Indian Institute of Management Rohtak

Batch 2019-21
Marketing Management-II
Term II

Section:
Group Number:
Group Members:

BigBasket, India’s largest online grocer, has registered a continuous growth in sales and
crossed Rs.2, 000 crore in sales in 2017-18. It has doubled its customer base in two years
indicating a growth in online grocery-shopping in the country. The company plans to invest in
marketing, supply chain infrastructure and analytics.
BigBasket has two operating entities. Supermarket Groceries sources products and sells them
to Innovative Retail Concepts, which runs the consumer-facing portal and makes last-mile
deliveries. The company has a strong hold in Bengaluru and Hyderabad markets and are able
to achieve efficiencies at operational level. However, the growth is uneven in different markets
and the company wants to expand in other regions. In 2015, BigBasket signed up actor
Shahrukh Khan as its brand ambassador and its sales has been continuously growing. The
retailer has more than 10 million customers and hopes to achieve break even in next few years.

There are several challenges confronting BigBasket. With exponential growth of ecommerce,
the sale of fast moving consumer goods is currently about 1.3% and is expected to increase to
11% by 2030. Other ecommerce companies are expanding their product portfolio by offering
groceries and other consumer goods. The company intends to expand in Delhi NCR and feels
market share can be achieved by increasing the purchase frequency and acquiring new
customers. BigBasket currently offers 10% discount to new customers after first two orders.
The redemption rate for discounts on repeat orders is 65%; however, many customers do not
avail the discounts and do not return to the website to make purchase. The tables provide details
of a study conducted by the company in Delhi NCR to track the behaviour of the customer for
a two month period regarding order size, monetary value of purchase order and frequency of
purchase.
The company is contemplating on the decision to give 5% discount on either bulk purchases or
on order size. It plans to increase customer base by offering 5% discount to new customers on
their first order. Two things were evident from the results of the study, percentage of customers
declined after the first order. It appeared that most customers were interested to try the service
for the first time but were not inclined to purchase from the company second time. The results
suggest that the order size increased as order number increased. The more a customer used
BigBasket, there was a likelihood that order size and monetary value of purchase increased.
The average interval for repurchase was two weeks. Currently the company offers e-coupons
of 3% on beverages and snacks, 5% on fresh produce like fruits, vegetables, fish and meat
items, and 4% on staples. Further, it offers 4% refund on the total purchase if the customer
buys within two weeks. The prices on food items offered by company are 10% lower than those
offered by brick and mortar retailers. The marketing is confronted with the following decisions:
a] how to segregate the consumer groups so that promotions can be offered, b] number of
promotions to give in the next six months, c] promotions to increase repeat purchase, d] find
out which consumer groups are most profitable and should be targeted. You are a part of
BigBasket marketing team and you are entrusted with the responsibility of chalking out a
strategy for the company so that it can attract and retain customers.
Task:
Identify the customer segment that BigBasket should target for increasing its sales in Delhi
NCR. Give reasons for selecting the customer segment. Suggest types of consumer promotions
it can offer to increase loyalty and evaluate the strategic implications of the consumer
promotions.
Table 1: Number of customers in Delhi NCR and average value of purchase.

Number Income group Size of order (average Average Value Average

of number of items of purchase number of
customers purchased) order in a
month

21 41,000-60,000 12 (staples and Rs. 2000 2

beverages, snacks)

18 81,000-1lakh 9 (fresh produce, Rs. 4800 5

poultry)

6 1lakh-1.5lakh 22 (beverages, fresh Rs. 5400 3

produce, gourmet)

13 1.5-2lakh 6 (staples, fresh Rs. 5000 2

produce, gourmet)

34 40,000-60,000 4 (snacks, beverages) Rs. 500 3

58 61,000-80,000 10 (fresh produce, Rs. 3500 4

staples, snacks)

28 61,000-80,000 8 (staples, snacks) Rs. 3200 4

15 41,000-60,000 15 (snacks) Rs.1800 1

17 61,000-80,000 11 (fresh produce, Rs.2200 5

poultry)

12 1.5-2lakh 13 (gourmet) Rs.5800 3

45 41,000-60,000 5 (snacks) Rs.350 1

31 61,000-80,000 6 (staples) Rs.3000 2

42 2-3lakhs 7 (staples, gourmet, Rs.6000 4

fresh produce,
poultry)

23 2-3lakhs 12 (gourmet, fresh Rs.7000 7

produce)

Table 2: Descriptive Statistics of Customer purchases based on how many times a customer
has bought groceries from Big Basket
Order number Frequencies Average amount of purchase
1 435 Rs.65
2 402 Rs.87
3 308 Rs.128
4 245 Rs.280
5 107 Rs.340
6 97 Rs.410
7 81 Rs.750
8 68 Rs.790
9 54 Rs.1200
10 49 Rs.1800
11 42 Rs.2300
12 31 Rs.3400
13 28 Rs.4000
14 21 Rs.4500
15 17 Rs.4800
16 12 Rs.5200
17 9 Rs.5800
18 6 Rs.6300
19 4 Rs.7000
20 2 Rs.7700