I was going to make this a rant about Riva Petrol Station shop in Nakuru but will not. This is because I have since made my peace with the damn place. I don’t buy anything from there.
Anybody who is a frequent traveller on the Nairobi- Eldoret road knows there are many places in Nakuru where the shuttles’ stop for passengers to refresh. All of them sell their wares at exhorbitant prices. Being a frequent traveller, I always found myself spending the highest amount I could spare to buy the cheapest available snack for my journey.
Sample this pricelist from Riva Petrol station Shop.
Delmonte juice 1 litre @180 shillings, Mala 500ml @100 shillings, Yoghurt 500ml @130 shillings, Bread 400gms @60 shillings, plastic can soda 500ml @70 shillings and Blue band 1kg @300 shillings. To crown it all, I bought eclairs sweets for 15 bob each!
Please check in the supermarket how much each of the items listed above costs.
After being ripped off once or twice while travelling, I decided to buy my snacks in the supermarket and carry them if need be.
I thought maybe I was just being mean to myself or that Kenyans are rich people who don’t mind the outright theft. This was until I realized each person silently prays that the vehicle will stop at a place other than the one mentioned above and quietly squirm in their seats in horror when the vehicle inevitably heads there. Thus I was quietly amused recently when one lady loudly complained when she realized were headed to Riva shop for our stop over.
However, since the guys have not closed shop in all this while, I guess not every traveller thinks like me. They have their customers who will buy at whatever price.
This got me curious to find out how different businesses price their produts and services.
Among the many dynamics at play is the idea of a captive market. Wikipedia defines a captive market as one where consumers face a severely limited amount of competitive suppliers such that they can only buy what is available at whatever price. The only alternative is not to buy at all.
Now all Riva shop has to do is to generously reward drivers of the various shuttle services who stop at their shop. The passengers can walk out through the window for all anyone cares.
Initally I thought these guys were losing sales by their high margins but now I realize they are smart businessmen. They know as a traveller, you will buy what they stock at whichever price. Their business strategy is not based on building loyalty and having repeat purchases from anyone. They understand that many travellers will make a stop over and a repeat purchase will come very many months later if at all. By then, the pain of the first rip off will have dulled. They will walk into the shop, stare at the prices in horror before picking an item and walk out hurriedly as if that reduces the pain of paying so much.
As for regular travellers like me, pricing theory has given us the option of not buying at all. Thus I will always stare with glee at the pained faces of shocked travellers buying at Riva shop for the first time.