Understanding Haggling in Open Air Markets: A Study on Buyer-Seller Interactions in Sunday Bazaar, Karachi.

RESEARCH PROPOSAL

Prepared By
Mohammad Ibad Desmukh Zaid Akhlaq Ghaznavi Ammar Hussain Tinwala Shoaib Durrani

Submitted to
Sir S.M. Saeed

Institute of Business Administration, Karachi (IBA)

1.1 Background of the Study

A merchandize can be sold in many different ways, and two major selling methods have already become part of our everyday life: bargaining and take-it-or-leave-it. Ye (2009)

Bargaining or haggling, has been an important characteristic of trade, whether it be open air markets or business-to-business deals. Haggling is defined as a process of price formation which aims at establishing particular prices for specific transactions, acceptable to both buyer and seller, within the price range that prevails in the market (Hill 1962).

Open air retail markets, commonly known as bazaars are a very important feature of trade in a developing country. Haggling is widely popular in a bazaar setting as prices are agreed upon between buyers and sellers by mutual agreement. Unlike departmental stores or supermarkets, prices are not fixed in a bazaar and information is asymmetric. It is of the essence to determine the dynamics of bazaar trading and in particular the dynamics of haggling to have a better understanding of how these markets function on day to day basis.

There has been little research on haggling behaviour, as many of the researches conducted previously have not addressed bargaining behaviour outside the lab setting or the difference in behaviour between genders and age groups within the society (Tanguma et al. 2007).

In Pakistan, a developing country where people are very much price sensitive, haggling behaviour can be widely witnessed in local bazaars. Sunday Bazaar in Defence Phase VIII, which is known as DHA Bachat Bazaar, Karachi is the biggest open air market of Asia (Ahmed, 2010). Currently, DHA Bachat Bazaar, also known as Sunday bazaar, has more than 1500 shops where retailers sell a wide variety of products and assortments, from used items to brand new items. Average footfall on a given Sunday is between forty to fifty thousand shoppers. The dynamics of this bazaar are such that it attracts people from all walks of life no matter what socio-economic background to which they belong (DHA, 2009).

1.2 Research Problem

Haggling is a practice that is followed across the world in markets that have no fixed pricing systems. However, there has been no previous research on what constitutes the haggling process, especially in open air retail markets. By studying the interaction and the bargaining process between the buyers and sellers, demonstrated at one of the countrys biggest open air bazaars, we will analyze the motives behind, and usage of haggling. Based on this information, we will develop a haggling model for local open air retail markets, by studying the different degrees of haggling that they believe will be a beneficial contribution to understanding consumer behavior.

1.3 Objectives of Study

The objectives of this study will be to understand the concept of haggling in bazaars with respect to local open air markets and the motives behind shopping at weekly bazaars focusing on DHA Bachat Bazaar, Karachi. Furthermore, the purpose of this study is to explore and understand the motives behind haggling so as to develop a haggling model based on it.

We will study various variables like the type of products, asking price, product features and environmental factors that support or hamper the usage of haggling. An analysis of the benefits and drawbacks that arise from haggling will also been done, based on which a haggling model will be eventually developed.

1.4 Significance of the Study

This research will help in consumer education on the practices followed in purchasing of goods in open air markets such as bazaars. It is a basis for further research on similar topics in the future. Also, with this research the researchers will develop a haggling model that would act as a resource for future researchers.

This research will provide very useful consumer insights that could be used by businesses when planning to enter such markets and understanding the dynamics of bazaars.

1.5 Limitations of the study

A number of limitations could be faced during the research study mainly because this research will be conducted in Karachi, Pakistan; with the assumption taken that the same dynamics are true for other markets of Pakistan. Also, due to time and technical constraints, this research will be limited to a smaller sample size.

Moreover, the ability and willingness of the respondents to take part in this research may also be a major constraint.

It will be assumed that the consumer insights that the researchers may gain through interviews and observations are genuine and authentic. Since these interviews will be taken on site in a bazaar setting, the respondents may lack the time and may give in accurate information. Any inaccuracy in information collected will contribute to validity issues due to single source error susceptibility. The research will be dependent on the information provided by different resources and will be based on the data available.

1.6 Audience
The audience of this research will be the academic faculty at the Institute of Business Administration, Karachi. Secondly, the audience will include researchers who may use the insights from this report for secondary research purposes. Lastly, it includes executives of businesses who may be planning to enter such markets as Pakistan, and understanding the dynamics of bazaars.