New Marketing For a New Era In Africa

If the 20th century was the era of abundance for African SME’s, Viffa Consult reckons that the 21st century will be that of scarcity.

This article tries to analyze the anticipated changes at play in the variables that influence consumption — such as demographic decline, economic inequality, educational and workforce shortcomings.

Our view is that in order to narrow the gap between what 21st century consumers are promised and what they can actually be offered; marketers must tailor expectations – political, social, economic, financial and career-related expectations -to suit new realities. The new realities reflect an overall climate of scarcity that contrasts with the era of relative abundance experienced by many African corporations in the last decades.

The Disenchantment Divide
A divide has emerged between consumers and companies, and it has only widened in recent years, leading to a growing disaffection in which marketing, as a creator of expectations, plays a key role.

The challenge is that today it is no longer possible to increase the offer because we live in an “era of scarcity”– a new age characterized by its scarcity of resources to generate wealth.

This is the period that Africa is weathering, where young people have it very hard, and jobs, equality and training programs are all running in short supply. In brief, what is quickly disappearing is the abundance that is characterized by ability to consume by the African middle class which has a ripple effect on the performance of most African economies.

We must realize that most African countries are still very poor and are classified as least developed countries (LDC) as much as most governments are claiming to be middle income economies by re-basing their economies.

Much of the focus over the last couple of years has been on Africa being touted as the next frontier after Asia due to an ever growing middle class. It is true African middle class is growing but not at an astronomical rate as is claimed, the reality sunk to Nestle who just like most multinational expand their operations in Africa riding on the wave of middle class only to scale down upon realizing their forecast were not accurate (http://www.ft.com/intl/cms/s/0/de2aa98e-1360-11e5-ad26-00144feabdc0.html#axzz3sHuZTvsA ).
Companies operating in Africa must understand that consumers have changed, not because they chose to or because they have matured. They are neither smarter, nor pickier. They are poorer.

As it is impossible to increase supply, political parties and companies have no choice but to encourage the reduction of demand and to modify expectations. Politicians must adapt their offer to the conditions that make it sustainable, and brands need to educate consumers.

Business Strategies
In the era of scarcity, business competitiveness will be based on the ability to develop new business models and to adjust supply to expectations. Using these two vectors, Researchers have built a matrix that describes four strategies of strategic positioning:

Strategies for Positioning Strategically

New

Same

Expectation/Benefit sought by Consumers

1. Disruptive transformation. These are new operators, or renovated ones, that find new ways to meet existing expectations. Disruptive business models like those of Safaricom’s Mpesa, Equity Bank offer good examples.

2. Visionary leadership. This occurs in those disruptive business models that create and meet new demands and expectations. Examples include Google, Amazon and Apple.

3. Solitary leadership or operational excellence. These are operators that continue to address long-established expectations with the same business model and survive thanks to a very solid positioning, either by their level of operational excellence (Barclays Bank) or because they have eliminated or absorbed their competitors (Brookside Dairy-Kenya, Diageo Group ,SAB Miller ).

4. Disappearance. This happens to the players that kept their old business models even though they were incapable of satisfying consumers’ new expectations: They end up being driven out of the market. Examples include many multi-brand clothing stores and manufacturers’ brands that ended up trapped between the advantages of low-cost, vertical chains and the massive response (on a grand scale) of the aspirations of consumers.

What Role Should Marketing Play?
Regardless of the specific strategic choices that each company makes, the age of scarcity means there is a new mission for marketing: It must play a key role as a mediator between consumers’ expectations and products’ performances, and also between society and politicians.

We believe that African marketing faces a historic opportunity as it can help bring together two concepts that are both essential for sustainable consumption: that of consumer-centered sustainability – concerned with companies’ “triple bottom line” affecting people, planet and profit — and that of responsible consumption — which depends upon consumers adjusting their expectations.