This is about 10 per cent more than what one would get in a straight deal. Some finance men have suggested that this price reduction is a loan taken on a 25 per cent interest. This is scandalous. Instead, this is a creative pricing strategy to sell to a large market with poor buying power. While buying power is low, an average Indian can wait endlessly.
Patience is in our blood.
The third reason is the classical economic theory of elasticity of demand. Such schemes will create demand. Added demand brings down costs by spreading fixed overheads. The fourth reason is that by promoting such schemes in the media there is a possibility of selling directly to the consumer by bypassing the middlemen, and saving on those margins. Fifth, inventory costs come down as the goods are produced just when they are required.