Most businesses in Uganda often find that the middle class is often constricted. Let’s consider the case of a Beverages player such as Uganda Breweries Limited (UBL). Although the long-term strategy would be to move consumers upwards in the different segments. That’s to say, get someone drinking mainstream beer to lift into the premium beer segment. Or get someone in the mainstream spirits category to play in the upper mainstream. The market realities often reflect more opportunity at the base of the pyramid.
Emerging economies will often have a large-sized bottom of the pyramid, all the consumers that have potential of purchasing one’s product if only there was a right entry price. Companies such as Mukwano Industries solved this with the sachet. Imagine such a time when detergent was sold in bucket containers. It meant that only a few could access this essential product. The same applied to the cooking oil, that was sold in the big-sized plastics. Firms realized that they were pricing themselves out of a big market. The margins may not make that much sense, but the volumes at the base of the pyramid would always justify the low margins. Sachets brought that transformation in the consumer products segment.
You can think of what the Bodaboda did to the Special Hire business in Kampala. All these products that find a right entry price into this bottom of the pyramid often go viral. Thus, in thinking about base of the pyramid strategies, we should mostly think through cost-differentiation. Not that quality should be compromised, but any strategy that doesn’t deliver on the cost-element is bound to fail in this segment. Think of the clinics versus the hospitals in Uganda.
One of the opportunities that currently exists in East Africa is the absence of a super low-cost-carrier. There should be a way to cheaply move East Africans around their region. That could be Uganda Airlines’ opportunity, choosing to be that low-cost carrier.
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