We all have criteria we use to make life choices. Some are objective and some are subjective. Some are reasonable for some, and some may not. But we all have criteria. As a consumer who plans to purchase goods and services, one of the important criteria we use is the qualities and other features of the goods or services. One of the things that have always puzzled me is the really small importance that businesses give to “real differentiation” of products and services. As a consumer, you get confused on what should be your criteria to make your selection.
Typical example are banks. It seems to me that there are ten banks coming in the market every year. Maybe that’s an exaggeration, but with the ads everywhere on new public share offers for the establishment of a new bank, it makes you think that they are being manufactured like you would manufacture a line of products. It makes you think that, with the growing number of banks in the country, it must be still quite profitable to come up with a new one to the market. But how does one choose one bank over another? Banks advertise all the time on TV in particular. And I must say, although each desperately tries to highlight their competitive advantage over others and convince customers, I personally do not see any significant advantage that one has over the other. This is particularly true for customers such as myself who use banks to make savings related transactions. So again, what would be my criteria to choose one bank over another? Many banks advertise for the different forms of international wire transfer methods that they offer to the Diaspora community. I have never really seen how exactly the banks differ in their wire transfer services, to be honest. So, how does the Diaspora community actually make its choice of banks when sending money back home? I bet that many probably use the banks that they have known for long, or their families already know and already use to make their transfers.
Again, how do individuals who wish to invest and buy shares in banks make their choice of banks? I have to be honest here. The names of the banks seem to be the only criteria for making your investment decisions. As you might also have noticed, some banks coming these days to the market have names that are rather location based, region based, and religion based. So maybe are the bank names the criteria that we are supposed to be using to make our investment and banking decisions? Probably.
Meaningful differentiation of products and services seriously lacks in Ethiopia. Take clothing stores for instance. From one store to another, the prices are the same and the products very similar. Small businesses in particular do not bother differentiating. So, at the end of the day, you only have very few criteria that you would use to make your choices. Either it is proximity, or your familiarity with the place, or maybe, just maybe, it is the tiny differences in prices.
I believe that the lack of differentiation is due to the fact that many business owners are risk averse. They would like to do only what is known and well tested. This of course limits our options as consumers and limits the opportunity for the business owner to take advantage of a large profit that would have been obtained by taking the risk of being different. We are so used as consumers to the same kinds of goods and services that we are very reluctant to try something different. So, it is a vicious cycle. I believe we, as consumers, need to be given the chance to choose from a meaningfully different range of products and services!