MOP Mentality

The spate of discounts notwithstanding, Indian consumers have always relied on an MOP (market operating price) which is a discounted version of the MRP (maximum retail price) printed on products sold in India. The MRP was made mandatory by the government in 1990 following large-scale complaints of retailers charging way beyond the price printed on labels. The MRP includes all taxes. Before this, products mentioned a price and said taxes would be extra. MRP has changed that and any breach today invites action for unfair trade practices.

MOP itself has been forced upon companies because customers have always bargained on MRP and sought discounts. Says former LG marketing head and Milagrow Robots founder-dir­ector Rajeev Karwal, “It is unfortunate that this discount culture is deeply ingrained in our society and a customer is not satisfied if something is sold on MRP.” This has bred MOP, the price that prevails in offline organised and unorganised retail. Much of a market’s MOP is also decided by manufacturers who exploit retailers and follow a preferential and layered system of pricing for different retail outlets. Prices are lower at company-owned or exclusive showrooms and higher at multi-brand outlets. Retailers also enjoy the legal freedom to underprice a product, the government having fixed only the upper limit. There have been no complaints so far against under-pricing or level of MOP a company can fix for specific areas.