Final Report: The Role of Pricing Strategies in Consumer

Decision-Making for Momos-

Project Title: Pricing Psychology and Market Trends in India’s

o Darshan Bhatter (PGP26110)

 Batch: PGP2024-26
 Institution: Fostiima Business School
 Submission Date: March 30, 2025
. Table of Contents
1. Introduction
2. Research Problem and Objectives
3. Methodology
4. Literature Review
5. Findings and Analysis
6. Conclusions
7. Recommendations
8. References
Title: Consumer Behavior and Market Dynamics in the Indian Momo
Industry
1. Introduction
Momos, a delicacy originating from the Himalayan regions, have
become one of the most popular street foods in India. Over the past
decade, the momo market has evolved from being an unorganized
street food segment to a multi-billion rupee industry with organized
players and QSR (Quick Service Restaurant) chains like Wow! Momo
leading the charge. The industry is valued at approximately ₹30,000
crores, with only 10% of it being organized. This report delves into
the consumer behavior, market trends, and growth opportunities in
this burgeoning sector.
2. Research Problem and Objectives
Research Problem
Despite its exponential growth, the momo market faces challenges
such as intense competition from unorganized street vendors, pricing
sensitivities, and evolving consumer expectations for hygiene and
innovation.
Research Objectives
1. To analyze consumer preferences for momos in terms of taste,
price, hygiene, and variety.
2. To evaluate the impact of organized players on the traditionally
unorganized momo market.
3. To identify growth opportunities and strategies for businesses
entering or expanding in this sector.
Hypothesis
Indian consumers prioritize taste and affordability over brand loyalty
but are increasingly valuing hygiene and innovative flavors.
3. Methodology
Type of Research
This study employs a mixed-method approach combining
quantitative survey data with qualitative insights from secondary
research.
Data Collection
 Primary Data: A structured survey conducted with 133
respondents aged 18–34 years.
 Secondary Data: Analysis of reports, articles, and case studies
on the Indian momo market.
Sampling Design
Convenience sampling was used to target urban youth, students, and
working professionals who frequently consume street food.
4. Overview of the Indian Momo Market
Market Size and Growth
The Indian momo market is growing at a CAGR of 20-25%, driven by
increasing urbanization, changing lifestyles, and rising disposable
incomes. The frozen momo segment is also gaining traction, with
brands like Prasuma reporting annual sales of 100 million frozen
pieces by 2023.
Key Players
 Wow! Momo: Market leader with a 35% share; over 680 outlets
across India.
 Momos Point: Holds a 20% share with a focus on traditional
offerings.
 Hunger Strike: Known for fusion options like tandoori momos;
holds a 15% share.
  Prasuma: Dominates the frozen momo category with innovative
ready-to-cook products.
Consumer Preferences
 Non-vegetarian momos (chicken) dominate in North India.
 Vegetarian options like paneer momos are popular in regions
like Bhubaneswar (51%) and Jaipur (46%).
 Taste is the most critical factor influencing purchases (78.8%),
followed by hygiene (12.1%).
5. Findings from Primary Research
Demographics
 Age: 90.9% of respondents are aged 18–24.
 Gender: 57.6% female; 42.4% male.
 Occupation: 75.8% are students.
Purchasing Behavior
1. Frequency:
o Weekly consumption: 36.4%.
o Rarely consume momos: 36.4%.
2. Purchase Locations:
o Street vendors dominate (78.8%), followed by fast-food
chains (18.2%).
3. Pricing Sensitivity:
o ₹50–₹80 per plate is preferred by 60.6%.
Factors Influencing Purchases
 Taste remains paramount (78.8%), while hygiene is gaining
importance (12.1%).
  Discounts have limited impact; only 6.1% always consider them
when purchasing momos.
6. Deep Analysis of Consumer Behavior
Taste vs Hygiene
While taste remains the primary driver for purchases, there is a
growing awareness about hygiene post-COVID-19. Organized players
like Wow! Momo capitalize on this by offering hygienic alternatives to
street vendors.
Pricing Psychology
Charm pricing strategies such as ₹99 instead of ₹100 influence 21.2%
of respondents. However, most consumers prioritize value over
minor price differences.
Brand Perception
Despite efforts by QSR chains to establish brand loyalty, 60.6% of
respondents do not differentiate between branded outlets and local
vendors as long as taste expectations are met.
7. Competitive Landscape
The momo industry faces stiff competition between organized
players and street vendors:
Organized Players (e.g., Wow! Unorganized
Feature
Momo) Vendors
Pricing Higher due to overhead costs Affordable
Hygiene
High Low to moderate
Standards
Variety Extensive (fusion flavors) Limited
Strong due to
Consumer Trust Growing
familiarity
Organized players are addressing challenges through innovation (e.g.,
cheese momos), strategic pricing, and expansion into frozen
segments.
8. Growth Opportunities
1. Frozen Momos
The frozen momo segment is growing at 20–25% annually,
driven by convenience-seeking urban consumers. Brands like
Prasuma are leading this category with innovative packaging
and distribution strategies.
2. Regional Variants
Introducing region-specific flavors can help brands capture
diverse markets across India.
3. Tier-II Cities
Expanding into smaller towns offers significant potential as
disposable incomes rise in these areas.
4. Combo Offers
Bundling momos with beverages or other snacks can enhance
perceived value among price-sensitive consumers.
9. Challenges
1. Competition from Unorganized Sector: Street vendors account
for 90% of the market due to their affordability and
accessibility.
2. Pricing Pressures: Organized players struggle to match the low
prices offered by street vendors while maintaining profitability.
3. Consumer Education: Convincing consumers to pay a premium
for hygiene and innovation remains a challenge.
10. Recommendations
 1. Enhance Hygiene Standards
Organized players should emphasize hygiene certifications to
differentiate themselves from street vendors.
2. Innovate Product Offerings
Experimenting with fusion flavors like tandoori or cheese
momos can attract adventurous eaters.
3. Focus on Tier-II Markets
Brands should expand into smaller cities where competition
from organized players is minimal but demand is rising.
4. Leverage Digital Platforms
Utilizing food delivery apps can help brands reach tech-savvy
urban consumers more effectively.
5. Strategic Pricing
Employ charm pricing strategies (e.g., ₹99) and introduce value-
for-money combos to attract budget-conscious buyers.
11. Conclusion
The Indian momo market is at an exciting crossroads, balancing
traditional street food roots with modern QSR innovations. While
taste remains king, factors like hygiene, convenience, and variety are
becoming increasingly important to consumers—especially in urban
areas where organized players like Wow! Momo are making
significant strides.
With an estimated market size of ₹30,000 crores but only 10%
organized penetration, there is immense potential for growth
through innovation, regional expansion, and strategic pricing tactics.
By addressing challenges such as competition from street vendors
and educating consumers on quality differences, businesses can
carve out a larger share in this dynamic industry while meeting
evolving consumer expectations.
This report provides actionable insights for stakeholders looking to
enter or expand within India's thriving momo market while adapting
to changing consumer preferences and competitive pressures.
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