Constrained Choices: Exploring Retail and Brand Selection Among Base of the Pyramid Consumers

Abstract

This study examines the constrained retail and brand selection patterns of Base-of-the-Pyramid (BoP) consumers in India, a segment characterized by low income, limited literacy, and information asymmetry. Drawing on Transaction Cost Economics, it conceptualizes how consumer vulnerability activates bounded rationality, perceived opportunism, and lock-in effects, which together shape constrained retail selection (CRS) and constrained brand selection (CBS). A mixed-method design was employed, beginning with grounded theory interviews (n = 48) to generate and refine scale items, followed by a survey of BoP consumers (n = 342), analyzed using Partial Least Squares Structural Equation Modeling. The findings indicate that bounded rationality and lock-in significantly contribute to CRS, which, in turn, directly predicts CBS. Opportunism, although present, does not substantially influence CRS or CBS. CRS also mediates the relationships between bounded rationality and CBS, and between lock-in and CBS. The study contributes by empirically validating CRS and CBS as new constructs, demonstrating the mechanisms through which transaction-cost antecedents shape constrained choices in subsistence markets, and offering actionable implications for policymakers and marketers seeking to improve BoP consumer welfare. The study is among the first to empirically operationalize and validate constrained retail selection and constrained brand selection in a BoP context using an integrated transaction-cost framework. However, the findings are limited to a specific Indian BoP setting and may require cross-cultural validation in other emerging economies. The study is limited to semi-urban BoP consumers in West Bengal, India; retailer perspectives and cross-cultural generalizability remain avenues for future research.

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