Nairobi - It is almost three years since I arrived Kenya, the hub of East Africa from Nigeria, the hub of West Africa. I would like to share snippets of my experiences and observations (both mine and borrowed). From these reflections, I shall draw perspectives, some of which could be debatable, but which I hope can be built upon to create some shifts in paradigm.
I would also like to put out a caveat in the fashion of business school case studies: any brands or companies mentioned are mentioned only for discussion purposes and should not be seen as an indictment of the managers of the brands or businesses.
Why did I choose to speak about marketing in Africa, East and West? Well, aside from the fact that I have experience of both regional markets, I believe that both regions, particularly Kenya and Nigeria, are not optimally exploiting the goldmine opportunities that collaboration offers.
After Asia, Africa is the next frontier for global economic growth. I believe, like many other people, that Africa's economic renaissance lies in the synergies that its constituent Nation States can generate. As developmental banker and Nobel Laureate Yunis Mohammed of Grameen Bank, Bangladesh has proved, what would drive Africa's economic recovery and growth is trade, not aid.
I believe that marketers should lead this charge, especially in Kenya and Nigeria, the two countries being key drivers of the 6% GDP growth predicted for Africa in 2007.
A significant portion of what I shall share would therefore take context from Kenya and Nigeria in recognition of their being the socio-economic powerhouses in the respective regions.
So, marketing in Africa, East versus West: what key paradigms and parallels exist? What insights can we draw from the paradigms and parallels?
Because marketing people like models and because I believe models help understanding, I shall use what I call the ‘P-CA' model as a framework during this discussion.
The P-CA model, is an amalgamation of various models, and stands for 6Ps 6Cs 6A:
People-Customs-Attitudes
Product and Packaging-Consumer/Customer needs-Aptness
Price-Cost-Affordability
Place-Convenience channel-Availability
Promotion-Communication-Awareness
Positioning-Competition-Alternatives
There is a prevailing perception here in Kenya that West Africans are very different from East Africans. While in some respects this might hold true, West and East Africans are more alike than different. And in some ways, Nigerians and Ugandans are more alike than Kenyans and Ugandans, while Ghanaians have closer affinities in some respects with Kenyans than with Nigerians.
Kenya's population is estimated to be 34 million, with growth rate of 2.5%, while Nigeria's population is estimated to be 144 million, with a growth rate of 2.83%; this makes Nigeria's population greater than that of core East Africa, i.e. Kenya, Uganda and Tanzania. Ghana has a population of about 20 million.
In both regions, under-40s constitute the bulk of the population, 80% in Nigeria and over 70% in Kenya. This is important to note for marketing people in both regions as this age band comprises key decision-makers and influencers.
Broken down further, in Nigeria, under-15s constitute about 46% of total population, while the age group 15-40 years old accounts for 35%. There is a difference in Kenya with the dominant group being the 15-40 year-olds (41%), and the under-15s (31%). In addition, the population profile in Kenya is older than Nigeria. So, is there an opportunity for products that target the older profile?
The AB class accounts for 4-5% of the population in both countries, but the middle-class in Kenya is larger than Nigeria and accounts for about 38% versus Nigeria's 25%; the DE in Nigeria are about 70% of the population, in Kenya about 60%.
Urban-Rural residence ratios are about the same at 60:40, with Kenya being a bit more urban.
The male-female ratio in both regions is also about the same; whether that is good or bad news is debatable.
A key area of difference is that the custom of the East is more informal than in the West, especially comparing Kenya and Nigeria. In Nigeria, a 20-year-old would not call a 40-year-old by first name, as is in the case in Kenya.
I had a bit of a culture shock in my first six months in Kenya when conducting my initial set of interviews for brand managers, and a candidate breezed into the interview room, said ‘Hi' with his arm stretched out for a handshake and sat down without being asked to do so. In Nigeria, that could have ended the interview.
East Africa is also a more cosmopolitan and heterogeneous region with a collage of races: Negroid, European, Asian, and Arab. This should make marketing communication more exciting, but I do not see brands, especially FMCGs, exploring much niche marketing and advertising. Perhaps Radio Africa's acquisition of East FM and the launch of Frontier FM for the North-Eastern audience would bring some excitement in this regard.
Another difference between Africa, East and West is that the work ethic and lifestyle in East Africa is less adrenalin-driven than in West Africa, especially Nigeria. I don't know if this inspired the Hakuna Matata ‘no worries, carefree' philosophy espoused by Timon and Pumbaa to the young Simba in the animated Disney film, The Lion King.
I am aware that the ‘aggressiveness' of Nigerians is well-documented, but I suggest that to win and to grow our businesses and markets in East Africa, especially in countries like Uganda and Tanzania, we need a lot more aggressiveness and gung-ho spirit.
There is the story of the Kenyan wife who resisted her husband's plea for a fourth child on the basis that she had heard that one in every four Africans is a Nigerian!
But beyond the stereotypes and stories, similar motivations drive the consumer in East Africa as in West Africa: affordability, value-for-money, convenience, and self-esteem. The degree of these motivations may vary, but they are common to both corners of the globe.
Achieving a step-change in commercial performance in any business, whether East or West Africa requires a deep understanding of the Consumer, she who buys and he who uses; understanding the Customer across trade channels, from distributor, through wholesaler, down to the retailer; and understanding Competition.
Apt offers are critical to winning with consumers in both markets; one size may no longer fit all, and that's the challenge for brands that seek to become regional or global brands. What works in one market, may not exactly work in another.
Case in point is the brand Malta Guinness. In Nigeria, malt products are taken to be non-alcoholic and healthy with invigorating properties. In Kenya, there is a different perception. On one of my early visits to a restaurant in Kenya, I had asked for a malt drink, expecting a drink such as Malta Guinness; to my embarrassment, being a teetotaller, I was offered Tusker Malt.
Therein, I believe, lies the challenge to grow Malta Guinness. To grow the brand, it might be necessary to first educate consumers about the healthy malt category and its benefits to usurp the Tusker Malt alcoholic association.
Aptness would also involve the Packaging strategy, which has become a key part of marketing and brand strategy. For example, because of the erosion of consumer disposable income in past years, the small pack segment with low unit prices (LUP), a.k.a. the kadogo economy in Kenya, is growing across product categories, as it is in Nigeria.
A typical shopping list for a growing number of Kenyans may comprise: 5g Royco cubes (2Kshs), Powerboy washing powder (3Ksh), 50g Mallo cooking fat (10Ksh), 100g Blue Band (10Ksh), Fair and Lovely lotion (10Ksh), 50g unbranded sugar (5ksh), 200mg Angelwells Orange juice (10Ksh), pint-sized salt and tea leaves (2ksh), 250g unbranded maize meal (20Ksh), 12g Cadbury Drinking Chocolate (Ksh5) and 11ml Colgate (Ksh 17). So for less than 100Ksh, a consumer has the ingredients for breakfast and supper, clean clothes and teeth and a face massaged with a trendy cosmetic from an international brand name. And if he has a taste for alcohol, there are 500ml kegs Senator at Ksh20 from East African Breweries.
However, I would hasten to say that appropriate packaging is not just about low unit prices (LUPs), but about identifying the latent and expressed needs and expectations of consumers and customers and different socio-economic levels and satisfying them.
With the improvement in economies and re-emergence of a stronger middle-class consumer base, we are starting to experience consumers upgrading to bigger and more expensive packs. Ugandans for example, prefer to buy bigger packs; it is possibly because their egos and appetite for the good things of life are as big as Nigerians'?
But there is a limit ego can take a consumer when purchasing power is challenged.
Like West Africa, about 70% of the population in East Africa earn less than a dollar a day. I have a hypothesis though, that the poverty level in Kenya is higher due to the higher degree of wealth in the informal economy in Nigeria. Also, although the Kenyan shilling is almost twice as strong as the Nigerian naira on a foreign exchange basis, I feel the cost of living in Kenya is higher than in Nigeria; like most foreign travellers, I do mental forex calculations when I purchase goods or services abroad. My heart palpitated when I went for my first haircut in Kenya and discovered it was eight times what it would have cost me in Nigeria.
Affordability is therefore a key determinant of choice for both the East and West African consumer, perhaps more so for the Kenyan. Rumour has it that a middle-class Kenyan could travel one kilometre through traffic to buy fuel at a petrol station selling cheaper by two Kenyan shillings per litre.
I think Kenyan consumers are more bargain-hunters compared to Nigerian consumers. This probably justifies why price promotions are much more popular in Kenya than in Nigeria. I found it intriguing for Unilever's Blue Band margarine, for example, to run a year-long promotion to celebrate 50 years in Kenya with a 3 Ksh price-off promotion in 2005.
Because of differences in consumer disposable income across socio-economic classes, there is need to hit critical consumer price points for brands as this could be a determinant of choice at the Point-of-Buying.
Price mapping is thus an important element of marketing strategy in order to identify consumer-price-point gaps and address critical consumer price points, especially at the bottom of the consumer pyramid.
Availability is another key ingredient to winning in both markets.
While the Kenyan market is a mix of structured hypermarkets and shopping malls, wholesalers, smaller supermarkets, kiosks and hawkers, and is better organised than the Nigerian market where most shopping is done in unstructured open markets, small residential shops and kiosks. Shoprite and Game made an entry into Nigeria only in late 2005.
The more formal nature of the Kenyan shopping environment has driven competition and cost for shelf-space, as well as innovation at point-of-buying; this an area that Nigerian marketers can learn from.
Conversely, in Kenya, there is a huge opportunity to improve availability and visibility at the bottom end of the market, and this is an aspect that Kenyan marketers can learn from Nigerian marketers, who operate in a very mass-market shopping environment.
Creating awareness for brands is an important plank of marketing strategy. Available media vehicles and advertising spend are growing significantly in East and West Africa, more so in 2006. Economic growth and increased competition have driven this.
Advertising spend in Kenya in 2006 was about Ksh14 billion, a growth of 46% over 2005; in Uganda spend was Ksh4.4 billion (19% growth) and in Tanzania spend was Ksh2.2 billion (10% increase).
The ad spend in Ghana in 2006 was Ksh5 billion (37% growth).
In Nigeria, advertising spend in 2006 was Ksh20 billion, 66% higher than in Kenya. This is projected to cross the Ksh40 billion mark by 2010.
With sustained economic growth, Kenya's advertising spend could cross Ksh20 billion by 2010 but there could be limiting factors, which I shall come to shortly.
In both East and West Africa, the top advertisers, who account for about 30% of total advertising spend, are found in the telecommunications, food and beverage, household goods and population services sectors. It is interesting to note, in passing, that the Nakumatt Supermarket chain is amongst the top 10 advertisers in Kenya.
With respect to the media vehicles, both regions use mainly the traditional media of television, radio, billboards and press; however, cinema and internet advertising is starting to grow.
In Kenya, there are currently 10 free-to-air TV stations, two pay direct-to-home/satellite TV stations, 57 radio stations, two dominant national newspapers and a plethora of magazines. The top two media in terms of penetration are radio and television, trailed by newspapers.
In Nigeria, there are currently 147 free-to-air TV stations, including a national network station; nine direct-to-home/satellite/cable TV stations, 112 radio stations, and about 10 major newspapers amongst over 90 print media vehicles. In terms of penetration, the top two media are outdoor and radio, followed very closely by TV.
A 30-second TV advertisement in Kenya will cost 40,000Ksh. In Nigeria the cost is 16,800Ksh - %diff=138%.
A 30-second radio advertisement in Kenya will cost 15,000Ksh. In Nigeria the cost is 2048Ksh - %diff=632%.
A full-page, full-colour newspaper advertisement in Kenya will cost 380,000Ksh. In Nigeria the cost is 145,500Ksh - %diff=161%
*Agency sources
**Ksh 1,00=N1.86
The key area of difference therefore in terms of media penetration is that newspapers are more significant in Kenya than Nigeria, while outdoor is more significant in Nigeria.
Obviously, the media environment in Kenya is not as fragmented as it is in Nigeria, and a media planner and buyer's life in Kenya should be easier.
However, on absolute and per capita basis, it is more expensive to buy media in Kenya:
On absolute basis, a 30-second radio advert on a national radio station costs over 600% more than in Nigeria.
A full-page colour advert in a national newspaper is 160% more expensive, while TV advertising is over 100% higher. On a per capita basis, these figures would be a lot higher because Kenyan population is four times less than Nigeria's.
I think that the cost of advertising in Kenya needs to drop to enable advertisers, especially smaller businesses, derive better value, and for the industry to grow faster than it is. This would have a ripple effect on business growth.
As I have challenged my advertising agency several times, I believe that media needs to be more innovative in the space and airtime they sell and be more flexible to advertisers needs and suggestions. I suggest that there should be a higher level of consultation between media owners and advertisers (and I do not mean advertising agencies alone but the brands that ultimately pay the bills).
Perhaps it is time to consider the establishment of an Advertisers Association of Kenya?
With respect to advertising agencies, while there are 13 APA agencies in Kenya, in Lagos alone, there are hundreds of registered agencies.
However, my perception is that the advertising skill-set in Kenya is slightly higher than in Nigeria, driven by better exposure to global trends, technology and training.
With economic growth, we are starting to see growth of the industry in both countries, and this is an area in which East and West Africa are collaborating positively using as examples, the existing Young & Rubicam network and Scangroup's planned entry into the Nigerian market.
Competition among brands and businesses is not as intense in Kenya when compared to Nigeria, because the former had been a command economy until recently. Though still with limited competition in most major sectors (mainly due to low foreign investment), my sense is that the level has increased with new product launches and brand re-launches, though many of these are ‘me-toos'.
Nonetheless, in Kenya's key categories, market leaders are dominant and comprise brands such as Colgate, Coca Cola, Toyota, Nescafe, Nokia, Ribena, Safaricom, Wrigley, Tusker lager beer, Scangroup and of course Cadbury.
In Nigeria, market leaders, apart from Coca Cola, are not so dominant.
The danger is that in monopolies or near-monopolies, the quality of marketing, consumer value and innovation could come under threat.
Add to that, potential conflicts of interest in the advertising industry where there is a dominant player.
Thinking aloud, I think that the newspaper industry in Kenya could do with novel competition as this would raise quality especially in content and semantics, and hopefully advertising costs would fall. I am hoping that the entry of the Nairobi Star newspaper would drive this.
I also wonder why the dominant beer brand keeps running expensive consumer promotions in Kenya; is the ROI commensurate to the investment? Perhaps. But could that money be better spent in seeking to conquer new geographies in the greater Eastern African region or beyond, or building struggling brands such as the non-alcoholic malt brand? Could we dare to be big, hairy and audacious and build that brand into an African icon?
I also think that consumers would gain significant value by the entry of a third GSM operator, as competition would become more intense leading to reduced costs and better consumer value, as is the experience in Nigeria where there are currently four key players, with prospects for more.
Having said that, I do acknowledge the level of innovation in the Kenyan GSM market; my point is that this level would increase with increased competition. In other words, competition would produce cutting-edge marketing skills and consumer value.
A paradigm shift would be required to develop cutting-edge marketing people. The question is: are we Brand Managers or Bland Managers?
This is not an attempt to parody a tribe in Kenya that has the linguistic challenge of interchanging ‘l' for ‘r' and vice versa. Rather it is a caution that in both East and West Africa, brand managers could become an endangered specie if the current situation is not redressed.
I find that increasingly, brand managers ( at all levels) are focussing more and more on the ‘Promotion' element of the marketing mix with a short-term mind-set to the detriment of the other ‘Ps'. So, for example, we push out the troops during the back-to-school period, and in one store, one brand can have 10 push girls.
However, we neglect to focus on things that would build brand-equity and generate long-term value, such as driving frequency of regular usage and recruiting the next generation of users.
In many businesses here, the marketing team is not involved in ‘Pricing', a key element of the marketing mix that influences consumer decision and the company top-and bottom-line.
I would like to suggest that as brand managers, we need to see ourselves as, and act as, business managers who impact on the company's revenue and profit performance.
Marketing and advertising are, arguably, higher on the agenda of the CEO in Nigeria than in Kenya. I think that with marketing people in Kenya driving the top- and bottom-line more strongly in Kenya, marketing people would gain greater respect and more would become CEOs of the top companies.
Another point to make is that marketing people, whether East or West African, occasionally transfer our personal perceptions to be that of the consumer without validating with the consumer. Perhaps it is true to say that there are no mature brands, only mature brand managers!
As I said at the start, there are more similarities than differences in marketing in East and West Africa. There is certainly more room to collaborate especially between Kenya and Nigeria. (Scangroup, Y&R, RMS, multinationals).
My closing comment is that marketing people on both sides need to raise the level of the game. Rather than over-focusing on recruiting new brand managers, we should seek to create brand new managers - people investment.
I would like to leave you with this thought:
There are five types of marketers
1. Those who make things happen.
2. Those who think they make things happen.
3. Those who watch things happen.
4. Those who wonder what happened.
5. And those that did not know that anything had happened!
