Tradeoffs made in purchasing decisions influence product and marketing strategy

By | August 26, 2011

Kenya, June 2011

This snippet from the Business Daily caught my attention:

With the inflation rate at 15.93 per cent in the month of July, product sales have come under pressure as consumers put aside non-essential commodities like refreshment drinks from their budget lists.

“Right now, the market is very sensitive to price. Coke is competing with other consumables like airtime so consumers have to relate the money in their pockets with the products,”

It captures the essence of the real world challenges faced by lower income customers, especially those who manage on irregular cash flows viz.,

Every decision to spend money made by those who manage on uncertain incomes at the base of the pyramid can be said to be analogous to making a strategic investment decision. This needs to produce tangible value in their immediate future, in some way or the other. Whether the decision is a trade-off between purchasing shoes for a school-going child and meat for a meal, or choosing to buy some airtime instead of a meal, each of these is an investment—in the child’s future, in future income if work is dependent on being accessible by phone, or in simply ensuring the next meal is on the table ~ The 5Ds of BoP Marketing

As disposable incomes shrink, every product or service will need to justify its value to the increasingly demanding customer.  Strategy planning begins by understanding this demographic, their mindset and values and how they manage their household incomes. Marketers and product managers cannot afford to assume that buyer behaviour will follow the patterns of mainstream consumer culture. The challenges in the local environment are too different.

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