareness; availability; accessibility; affordability; subsistence marketplace.

DOI: 10.1504/IJBEM.2014.065552

International Journal of Business and Emerging Markets, 2014 Vol.6 No.4, pp.298 - 315

Received: 03 Jan 2013
Accepted: 02 Sep 2013
Published online: 08 Nov 2014 *

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