GETTING YOUR PRODUCTS INTO GHANA (AFRICA) MARKET FOR AN INVESTMENT

In this installment, I will further explore the business opportunity and market conditions, delving deeper into understanding the purchasing habits of various Ghanaians (African) consumers and the most effective marketing communications channels.

There are numerous reasons why Africa is all over the business media of late and why so many events are being held about doing business on the continent. Studies carried out by various experts have uncovered a number of key factors for the enormous interest in Africa. Africa has the fastest growing population in the world, currently growing at a rate of 2.3% a year. The continent also has the youngest population with over half of its inhabitants under the age of 20, compared with only 28% in China. 16-34-year-olds are more educated, with 40% having completed high school; they also make 53% of income on the continent. As this generation ages, and its incomes increase, there will be significant changes in consumption habits.

Inhabitants of Ghana are optimistic about the future and have a sense of progress – 84% of the population feel they will be better off in two years. This optimism is played out through consumers’ increased spending habits. The increases have been seen in the frequency of shopping and the purchase of new and more expensive products.

Healthy urbanization – 40% of the African population lives in cities (India 30%, China 45%) and the number of cities in Africa with more than 1 million people will reach 65 by 2016 (2011 was 52). This is already on par with Europe, higher than US and India. Urban spending by governments is increasing twice as fast as rural spending and, to add to that, urban per capita incomes are on average 80% higher than that of the country as a whole – due to the higher productivity of urban workers.

Evolving retail preferences

Modern retail outlets like the large supermarkets found in the west are becoming more and more popular in Africa. The variety, lower cost, large pack sizes, quality, freshness and cleanliness are increasingly attracting more Ghanaian consumers. However, ‘traditional’ retail outlets such as the kiosks still largely dominate sales.

Experience from around the world shows that retailing starts to expand when a country’s GDP per capita reaches $750 and really takes off when it reaches $3000. Current GDP per capita across Africa ranges from $25,700 in Equatorial Guinea to $400 in DR Congo (Source:www.CIA.gov. Estimated for 2013)

Desiring International brands
Ghanaian consumers know, love and are increasingly purchasing international brands – this is across all seven socio-economic groups. In many instances international brand names have become the common terms for categories of products, for example, washing powder is commonly called “Omo” in Ghana and Kenya. An example of this in the UK is the naming of a vacuum cleaner as a Hoover. Ghana isn’t yet home to any local brands that truly span the continent; Ghana brands are typically country/region specific and focused on one market. International brands have the opportunity to build their brand advantage now while African markets are still less competitive than other regions.

Willing to pay for quality
The cheapest products aren’t always the winners in Ghana despite limited budgets for the majority of consumers. Ghana (Africans) associate price with quality and are willing to pay more for a higher quality product or products that will last longer. On average 60% of Africans feel this way. This number increases greatly in North Africa. Many will find a way to buy more expensive quality items, even if it means saving for several months.

People in sub-Saharan Africa are more accepting of local brands. In Nigeria, only 11% agreed with the statement ‘International brands are more fashionable than local brands’. In South Africa the figure was 12%. This offers a huge opportunity for local companies to create and build their own brands.

Companies going into the African market cannot assume that any international brand will be a hit. A balance needs to be struck between quality, which often means durability, and price. This sometimes means that companies design products specifically for the market. Samsung did this by creating televisions with built-in power surge protectors.

Businesses that emphasize the quality of their products and reinforce the message through sampling, advertising and marketing will be the most effective. Educating salespeople and store owners who are trusted influencers at the point of sale, can also be an effective route.

Communications – The importance of traditional media and word of mouth
Ghanaian consumers use both traditional and non-traditional sources to gather information. TV remains the most frequently used and trusted, with 80% Ghana saying it is a significant source of grocery information for them. Print media is also important and is used by 70% of African consumers, although use does vary by country.

Media penetration in Ghana, for example, is 95% for TV, 92% for radio and 33% for the Internet. The slower penetration of print is driven by low literacy rates – 67% of the population. Penetration of newspapers (32%) and magazines (12%) in Ghana is lower than what was observed in other African countries.

Setting up an enterprise

As mentioned earlier Ghanaian consumers are very brand loyal. Because of this, getting your brand into a consumer’s initial consideration set at an early stage will pay off further down the line. Daily used products such foodstuffs, cosmetics, electronics, clothes, footwear etc. are rapidly growing on the Ghana market.

Establishing Mall in Ghana, as I conducted a survey will yield investors and customers to patronize in such business and the products as a whole.