Don’t be cheap be affordable

Selling to the bottom of the pyramid consumers in Cameroon

Companies interested in doing business in Cameroon will most likely consider selling low quality and cheap products since according to World Bank statistics majority of sub-Sahara African population live with less than 1 dollar per day. What can they buy apart for cheap and low quality products then?

It is true that price is a major factor for many Cameroonian consumers; however quality is never far away from their minds.

  • Nokia telephones were widely used n Cameroon because of its quality and price
  • Second hand goods from Europe are very popular in Cameroon because of the perceived quality and price
  • Toyota cars are very popular in Cameroon because of its perceived quality(durability) and easier to maintain and resale than other cheaper brands of cars

The right balance of quality and price must be meet in order for foreign companies to established and operate profitably in Cameroon.

Millions of consumers in Cameroon and Africa in general are simultaneously price and quality sensitive.

How to maintain quality and price                                                               

Several companies in the fast moving consumer goods sector in Cameroon have understood how to maintain quality while reducing their prices to reach millions of price/quality sensitive consumers in Cameroon.

What they do to reduce the price of their items without reducing the quality?

By reducing the package sizes and quantity of their products, they create what’s known as low unit packages (LUP), by creating LUP companies can comfortable reduce their prices thereby reducing the upfront cost of their products. These products immediately become affordable to almost anyone of any income bracket group in Cameroon.

Low unit packages allows brands to maintain the quality of their products  while reducing their prices thereby preserving their brand image while appealing to millions of price/quality sensitive consumers in Cameroon.

Buying in small quantities is actually more expensive in a long run especially if the product is consumed several times a month, but the fact that the upfront cost is reduced makes the product affordable for almost everybody. Most people in this category don’t buy to stock; they mostly buy for one time consumption, typical of a hand to mouth consumer.

Through LUP, almost any one in Cameroon can enjoy the minted flavored Colgate herberlife toothpaste, have a refreshing fruit flavored drink, eat a biscuit with a cup of tea, afford baby diapers and much more even though they seem to live on $1 per day.

Floating middle class also need LUP

The middle class in Cameroon is very volatile due to frequent changes of income and increasing financial responsibility of family bread winners. Incomes are actually spread over more heads rather than just father/mother and their immediate family thus reducing the purchasing power. An increase in salary for a Cameroonian middle class  literally increases its disposal income but it doesn’t necessarily translate to a higher purchasing power due to the family structure and extended family culture. This makes it difficult to target this group. Products meant for bottom of the pyramid (BOP) consumers ends up attracting consumers of various income groups in Cameroon.

Table 1: the relationship between cheap, affordability, quality and demand in Cameroon

  Affordability Demand Type of Consumer Product category example
Quality Price    
  Low Low High high BOP Low grade, non- branded , Chinese products
  Low Average Average low Uninformed & Lower middle class Counterfeit branded, B & C graded products
  Low High Very low Very low Uninformed Consumers counterfeit branded products
  Average Low high Very high   Lower middle class & BOP FMCG, clothing & secondhand goods from the west
  Average Average average average   Lower & upper middle class FMCG, clothing, electronics, cars & secondhand goods from the west
  Average High low   low   Upper & lower middle class FMCG, clothing, B graded & secondhand goods from the west
  High Low high   Excellent! BOP, lower & upper middle class FMCG, clothing & secondhand goods from the west
  High Average high Very high Lower & upper middle class FMCG, clothing, electronics, cars & secondhand goods from the west
  High High Very      low average Upper middle class clothing, electronics, cars, entertainment etc

 
If the quality of a product is low and the price is low, the products become very affordable and this will generate a high demand mainly from bottom of the pyramid consumers. These types of products are mostly less resistant, non durable and poorly manufactured products.

It is most interesting to be at the green spot, where the product quality is high, the price is low. The low price makes it very affordable and the high quality attracts an excellent demand from all income groups. This is the point where LUP becomes necessary incase for FMCG.

The orange spot is interesting for other products such as cars, if the quality is considered as high and the price is average, you can expect a very high demand from the growing middle class. In case of Cameroon Toyota second hand cars perfectly fits in this spot.

To note

In the table above, a high demand does not necessarily translate to high profits; other variables such as cost and market size have to be considered to determine if an increase in demand could eventually be translated in to decent profits.

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Denis Wung

A54 Marketing Group

info@a54marketinggroup.com