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Consumers’ decisions are rational

Taurai Changwa Business Forum
Regardless of what measures authorities may take, if they do not consider the needs and wants of consumers, Zimbabwe will continue to be a net importer of goods and services.

TRADITIONAL economists, just like lawyers, also use the reasonable man theory.

They often describe a rational decision maker as one who takes into consideration only feasible alternatives, which an individual ranks according to preferences, and eventually chooses the best possible alternative within the budget.

According to behaviourists, the rational choice approach fails to reflect realities in many cases because it ignores people’s psychological peculiarities such as self control problems, limited attention and choice avoidance.

Currently, it might seem as if local consumers are now used to South African goods and products.

And this has unsurprisingly led to an unsustainably high import bill and negative trade balance with South Africa.

Of late, subscriptions for digital satellite service, DStv, have become topical.

It is the sheer amount of money spent on such subscriptions that has been shocking.

In the six-month period to December 31, 2016, US$45 million was spent by Zimbabweans to access the service.

Apart from highlighting worrying foreign currency outflows, it also shows the extent to which the Zimbabwe Broadcasting Corporation (ZBC), the local television service provider, is losing out.

But it is not DStv alone that has enchanted local consumers.

All manner of South African goods and services continue to find their way onto the local market.

It might have been ideal if we had a competitive industry.

At the moment, the South African economy continues to grow at our expense, which obviously explains the negative balance of trade.

But as Government tries to revive local industry, there is crucial need to consider consumer behaviour.

Considering ZBC’s poor programming, there is nothing peculiar about local consumers outsourcing the service, through DStv, from foreign content producers.

If given an option, locals would rather opt for local productions.

There is definitely a business case for ZBC to consider investing in content in order to lure back subscribers.

And it can do so for a fairly reasonable price.

Introducing live football broadcasts from some of the biggest and exciting leagues in the world could be a big step forward.

Hopefully, the current digitalisation project will help provide scope for quality programming.

Usually, the market cannot dictate to consumers what they should or shouldn’t buy, but consumers, on the other hand, have the power to dictate to the market what they want to buy.

It is a matter of preference and choice.

Local companies have no option but to try and meet consumer expectations.

However, it is not only about the quality, but pricing as well.

For a long time, policy makers have been trying to review local cost structures but nothing meaningful has happened.

It is precisely for this reason that some consumers continue buying clothes from markets such as China, Dubai and South Africa.

Again, consumers can never be forced to buy clothes from the local market since the flight to reasonably priced products can be considered rational.

Regardless of what measures authorities may take, if they do not consider the needs and wants of consumers, Zimbabwe will continue to be a net importer of goods and services.

It is not surprising, therefore, that some wealthy Zimbabweans now prefer buying properties in South Africa where terms and conditions are less rigid than those obtaining on the local market.

Put simply, the solution lies in making investing in Zimbabwe as lucrative as possible.

There are clearly no reasons why Zimbabwe can’t attract big brands.

It is better for big brands to set up shop in Zimbabwe as this naturally impacts on employment creation and economic growth.

Statutory costs, utility costs and wage structures have to be reviewed in order to make our pricing competitive.

Businesses are presently burdened by some statutory obligations whose value and use remains questionable.

Overall, Zimbabwe still has the potential to attract capital and contribute meaningfully to regional trade.

Suffice to say, local products still have a niche market in the region.

The fact that local farmers produce organic commodities — not genetically modified ones — is also a major selling point.

But for Zimbabwe to succeed there has to be an overarching policy framework that supports industry and innovative entrepreneurs as well.

The story of Mr Maxwell Chikumbutso is both exciting and disturbing.

A high school dropout, Mr Chikumbutso invented a vehicle and a helicopter that is powered by green energy.

His potentially disruptive technology however has not yet been commercialised.

In fact, it has failed to find any local takers.

Instead, some business interests from Angola are willing to partner him. This is how we eventually lose out.

Zimbabwe has a lot of talent that is unfortunately working for other economies.

It is unquestionable that Zimbabwe, as it has shown in the past, has the capacity to compete with some of the global economic powerhouses.

We need to derive strength from the fact that Zimbabwe once had the best currency in Africa.

Going forward, any policy intervention should critically consider the input from consumers.

Source :

sundaymail

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