Information Patterns in Indigenous African Markets: a Lesson in Consumer Performance

ABSTRACT - Consumers in indigenous African markets are so familiar with the goods they purchase that specialized techniques for gathering information are not needed. The manner in which these consumers function provides a useful contrast to patterns which are evident in Europe and North America and suggests that the analysis of information in human capital terms would provide insights into consumer behavior.

Citation:

Roger M. Swagler (1977) ,"Information Patterns in Indigenous African Markets: a Lesson in Consumer Performance", in NA - Advances in Consumer Research Volume 04, eds. William D. Perreault, Jr., Atlanta, GA : Association for Consumer Research, Pages: 297-301.

Advances in Consumer Research Volume 4, 1977   Pages 297-301

INFORMATION PATTERNS IN INDIGENOUS AFRICAN MARKETS: A LESSON IN CONSUMER PERFORMANCE

Roger M. Swagler, The University of Tennessee - Knoxville

[This research was undertaken while the author was Fulbright Lecturer in Economics at the University of Liberia.]

ABSTRACT -

Consumers in indigenous African markets are so familiar with the goods they purchase that specialized techniques for gathering information are not needed. The manner in which these consumers function provides a useful contrast to patterns which are evident in Europe and North America and suggests that the analysis of information in human capital terms would provide insights into consumer behavior.

INTRODUCTION

This paper deals with information flows and consumers' learning processes as illustrated by market operations in Liberia, West Africa. While there is a considerable literature on African markets, the manner in which consumers operate within the market structure has attracted little attention. [Bohannan, 1962 & Meillassoux 1971] However, an examination of that question, with particular reference to information needs, offers insights into a more generalized understanding of information flows by:

1) providing contrasts which give a clearer perspective on our own situation;

2) permitting, in this simpler setting, observations of elements which are masked in more complex markets; and

3) suggesting alternative approaches to further study of our situation.

The analysis is based on the proposition that while market organization and specific informational needs may vary, the need for information itself does not. If all consumers share a universal need for information, it follows that information-related attributes of products can likewise be viewed as universal. Recent developments in the analysis of information and consumer behavior can therefore be related to consumer performance in African markets.

In undertaking the analysis, we are not assuming that consumers around the world form a homogeneous group. On the contrary, it is essential to acknowledge a wide range of variation. Consumers may have little in common beyond the need for information, but in observing how that need is fulfilled under different circumstances, we can gain a better understanding of the elemental processes involved.

Unfortunately, a brief treatment such as this cannot do justice to all the subtle variations within Liberian markets. It is possible only to outline the most salient features of Liberian market structures. Those who are familiar with markets in less developed countries will recognize common characteristics. Those who are not should keep in mind that a great deal of variation exists within the general pattern; development presupposes a fluid state which accommodates a range of economic, cultural and social modes.

LIBERIAN MARKETS

Background

While the distinction is not always clear, Liberians are commonly divided into two groups: the Settlers, descendents of freed American slaves, and the indigenous population made up of local tribal groups. [See Appendix A] The latter make up over 95 per cent of the total population, but the former retain the bulk of the political and economic power. [Clower, et. al., 1966]

Indigenous markets represent the first of three tiers in a progression of market types. Next come the Lebanese Stores. [Somewhat inaccurately named, since this merchant group is drawn from throughout the Middle East. [Bonaparte, 1974]] These retail establishments are spread throughout the country and make up the bulk of the internal marketing system. Finally, there are stores of the European or North American type, designated here as Type III. These are found either in Monrovia (the capital city) or attached to concession areas.

FIGURE 1

LIBERIA: SHOWING MARKETS, LEBANESE STORES & SETTLEMENTS

Moving through the three types of markets, the consumer encounters increasing complexity in terms of both structure and the range of products. Thus, individuals must learn new skills to meet the demands of changing conditions. The adjustments which these demands require tell a great deal about how consumers adapt to, and ultimately function in, the marketplace.

Indigenous Markets

Liberia's indigenous population is part of the well established tradition of markets in West Africa, a tradition which can be traced back a thousand years to the establishment of the trans-Saharan trade. [Handwerker, 1973] Markets as an institution are therefore part of the culture and way of life of the people. Having said that, however, it is necessary to add that the role of markets remains somewhat ambiguous.

That ambiguity stems from the fact that markets do not serve as the central mechanism for resource allocation. In that sense, markets may be described as tangential to the mainstream of economic activity, serving as a means to exchange available surpluses, but not determining the fundamental processes of production and distribution. [Bohannan & Dalton, 1962] The bulk of the rural population is engaged in non-commercial agriculture, producing goods which are consumed within the community. Thus, economic activity is nonspecialized and the individual's role as consumer is directly tied to his or her role as producer.

It is specialization, or the lack of it, which distinguishes between the traditional sector and the money economy (or "modern" sector). [Hirschman, 1958] Such distinctions, while they may be valid from a national-income point of view, fail to account for the subtle patterns of change which characterize the evolving role of the consumer. In this case, individuals cannot be uniquely classified; their primary economic activity may be within the traditional sector, yet they may still operate as consumers in the marketplace.

This process marks the emergence of the individual as a consumer in the true sense, as distinguished from one who consumes only what he or she has produced. Even though specialization may be incomplete, individuals are learning the skills necessary to operate in the marketplace as consumers.

These skills need not include literacy. Literacy is assumed to be necessary for information gathering, but its absence in this case does not mean that consumers cannot cope with the demands of the marketplace. Evidence suggests the opposite; nonliterate societies are often characterized by sophisticated cognitive structures and complex patterns of organizing information. [Gay, 1967 & Colby, 1975]

Indigenous markets are found throughout Liberia, hut are concentrated in the central and northwestern regions (thus mirroring patterns of settlement and recent economic expansion). Typically the markets carry agricultural products and household goods. Prices vary according to supply and demand conditions and are subject to negotiation. On a given day, actual selling prices to knowledgeable buyers reflect the narrow range suggested by the competitive model.

There are three important elements which bear upon the effectiveness with which consumers operate. The first, and most significant, is the range of commodities offered. Most are either locally produced food stuffs or simple manufactured goods. The latter include such things as cloth, T-shirts, kitchen utensils and kerosene.[See Appendix B] Products are therefore either indigenous or represent nontechnical manufactured goods; in either case, the consumer can easily master information requirements. [For a contrasting view, see Norton, 1976]

Consumers, however, would still face problems if the distribution of offerings were subject to frequent change. Thus, the second point concerns the stability of the choices offered. Comprehensive data are lacking on this point, but such data as are available point to relative stability. [Compare the list in Appendix B to the accountings given by various authors in Bohannan & Dalton. The similarities are striking.] Impressions of those in the area support the idea that changes have been evident, but gradual.

Finally, the manner in which market operations are conducted deserves comment. Market layout varies with size, but usually features either open-air selling or some combination of open air and stalls. Buyers and sellers meet face to face and deal with each other as individuals. The social dimension of markets is reflected in the elaborate and animated bargaining which accompanies transactions.

Lebanese Stores

While markets per se are indigenous to West Africa, new market forms have also been introduced. This is clearest in the case of the Lebanese Stores which are scattered throughout the country. The Lebanese fulfill a role similar to that formerly served by the Indians in East Africa and the overseas Chinese in Southeast Asia.

Lebanese stores literally come in all shapes and sizes. In rural areas, the operation may be little more than a store front, perhaps attached to a local market. In urban centers, the stores are larger and may be similar to European or American stores. The rural Lebanese store may best be described as an old fashioned general store. The store serves as a social center and commonly features personalized service, including the extension of credit and other banking functions.

The larger stores in rural areas carry a broader range of household and hardware goods, processed foods, beer and soft drinks. While the particular selection differs from store to store and time to time, basic categories of goods do not vary greatly. In urban areas, more sophisticated, technological goods become available, including electrical goods and some electronics. In Monrovia, the large Lebanese stores blend into the Type III stores on the European and North American pattern. [Indeed, "Lebanese Store" refers to a type of establishment rather than ownership; many of the Type III stores are owned or operated by Lebanese.]

Type III

Little need be said about the Type III stores, which are similar to those found in Europe and North America. Liberia's "Open Door Policy," which encourages foreign investment, means that a wider range of foreign goods, including luxuries, is available than in many African countries (although import substitution is present). However, prices are high because of duties and transport and storage costs.

When all three market types are found together, patronage tends to be divided along income and ethnic lines. The local population predominates in the indigenous markets, while only upper income Liberians (mostly Settlers)and expatriates can afford to patronize Type III stores. True to their middle ground, Lebanese stores draw from all groups. For a given item, prices tend to be highest in the Type III stores, but there is a considerable degree of variation.

INFORMATION ACQUISITION AND SEARCH

The three market types outlined above reflect major differences and in turn make different demands upon consumers. However, despite these differences, consumers' need for information remains unchanged. The manner in which the information is obtained does change and is itself tied to the type of good the consumer is purchasing.

Nelson's analysis of search and experience goods offers a point of departure. Search goods are those about which relevant information can be gained before purchase, while experience goods can only be evaluated after they are consumed. [Nelson, 1970] Thus, the consumer gains information on the former by explicit search prior to purchase, but must depend on a series of samples over time for information on the latter.

More highly technological goods, such as consumer durables, tend to fall into the search category, while basic products, such as foods, are likely to be experience goods. The pattern of purchases will therefore play an important role in determining the pattern of information gathering. If more basic goods are over-represented, then experience qualities will likewise predominate and limit explicit search.

The distinction between the two categories may be blurred when the process is extended over time. To illustrate, assume that the distribution of possible purchase options is finite and stable. Then, as consumers accumulate information, formal search is reduced or eliminated. In the case of experience goods, consumers develop a store of knowledge which makes it possible to identify suitable products.

Over time, experience qualities may come to be associated with products which had initially been search goods. Consumers may continue to seek information prior to purchase, but they also learn about the goods (or experience them) during consumption. When the purchase is repeated, prior experience will play a part in the purchase decision. [Children's clothing, for example, may be purchased because information indicates that it is durable. If, in fact, it wears out quickly, that information will affect the pattern of future search and ultimately the purchase decision.] As this process continues, search qualities become insignificant and the product may be treated as an experience good.

The process may not reach that stage if search qualities are too complex to be fully learned, purchases are infrequent or the range of available products is in continual flux. In such cases, available information will be incomplete and may soon be outdated. As a result, consumers must continually sample experience goods and seek out information on search goods.

However, in the case of indigenous Liberian markets, such elements seldom interfere with consumers' learning processes. The range of consumption opportunities is stable and limited to largely nontechnological goods. Under those circumstances, information from search can be blended with information from experience to form a comprehensive knowledge about products. This knowledge can then be internalized so that the consumer can function in the market without formal search strategies.

As mentioned, many of these individuals remain largely self-sufficient, moving easily from the role of consumer to the role of producer. This lack of specialization is reflected in techniques for gathering information, which are likewise nonspecialized. Accumulated learning provides an adequate stock of information.

It should be clear, however, that the skills which serve consumers so well in indigenous markets do net enable them to function effectively in Type III markets. The latter require specialized informational gathering skills. Thus, in order to expand their consumption opportunities, consumers must also extend their skill levels. [It should be added that consumers whose experience is limited to Type III stores typically have difficulty functioning in indigenous markets.]

In the Liberian case, the differences between indigenous and Type III markets is bridged by the Lebanese stores. These serve as a means of educating consumers to a gradually more extensive range of more complex goods. This means that the Lebanese stores are tremendously important in terms of the long-run development of the country. If we can judge from developments elsewhere, it also means that the process will be protracted and difficult.

SUMMARY AND APPLICATIONS

The introduction made note of three ways in which an understanding of indigenous markets contributes to a more generalized understanding of information flows. By way of summary, it is worth recounting those propositions here.

1) provide contrasts which give a clearer perspective on our own situation.

The contrasts are obvious. Specialization expands consumption opportunities, but it also fragments the individual's economic life and requires the development of new skills. Consumers who confront highly technological products which are alien to their experience face a difficult task; those who deal only with products which are part of their day-to-day lives enjoy the advantages gained from continual contact.

For Liberians in indigenous markets, consumption patterns are not only related to production, but also to the community's traditions and culture. Thus, each aspect of the individual's life is tied to and makes sense in terms of the others. It follows that information which serves in one area will serve in the others also. Learning how to live in the society means learning what is needed to operate in its markets.

2) permits, in a simpler setting, observations of elements which are masked in more complex markets.

Two elements are of particular importance here. One relates to the clear progression of markets in Liberia. The three market types isolate and identify the expanding number of skills which are required of consumers as they extend their range of consumption. This gives clear indication of the sources of problems commonly encountered by consumers in Europe and North America.

The second element refers to the consumer learning process in indigenous markets. With a stable and limited range of consumption possibilities, consumers may learn all they need to know about products. This process is aided by the fact that consumers confront these goods in all aspects of their lives.

It seems so unlikely that consumers in industrial countries could ever learn everything they needed to know about products that the possibility might never he considered. By overlooking the possibility, however, we also run the risk of overlooking a fruitful way of viewing information. This brings us to the third- -proposition.

3) suggests alternative approaches to further study of our situation.

The alternative approach is suggested by the phrase "stock of information," which was used in the previous section. Consumers do accumulate a stock of information which they can draw upon in evaluating purchase possibilities. However, for consumers in Europe and North America, that stock is inadequate and must continually be expanded and renewed by explicit search; therefore it is the search, rather than the stock of information, which attracts attention.

Treating accumulated information as a stock and new information as a flow suggests a framework traditionally associated with capital theory. Extending this line of thought incorporates information into that framework. In doing so, information becomes a part cf human capital and can be analyzed in similar terms.

A human capital approach to information is consistent with other recent developments in the field. Lancaster's emphasis on goods as inputs rather than objects of utility suggests a production function of which information could be a part. [Lancaster, 1966] Similarly, if consumption is viewed as providing a flow of services over time, then that flow can be related to investment in information. From this perspective, questions concerning learning and information processing would be linked to depreciation and efficiency of the stock of information.

If we maintain that individuals make decisions concerning human capital allocation in terms of the expected return over time [Ghez &Becker, 1975], then it requires little extension to include consumption information in the process. In the traditional case, the return is measured by the flow of earnings; with information, the return would be measured by the flow of satisfaction.

it appears that a human capital approach to information is more than a convenient analogy. It should be the basis for a thorough analysis. That analysis cannot be developed here, but the experience of the peoples and markets of West Africa suggest that the possibility ought to be considered.

APPENDIX A

Liberia is located on the West African coast some 6 degrees north of the equator. While it was never a colony, the country was exposed to significant American influence following the settlement of freed American slaves in the 1820's. The Settler communities were largely confined to the coastal regions though they traded and often fought with the tribes of the interior.

The indigenous population is made up of a large number of separate tribal groups. [Twenty-six is the commonly accepted number, although the actual count varies according to the system of classification.] This fragmentation meant that while the country is small (under 40,000 square miles), it was not dominated by any one group. Recent estimates place the total population at about 1.5 million. [Schulze, 1973]

Some 80 per cent of the population remains in agriculture. Much of this is non-commercial, although some trade commonly takes place even among smallholders. Income estimates, which do not include the traditional sector, place annual per capita income at $210; this is above the average for Africa. [World Bank, 1974]

Trade has increased since World War II along with the improvement of the overall economic situation. Infrastructure development is progressing, but remains limited outside of Monrovia. During the first half of the century, the economy showed little sustained progress. The major event during that period was the establishment cf the giant rubber plantation near Monrovia by the Firestone Tire and Rubber Company. However, the plantation remained isolated and did not promote broadly based development. [Ghosal, 1974]

The major change in recent years has been the exploitation of rich iron ore deposits, beginning in the early 1950's. The most extensive operation is currently the Liberian-American Metals Corporation (LA/ICC) on the Guinea border. It is a joint Swedish-American concern operated in conjunction with the Liberian government.

APPENDIX B

REFERENCES

P. Bohannan and G. Dalton, eds. Markets in Africa (Evanston, Ill.: Northwestern University Press, 1962)

Tony H. Bonaparte, "Business in a Developing Economy," (unpublished paper, 1974)

B. N. Colby, "Cultural Grammars," Science, 187 (14arch 14, 1975), 913-19.

R. Clower, G. Dalton, M. Harwitz and A.A. Walters, Growth Without Development (Evanston, Ill: Northwestern University Press, 1966)

John Gay, The New Mathematics in an Old Culture (New York: Holt, Rinehart & Winston, 1967)

Gilbert Ghez and Gary Becket, The Allocation of Time and Goods over the Life Cycle (New York: National Bureau of Economic Research, 1975)

Animesh Chosal, "The Impact of Foreign Rubber Concessions on the Liberian Economy," The Liberian Economic and Management Review, II(1974), 48-58.

W.P. Handwerker, "Viability, Location and Timing of Liberian Periodic Markets," Paper presented to the African Studies Association, Syracuse, N.Y., October, 1973.

A.O. Hirschman, Strategy of Economic Development (New Haven, Conn.: Yale University Press, 1958)

Kelvin Lancaster, "A New Approach to Consumer Theory," Journal of Political Economy (April, 1966) 132-57.

Claude Meillassoux, ed., The Development of Indigenous Trade and Markets in West Africa (London: Oxford University Press, 1971)

Phillip Nelson, "Information and Consumer Behavior," Journal of Political Economy (March/April, 1970) 311-29

George Norton, "Consumer Markets in a Columbian Town," The Journal of Consumer Affairs, 10 (Summer, 1976) 48-61

Willi Schulze, A New Geography of Liberia (London: London Publishing Group, Ltd., 1974)

World Bank Atlas, (Washington, D. C.: International Bank for Reconstruction and Development, 1974).

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