Strategy in Africa

South African executives looking for new markets, call for the development of a “Strategy for Africa”. South Africa and often the rest of the SACU region are not considered to be part of this strategy. North Africa is excluded as being part of the Middle East, not part of Africa. War torn countries are excluded, forgetting the lead some companies have taken by establishing an early position in Angola. Countries with despotic leaders are thought to be best ignored. A strategy for “Africa” is then initiated and promotional plans are developed.

I prefer the route where the strengths of individual countries are recognised and regional synergies are identified. The benefits to the company of trading in this environment are identified and then strategies and plans are developed for this region.

Once you have chosen your focus countries, get your feet on the ground in these countries as soon as possible. Learn the market, find local partners, develop a strategy and grow your brands.

Continue trading in your second tier countries which may be future prospects as this will help to develop your company’s knowledge of these markets for future entry. Do not allow this trading to divert resource from your focus countries.

Have your third tier “blue sky” countries in Africa in mind for future expansion. Be aware that in our rapidly changing environment, “blue sky” countries may become realistic propositions more quickly than anticipated.

Most African markets are at an early stage of development and do not have a good record of economic development, many have not even reached emerging market status. Africa’s share of world GDP has been dropping constantly over the last twenty years, from nearly four percent in 1980 to less than two percent in 2004. I am confident that this will turn around dramatically over the next 20 years. Despite my discomfort with generalisations I will make some observations on African markets and marketing. You will have to decide how relevant they are to your focus countries.

Marketing Focus

In South Africa, distribution has become so sophisticated that many companies have handed their distribution over to third parties, often alongside the products of their competitors. They only take an interest in distribution once a year when rates and terms are renegotiated.

In developing countries it is essential that all the traditional aspects of marketing be taken into account in developing your brand. Do use people with local knowledge to help you in your marketing plan. Think long term. Building brands is not achieved overnight.

Information/Market Research

Good information is often not available and the information available is not always accurate. No matter how inaccurate data is manipulated and presented, it remains inaccurate. Information from outside sources is also often biased towards the goals of the supplying party. Don’t ignore instinct.

Products

Be aware of significant legal and regulatory differences from country to country. Minor contraventions of regulations could result in your container being blocked at the port of entry or substantial fees being required for release.

Labeling requirements vary from product category to category and country to country. The “international pack” we would all love to have, is not yet easily achieved. This of course can also be to our benefit if we have, for example, Swahili on our insecticide product labels (a legal requirement for safety purposes) which may make supply of European or Asian products into Kenya more difficult.

Think ahead in naming your brands. There is a food product on the SA market with an attractive name in English which reads “quick dead” in French.

Product ingredients and specifications must be researched. The required specifications for certain food products to enter East Africa are sometimes more stringent than those required for the US.

Know the market. A medicine for human consumption was launched with much expense in East Africa, using thoroughbred racehorses as the theme. This medicine was presumed to be more suited for animals.

Know what is special about your product or service, a good brand is unique. Aim to be number one in the category.

Study the local products and be open to learn from Africa. Let us ensure that the saying “Ex Africa semper aliquid novi” (Pliny the Elder AD 23-79) becomes as relevant as it was nearly two thousand years ago. New products such as traditional medicines or new services, especially in the field of humanities may be waiting to be globalised.

Do not expand the brand name/range excessively. If South Africa has ten product extensions under one name it may be wise to limit the number of variants introduced in order not to confuse the consumers. Getting extra shelf space with additional variants will not help build the brand name. In fact inadequate sales on some specific variants could lead to the entire product range being removed from the shelves. Push for shelf space but not through additional variants. This is still possible in many stores, as the shelf space allocation software is not yet as sophisticated as in South Africa.

Do not take a chance in these markets. Do not dump sub-standard products and expect that in a year’s time when you want to re-launch the product, that the consumer will have forgotten. Product quality does not have to be the best in the world but products must offer value.

Unpleasant as it may be to accept, the rest of Africa is not waiting for South African companies to arrive with South African products. In most cases they have had similar or better products for years.

Price

As seen in the rapid growth of the cellular phone market there is substantial disposable income in Africa. Furthermore with the increased stability in Africa, the spread of this income is improving. Not only is the spread improving but the consumer needs are also changing. For example, governments have traditionally provided basic healthcare in many countries with very limited alternatives. Private medicine and choice of treatment for those willing to pay is a growing industry in many of our neighbouring countries. It is the way that this disposable income is spent that becomes relevant.

To many people in Africa the extended family is important and still has to be taken into account in their purchasing.

Place

In many African countries getting your product through the ports, into the stores and onto the shelves becomes number one priority. In certain areas transport is unreliable and channels often need to be developed. Staff need to understand stock rotation and must be trained to forecast requirements. Many companies are still family businesses where the owner makes all the decisions and staff members have been taught not to make decisions. In these cases encourage and participate in the training and development of staff.

You will not sell your product if your product is not on the shelves. Do not rely exclusively on the electricity network for appropriate storage conditions. Do not take the distribution channels for granted.

Promotion

Never be unbelievable. Learn from those who know. Use the advice and help of local people in whatever promotion you introduce. Local culture, customs and values need to be considered and understood. A logo showing the outline of a female had to be withdrawn recently due to offending certain religious groups.

Brands need publicity, people want to experience your brand. Let the public know what is special about your brand. Use experiential marketing. Use local teams to develop entertainment such as live shows that will allow the customer and the local personnel to interact with the brand. Demonstrations and selling are still important. A picture on a billboard is only a reminder.

Often your competition is not only a competing product but also a product competing for disposable income. A wide range of products compete for cash flow. The informal market, which makes up substantial parts of many economies, consists of vendors with a limited resource who need to purchase goods for cash to resell quickly. If the person selling razor blades gets to the vendor before you get there with your cream, then there may be no money for cream purchases that day.

Final remarks

Remember that many of the decision-makers in countries to the north of us have been trading with their American, Indian or European counterparts for many years and were often educated in these countries. Others were well educated in their own countries. Arrogance is quickly recognised in these markets – these countries are keen to work together not to be told what to do.

Risks are high in many of these markets. Be aware of the rewards versus the potential pitfalls. For example, the massive mobile phone card market in Nigeria was recently suddenly impacted and changed by a decree that cards will no longer be allowed to be imported in the future. Beer shipments have been banned when containers are already en route. Payments and contracts are difficult to enforce.

Once the ideals of the African Union, the NEPAD initiatives and the ground breaking work of major organisations networking and developing African talent in Africa (e.g. ESKOM, MTN, SAB, Tigerbrands, Anglo/Ashanti, DStv, Shoprite Checkers and numerous others) start to bear fruit, then an African Strategy can truly be written and implemented. Until then, appreciate the differences.

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John Spiers
General Manager:
International Market Development (FMCG/Healthcare)

John matriculated at Grey College. He holds a Pharmacy degree and honours degree in Chemistry (Rhodes University) and a Masters degree in Business leadership (Unisa). He has participated in numerous management programmes including the Human Resource Management and Industrial Marketing programmes at UCT, the Marketing Management programme at Stanford University and the Unisa International Marketing course.

During his career he has held executive positions in Manufacturing, Human Resources, Marketing and General Management. Presently he is General Manager of Tiger Brands International Market Development. (FMCG and Healthcare products)

He is married to Sandra and has two sons Richard and Robert.