The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
While the consumer concept of value has changed in recent years, with shoppers looking for product attributes such as durability, ‘cool’, green credentials and of course, peer recommendations alongside price, lower income consumers present more challenges to brands. Cultivating loyalty among the so-called BoP [base of the pyramid] consumers that must consider price first, and may be too poor to be really brand aware, is complex. It is, however, a priority, as these consumers, often newly-minted urbanites, are and increasingly will make up a significant consumer market. The ability of brands to think about issues like cultural relevance and building consumer trust is key. Technology is already reaching out to lower income consumers. Right now, in mobile communications, they are early adopters of pared-down smartphones with global brands in a race to sell them new models first.
Brands need to offer cheaper prices and/or smaller packaging and discounts on packaging and via loyalty cards to appeal to low income consumers. In today’s crowded marketplace, however, they should also stress innovation to create engaged customers and generate long-term bonds. This is also because it is likely that loyalty will focus more on emotions than on rational incentive-based initiatives as rational decisions lead to loyalty loss. This is a lesson learned by brands seeking to re-establish consumer loyalty following recession in developed economies.
Source: Euromonitor International from national statistics
Cheaper convenience is being marketed to consumers struggling financially. August 2012 saw Unilever announce that it would employ packaging and marketing lessons from its Asian division in European markets, in response to the increasing number of households operating on tight budgets. The company is selling Surf detergent in packets of just five sachets in Spain, for instance. The head of Unilever’s European division explained why: “If a consumer in Spain only spends €17 when they go shopping, then I’m not going to be able to sell them washing powder for half of their budget.”
In the food market, Nestlé innovated through its floating supermarkets, which reached eighteen low-income communities in Brazil’s Amazonian region and saw strong sales for the brand’s 300 products sold there. Meanwhile, companies such as Spain’s Telefónica “ventured into Rio’s favelas with their wire networks when street violence was more prevalent and now they have thousands of internet subscribers” reported financial paper Valor.
African consumers are said to be very loyal to brands and reluctant to try different products. Loyalty programmes which reward repeat customers are becoming an increasingly popular route for retailers aiming to challenge this conservatism in the African market.
Cultural relevancy will be a key driving force of customer loyalty and engagement. While sales made via mobile phones are increasingly popular in Africa, many local economies are still cash based so provisions need to be made for cash payments. In a country like Nigeria, where online scams are common, many consumers are still wary of online transactions. Establishing trust in a brand is therefore important when it comes to promoting online transactions.
In Kenya, online start ups have been hindered by the preference for face-to-face interaction. As Jacob Lennheden, MD of a Kenyan online food delivery service, Yum, says: “When it comes to online start-ups like Yum, the biggest difficulty has been in building up a level of trust between our customers and us. Most sales take place between people, whereas with online business you quickly get the impression you are dealing with a robot or a computer – which increases the suspicion from the customers.”