Wednesday,20 September, 2017
Current issue | Issue 1360, (14 - 20 September 2017)
Wednesday,20 September, 2017
Issue 1360, (14 - 20 September 2017)

Ahram Weekly

Benefiting consumers?

Smaller packages of products on the local market may sometimes be intended to deceive, but they can also benefit consumers, writes Mai Samih

 Benefiting consumers?
Benefiting consumers?

More and more imported products are disappearing from the market due to the increase in the value of the dollar relative to the Egyptian pound after the floatation of the pound in November 2016. Others are evolving to meet sometimes straitened budgets.

Egyptian-made olive oil soap, widely used in the 1950s and 1960s before imported soap became more popular, is now coming back into fashion. The soap costs LE3 to LE4, depending on the size of the bar, but it is still much cheaper than imported soaps, now averaging LE8 per bar.

Egyptian juices, pickles and jam products are now reappearing on the market, having earlier lost market share to imported products. Needless to say, these Egyptian products are much cheaper than their imported counterparts.

Against this background of sometimes rapid price increases, some companies have also been offering a psychological solution to rising prices by selling their products in smaller and more affordable packages. The market is now flooded with mini soap and detergent packs, mini soda bottles, and mini cheese packs, to name just a few. But are they suitable for a population that has been used to plenty and may be suffering from the straitened circumstances?

“The smaller packs are already for those who earn a lot each month. They are not designed for the poor. We buy cheese per piece from a local supermarket. We don’t buy it in packs in the first place,” commented Um Mohamed, a mother of two children and the wife of a porter.

“The detergent mini packs are good since we don’t use them all the time, but the cheese mini packs are too expensive. Even if we can afford to buy one of these packs it often turns out to be only half full.”

One shopper who spoke to Al-Ahram Weekly on condition of anonymity said that consumption patterns had radically changed. “We used to buy large product packages that could be stored and would last for the whole month, but we don’t do that anymore. We now buy what will last us for about 10 days. The prices of family pack products are constantly increasing, making it difficult for us to buy them, and we buy the mini packs because they are cheaper,” she said.

According to World Bank statistics, inflation in Egypt in 2016 was 13.8 per cent. GDP in the first half of 2017 rose by 3.4 per cent, and the poverty line in Egypt was at those living on less than $1.9 a day.   

Economist Hani Tawfik explained the goals behind companies putting such mini packages on the market. “If a company manufactures packs of the same size but puts less of a product into them, this means that the company is tricking the consumer. A chocolate bar that was 10cm in length could become 8cm in the same pack, for example. But companies may not be setting out to deceive. They may have realised that they need to decrease the size of packs to suit the decreasing purchasing power of consumers,” he said.

“People who used to buy four packs of a certain product will still buy four packs, giving them the psychological feeling that they are buying the same thing. But the quantities the packs contain will be less.”

 This strategy can also disguise decreases in incomes and increases in unemployment because shoppers may not recognise that anything has changed. This is especially because in many countries, not only in Egypt, shoppers have got used to buying a certain number of packets of a product rather than a certain weight of it, he said. 

Making packs smaller can also help companies sell more, Tawfik said. “Companies aim to increase their sales. All companies saw decreasing sales after the floatation of the pound, with prices increasing to make up for exchange-rate movements and the ability of people to buy their products decreasing. In this situation manufacturers may have reduced the size of their packaging in order to encourage consumers to buy,” he commented.

Companies making smaller packs are well aware of the psychological behaviour of consumers. For example, a housewife may buy four packs of washing powder each month, and when the size of these packages decreases she still buys the same number of packs. Although the amount of soap has decreased, she will organise her washing to suit the amount of soap she has. She will use less soap than she used to, and probably wash once per week instead of every three days. 

In general, consumers who buy many mini packs of the same product have not been affected by decreasing incomes. They are making up for the decrease in pack size by increasing the purchased quantities. However, these people are not necessarily those that the manufacturers are targeting. The latter are people who can only afford such mini packs and must abide by the changes in the quantities of the products.

Tawfik speculated that the consumption patterns of many people could change, and they may think twice about buying even familiar products.

 

BENEFITING PRODUCERS: It is the producer who wins in this situation, Tawfik explained.

“The decrease in pack sizes is good for producers since they will make up for the decrease in sales by psychologically suggesting to people that they are buying the same amounts. It is natural that with the current inflation people’s purchasing behaviour will change to meet new financial circumstances. It is to be hoped that this is a temporary state,” Tawfik said.

Psychologist Ali Suleiman explained the behaviour of consumers and producers under such conditions. “The idea is not that everybody has the right to buy such-and-such a product. The idea is that the market supplies such products, meaning that no one goes to the supermarket to buy a product and does not find it,” he said. Poorer people can still find the products they need, and richer people will be encouraged to waste less since they will be buying smaller quantities.

All this does nothing to solve other problems related to consumption, such as hoarding, however. Some people still store hundreds of kg of rice at home, while others may be unable to buy one kg. This must be changed. “We have a problem here in the culture of consumption, since human beings are never satisfied. Perhaps this is related to states of deprivation in the past, when people could not get what they wanted and so now over-compensate by buying more,” Suleiman noted.

Such behaviour can also be seen in the case of people invited to weddings or other events where there are open buffets. They may load up their plates with food, far more than they need, expressing in so doing cases of “bulimia nervosa”, or emotional over-eating.

“The type of consumption we are talking about here is deceptive. People buy extra food, and this stays good for a day or two but eventually goes bad. This is a system of life that we see today in many Arab countries, being a form of extravagance related to past deprivation. But people should buy according to their needs. They should not worry what other people think if the latter do not think them sufficiently ‘generous’ in their purchasing habits,” Suleiman explained.

“Real generosity means that a person meets another person’s needs. It doesn’t mean giving them more than they need. We have to practise more efficient forms of consumption.”

If this happened, prices would also not go through the roof as products would stay on the shelves. “People should organise their thoughts when they are buying and only buy what they need. This idea of controlled consumption is implemented in some supermarkets at the time of sale, when people are only allowed to buy two packs of certain commodities, sugar, for example. This should be generalised,” Suleiman said.

He said the new pack sizes could be morally beneficial since people would cut down on their expenses. “The current fashion for people buying mini packs is a reaction to the increases in prices and is something imitated from Western countries. The idea is that a person should only buy what he can use. In some Western countries, people can buy one banana at a time, for example, which encourages them to buy only what they need. This is not the case in Egypt, where people load up on everything and then throw a lot away.”

 “Smaller packs are a good political and economic move since people will learn to buy only what they can use, or learn guided consumption. If people buy small packages and there is some of the product left, it will not be a great loss. The companies in fact are helping consumers to moderate their consumption, helping people to save money and the resources of the country,” Suleiman commented.

Combating the culture of consumption should be emphasised more widely, he said, including in schools. “At the moment we only have a culture of ownership. We need to learn how to meet our necessary needs, not our extravagant ones. We need to organise a campaign to make sure that everyone gets their immediate needs, especially the poor, and then stops consuming.”

Tawfik added that for him it was important that job opportunities in the manufacturing sector be prioritised, even if this means de-emphasising longer-term construction industries.

“We have a short-term problem with inflation that must be given short-term solutions. Consumer product factories can provide young people with jobs, and these will continue even after the end of a project life-cycle as products can always be exported after the local market is saturated,” he explained. 

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