Why the Most Visible Multinationals May Be More Cautious About Pricing Low-Income Consumers

A small package can make an everyday product affordable to a cash-constrained customer. But on a per-unit basis, that same package can cost substantially more than a larger version.

For multinational companies selling “frugal” products in emerging markets, that pricing decision is not only economic. It can also become a reputational decision.

In “Do multinational enterprises from developed and emerging economies differ in their price discrimination strategies? Evidence from Africa,” published in the Strategic Management Journal in 2026, Arzi Adbi, Ajay Bhaskarabhatla, and Andrew Delios examine laundry-detergent pricing in Cameroon, Ghana, and Ivory Coast. They find meaningful differences between multinationals from developed economies and those from emerging economies—and suggest that exposure to stakeholder scrutiny may help explain the gap.

The Research

The researchers analyze prices for laundry-detergent products sold in Cameroon, Ghana, and Ivory Coast from July 2017 through June 2020.

Their focus is the price premium charged on frugal products—small packs designed to make products affordable to consumers with limited ability to pay—relative to larger, non-frugal packages. Because small packs can have a higher price per unit even while requiring less cash at purchase, the strategy sits at the intersection of affordability, profitability, and perceptions of fairness.

The authors use an abductive approach. Rather than claiming one predetermined explanation, they document the pricing difference and then evaluate several plausible mechanisms.

Developed-Economy Multinationals Charged Smaller Premia

The main finding is clear. Compared with multinational enterprises from emerging economies, multinational enterprises from developed economies charged smaller price premia on frugal products relative to non-frugal products.

The difference was material: the paper reports that developed-economy multinationals charged premia that were 21% to 28% smaller than those charged by emerging-economy multinationals.

Put differently, emerging-economy multinationals were more willing, on average, to charge a higher per-unit premium on small packs relative to larger packs.

The Researchers Tested Several Possible Explanations

Why would firms from different home-country contexts price the same type of product differently?

The paper considers multiple possibilities, including differences in promotional strategy, responses to informal competitors, product quality, market reach, and institutional experience. The analyses did not support those explanations as the primary drivers of the observed pricing difference.

Instead, the researchers find suggestive evidence pointing toward what they call a “liability of visibility.”

Visibility May Constrain Pricing

Developed-economy multinationals often have longstanding global brands and operate under greater scrutiny from international stakeholders. Charging a high per-unit premium on products targeted at resource-constrained consumers can be interpreted as unfair or exploitative, even if the smaller package makes the product more affordable in absolute cash terms.

The study finds that even among developed-economy multinationals, the more visible firms charged smaller price premia on their frugal products than less visible firms.

That within-group pattern is important because it is consistent with the idea that reputational exposure influences how aggressively firms price products aimed at lower-income consumers.

The authors are careful about the conclusion. They describe the evidence for visibility as suggestive rather than definitive. Their abductive analysis supports reputational risk as a plausible mechanism, not a proven causal explanation.

Pricing Has a Social-Acceptability Dimension

The research highlights a broader strategic tension. Frugal products exist partly because small packages reduce the cash required for a purchase. But a higher per-unit price can still create a perception that companies are extracting more value from consumers with fewer resources.

That means pricing decisions can affect what the authors call social acceptability—the extent to which key stakeholders view a firm’s behavior as appropriate and fair in the local context.

Firms with more to lose reputationally may therefore behave differently even when pure pricing economics would permit a larger premium.

What Managers Should Do Differently

The Takeaway

Pricing a small package is not simply a matter of dividing cost by quantity. Adbi, Bhaskarabhatla, and Delios show that the social context around pricing can differ across firms, particularly when products serve resource-constrained consumers.

In their African detergent markets, developed-economy multinationals charged smaller frugal-product premia than emerging-economy multinationals, and the most visible developed-economy firms were more cautious still.

For managers, the question is therefore not only, “What premium will the market bear?” It is also, “How will this price be interpreted by the stakeholders who are watching us?”