3. Gain a competitive edge by compiling your own information about Africa’s fast-evolving consumer or trade landscape.
Building in-house consumer and customer research capabilities, systems and know-how is a proven way to fill a critical gap. In Africa, there’s a dearth of data and insights about consumers’ needs and behaviour, as well as the retail environment. The shortage is made even more challenging because of the diversity of both African consumers and markets. Leading consumer packaged goods makers rebuild capabilities that they had long outsourced to external agencies in developed markets, gathering their own information on Africa instead of depending on limited and not-so-reliable data from public research firms.
Some companies establish research programmes to identify consumer preferences and behaviour in each African market. Olam, a global leader in agricultural products, which also operates a packaged foods business in Africa, is investing heavily to analyse the extreme differences among consumers in West Africa. Its investments aren’t simply to help them tailor products to local needs and preferences, but to also help identify possible new categories for growth.
Leading consumer packaged goods players also gather retail data through internally led censuses and point-of-sale studies. In 2008, one beverage company performed an extensive survey of retail outlets in Nigeria to gather information about the location, size and turnover of distributing stores. The resulting insights helped the company assess the relative importance of the different outlets and make appropriate adjustments to its distribution strategy. Among the changes: It was able to re-prioritise the stores it served and visited.
4. Partner with local stakeholders – governments, businesses and communities – to establish credibility.
It’s a smart way to deal with the political complexity and web of regulatory and trading barriers that companies face in Africa. It’s no secret that the business environment in many countries is hindered by bureaucracy, corruption, ever-changing regulations, as well as multiple currencies and protectionist measures that often result in high import costs. By developing strong relationships with local stakeholders, companies ultimately earn the ability to influence local agendas and effect change.
Market leaders collaborate with local business networks. They appoint local business leaders to their board of directors or get listed on the local stock exchange. They also invest in community development. They seek to form mutually beneficial partnerships with local governments. For example, Kenya faced high illicit alcohol consumption, creating dangerous side effects, including blindness and even death, from consuming poor-quality alcoholic beverages. At the same time, relatively high taxes were making the lower-income market inaccessible for East Africa’s scale brewers. Diageo won government support for a new product by offering a safer and legal alternative: regulated beer in a sanitary keg. The government helped make the offering affordable to consumers by providing reduced tax rates.