Hello my CLSME Community.
I’m sorry I couldn’t write to you last week. I have been overwhelmed with multiple client engagements that I am now on the verge of burnout.
Sadly, I cannot even take a rest now because fuel is now N617 and the dollar is over N800 to a dollar. And man must eat. Things are getting really unbearable and my heart goes out to every one of you that belongs to this community and is getting affected by this downward turn of events with the country. May God be with you and may you experience abundance, even in the face of scarcity.
So today, I want to gist with you about these unending debates between online vendors, their customers, and the Balogun/Eko Market traders. Many times, at the core of these debates are the pricing and competitive dynamics between these parties.
So let’s say the price of a product at Balogun Market is N100, vendors want to sell for N200 because, according to them, the logistics, packaging, and other associated costs. Plus their margin. On the other hand, the buyer who is aware of the price range at Balogun feels N200 is a ridiculous price and tells the vendor the selling price of N200 is outrageous.
Who will settle this wahala like this?
Well let me tell you some of the things to do in lieu of situations like this, but you need to understand as a small business, your ability to appeal to a wider market, which in this case is both the middle class and the lower-income segments, should be a priority for you (except you are strictly into luxury products).
So you must model your business along with market realities.
And what are the market realities? Balogun market. Mushin market, Oshodi, etc. Brushing off this reality is delusional and self-destructive. I see a lot of business motivational speakers say “If they can’t pay you, they are not your customers”. Well…yes, except that you’re not Mercedes Benz or Louis Vitton yet.
Under estimating or overestimating your target market/audience is one of the biggest contributors to the failure of many businesses in this economy.
Brushing off this reality: over-estimating the market and undermining the influence of the informal markets is a contributor to the exit of retail giants and loads of MSMEs you may not even know about.
So what should you do?
1. Recognise who your real competitor is Balogun market. Balogun is your competitor. Not the fancy luxury stores (except again, you sell luxury). Stop getting angry that people compare your prices with Balogun. They will because that is your competitor.
2 Understand your market: Your market is a largely poor market. Poor people will tolerate stress to spend less than spending more with no stress. Don’t abuse them for it. Speak their language and communicate your differentiating factors and prices politely. It's part of branding.
3 Price Appropriately: Adopt a pricing strategy that aligns with your market reality. A good example is Chicken Republic. They understood their market and created N500 rice & chicken which has become their fastest-selling unit product because it appeals to the mass market.
That was the recognition that local Bukkhas are also their competitors. And they priced and competed at that lower end of the market. Remember that lower margins & higher sales are better for your small business than lower sales & higher margins (will do a letter on this later).
Also take your time to communicate the differences in your product, price & the market. Don’t just shrug people off arrogantly by saying others will buy. It’s better to stop marketing to an audience that won't or can't buy than to market to them & then shrug off those who can't buy off
Word goes round and you don’t want to be known to be proud or rude. You never know who won't buy today but will tomorrow or introduce you to the client that will turn you around. This doesn't mean there are no totally bad clients or prospects.
4. Lastly, Commit to quality & reliability: People will relate more to your prices if it's reasonable along market rates PLUS other dynamics such as quality, delivery, reliability, etc. You can then mark up as you acquire more customers and they pay more because they trust you.
Please don’t be carried away with your allies. Feel the pulse of your market & respond accordingly.
As you know, the conversation does end here. Join us using this link, I can’t wait to welcome you all.
Ayo Bankole Akintujoye
Instagram @AyoBankolee