With the high rates of inflation around the world, and not in the last place here in Ethiopia, the costs of living are skyrocketing. The increasing costs of living have a direct effect of the buying patterns of consumers, as their buying power is decreasing rapidly. Consumers around the world have many similar needs. All people must eat, drink, and have a roof over their heads. Once these basic needs are met, people will try and improve their standard of living: a more comfortable home, more recreation and higher social status. Although basic needs and the desire to improve the standard of living are universal, people’s ability to achieve these objectives is not the same at all. The economic, political, and social structures of the country people live in affect the ability of people to achieve these goals. To understand consumers, whether here in Ethiopia or in a country where you intend to export your products to, you must examine four aspects of consumer behaviour:
- What they can afford.
- What they need.
- Why they buy.
- And how they buy.
What people can afford varies significantly from country to country and the total wealth in a country is an important indicator of market potential. Governments have a major influence on the distribution of wealth in their country, by means of policies, taxes, subsidies, or ownership of industries for example. Low wages and unemployment are factors that increase the lower income class. Concentration of business ownership in a few families or individuals decreases the size of the upper class.
People spend money to satisfy their needs. They will first fulfil their basic needs like food, clothes, and housing before spending money on more luxury items. Consumption patterns therefore differ tremendously between classes of a society and between different countries. In less developed countries people tend to spend a bigger part of their income on food and in richer countries they will spend relatively more on health, recreation, and education for example.
Next, we need to find out why people buy what they buy, in other words what are the motives of consumers. Culture and norms come into the picture here. With the rich coffee culture in Ethiopia and the ceremony around it for instance, few Ethiopians will be treating their visitors on a cup of instant coffee. And pork products for example are not eaten by most Ethiopians for religious reasons.
Social class is another factor. People who belong to the same social class, based on their income, education and occupations, tend to have similar buying patterns. They may wear the same kinds of clothes, sunglasses, jewellery, watches, handbags, etc. At home they may have appliances like a tv, satellite dish, computer, or they will drive a certain type of car. And their children are likely to want certain things as well, e.g. toys and kinds of shoes.
It also matters who makes the decisions at home when it comes to spending the money and buying for the family. Ask yourself who for example buys any of the following items. Is it the husband, the wife or do they decide together on buying the groceries, furniture, the electrical appliances in the house, insurances or the car? And what influence do the children have? Mind you, many marketing strategies target children and they are informed more and more. They hear or have an opinion about what is cool, what is healthy, what is trendy, and they tell their parents. Mothers have a hard time explaining that the other cheaper brand is just as good.
Levels of education and literacy play a role as well. They go hand in hand with the economic development of a country. A low level of literacy affects the market in two ways. First, it reduces the market for products that require reading such as books and magazines. Second, it reduces the effectiveness of advertising. There may be a relation here with the way companies advertise their products on ETV, in the form of drama. Not a bad strategy I would say, considering most people watching ETV around that time.
We must be careful though not to generalize consumer behaviour too much. Consumption patterns of individual buyers still vary considerably. Not everybody in the same social class will buy the same goods. Many consumers are careful with spending their money and balance quality with the price they are willing to pay. When it comes to food, it becomes even more complex as cheaper food is often not the most nutritious.
A wise consumer will ask at least two questions before deciding to buy a product:
Do I need it? Can I afford it? The challenge for the seller and producer therefor is items to find out what people need most and what they afford.