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27 June 2014

How Africa Is Challenging Marketing by Niti Bhan

 
For the first time, Western stereotypes associating Africa with death, disease, poverty, and war are being replaced by the reality of demanding, brand-conscious consumers who happen to live in a challenging environment. For too long, “Africa” has been considered a homogenous mass rather than a multicultural continent of diverse citizens. The media-generated image of passive beneficiaries of international charity and financial aid is now giving way to one of active customers voicing their opinions on product performance, service quality, and advertising.
After all, the emerging affluent African consumer is as connected as the rest of the world, smartphone always in hand.

As this untapped market captures global attention, it also offers marketers a chance to leapfrog the legacy of mass marketing and reinvent the field from the ground up. The insights that marketers currently rely on, such as what consumers value in a product price and how to best reach them, drawn from decades of consumer research and studies on buyer behavior, don’t necessarily apply to the fragmented African markets.
Take a look at what’s happening in Africa now: Kenyans on Twitter (#KOT) are among the most voluble and outspoken, directly asking CEOs why their customer service is not up to par and pressing for change during CNN’s coverage of their elections. 

The Mo Ibrahim Foundation’s statistics say 68% of Africans on Twitter rely on it for daily news – not surprising considering that the news of Malawi’s recent presidential shenanigans first broke as a tweet. And Ethiopian news reports the rise of Facebook as an increasingly important medium for everything from filling job vacancies to selling traditional dresses. African voices are clamoring to be heard, and now social media offers them control over their narratives.
This shift will play out most obviously in marketing communications and advertising. Television, the industrialized world’s traditional driver of mass-market brand awareness, has been trumped by mobile-driven word of mouth. But in Africa, a phone in every pocket has only scaled the way hyper-local and regionally fragmented markets were already communicating – through trusted referrals from family and friends, eyewitness stories, and first-hand experience.

However, a lack of formal retail distribution infrastructure and marketing support services, among other factors, means that conventional solutions for market analysis will not work effectively. Everything from estimating purchasing power of a market segment to the impact of conventional value propositions will have to be questioned and redeveloped from scratch. And as Ghanaian entrepreneur Bright Simons has pointed out, much of this new African middle class is emerging from the informal trade and services sectors, while university-educated youth still search for white-collar jobs. Understanding the values of this new emerging consumer class is crucial for developing successful marketing strategies. African market research consultant Vusi Vuma mentioned the challenge faced by Coca Cola when attempting to account for as much as 40% of their sales volumes in terms of final retail channels.

 How does one estimate the size and value of an opportunity when both the target audience and retail outlets are outside the documented formal economy?
More than 90% of retail transactions tend to be in cash, and this impacts everything from purchasing patterns and buyer behavior to retail inventory. It implies longer lead times for purchase decisions and seasonal variations in consumer demand and choice of payment plans.
Data shows that 96% of Africa’s rapidly growing mobile phone customer base is on prepaid or “pay as you go” payment plans. This does not reflect income level. Lower denomination airtime vouchers account for as much as 80% of sales in the mass market. Vuma says some subscribers in South Africa spend as much as USD $30 a month on airtime credit, but they purchase overtime in 50-cent increments.
 
Conventional pricing methods cannot be transposed without questioning the underlying assumptions (revenue generation or flexibility of the payment plan instead of utility value) from the established markets where they were first developed. For example, “The price is not the problem” was the most common refrain during an ethnographic study in Kenya of household energy consumption behavior for a solar product manufacturer (the now defunct Tough Stuff). And small business owners were more interested in the revenue generation potential of a high-tech mesh Wi-Fi router when surveyed for a pricing study.
Forward-looking marketers have the opportunity to build and experiment with new methods and means to create demand, reach their target audience, and develop offers that resonate. African consumer markets can provide the perfect laboratory for new solutions to the global disruption of traditional marketing.
http://hbr.org/

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