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BUSINESS STRATEGY
Three common errors by international brands entering the continent
By our News Team | 2022
Three common errors by international brands entering the continent
International brands and their marketing teams tend to make three common mistakes when entering African retail markets for the first time.
International brands and their marketing teams tend to make three common mistakes when entering African retail markets for the first time.
Mirabell Mayack, a consultant with African Investment Intelligence who specialises in the Francophone countries, has highlighted them in a recent post:
- Companies set unrealistic goals as they misunderstand the drivers of consumer purchasing power.
- They underestimate the extent to which local factors determine how, where and why consumers make purchasing decisions.
- Businesses fail to consider how the consumer class is changing as the region changes.
Photo by Dbmpictures via Wikimedia Commons
She advises decision-makers not rely solely on economic-indicator headlines. “Corporate estimates of consumer opportunities in Africa are typically based on GDP and demographic growth data. These are misleading because they don’t reflect how wealth seeps through the economy,” Mayack explains.
In many of Africa’s fastest-growing markets, average spending power is very low as economic growth has not resulted in high-paying jobs, instead creating a small elite and a large population with low spending power.
A better measure of purchasing power, Mayack believes, is the Consumer Class Conditions Index (CCCI), which ranks markets based on how easily wealth is filtered through society. This indicates whether a wider range of consumers are able to make purchases on a regular basis.
According to African Investment Intelligence, sub-Saharan French-speaking Africa offers virgin markets and opportunities. However, these markets remain hard to access from the outside without customised due diligence and a deep knowledge of each market.
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