The Informal Customer

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The Informal Customer

Insight

Understanding who is the informal customer

The main difference between formal and informal customer interactions is how the relationship is built and maintained. The formal trade market’s interactions are established and grounded on integrity, shopper experience and location convenience. Whilst the informal traders’ interaction is less prescriptive, but relies on a more personalised approach to grow their customer base.

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Research has shown that the biggest segment which makes up the informal customers is the females, and age is no limit. Their purchase decisions are often driven by basic need recognition and social relationships with informal traders.
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As these customers establish a deeper connection with the informal traders, both parties begin to develop mutual trust and deepen the relations on a social level.
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As the informal interactions proceed, these relationships will likely result in credit and discount privileges down the line.

Who is the Informal Customer?

Gender:

Female predominantly, Males as well

Age:

23-60+ years old

Residing:

Informal settlements, high density urban dwellings and outlying rural areas

Income:

$420 or less

Daily informal customer spend (per informal trader):

Depending on the size and the development of a region, informal customers can generate between USD$17 – USD$105 daily income for an informal trader.

The Informal Customer Journey

The informal market customer has many purchase opportunities in an average day from street and table top hawkers to walk-in stores. So the questions are, when do they buy what products and why do they choose that informal trader?

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The customer is most likely to purchase:

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Home > Work/Destination

Loose cigarettes, airtime, breakfast goods, fruits, snacks like biscuits, sweets and chips.
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Work/Destination > Home

Loose cigarettes, cool drinks, pre-packed vegetables, airtime, bread, local staple food like rice and maize meal, canned goods

POSM Strategy

Previously, large FMCG brands have found it challenging to establish proper avenues of distribution for their products in the informal market. But, establishing a distribution avenue is only the beginning. Brands need to promote their products in the cluttered informal market environment. This is where the importance of choosing the right Point of Sales Merchandise (POSM) comes in.

In modern trade, POSM primarily serves as a temporary function for disruption. In the informal market environment, traders look to develop their presentation of products on sale. By nature an uncontrolled environment, traders seeks organisation and functionality from their POSM.

Characteristically unique to the informal market, POSM assets must add functional value to the informal trader. The question you must ask yourself is, what piece of POSM can a trader continue using after the initial sale/promotion?

When designing POSM for the informal market you need to consider the following aspects:

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Material

All the materials used in any POSM going into the informal market need to be durable. Materials like mild steel, aluminium for outdoor units and wood and plastics for units being used indoors.
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Design

The units need to be as simple as possible. No unnecessary elements should be added. Durability should be kept in mind during the design process as well as brand awareness.
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Adaptability

Many shops in the informal market are “packed away” in the evening or informal traders transport their kiosk platforms by stacking them in trollies. This requires the POSM to be foldable and easy to assemble.
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Stock

Because kiosks are temporary structures, most informal traders have no additional stock storage facilities. All stock bought for the day needs to be displayed on the relevant POSM element.

Want to find out more about how to successfully innovate and develop your informal trade POSM? Talk to us at info@pointgroup.biz

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