MKT 4468 GROUP ASSIGNMENT SOLUTIONS

Assignment #4.

Introduction

We start with a definition of consumer goods to guide our analysis. The output of

production and manufacturing available on a store shelf such as clothing, food, and jewelry

(Investopedia, 2018). The type of demand for consumer goods in a country with a low per capita

nominal GDP are basic, such as clothing or housing needs. The three countries with the lowest

nominal per capita GDP in 2017 are all located in sub-Sahara Africa; Burundi at $292, Malawi at

$338, and Niger at $378 (World Bank, 2019). For comparison, the 2017 per capita income for

the U.S is $59,531 (World Bank, 2019).

Low per capita Nominal GDP Nation Consumption

According to Banerjee and Duflo (2007), people earning $1/day spend from 56% to 78%

of their money on food (in rural and urban households), 4.1% on tobacco and alcohol, and 10%

on festivals (wedding, a funeral, or a religious festival). The world’s poorest may not have the

necessary purchasing power to buy Western produced goods, though goods tailored for the sub-

Saharan markets may fare better. The emphasis should shift to indirect export of goods to various

middlemen with funding such as Non-Governmental Organizations (NGOs) such as the Red

Cross, United Nations Development Program, or government agencies such as United States

Agency for International Development.

Consumer Goods Consumption. A report by Brookings (2018, p.6) suggests the highest

African consumer expenditures are in food, beverages and tobacco. Deloitte (2016, pp.11-12)

reports that of the 50 top companies in Africa, none are in our three countries with the lowest per

capita GDP that points to low competition opportunities. A PwC report (2016) identifies online

Copyright © 2019 Dr. M. Elbeck 1

retailing as a major growth opportunity. The proliferation of smart phones such that “subscriber

numbers are expected to account for half the population in 2023” (ZDnet, 2018) suggests major

opportunity in mobile sales. In conclusion, online and mobile sales of food, beverages and

tobacco might offer strategic opportunity.

Country Analysis: Burundi

Let us select Burundi with the lowest per capita nominal GDP. Our analysis will cover

the following three areas.

Imports. A country’s imports inform us of goods and services that are valued and cannot

be produced domestically. The top three imports in 2017 were refined petroleum products (17%

to 20%), medicines (8.2% to 6.2%) and cereals (7.6%) such as rice, corn, malt and wheat

(Observatory of Economic Complexity, 2019; Trading Economics, 2019). We conclude that

demand for consumer goods in Burundi include medicines and cereals.

Literature on Burundi Food Consumption. Common foods are beans, corn, peas,

millet, sorghum, cassava, sweet potatoes, and bananas. Beer is consumed at all important

occasions (Everyculture, 2007). Another source points to beer, soft drinks, soap, textiles, and

cigarettes (Groelsema, 2007).

Images. A neat approach to solve this low per capita GDP question is to focus on Google

images of Burundi. If pictures are worth a thousand words, then the diversity of images may

provide clues as to what the citizens consume and perhaps imply demand for consumer goods.

Images point to a poor rural nation with armed conflict, poor infrastructure, subsistence living

with a strong support for tribal/national celebrations. Remarkably, the variety and vibrance of

clothing suggests an opportunity for fabrics and finished clothing. The following table

consolidates our analysis for Burundi.

Copyright © 2019 Dr. M. Elbeck 2

Table 1

Demand for Consumer Goods in Burundi

Source Consumer Goods Opportunity

Literature on Poor Nations Online and mobile sales of food, beverages and tobacco

Imports Medicines and cereals

Beer, tobacco, beans, corn, peas, millet, sorghum, cassava,

Literature on Burundi Food
sweet potatoes, and bananas, soft drinks, soap, textiles,
Consumption
and cigarettes

Images Fabrics and finished clothing

Conclusions

Sub-Sahara Africa’s poorest economies’ consumer goods are generally food, beverages

and tobacco consumer products. For the case of Burundi, Table 1 draws on four sources

suggesting consumer goods in demand are of the nondurable type such as medicines, food

(cereals, beans, corn, peas, millet, sorghum, cassava, sweet potatoes, and bananas), beverages

(beer, soft drinks) fabrics (textiles and clothing), tobacco (cigarettes) and medicines.

References

Banerjee, A. V., & Duflo, E. (2007). The Economic Lives of the Poor. The Journal of Economic

Perspectives: a journal of the American Economic Association, 21(1), 141-167.

Brookings. (2018). Africa's consumer market potential Trends, drivers, opportunities, and

strategies. Brookings, retrieved from https://www.brookings.edu/wp-

content/uploads/2018/12/Africas-consumer-market-potential.pdf.

Copyright © 2019 Dr. M. Elbeck 3

Deloitte. (2016). African Powers of Consumer Products 2016, Deloitte, retrieved from

https://www2.deloitte.com/content/dam/Deloitte/za/Documents/Consumer_Industrial_Pro

ducts/za_APCP_Brochure_Digital.pdf.

Everyculture. (2007). Burundi, Everyculture, retrieved from https://www.everyculture.com/Bo-

Co/Burundi.html.

Groelsema, R. (2007). Burundi. Worldmark Encyclopedia of Nations, retrieved from

https://www.encyclopedia.com/places/africa/burundian-political-

geography/burundi#DOMESTIC_TRADE.

Investopedia. (2018). Consumer Goods. Investopedia, retrieved from

https://www.investopedia.com/terms/c/consumer-goods.asp.

Observatory of Economic Complexity. (2019). Burundi Imports, OEC, retrieved from

https://atlas.media.mit.edu/en/profile/country/bdi/.

PwC. (2016). Eight trends shaping the retail and consumer sector in sub-Saharan Africa, Africa

Business Insight, retrieved from https://www.howwemadeitinafrica.com/eight-trends-

shaping-retail-consumer-sector-sub-saharan-africa/53872/.

Trading Economics. (2019). Burundi Imports By Category, Trading Economics, retrieved from

https://tradingeconomics.com/burundi/imports-by-category.

World Bank. (2019). GDP per capita (current US$), World Bank, retrieved from

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD.

ZDnet. (2018). Mobile in Sub-Saharan Africa: Can world's fastest-growing mobile region keep it

up? ZDnet, retrieved from https://www.zdnet.com/article/mobile-in-sub-saharan-africa-

can-worlds-fastest-growing-mobile-region-keep-it-up/.

Copyright © 2019 Dr. M. Elbeck 4