Consumers can be widely categorized in two segments, one who purchase their goods in an informal economy and the other those who fall under the category of formal/rational economy.
How much is that for cash?
A number of times you must have heard people bargaining for any commodity in those areas of first countries, where the per capita income of the people is significantly low than the other areas.
For your information: “A large part of Mozambique’s street traders make money from their business by selling their products in an informal economy, where everything is dealt in cash, without any money receipt or bill”.
Now some of you may say, ‘look at these guys, it’s completely illegal’.
But the fact remains same!
A huge number of population in the developing and the first countries are majorly dependent on informal mode of business because,
It’s the easiest way to buy a product after a good bargain
Those who have been to the streets of Old Delhi, they will find number of hawkers and small time vendors are sitting at Sarojini Nagar with multiple cosmetics item, toys, accessories, shirt etc. that starts from a price range of 10-30 INR.
Believe it or not the buyers and those roadside traders deal in cash only!
They earn 5-7000 (INR) per day, and that makes around 1, 50,000- 2, 10,000/*- INR in a month!
When a buyer sees an open street market place where the price of the commodity starts from a low range, it’s easy for him/her to find a product that suits his/her price range and the commodity is sold!
Free from income tax, business tax, registration ID/number etc.
Be it a buyer or a consumer, both has to pay a specific amount of tax once a product or goods is purchased, but there’s no such void while buying a product in an informal economy!
Just when a buyer enters into a store and finds it hard to acquire a product because of its too high price range, they always prefer to acquire any alternative replacement of the product at a much lower price.
That’s where an informal business structure sneaks in an economy!
Cheapest way to open a temporary business anywhere
Say for e.g. you’re travelling through the streets and all of a sudden your attention is stuck at a wonderful woolen hand gloves hanging from a roadside stall which has a price tag written 50/*- INR only.
If you’re accompanying with your partner, the first reaction of her/him will be ‘look at these guys, they’re selling such a beauty at a low cost. The next moment the gloves become yours.
A buyer always look ahead to acquire a product or a commodity at a competitive market price that’s lower from the other without/with compromising the quality, depending upon the situation.
That’s why they always purchase goods where the price is low
- Universal truth from a customer’s perspective