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  • Category: Miscellaneous

    Maximum Retail Price. Is the consumer at a disadvantage?

    When we shop for the multitude of things for our day to day life, comfort or luxury, almost all the items carry a MRP - Maximum Retail Price. Sometimes the MRP prices are obviously high and there are variable levels of discounts offered depending on the article, place, the customer and the seller. I have come across day to day items that are at 50% off (not expired/not damaged) in one shop and two doors across the item is at MRP only.

    So, it looks like the producer or manufacturer has already built in a wide margin of profit, the profit for the producer, wholesale dealer and the retail seller. It's obvious that MRP can be adjusted to the needs of these three and NOT in favour of the consumer. And on top, the consumer pays the GST too. At times the MRP is 100-500% higher than the actual cost of producing an article (for instance branded clothes). So for me higher the MRP + profit margin, higher is the tax that we have to pay. Why should we pay tax on the built in profit for somebody else.

    Are there any guidelines to monitor MRP or is it time for the government to cap the price of a particular article in a particular category or is it time to find a new system?
  • #617048
    I agree with you. Most of the products are priced at high solely to benefit the retailer who makes lots of investment and has to wait for his returns. For example one Kg of Henna packet is priced at 299 on the pack. For manufacturer , he sells the same to distributor at 150 per kg. The distributor would sell the same at 170 to 180 per kg. Now the retailer is going to earn whooping profit of 120 per kg. But for that he has to wait for 2 to 3 months some times to get the stock sold. This is the marketing strategy being carried out by every company and imagine how much a customer losses.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #617130
    The MRP is decided to keep the sales at a retailer always. If MRP is the price sold by the manufacturer to the agent. The agent can sell this at any rate to the retailer. The retailers can sell the product as per their whims and fancies. So to avoid this problem only MRP is decided. At any cost, the retailer can't sell the product at a price higher than MRP. This will check the retailer and see that he will increase the rates very high. Actually, this is for the benefit of the customer only. In fact these days some retailers are selling at a lesser price than MRP to face the compettion. When there are to General stores if one person sells at a lower rate and quality is good people will tend to go to him. So the other person also has to sell the product at a lesser price. But when there is a scarcity of the product is there they may sell ,aximum at MRP without reducing.
    always confident

  • #617144

    MRP, which was introduced by well intended administrators under request from consumer service bodies, was effective in the initial says. That was the time when only 'small' fish were playing. Being small fish they were within the nets.
    Then came the Big Fish . The influential big corporate and Multinational business entities. They used very cleverly to increase their profits and turnover. As pricing is not controlled nor monitored except in a very few items like life saving drugs, Due to this MRP eventually became Misused of Regulatory Practice(in pricing).
    The stipulation is that no one should sell above MRP. So the smart manufacturers kept MRP so unrealistically high. Then they allowed 'offers' and 'discounts' so that it served two purposes . One that the sales price is below MRP-complying the MRP stipulation as good boys. Two, the consumers were trapped under an illusion that the products are given at a discount. This helped to increase turnover.
    The next batch of products will be bearing a little more higher MRP. It continues like that. So MRP, as of now is as the author says"It's obvious that MRP can be adjusted to the needs of these three and NOT in favour of the consumer.". But I am scared to imagine what will happen if the MRP is not there at all. Even though very weak, MRP still gives its part to prevent though feebly, a tsunami of predatory pricing.

    The government has to intervene and monitor for a cost -related realistic pricing. But present legal frame works and international agreements prevent that. So the only way is for people to be alert and give a passive resistance voluntarily when they feel price is very high and manipulated.

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