Marketing
Seminar
April 23 2014 - © Copyright NABC
By Maryn Kleingeld – NABC
“Marketing Strategies and
Instruments”
Opening:
'African consumers were horrified by
an American baby food company's
product packaging.'
“Unilever comes under fire for
'homophobic' South African Flora ad”
- Opening by Maryn Kkleingeld - NABC
- Introduction on Marketing in Africa by Aad van
Tilburg – Former professor Wageningen University
- Strategy Speech by Simba Ngandu on "Market
Research and Finding local Partner”
- Strategy Speech by Jeffrey de Visser on
"Microfranchising in Africa“
- Break
- Strategy Speech by Frans de Pater on "Hands-on
Development“
Program:
- Panel Discussion by:
Heineken - Rob Marijnen
Friesland Campina - Jan Bles
Dasuda - Robert van Kats
Philips - Nick Kelso
Vlisco - Saskia Bosscha
Moderator: Aad van Tilburg
- Matchmaking with the speakers
- Drinks & Networking
Program:
By Aad van Tilburg – Former Professor at
Wageningen University
“Introduction to
Marketing in Africa:
Marketing and Consumer
Behaviour”
Presentation:
Customer satisfaction?• Who is your customer?
• How can we reach our customer?
• What is necessary to bridge the geographical gap between
supplier and customer?
• How does the customer evaluate your product or service?
• How do you evaluate your customer?
How to bridge the gap between
producers and consumers?
• Consumers and producers may be o close to each other, or
o Separated, to be connected by a value chain.
• Linkages: o an information flow,
o a flow of products or services,
o a flow of payments, credit, insurance
However, bridging this gap implies
transaction costs
Transaction costs are the costs to prepare and to complete a transaction
o Cost categories:
• Search costs:
o before the transaction is concluded
• Negotiation costs to conclude the transaction
• Enforcement costs in case of breach of contract:
o potential costs after delivery
Transaction costs tend to be high in
African developing countries
• Lack of market information?
• Lack of standardization?
• Absence of vertical coordination in value chains?
• Missing collateral in case of credit? o Smaller business (wo-)men are constrained by a lack of
assets that can be used as collateral
• Is the value of a transactions small in relation to the enforcement costs?
• Lack of a proper institutional context?
Trust in a transaction environment
• Trust is the willingness of at least two persons o to enter in a negotiated agreement
o to incur obligations and to acquire rights
o that have only imperfect legal protection.
Trust & Relationship
• When can contract partners trust each other?
o Reputation: Trust may result from a history of successful
exchanges
• Relationship-based contracts are expected to arise
in markets where:
o Personal trust is a substitute for external contract
enforcement
o Product-screening costs are high
• Shortcomings in institutions can be bypassed by trust-
based exchange!!
Relationships among traders
• Good relationships can be used for:
o Mutual exchange of information about
• Market conditions and prices, e.g.:
o The regularity of trade flows: trend, seasonality,
irregularities
o Current and expected prices in different stages of the
value chain
o Obtaining or giving trade credit
o Minimizing the risk of contract problems
o Risk sharing in case of unexpected external
events
Benefits of trade relationships• Trade relationships can be beneficial for:
o Business start-up support and training
o Sharing information
o Ensuring regular demand or supply
o Sources of credit
o Reducing the risk of contract breach
o Risk sharing
Types of transaction relationship
• How important are the following contract types in
your (potential) customer base?
o Reputation-based exchange,
o Trust-based exchange or social network based exchange,
o Exchange based on a written contract (that can be
enforced).
A contract links suppliers and customers
Contract content:
• Type of product or service
• Its quality
• Its packaging
• Its price, terms of credit, insurance
• Its (food) safety (HACCP, tracking & tracing)
• Its logistics
• Type of arbitrage that will be used in case of a problem?
Contract & trust
• Assume two persons want to conclude a
contract (e.g. sell & buy ........)
o Do they have reasons for opportunistic
behaviour, for example, to cheat each other?
Why (not)?
o Are there opportunities for cheating?:
• For example, with respect to o quantity
o quality
o warranty
o form of payment
Are legal contracts useful?
• Legal contract: o The instrument that defines the legal battleground.
• Courts can hardly enforce the legal contract itself:o Delivery or payment itself is difficult to enforce, but:
o Some financial compensation can/may be offered.
• Assume a breach of contract, consider:o If the expected gains from future trade are larger than the
expected gain from immediate court action:
o Legal suit or not?
Contract flexibility
• Is breach of contract due to
o unanticipated events (excusable breach), or
o to carelessness, or incompetence of one of the contract
partners?
• Depends the sanction on the cause of the breach
of contract?
• Contract flexibility
o means acceptance that contractual performance may depend
on external events that are affecting one or both contract
parties.
o may lubricate long-term relationships!
Sources• Aad van Tilburg:
o Linkages between theory and practice of marketing in developing countries (2010)
• Marcel Fafchamps: o Market institutions in Sub-Saharan Africa, Theory and Evidence (2004)
By Simba Ngandu – Category 5 Consulting
“The Importance of
Market Research and
Finding a Local Partner”
Presentation:
© 2013 Power in Partnership
“A company determines there’s an
opportunity in Africa.
Then it flies in all its expats, recreates what it
has at home and runs the operation out of its
European headquarters……it’s expensive
because it doesn’t work.”
Neville Isdell, Former Coca-Cola CEO
Taken from article on Forbes.com “Glaxo and Unilever Take Note” 02 Apr 2014
© 2013 Power in Partnership
What we already know….
• Potential to give attractive returns› Not confined to single sector (telecoms, tourism, retail….),
economies diversifying
• Not one country› 54 countries, ~2000 spoken languages, >250 religions› Not reading from same policy script
• Changing rapidly› Urban transformation, Middle class burgeoning, cultures
diluting, traditions transforming
• No longer the “dark continent”› Exponential mobile/internet reach, increasing spend on
research and data collection
© 2013 Power in Partnership
…..presents interesting challenges to B2C marketers
• Unfamiliar terrain› Challenges of physical, logistical, regulatory and social
constraints
• Strong incumbents and increased competition› Early entrants/local stars have deeper roots
• Diffused nature of market› One size does not fit all - informal, formal and modern
retail
• High trial, low adoption› Market is hungry for the new and foreign, but stable
sales/growth can prove elusive
© 2013 Power in Partnership
How can market research be of use?
African Ambition
Build a Consumer-centric marketing model
Assess Risk
Understand competitive landscape
Optimize local vs. Global
Non-traditional media channels
Leverage marketing
tools
© 2013 Power in Partnership
Overcoming market research challenges
• Offer is no longer 2-dimensional
• Innovative methods/options –inaccessible segments etc
Expensive
• Multi-pronged approach using multiple sources (primary, published, expert opinion)
No depth of understanding
• Mobile platforms
• Interactive sms, feature phonesHigh turnaround times
• No preconceived position
• Integrate active and passive data Low Trust
• Partner should know what/how to ask
• Understand local phenomena like top-boxing, badging etc
Poor interpretation
© 2013 Power in Partnership
Examples – birthed from insight
M-PesaSafaricom
Eagle Lager SABMiller
MYOWBU channelNestle
Ekocenter kiosksCoca-Cola
Cooking CaravanMaggi
© 2013 Power in Partnership
Who can you speak with?
• Finding the right partner can be challenging:› Right skills› Reputable› Specialized› (True) Local knowledge› Integrated into local business network
• Professional associations like ESOMAR, SAMRA, or MSRA have membership lists
• NABC and matchmaking consultancies are able to scout markets on your behalf
• Or talk to people like us who have a specific MR network……..
By Jeffrey de Visser – African Endeavours
“Micro-franchising in Africa”
Presentation:
How can we design businesses that alleviate poverty?
32 African countries
58.000 kilometres
4 out of 6 billion people live off less than $2.50 a day
People turn to the market
To change the world go for-profit
Goals
- Reach consumers at a local scale
- Alleviate poverty with market mechanisms
- Design a profitable business model
How can we design businesses that alleviate poverty?
Lesson: it’s all about opportunity
Micro finance provides opportunity
Lesson: not everybody is an entrepreneur
Lessons
- For-profits have a larger impact
- Micro finance provides opportunity
- Not everybody is an entrepreneur
- Use design thinking to innovate
Microfranchising
- A ‘business in a box’
- Providing the tools they need to start & operate a business
- Optimize, systematise & replicate
- Alleviate entrepreneurial burden
Microfranchising
- A ‘business in a box’
- Providing the tools they need to start & operate a business
- Optimize, systematise & replicate
- Alleviate entrepreneurial burden
Finance using micro-loans
Fan Milk
- Ice cream sachets sold from bicycles
- Started in Ghana by Danish company
- 7 countries in West Africa
- Legion of micro-entrepreneurs
- $78 mln turnover in 2012
1. Listen & assess needs
2. Use design thinking
3. Live market tests
4. Systematise & replicate
5. Achieve profitability
Market entry strategies
Agent
Non-equity Equity
Distributor Joint ventureExport
Licensing Turnkey Acquisition
Subsidiary
Greenfield
Microfranchising
Advantages
- Mitigate certain risks
- Get feet on the ground
- Secure ‘first-mover’ advantage
- Use local market knowledge & networks
Create a synergetic
collaboration
between Western & African parties
social impact
&
profitability
to achieve
Break
April 23 2014 - © Copyright NABC
By Frans de Pater – Africanwise
“Hands-on Development”
Presentation:
haarlem | cape town | lagos | nairobi
strategic hands on developmentNetherlands-African Business Council Zeist, April 23th 2014
frans de pater – managing partner
presentation limited to B2Capplicable to B2B or H2H
strategic hands on development
date |april 23th 2014
presenter |frans de pater
some structural trends• the global race for commodities; cost competitive location
for sourcing many minerals• access to international capital; the highest return to fdi of
any region• seismic demograpthic shifts; increase of discretionary
spending power; the largest workforce by 2040• green revolution; africa has 60% of world’s available arable
land• …
strategic hands on development
date |april 23th 2014
presenter |frans de pater
a continent of both vast opportunities and significant risks for entrepreneurs, corporations and investors.
strategic hands on development
date |april 23th 2014
presenter |frans de pater
strategic hands on
development?
strategic hands
on development
date |
april 23th 2014
presenter |
frans de pater
Now
Goal
???
time & strategy
what is your company strategy?
• increase markt share• add services or products• enter new markets or regions• add services or products in new markets
strategic hands on development
date |april 23th 2014
presenter |frans de pater
what is your african strategy?
• how will your survive?• how will you be succesfull?• how will your company benefit?• …
strategic hands on development
date |april 23th 2014
presenter |frans de pater
presentation
title
date | april 23th
2014
business model canvas
strategic hands on development
date |april 23th 2014
presenter |frans de pater
key partnersvalue
proposition
customer
segments
key activities
key
resources
customer
relation
channels
revenue streamcost structure
customer segments
• how to find?• how to know?• how to reach?• how to communicate?• how to supply?
strategic hands on development
date |april 23th 2014
presenter |frans de pater
customer
segments
presentation
title
date | april 23th
2014
s.a.v.e.
• solution instead of product • access instead of place• value instead of price• education instead of promotion
strategic hands on development
date |april 23th 2014
presenter |frans de pater
strategic market selection – key issues
• uniqueness of product or service• barriers to entry• scalability• business and operation model• …
strategic hands on development
date |april 23th 2014
presenter |frans de pater
‘western’ planning process
strategic hands on development
date |april 23th 2014
presenter |frans de pater
Planning
Analysis
Design
Develop-ment
Execution
Evaluation
‘african’ logical process
strategic hands on development
date |april 23th 2014
presenter |frans de pater
Decide Do Analyse Evaluate Design Plan
critical factors
• market data and consumers insights• value proposition• network and contacts• market entry strategy• supply chain• marketing channels and technology• …
strategic hands on development
date |april 23th 2014
presenter |frans de pater
hands on development
• from desk to street• involve the market• ‘testing the waters’• translate ideas into actions• keep it simple at start• create local footprint
strategic hands on development
date |april 23th 2014
presenter |frans de pater
hands on development
• gain data and insights• analyse• develop scenarios• simultaneous scenarios• create company awareness
strategic hands on development
date |april 23th 2014
presenter |frans de pater
necessary company awareness
• set priorities• strategy is not the budget• quick response• decisive and adeptive• long term view• reviewing african strategic goals
strategic hands on development
date |april 23th 2014
presenter |frans de pater
key essentials
• entrepreunerial orientation• strategic development with an project focus• short term actions with long term view• ‘out of the airco’
strategic hands on development
date |april 23th 2014
presenter |frans de pater
Panel Discussion:
Heineken - Rob Marijnen
Friesland Campina - Jan Bles
Dasuda - Robert van Kat
s
Philips - Nick Kelso
Vlisco - Saskia Bosscha
What is changing withrespect to the marketing tools
nowadays used in Africa?
How do you use these or other marketing tools?
To what extent is the use of social media
possible/necessary as a marketing tool in Africa to
reach your cutomer?
Do you take social classes or other characteristics of your
potential customer intoaccount when choosing a marketing instrument?
How do you – step-by-step –use market research tools in
order to gain information about potential customer
demand or B2B opportunitiesin African countries?
To what extent is it relevant to establish a good
relationship with institutionsin general and the local
government?
Are there any examples of no-go’s when it comes to
marketing in one or more of the African countries you are
working in?
How do you deal with localcompetition, either local or
foreign?
What strategy go you use todeal with competition: defensive or offensive?
How do you deal with localcompetition, either local or
foreign?
What strategy go you use todeal with competition: defensive or offensive?
What is the best advice to a company represented herethat wants to enter an/the
African market?
Closing Note:
Thank you for your attention