If you’re planning to take your business into Africa, you really need to understand your potential market, says Andrea Opoku

So Africa is the next big thing right? Everyone is looking to take his or her business to Africa, aren’t they?

The market seems ready for it: over 1 billion inhabitants; geographically the size of the US, India, China, Japan and all of Europe combined; a rising middle class, increasing incomes and educational levels….

Large multinationals to small businesses are moving into the market to access the huge opportunity that is Africa. But the political and social instability in some areas and infrastructure shortfalls are not the only challenges businesses are facing. With 54 countries, 2000+ languages spoken and a huge array of cultural, ethnic and social differences, the biggest challenge for marketers is the immensely diverse nature of the market and how to abide by the first rule of marketing: know and understand your customer.

Reliable data and consumer insight on the entire continent are hard to come by, even on an individual country basis. One piece of research carried out by Nielsen gives an insight into the diverse behaviours and attitudes that shape the African consumer.

Nielsen carried out research into the retail of consumer-packaged goods (CPG) and surveyed consumers living in urban and peri-urban (outskirts of cities) areas of sub-Saharan African countries. The results of the research gave an insight into how African consumers think, buy and consume media.

Based on these insights they developed seven unique consumer segments which allow marketers and business owners to not only see the potential in these countries, but which also gives them the information needed to make key market entry decisions.

The following are brief descriptions of each consumer segment summarized from the research.

Tier One: Trendy Aspirants and Progressive Affluents

These are wealthy, urban and well-educated Africans with high incomes and high spends compared to other segments. They represent 28% of the population (21% and 7% respectively) but account for 47% on the income and 40% of the consumer spend.

They’re generally willing to pay more for better service, are more open to expensive and new brands and are more likely to shop at modern trade stores. They have high media usage, especially across the internet and social media. They also have the highest usage of internet-based activities on the mobile phone and over half of them have more than one mobile line.

Although similar, the two segments have lifestyle differences: trendy Aspirants are young, ‘up-and-coming’ high-end consumers, while Progressive Affluents are older and tend to have families. Progressive Affluents are also better educated, belong to a higher socio-economic class and are more likely to be online.

Tier Two: Balanced Seniors and Struggling Traditionals

This group is made up of middle-aged and middle-income Africans with average spending power. They are head of households, shop for their family and are focused on affordability.

They account for 27% of the population (17% and 10% respectively), are responsible for 28% of spending, but only 22% of total income. They are generally in their mid-thirties, married and live on the outskirts of urban areas. Common beliefs are centred on strong family and religious orientations, respect for elders and a focus on affordability. They tend to shop at traditional trade stores and are average consumers of mass media like TV and radio.

Differences in income, driven by education and occupation, separate them. Balanced Seniors are better educated (post secondary school) and have a higher income ($550 per month). They are willing to stand out and take risks and are much more likely to read magazines or newspapers. In contrast, Struggling Traditionals haven’t completed secondary school and have lower incomes ($285 per month). Only 75% own a mobile phone, which is amongst the lowest of all the seven segments, and they are the least likely to upgrade their current mobile phones to new devices.

Tier Three: Evolving Juniors, Wannabe Bachelors and Female Conservatives

This is the biggest group, made up of low income, low spend consumers. Primarily young and lower class, they are a diverse group of Africans ranging from increasingly modern students to conservative housewives.

Collectively, they make up 45% of the population (11%, 24% and 10% respectively) yet have only 31% of the income and contribute to only 32% of spending. They tend to live on the outskirts of urban areas, are undereducated, shop in traditional retail outlets and are least likely to buy expensive products. Affordability, availability and trust drive their purchase decisions. They are receptive to TV and radio but score low on print and internet penetration. However they are likely to own a mobile phone, which they use primarily for text messaging.

Female conservatives are likely to be married, deeply rooted in family and traditions, which are important aspects of their lives. In contrast Evolving Juniors and Wannabe Bachelors prefer to spend time with friends rather than be at home. Wannabe Bachelors tend to be more receptive to advertising and whilst only 3 out of 4 Evolving Juniors own a mobile phone, those that are connected have a higher internet penetration and usage of advance mobile features.

So there you have it, one billion African consumers categorized into seven segments. There is a wealth of information to be gleaned from this research which literally only scratches the surface.

However, there are limitations to the data: only 7 sub-Saharan African countries were surveyed and although face-to-face interviews were carried out, the total sample consisted of 5000 15-45 year olds.

In part two of this article in the next issue of ReConnect Africa magazine, I will cover the business opportunities with each of these segments, how to communicate with them, and their purchasing habits.