Surge in food prices poses new hurdles for marketers

The current surge in food prices in Kenya is changing the buying consumer patterns, posing new challenges for marketers as buyers move into different groupings, behaving differently.

With a surge in inflation to 11.48 per cent in April and a shortage of staple foods, the number of cost-conscious consumers has increased, reducing their spending and even forgoing some products in a bid to meet daily needs. This leads to a fall in the volume of sales.

“In Kenya, almost 40 per cent of consumers fall under this category and the most common way in which they respond is by substituting the high priced products with cheaper ones or foregoing them all together in a bid to save money and survive the downturn,” said Dr Joseph Muniu, an economics lecturer at Kenyatta University.

“For marketers seeking to prevent further losses, they can enlarge their consumer base. If the target market for maize flour is the bottom of the pyramid consumers, then marketers can reach out to the middle-class income consumers who hardly change their consumption behaviour, but are at the same time selective.”

Offering a solution to the price hurdle for cost-conscious buyers by packaging the product in smaller quantities and pricing it accordingly is another marketing tactic that businesses employ.

This can enable low-income consumers to keep buying and can even attract new customers.

However, Dr Muniu argues that this tactic is not always viable: “If a two-kilogramme product is cut in size and packaged into a 250-gramme product, yes, the consumer will buy it when it is introduced in the market.

“But eventually they will update their belief that with a smaller quantity product, it runs out faster and they need to buy it almost every day, which is expensive and they will stop buying.”

During a downturn, another category of buyers becomes the enduring consumer, who chases discounts and sales to buy their favourite products but will settle for cheaper alternatives.

In the US, for instance, during the 2008 recession, enduring consumers showed more restraint in consumption and a rising interest in sales and discounts.

“Consumers questioned whether the full-priced merchandise was ever really worth the price. There was a stigma associated with wasteful, impulsive spending, while thoughtful, responsible spending was more socially acceptable. From grocery to apparel shopping, about one-fifth of consumers abstained from buying items that seemed just too expensive,” reported PricewaterhouseCoopers.

However, for ‘live for today’ consumers, the price is not an issue and they will not settle for a cheaper alternative to their favourite brand.

The live-for-today segment carries on as usual through any downturn and, for the most part, remains unconcerned about savings. The consumers in this group respond to a downturn mainly by extending their timetables for making major purchases.

Typically, urban and younger, they are more likely to rent than to own, and they spend on experiences rather than objects, with the exception of consumer electronics. They are unlikely to change their consumption behaviour unless they become unemployed, according to John Quelch a Professor of Business Administration at Harvard Business in an article titled ‘How to Market in a Downturn’.

- African Laughter