MARKETING IN AFRICA
MNM2615
Semester 1
2020
ASSIGNMENT 1, 2 & 3 – PORTFOLIO
Name:
Student number:
Date submitted:
I declare that the work presented in this assignment is my own work and that all
the sources that I have used or quoted have been indicated and acknowledged by
means of complete references.
1
,TABLE OF CONTENTS
INTRODUCTION..........................................................................................................3
1. CORRECTIONS APPLIED TO ASSIGNMENT 01...................................................4
1.1. DOMESTIC AND INTERNATIONAL COMPETITION.......................................4
1.2. TECHNOLOGICAL PROGRESS IN AFRICA....................................................5
1.3. ESTABLISHMENT OF BUSINESS IN AFRICA.................................................5
1.4. POPULATION SIZE IN AFRICA........................................................................6
1.5. THE AFRICAN CONSUMER.............................................................................8
1.6. MARKETING ENVIRONMENT OF THE AFRICAN CONSUMER....................9
2. CORRECTIONS APPLIED TO ASSIGNMENT 2...................................................11
2.1. THE RATIONALE FOR DOING BUSINESS IN AFRICA.................................11
2.1.1. Africa in the Global Economy....................................................................11
2.1.2. Africa’s Macro-Economic Outlook.............................................................11
2.1.3. The Factor Markets...................................................................................11
2.1.4. Preparing Swiitch Beauty for Potential Investors......................................12
2.2. CHALLENGES OF DOING BUSINESS IN AFRICA........................................12
2.2.1. Inadequate Infrastructure..........................................................................12
2.2.3. Economic Instability...................................................................................13
2.2.4. Cumbersome Business Environment........................................................13
2.2.5. Political Instability......................................................................................13
2.2.6. Low Application of Technological Development.......................................13
2.2.7. Operational Conditions..............................................................................13
2.2.8. Cultural Diversity.......................................................................................14
2.3. OVERCOMING CHALLENGES TO DO BUSINESS IN AFRICA....................14
2.3.1. Strategic business growth platforms.........................................................14
2.3.2. Investment in human capital......................................................................14
2.3.3. Partnering with local suppliers...................................................................14
2.3.4. Product Distribution...................................................................................14
2
, 2.3.5. Product Promotion.....................................................................................14
2.4. FACTORS AFFECTING BRANDING IN AFRICA...........................................15
2.4.1. Maturity of the African Market...................................................................15
2.4.2. Lack of Available Data...............................................................................15
2.4.3. Lack of Knowledge about the African Consumer......................................15
2.5. BRAND PIRACY IN AFRICA...........................................................................16
2.5.1 How a brand should break into African consumer markets.......................16
2.6. GENERALLY ACCEPTED RULES FOR A BRAND NAME IN AFRICA.........16
3. NATURE OF SMME’S IN TOWNSHIP ECONOMIES............................................17
3.1. Size and scope of small businesses................................................................17
3.2. Characteristics of SMME’s within townships...................................................17
3.3. SMME Economic activities within townships...................................................18
4. THE INFORMAL ECONOMY.................................................................................20
5. LOCAL BUSINESS EXPANSION IN SA................................................................20
5.1. Innovation in Products, Packaging and Price..................................................20
5.2. The Growing Middle Class...............................................................................20
6. SEGMENTATION BASE........................................................................................21
6.1 Needs-based segmentation..............................................................................21
6.2. Needs Segmentation Linked to Emotional Drivers..........................................21
6.3. Living Standards Measures.............................................................................21
6.4. Youth Segmentation.........................................................................................22
7. PRODUCT AND DISTRIBUTION APPLICATIONS...............................................22
7.1. Product.............................................................................................................22
7.2. Distribution.......................................................................................................23
8. RECOMMENDATIONS..........................................................................................24
9. CONCLUSION........................................................................................................25
10. REFERENCES.....................................................................................................26
INTRODUCTION
The world of E-Commerce is significantly pronounced in Africa than it is in other territories,
and we are seeing a dramatic increase in the number of people accessing the internet and
making payments via the internet and how the internet can be leveraged to target a brand’s
3
, audience – especially when it comes to younger consumers. Swiitch Beauty is an online
shop marketing a cruelty-free, trendsetting and an innovative brand. Switch Beauty is an
inclusive, affordable beauty brand specialising in skincare, makeup products and makeup
tools. The company was established in 2014 by Rabia Ghoor when she discovered the
internet and You Tube.
Ghoor says she started SwiitchBeauty, from a 4 square meter area in my bedroom and
began researching, day in and day out, from the product formulation, E-Commerce,
packaging, manufacturing, design to everything else to do with the beauty industry
(SwiitchBeauty, 2020). The project started small, with an Instagram page and a mere two
products, since then Swiitch Beauty has grown into a successful business with just 10
employees. One product led to another and now the business delivers 2500 to 3000 orders
every month and has monthly pop up stores at various malls in South Africa (Entrepreneur,
2019)
1. CORRECTIONS APPLIED TO ASSIGNMENT 01
1.1. DOMESTIC AND INTERNATIONAL COMPETITION
A domestic market, is the supply and demand of goods, services, and securities within a
single country. In domestic trading, a firm faces only one set of competitive, economic, and
market issues and essentially must deal with only one set of customers, although the
company may have several segments in a market (Wkipedia, 2016). The term is also used
to refer to the customers of a single business who live in the country where the business
operates. There are certain limitations when competing in a domestic market, many of which
encourage firms to expand abroad, the main reasons why a business would decide to
expand abroad are limited market size and limited growth within the domestic market.
International competition is the services or products provided by competing companies that
serve international customers. Global competition has allowed companies to buy and sell
their services internationally, which opens the door to increased profits and flattens the
playing field in business (Study.com, 2019). In short, international competition is the driving
force behind the Globalisation of production and markets. In the modern world businesses
are increasingly affected by the actions of international competitors as a result of the
globalisation process. A nation’s competitiveness depends on the capacity of its industry to
innovate and upgrade. Companies gain advantage against the world’s best competitors
because of pressure and challenge. They benefit from having strong domestic rivals,
aggressive home-based suppliers, and demanding local customers (Hbr.org, 1990).
For Example: Competitors will try to win market share by cutting costs, improving efficiency,
lowering price and innovating by either creating new products and services or improving
upon old ones. Swiitch Beauty can use this knowledge to create marketing strategies that
take advantage of their competitors' weaknesses, and improve your own business
performance. Compared to other local SME’s Swiitch Beauty uses 100% organic ingredients
in all their products, supports local trade and focuses on a biodegradable packaging and
cruelty free cosmetics. In terms of international competition, yes there is! But most
consumers in Africa are middle-class and lower income earners so purchasing expensive
products would not be feasible for them in an average household of 5 people living together,
4
MNM2615
Semester 1
2020
ASSIGNMENT 1, 2 & 3 – PORTFOLIO
Name:
Student number:
Date submitted:
I declare that the work presented in this assignment is my own work and that all
the sources that I have used or quoted have been indicated and acknowledged by
means of complete references.
1
,TABLE OF CONTENTS
INTRODUCTION..........................................................................................................3
1. CORRECTIONS APPLIED TO ASSIGNMENT 01...................................................4
1.1. DOMESTIC AND INTERNATIONAL COMPETITION.......................................4
1.2. TECHNOLOGICAL PROGRESS IN AFRICA....................................................5
1.3. ESTABLISHMENT OF BUSINESS IN AFRICA.................................................5
1.4. POPULATION SIZE IN AFRICA........................................................................6
1.5. THE AFRICAN CONSUMER.............................................................................8
1.6. MARKETING ENVIRONMENT OF THE AFRICAN CONSUMER....................9
2. CORRECTIONS APPLIED TO ASSIGNMENT 2...................................................11
2.1. THE RATIONALE FOR DOING BUSINESS IN AFRICA.................................11
2.1.1. Africa in the Global Economy....................................................................11
2.1.2. Africa’s Macro-Economic Outlook.............................................................11
2.1.3. The Factor Markets...................................................................................11
2.1.4. Preparing Swiitch Beauty for Potential Investors......................................12
2.2. CHALLENGES OF DOING BUSINESS IN AFRICA........................................12
2.2.1. Inadequate Infrastructure..........................................................................12
2.2.3. Economic Instability...................................................................................13
2.2.4. Cumbersome Business Environment........................................................13
2.2.5. Political Instability......................................................................................13
2.2.6. Low Application of Technological Development.......................................13
2.2.7. Operational Conditions..............................................................................13
2.2.8. Cultural Diversity.......................................................................................14
2.3. OVERCOMING CHALLENGES TO DO BUSINESS IN AFRICA....................14
2.3.1. Strategic business growth platforms.........................................................14
2.3.2. Investment in human capital......................................................................14
2.3.3. Partnering with local suppliers...................................................................14
2.3.4. Product Distribution...................................................................................14
2
, 2.3.5. Product Promotion.....................................................................................14
2.4. FACTORS AFFECTING BRANDING IN AFRICA...........................................15
2.4.1. Maturity of the African Market...................................................................15
2.4.2. Lack of Available Data...............................................................................15
2.4.3. Lack of Knowledge about the African Consumer......................................15
2.5. BRAND PIRACY IN AFRICA...........................................................................16
2.5.1 How a brand should break into African consumer markets.......................16
2.6. GENERALLY ACCEPTED RULES FOR A BRAND NAME IN AFRICA.........16
3. NATURE OF SMME’S IN TOWNSHIP ECONOMIES............................................17
3.1. Size and scope of small businesses................................................................17
3.2. Characteristics of SMME’s within townships...................................................17
3.3. SMME Economic activities within townships...................................................18
4. THE INFORMAL ECONOMY.................................................................................20
5. LOCAL BUSINESS EXPANSION IN SA................................................................20
5.1. Innovation in Products, Packaging and Price..................................................20
5.2. The Growing Middle Class...............................................................................20
6. SEGMENTATION BASE........................................................................................21
6.1 Needs-based segmentation..............................................................................21
6.2. Needs Segmentation Linked to Emotional Drivers..........................................21
6.3. Living Standards Measures.............................................................................21
6.4. Youth Segmentation.........................................................................................22
7. PRODUCT AND DISTRIBUTION APPLICATIONS...............................................22
7.1. Product.............................................................................................................22
7.2. Distribution.......................................................................................................23
8. RECOMMENDATIONS..........................................................................................24
9. CONCLUSION........................................................................................................25
10. REFERENCES.....................................................................................................26
INTRODUCTION
The world of E-Commerce is significantly pronounced in Africa than it is in other territories,
and we are seeing a dramatic increase in the number of people accessing the internet and
making payments via the internet and how the internet can be leveraged to target a brand’s
3
, audience – especially when it comes to younger consumers. Swiitch Beauty is an online
shop marketing a cruelty-free, trendsetting and an innovative brand. Switch Beauty is an
inclusive, affordable beauty brand specialising in skincare, makeup products and makeup
tools. The company was established in 2014 by Rabia Ghoor when she discovered the
internet and You Tube.
Ghoor says she started SwiitchBeauty, from a 4 square meter area in my bedroom and
began researching, day in and day out, from the product formulation, E-Commerce,
packaging, manufacturing, design to everything else to do with the beauty industry
(SwiitchBeauty, 2020). The project started small, with an Instagram page and a mere two
products, since then Swiitch Beauty has grown into a successful business with just 10
employees. One product led to another and now the business delivers 2500 to 3000 orders
every month and has monthly pop up stores at various malls in South Africa (Entrepreneur,
2019)
1. CORRECTIONS APPLIED TO ASSIGNMENT 01
1.1. DOMESTIC AND INTERNATIONAL COMPETITION
A domestic market, is the supply and demand of goods, services, and securities within a
single country. In domestic trading, a firm faces only one set of competitive, economic, and
market issues and essentially must deal with only one set of customers, although the
company may have several segments in a market (Wkipedia, 2016). The term is also used
to refer to the customers of a single business who live in the country where the business
operates. There are certain limitations when competing in a domestic market, many of which
encourage firms to expand abroad, the main reasons why a business would decide to
expand abroad are limited market size and limited growth within the domestic market.
International competition is the services or products provided by competing companies that
serve international customers. Global competition has allowed companies to buy and sell
their services internationally, which opens the door to increased profits and flattens the
playing field in business (Study.com, 2019). In short, international competition is the driving
force behind the Globalisation of production and markets. In the modern world businesses
are increasingly affected by the actions of international competitors as a result of the
globalisation process. A nation’s competitiveness depends on the capacity of its industry to
innovate and upgrade. Companies gain advantage against the world’s best competitors
because of pressure and challenge. They benefit from having strong domestic rivals,
aggressive home-based suppliers, and demanding local customers (Hbr.org, 1990).
For Example: Competitors will try to win market share by cutting costs, improving efficiency,
lowering price and innovating by either creating new products and services or improving
upon old ones. Swiitch Beauty can use this knowledge to create marketing strategies that
take advantage of their competitors' weaknesses, and improve your own business
performance. Compared to other local SME’s Swiitch Beauty uses 100% organic ingredients
in all their products, supports local trade and focuses on a biodegradable packaging and
cruelty free cosmetics. In terms of international competition, yes there is! But most
consumers in Africa are middle-class and lower income earners so purchasing expensive
products would not be feasible for them in an average household of 5 people living together,
4
