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The growth of Africa’s consumer markets presents an opportunity too big to ignore.
However, companies intent on pursuing high performance through developing African markets need to adjust their expectations and strategies in accordance with African realities. Accenture quantifies the opportunity, provides a basic segmentation of Sub-Saharan Africa’s consumer markets and proposes a simple seven-step framework for building a business in this region.
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Africa Market Entry: Strategies for Consideration
Read how Accenture’s seven-step framework can help craft a successful strategy for entering African markets.
For companies looking for growth via emerging markets, Sub-Saharan Africa looms large. Since 2000, Sub- Saharan Africa has experienced a compound annual growth in consumer spending of 4 percent, reaching nearly $600 billion in 2010. Consumer spending is expected to rise to nearly $1 trillion by 2020. Accompanying the growth are rapid improvements in income levels, infrastructure and the business environment that promise continued growth as a consumer market.
Companies will have to adjust their strategies and expectations when entering Africa. Logistics can be unreliable and infrastructure lags much of the developed world. Furthermore, understanding the diverse nature of opportunities in Africa can be challenging. As a result, many executives planning on entering Africa want to know why Africa’s consumers are an attractive proposition, which segments they should focus on and how they can capture the market’s potential most effectively.
Based on its research and experience, Accenture has constructed a broad segmentation of Sub-Saharan consumers:
Our segmentation identifies five broad consumer segments:
Basic Survivors are the largest consumer group in Africa and are characteristically low income consumers. They tend to make day-to-day decisions based on basic needs.
Working families are the second-largest consumer group. They focus their spending on their children’s needs and value stability and routine.
Rising Strivers value upward mobility and buy based on convenience, quality, or even more “expressive” factors.
Cosmopolitan Professionals are typically located in urban areas. They value pragmatic products but are also brand conscious and influenced by the media.
The Affluent of Africa have disproportionately high purchasing power, and are considered wealthy regardless of where they travel across the globe. This group is extremely small and very fickle.
Accenture estimates that Working Families will represent 33 percent of the total Sub-Saharan African market opportunity by 2015. The largest group will remain Basic Survivors at 45 percent, followed by Rising Strivers (16 percent), Cosmopolitan Professionals (3.1 percent) and the Affluent (2.8 percent). Even though Cosmopolitan Professionals and the Affluent will remain a relatively small portion of the market, their spending power translates into a significant opportunity for luxury products and services. As the African economy continues to mature, these segments are likely to grow more rapidly.
Companies in search of high performance must be explicit about Africa’s role in their broader corporate strategy which African countries it makes sense to enter and the timing of that entrance. The market-entry plan also should illuminate the company’s specific goals and how progress will be measured.
Based on its experience and research, Accenture offers a simple seven-step framework to build a business in Sub-Saharan Africa:
Accenture has its own network of offices in Africa and is helping many of its clients to enter these exciting growth markets. Contact us to find out how we can help your company to reach this next frontier of growth.
September 7, 2011
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