Understanding Africa’s seven types of consumers

Research firm Nielsen recently identified seven types of African consumers that companies need to be aware of as they target their products to the continent.

“Rather than just a continent, Africa must be viewed as 54 separate and distinct countries with a wide array of political, economic, geographical, cultural and social features,” says Nielsen in its The Diverse People of Africa report. “Even a single country like Nigeria has over 250 different ethnic groups and over 500 languages. In addition to the differences separated by international borders, many African countries also boast incredible levels of internal diversity.”

Comparing the seven distinct segments based on monthly income and average spend on consumer packaged goods, three tiers emerged:

Tier 1: Trendy Aspirants and Progressive Affluents

Tier 1 consumers are affluent and have the highest discretionary spending power of the three tiers. Trendy Aspirants (21%) and Progressive Affluents (7%) represent just 28% of the population, but they are responsible for 47% of the income and 40% of spending on packaged consumer goods. They are well-educated and mostly urban.

Tier 1 consumers are willing to pay more for better service. They are also more likely to shop at modern trade stores.

Despite their similarities, there are lifestyle differences between these two segments. Trendy Aspirants are young, ‘up-and-coming’ high-end consumers, while Progressive Affluents are older and tend to have families. Progressive Affluents are also better educated and belong to a higher socio-economic class.

Nielsen says that to reach these consumers, companies need to appeal to their upscale tastes by offering higher-end discretionary products and by ensuring that goods are available in modern trade outlets.

Tier 2: Balanced Seniors and Struggling Traditionals

Balanced Seniors (17%) and Struggling Traditionals (10%) account for 27% of the population. They are responsible for 28% of packaged consumer goods spend, but only 22% of total income.

Consumers in Tier 2 are usually in their mid–thirties, are married, act as the head of the household, and mostly live in peri-urban areas. Family and religion usually play important roles in their lives.

Nielsen says that they shop at traditional trade stores and are focused on affordability.

These two segments are separated by differences in education and occupation. Balanced Seniors are better educated (post-secondary school) and have higher incomes (around US$550 per month). In contrast, Struggling Traditionals haven’t completed secondary school and have low incomes ($285 monthly). Only 75% of Struggling Traditionals own a mobile phone, which is among the lowest of the seven segments studied.

Struggling Traditionals are eager to try new products, but are strongly focused on affordability. Inexpensive products that add maximum value are important considerations. Balanced Seniors are focused both on affordability and trust. While they spend the same amount as Struggling Traditionals, they earn considerably more. Build a relationship of trust to move them up the product chain to more expensive and discretionary goods,” says Nielsen.

Nielsen advises companies looking to target Tier 2, to build their trust by offering inexpensive products that add maximum value. Companies should also experiment with new products.

Tier 3: Wannabe Bachelors, Evolving Juniors and Female Conservatives

Tier 3 comprises Wannabe Bachelors (11%), Evolving Juniors (24%) and Female Conservatives (10%) – all low-income consumer segments. Collectively, they make up 45% of the population, yet contribute only 32% of the total spending on packaged consumer goods. They are peri-urban, undereducated, shop at traditional retail outlets, and are least likely to buy expensive products. These consumers’ purchase decisions are driven by affordability, availability and trust.

However, in spite of their low spending power, they are likely to own a mobile phone, which they use primarily for text messaging.

Female Conservatives are deeply rooted in family and traditions. In order to meet their family requirements, they often buy items on discount and prefer to purchase products that come in a variety of pack sizes. Unlike the other Tier 3 segments, they are likely to be married and value tradition and family.

In contrast, Evolving Juniors and Wannabe Bachelors prefer to spend time with friends rather than be at home. Wannabe Bachelors are more receptive to advertising and along with Evolving Juniors they show greater interest to try discretionary products, such as energy drinks, for example.

“Despite the low income … of Tier 3 consumers, the sheer size of this group makes them an important consideration. They exhibit a high degree of brand loyalty. This, combined with the young age and large size of these groups provide an opportunity to build lasting brand relationships that can yield long-term returns as their budgets and family responsibilities grow with age,” says Nielsen.

To target Tier 3 consumers, companies need to ensure that their products are affordable. “Offer basic essentials on promotion” and “build distribution in traditional retail outlets,” advises Nielsen.

Africa's three consumer tiers based on income and spending. Source: Nielsen

Africa's three consumer tiers based on income and spending. Source: Nielsen