The price premium of Cocoguru coconut oil packs has now increased to around 10% compared to other mass-market brands and is at par with premium brands.

We have a Sales Officer, Mr. Nandakishora, who holds strong opinions about pricing and tends to favour traders. During a discussion, he asked, “We’ve reached the final stage of our pricing evolution, haven’t we?”

I countered, “No, there’s still a long way to go!”

He expressed concern, “With great difficulty, we’ve increased the price premium to this stage, and you still want to go further?”

I reassured him, “From now on, it’s not about increasing prices but fine-tuning them as per our marketing strategy. Because, finally, we have control over our pricing.”

How did we reach here?

November 2014 – ₹1 Premium – The Association was formed and began fixing prices. We used to supply directly to shops using our own vehicles.

January 2015 – ₹2 Premium – We shifted from van sales to a distributor model. Distributors were given goods at the Association’s wholesale rate, which was ₹3 less than the retailer rate. With a ₹2 premium, the distributor received a ₹5 margin.

July 2015 – ₹3 Premium – The Association reduced the wholesale discount to ₹2. We retained the distributor margin by increasing the retailer price.

November 2015 – ₹5 Premium – The Association tried to keep prices low to discourage violations of pricing rules. We raised our prices accordingly.

Each price increase was not without challenges. We lost a few distributors, several wholesalers, and many retailers. Even those who continued raised serious concerns. I used to feel extremely nervous before making such decisions. But bold steps had to be taken — that’s what being an entrepreneur demands. Over time, the market adjusted and began to expect further price moves from us. What remained was a base of loyal customers. Retailers stocked Cocoguru only to cater to those who specifically asked for it. Yet, this base was strong enough to sustain us. These were customers we had rightfully earned, and that gave us confidence.

April 2016 – ₹6 Premium – To supply through distributors, we introduced a super stockist, adding ₹1 margin to the price.

Eventually, the Association stopped fixing prices, as its members had already stopped adhering to them. Still, to survive in a highly competitive market, we had to continue raising our premium. Weekly price fluctuations among competitors became a major issue. These fluctuations disturbed our trade partners. We decided not to revise our prices weekly. Instead, we announced reductions only after giving a one-week notice to distributors. A few times, we delayed even further, resulting in the premium rising to ₹7, ₹8, even ₹9, before settling at ₹10.

Our competitors still change their prices weekly, but we revise ours only when there is a significant change in raw material cost. This stability gives our distributors the confidence to stock our products without worrying about a sudden drop in prices. We have successfully differentiated ourselves from the competition. Now, I can peacefully enjoy my Sundays without worrying about competitor prices. With firm control over our pricing, we are now in a position to fine-tune our strategy further.

Two thoughts on “Yet another price increase.”