Friday, November 22, 2013

Is it Always About the Price? The Intricacies of Nigerian Buyers

Nigeria, more than anywhere else that I have ever journeyed to, is a consumer’s paradise. Advertisements are, literally, everywhere. Goods and services are peddled from shops, but also from stands, sidewalk blankets, wheelbarrows, and from the omnipresent street hawker. Everything is negotiated, from the price for a certain quantity of goods to the quantity of goods for a certain price. What’s more, Nigerians spend high percentages of their income purely on image. Think Beverly Hills, Mayfair, or Palm Jumeirah. Except that the average Nigerian makes $3.25 a day. I have even encountered Nigerians who skip a meal a day for months to afford a new smartphone or to purchase that new, glitzy suit.

In Nigeria, everyone is trying to sell you something.
Like these Hollandia Yogurt girls in Ibadan.
It is not my intention to malign Nigerian spending habits. In fact, I believe it is a sign of a healthy economy when consumers choose to spend a large chunk of their money rather than engage in over-saving, which taken to its ultimate extreme can lead to a situation not unlike deflationary Japan in the 1990s. Indeed, SVTP has made most of its revenue from Nigerians who love to buy useful electronics gadgets such as our own. What I do find fascinating, however, is in spite of how much they love to spend their hard-earned and often scarce cash on products and services, Nigerians perennially complain about the price. And not just meek grumbles here and there. I’m talking about intense, twenty-minute symposiums on how the price of whatever good or service they want to buy is too high.

People all around the emerging world where incomes are lower do tend to haggle over prices. But I have found that this phenomenon is exacerbated in Nigeria. Partly because of cultural pressures to make as much money as possible in preparation for marriage and building a home back in the village.  Partly due to slightly higher consumer prices compared to their African neighbors. And partly due to a very high INCOME GAP between very rich and very poor Nigerians, resulting in the latter desiring to do everything possible to spread their money out and “live the life” like the posh Nigerians they aspire to be.
Livin' the good life in Osogbo, Osun State.

What this somewhat ironic “buy well, but price well” mentality means for a company like us is complex. Should we listen to people’s complaints about the price? Absolutely. At SVTP, we take pride in being a people-centric manufacturing company, and every iota of feedback is valuable to ensure that our products continually incorporate customers’ reaction into their redesigns. However, is every price complaint equal? Here, I would argue no. Even if we sold our entry-level, Basic C200 solar phone charger at N500 ($3.15), we would still have complaints about the price. Moreover, many Nigerians, both consumers and distributors, associate products that are relatively inexpensive and that have a big “negotiation margin” as “Chinco” products – a deprecating term that signifies very cheap, often Chinese-built, mass-produced consumer goods. Clearly, pushing the price down a lot, even if that was possible with our modest margins, isn’t the winning strategy for a company aiming to distinguish itself on quality AS WELL AS price.

The solution? Well, I’m no rocket scientist, but I have noticed that Nigerian consumers largely group merchandise into two categories: The first are Chinco products – products they expect to be of low quality, which will need to be replaced within a few months but which can be bought very cheaply (usually all three characteristics). The second, which is what we here at SVTP are aiming to manufacture, are the “sexy”, high-quality products. The real Blackberry Q10 that just came out. The real Beats by Dre headphones. The real Samsung air conditioners. The real LG washers. For these latter products, Nigerians will still bargain, at first. But most Nigerians who can afford them (more than outsiders would assume) plus a large number of Nigerians who on paper cannot afford them STILL will ultimately pay whatever price in order to get their hands on them.

Even in this low-income village in rural Jigawa State, residents quickly snapped up the few samples I had, demonstrating the type of demand that exists for our products.

Long story short: once we convince a critical mass of Nigerians that SVTP means quality, that SVTP means American-designed, that SVTP means long-lasting, people-centric manufacturing coupled with effective sales, marketing, and after-sales support for distributors, then, and only then, price won’t be a major issue for us. But until that day comes, you'll still see our sales representatives and distributors on the streets of Lagos, Kano, Port Harcourt, and beyond doing what they do best: showing consumers that no better product can meet their phone charging needs at an affordable price than those from SVTP!

SVTP Northeast Nigeria Sales Representative, Mohammed Abubakar, and two DJs doing what they do best at a promotion in Bauchi!

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