Global business leaders and investors are becoming increasingly interested in Africa’s vast potential. Those who recognize the diversity of the African market and the value of insights in ensuring the success of their ventures in such an ecosystem have not been afraid to invest in market segmentation exercises. It’s turned into their cheat code.
With a growing population of over 1.4 billion people and still counting, an estimated reduction in poverty rate, where millions will emerge from poverty and move into the middle-class consumer market, where spending is expected to reach $4 trillion by 2025, it’s no surprise that most global corporations want a piece of the pie.
Despite well-known barriers to product positioning and scaling in the continent, like poor infrastructure and political unrest, some brands, like IKEA, Apple, Google, and Mastercard, have overcome these obstacles and successfully entered the African market.
With African consumers increasing in both number and purchasing power, now is the time to enter this market. However, doing so blindly is not recommended.
Keys to Market Segmentation in Africa
Market segmentation is critical for African businesses to succeed. It divides a market into subsets based on demographics, needs, priorities, shared interests, and other psychographic or behavioral criteria to help the target audience be better understood. Understanding your market segments allows you to target them in your product, sales, and marketing strategies.
So, how do you ensure that you do it correctly and achieve the desired results? The following keys are useful.
One continent, Different Nations, Unique markets
Start with the understanding that Africa is not a single market with a single entry or positioning strategy. One must adequately position a brand to succeed in Africa. It is a continent made up of 54 different countries with different regulations. It is made up of consumers with different ideologies, cultures, and purchasing habits. Opinions about specific brand categories vary by region, and how each market segment absorbs media during their purchasing journey varies by persona.
Different markets have distinct requirements. This means that positioning a hair product in South Africa will be different from positioning the same in the Kenyan market. This is why it is critical to include the Product and Marketing teams in the early stages of expansion plans. You must have them absorbed in the market research, market segmentation, and the ideation stage of initiatives.
Every market has a unique relationship with products. Because you have your sights set on various African markets, you must employ customized positioning strategies for each market segment. Consider Levi Strauss, a brand that embodies classic American style and seamless cool. To satisfy markets like South Africa and Kenya, the company had to evolve its product offerings. It achieved this by allowing consumers in these regions to demonstrate their style preferences as proud Africans.
Similarly, our Nigerian Beauty and Personal Care Trends report highlights that Nigerian women prefer homemade beauty products rich in natural African skincare ingredients to international brands. As a result, foreign beauty brands seeking to expand into the country would need to ‘Africanize’ their products to scale. But how will they know if they don’t try to find out?
Internationalization precedes localization
Careful internationalization comes before successful localization. To effectively position a product in any African market, one must first go through an internal process known as internationalization. This is essentially the practice of designing products/services, and other pertinent internal operations that will lead to the company’s successful facilitation of expansion into international markets.
Companies that take this critical first step will be able to design products that meet the needs of users from distinct ethnic backgrounds, speak different languages, and have different religious beliefs. These are important to Africans, so you can’t ignore them.
Consider McDonald’s for instance. With over 36,000 spots in over 100 countries and territories worldwide, localizing menus has become a standard practice. As a way of localizing the brand, McDonald’s South Africa menu proudly showcases some locally inspired flavors.
Localization involves developing a product that adds value to the lives of your target market based on extensive market research and market segmentation conducted to understand the needs in all of Africa’s markets.
During the internationalization process, the Product Marketing Management function in all scaling companies must collaborate with the engineering team, product developers, data analysts, market researchers, and other critical team members to develop solutions and communications that resonate with a specific consumer culture. This makes the product appear to be created by one of their own. It will also ensure that your company’s target markets easily adopt your products, a process known as localization. This makes it easier for your brand’s message to be heard globally.
Fix your pricing
Cultural values and societal trends influence how each market segment in Africa evaluates a product/service. African consumers who are price-sensitive welcome products from low-cost companies. This is mainly why affordable Chinese products such as mobile phones, home appliances, and clothing, etc, have become so popular in various African countries.
When it comes to positioning yourself in Africa’s markets, getting your pricing right will keep you ahead of the competition. The key to this is really understanding your target market and using the right pricing model. It, then, becomes easier to align your product value with the money they’ll have to part with. You can use pricing strategies like cost-plus pricing, competitor-based pricing, value-based pricing, or dynamic pricing. These all depend on your product type, target market segment, and overall business goals.
Conducting price sensitivity surveys while carrying out your market segmentation will assist you in setting the right price.
Stories build Us
Africans live and breathe stories that model our everyday moments. From the green hills of the Eastern Cape, home to the Xhosa community in South Africa, to the vibrant city of Nairobi in Kenya. To efficiently position a product in the African market, you must incorporate your corporate identity into the African story.
The most important thing to remember here is to be genuine. Africans can detect deception from a long distance. This means that all marketing campaigns must be customized for each market segment. Everything, from the ad copy to the promotional visuals to the music and symbolism used, must be tailored to each African target market.
Proper translation is also critical in your messaging. This refers to the discourse of the brand’s and product’s standard written texts in the local languages spoken by Africans in various regions. It is also recommended that you conduct your market research in the language of your target audience, rather than the one in which you are most comfortable.
To nail your translation, it is critical for the company to recognize multiple cultural factors that go beyond the terms and phrases a brand uses to describe its product to a specific market segment. Taking into cognizance that 72.4% of consumers are more likely to make a purchase if the information is in their own language.
Ingenious Competitive Intelligence
Entering some African markets will necessitate outwitting those who already control the market. Is it conceivable? Yes. Easy? Not at all. With some brands having a strong competitive edge due to government policies that favor them, others having well-established elite sourcing partnership deals that allow them to set competitive rates, and some which are held as a source of national pride by their citizens, you must up your competitive intelligence game to enter and compete in some markets. This is yet another reason why effective market segmentation is critical for African businesses.
By Africa for Africa
We, as Africans, are gradually adopting the concept of purchasing locally-made products. We’ve seen how it helps to boost our economies, create jobs for young people, and raise our global standing. Startups developing products for the African market must capitalize on this surge in market awareness and position their brands as African-built.
No one understands Africa better than Africans. True or True? This positioning strategy necessitates collaboration with industry thought leaders when developing products for your African target markets. Allow them to introduce you to talents in your market niche, and make an effort to involve them in the process of developing solutions for their people.
Facebook, Microsoft, and Mastercard have done an excellent job of this by expanding to new regions in African countries like Nigeria, South Africa, Ghana, and Kenya. They’ve hired local engineers, product developers, market researchers, and project managers to assist them in developing products that will appeal to local consumers.
Market segmentation in Africa
For the longest time, one of the challenges that multinationals face when positioning their products in foreign markets has been the urge to use a standardized marketing mix with one marketing strategy in all locations rather than tailoring their marketing strategies to the unique markets they enter. Those who follow the latter eventually triumph.
While global interconnectivity benefits the global economy by increasing global GDP, cultural neutrality remains a thing of the distant future. This means that when positioning and scaling a product, each market segment must be treated separately.
Companies expanding into new African markets must become acquainted with the continent. What is the history of the market segment you’re aiming for, and why do they value what they do and perceive certain things the way they do? Why do they make some purchases collectively? When creating your personas, make sure to include all of these data sets because they will assist you in developing a winning positioning strategy.
After studying the above keys, effectively positioning a product appears to be a daunting task, doesn’t it? No, you will be able to meet the requirements of eager and growing markets if you have proper internationalization strategies and localization tactics in place.
Rapid urbanization and the rise of cellular technology in Africa are two trends driving growth and having a significant impact on the consumer market. With consumption levels in most African cities rivaling those in China, India, and Russia, positioning your product in this growing market will yield high returns.
Companies seeking to establish a presence in Africa must prioritize the needs of the people and invest in the long term. As difficult and frustrating as it seems, the rewards will go to companies that excel at positioning, communicating, and storytelling, backed up by the right go-to-market strategies. Once you’ve gained the trust of African consumers, you’re set to thrive for decades. Do you need help with how to start? Contact the Survey54 team for an expert guide.