Price a refill pack for Kochi kiranas

The decision

A cleaner sells a 250 ml bottle for ₹50. It can offer a 100 ml refill at ₹19. The retailer keeps ₹4, and manufacturing and delivery cost ₹11 per refill. The launch needs ₹24,000 in fixed costs.

Does the refill improve access while maintaining contribution?

Worked solution

Reveal the visual and solution

1. The new pack cuts cash outlay from ₹50 to ₹19. Check whether customers already have a suitable bottle and whether the refill instructions are understood.
2. Unit contribution is ₹19 − ₹4 − ₹11 = ₹4. Break-even is 6,000 refills before cannibalization. If 1,000 refills displace 1,000 bottles at ₹8 contribution, the hurdle rises to 8,000 refills.
3. Pilot in matched kiranas. Measure new-household trial, displacement and leakage complaints before expanding.

Review the marketing concepts

• Customer Value Creation
• Core Marketing Mix Dynamics
• Low-Income Market Penetration