Over the past few weeks, the social media has been agog with chatter about the escalating prices of essential commodities, especially maize flour, milk and sugar.
Particularly interesting is the way the government, opposition, entrepreneurs and consumers are handling the whole issue. Everyone is trying either to capitalise or survive in their own way.
Some eateries in downtown and rural areas, I learnt through the social media. have suspended ‘ugali saucer’ — complimentary side plate — until further notice due to the high price of maize flour.
This narrative reminded me of something that happened a while ago. We were travelling back to Nairobi from an upcountry trip. One of my colleagues requested we stop at a particular roadside kiosk to buy some potatoes.
After heaping praises on the vendor whom she claimed to have known for many years nearly everyone in the car wanted to buy some potatoes too. But then something happened that spoilt the vendor’s broth.
One lady insisted on pouring the potatoes on the ground so that she could check the quality well. She was selling them in 20-kg used plastic oil containers.
When she poured the potatoes on a mat, another lady noticed they were fewer than she thought. Something prompted her to request they be put back in the same container. When this was done, everyone was surprised. The container was no longer full! “About one-tenth is missing. A whole 10 per cent less,” she shouted.
The seller was speechless for some time. When she opened her mouth she muttered something in mother tongue to the effect that the prices in the farm have become too high to make the profit in the usual way.
Apparently, she had arranged the potatoes in a way that few would fit in the container to maximise profit.
She lost the windfall and potentially loyal customers because she wanted to impress them with low price and ignored quality and integrity.
Reducing quality or quantity of products or services to save money is not uncommon for some businesses. Some sellers opt to reduce quality or quantity and maintain the same price to protect their profit rather than increase price and hurt customers.
However, giving your customers something different from what they expect or are accustomed to may harm your business, rather than save it.
If the cost of your inputs goes up beyond what you can naturally absorb, it is better to adjust the price accordingly and explain than to lower the quality. Poor quality is long remembered after the price is forgotten. After all, People buy things because of the value they derive, not price.
This article was first published in the Business Daily on Monday 22 May 2017