Lagos, Nigeria
Despite the onslaught of Covid-19 and the relentless economic impact on the purchasing power of consumers across Africa, there are encouraging shoots of economic recovery sprouting out in some countries. The re-opening of some countries to international travellers are clear indications that markets in Africa are re-starting again.
In light of the above, we have developed four keys that could enable new and existing investors win in consumer markets in Africa. The tips below are designed to give snap-shots of what can be achieved if research-based market entry solutions are deployed from onset.
Key 1: Customise product to meet local needs and behaviours.
New businesses seeking to enter consumer markets in Africa must study and gain knowledge of local needs that drive mass appeal of the leading brands in the prospective market. In saying that, making plans to launch products in a new market without research-based understanding of gaps in the market and local preferences is more like taking a leap of faith into the unknown. The chances of success are significantly diminished while prospects of failure are widened by large margins. For instance, “P&G changed the formulation of its Ariel detergent in Nigeria to make it lather faster and with less water, having discovered that Nigerian consumers see lather as an indicator of a detergent’s quality and effectiveness”.
New entrants must also consider that consumers’ buying behaviours in many markets across Africa are as diverse as their geographical locations. There is a high propensity for consumers in a big city to behave differently to the same brand from people in the rural areas. Therefore, the approach to each market segment, be it metropolitan or rural should be research-based and deliberately targeted.
Key 2: Establish Strong Partnerships.
To thrive in a new market, businesses are expected to screen and appoint local partner(s) with a proven capacity to distribute products in a designated area. In some unfortunate situations, new entrants launch new products on the back of a local partner(s) with exaggerated capacity largely influenced by personal connections. It makes sense to use independent consultants to screen and select reputable local distributor(s) as against personal affiliates.
Considering the depth of existing business relationships each nominated local partner might have, new entrants are encouraged to represent a minimum of 25% of local partner profit to gain and sustain the interest of the local partner. These might seem an uphill task at the beginning but remains a proven strategy that can establish long term loyalty and inevitable win-win business partnerships. There are other vital considerations in establishing solid partnerships such as exclusive rights, trade terms that reward growth and sell-through of products.
Key 3: Develop Effective and Robust Distribution Channels.
To succeed in product distribution across fragmentated markets in African countries, there is a great need to develop effective distribution channels that reach target consumers at their preferred market.
In many countries, the same brand can be found across the country because the company over time developed robust distribution channels that deliver products to mega-malls in metropolitan areas as well as local traders in rural markets. A successful example is the distribution of Indomie 2-minute noodles in Nigeria.
The products are widely available in city supermarkets, street kiosks and markets in remote parts of Nigeria. Effective distribution channels in Africa should be capable of reaching various market segments and robust enough to overcome the unique challenges presented by each segment.
New entrants should also consider establishing a route-to-market model that focuses first on the most attractive channels. These route-to-market channels can be segmented to meet demands from supermarkets, street kiosks and traders in open rural markets.
Key 4: Recruit and Train A Great Sales Team.
To reach the fragmentated markets we mentioned earlier, it is very important new entrants recruit and train a capable sales team that can develop and grow sales across different market segments.
Considering the dynamics of markets in Africa, an effective sales team that understands the preferences and behavioural patterns of local consumers remains the pathway to reach your sales target in due course.
In respect to training, businesses should equip their team with in-depth knowledge of product(s) and deploy technology-driven sales reporting processes. Adequate training will equip each team member with the confidence and capacity to promote unique selling propositions of products to any market segment assigned to them. Some established companies in Africa provide detailed sales training and guidance, breaking down the discrete activities each salesperson is expected to undertake. The more boots on the ground, the further a new product could go in fragmented markets across Africa.
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