Business expansion requires tapping the market gap and filling out this gap at the right time. This may seem easy; it's not though. This is the reason organizations appoint skilled professionals to help expanding the business in international markets. As a marketing manager of a company manufacturing fortified food products, I have presented detailed expansion plan for the business in Africa.
The reason of selecting the African markets is the poor health index signifying the huge demand for the enriched food. In US, sales of enriched or fortified foods have grown substantially in the country courtesy to the emergence of health conscious customers. As per the statistics, sales of enriched food reached whopping 18 billion in 2001. However, there are many developing countries across the world, struggling with nutritional deficiencies, that have not witnessed this level of penetration and passion regarding food enrichment. As such, these countries, especially war-ridden Africa, provide lucrative sales potential for companies involved in this business.
Research has stated that blindness, anemia, infections, mental retardations are prevalent in these countries because essential vitamins and minerals are lacking in the diet. Combined with the poverty levels across the continent, fortified foods at lower costs carry a special significance for the people out there. Theoretically, this is called the 'form utility' in which the specific product is developed considering the needs of the customers.
Utility of 'Place' refers to making the product available as per the convenience of customers. As internet penetration in sub-Saharan Africa remains poor, the food packed in pallets or boxes ( 150 g, 250 g and 500 g) ready to be picked up will remain convenient for customers compared to the online selling. Making food boxes accessible through supermarkets, hotels, restaurants, bakeries, and small shops will enhance the accessibility thereby increasing the place utility. In addition, timely delivery is very important. Especially for food items, companies can't just afford to make people wait. This is the reason the organization will carry out an extensive research on the market requirements of the region so that supplies are adjusted as per the demand. For instance, the area where blindness is prevalent, food fortified with vitamin A may be the primary sales choice so as to counter the health problem. The organization, thus, needs to create 'utilities' and 'awareness' simultaneously so as to meet out the demand gap. Marketing the products in trade shows and other such events are, thus, of great help in making the consumers aware about health benefits of fortification.
In line with creating the awareness, selecting the appropriate target market is crucial to company's success in the foreign markets. In US, fortified food spans almost all demographic segments but the focus has been on young consumers. Market trends have revealed that young adults aging between 18-24 are more likely to purchase energy drinks and brain boosters. However, the area of fortified food products is quite wide and other important targets include pregnant mothers, toddlers and seniors. The following table extensively identifies the target market for these products in US.
The condition in Africa, is substantially different to that of US. First of all, there is a huge gap in income, education and awareness levels. Secondly, while US is a top industrialized nation having the best of sophisticated and informed customers, Africa, on the other hand, is still reeling under worst of problems including hunger, malnutrition and poverty. In this scenario, marketing fortified foods and making people ready to consume that is not an easy deal. Thus, the initial targets will be people suffering from nutritional deficiencies and in the later phase, brain boosters will be marketed targeting the potential customers. The logic behind having phased target is quite simple. ' Basic health is more important than intelligent brain'. If people are sick and ill, rolling out brain boosters will be of lesser use. The two-phased target for Africa has been exhibited by the table below.
Selecting the right target and delivering specific products for different segments is necessary, especially to stay ahead of competitors. This is the way the organization can position it better in the industry. Functional food industry has grown colossally in recent years and the manufacturers are shifting from correcting nutritional deficiencies to creating and promoting optimal health conditions. As such, the competition level has increased and many large corporations have established themselves successfully in the market. However, the competition varies according to the category of the product. For instance, dairy products and energy drinks are leading the market from sales perspective. In US alone, sales of fortified products have increased to a level of $20-$30 billion a year fetching around 5 percent share in US food market. Changing lifestyle, awareness, income levels and recent health trends have well contributed to the struggle. In addition, the extensive research done by the organizations in health optimization has taken the industry to the forefront.
The scenario in Africa also is not very different, as far as the competition is concerned. Though the continent witnessed this awareness years later, present day business contour reflects dynamism and stiff competition. In wake of Government support and initiatives, many private sector companies have started different programs there to reduce prevailing health issues in the region. As the area offers huge sales and growth potential to the companies, many are vying to tap it as soon as possible. In that sense, entry in the African market becomes a bit difficult and the organization needs to have proper strategies to meet the organizational and societal goals at the same time.
The STP( Segmentation, Targeting and Positioning) model is quite relevant and successful in present day dynamic business environment. It is one of the most popular models that helps the organizations to engage with different and diverse audiences by developing and delivering personalized messages.
For the purpose of penetration, segmenting the market on the basis of different characteristics has been planned so that the complete focus can be on creating the niche by targeting customers.
There are many countries in Africa suffering from one of other health issues. The market will be researched for the purpose of identifying common cause and areas will be clubbed to create the specific product required to overcome the situation. For instance, there are countries like Somalia, Uganda etc where malaria is quite prevalent. Likewise, there are many areas where eyes problems are more frequent. So, the market will be segregated on the basis of different health indices so as to target the real problem.
Other than that, the organization will segment the market on the basis of demography( age). Toddlers, babies, children, young and adults have different requirement levels as far as brain boosting products are concerned. So, different segments will be targeted in a different manner so that the company can create a 'niche' and get competitive advantage over others. The extensive targeting strategy is exhibited by the table below.
As shown in the table above, rather than creating customized products for each segment, the organization will produce generic products suiting to common needs so as to cut down the cost of extensive product customization. However, after getting the market response and detailed results of the initial phase of marketing, the product customization for each segment can be the agenda a couple of years later.
Last but not the least, the organization needs to have a well charted out positioning strategy so that it can differentiate itself from competitors. Having evaluated the market conditions, it is necessary that the prices of the products must be kept as low as possible. This, we can say, will be the unique selling point of the company's products and will differentiate it from the competitors. To get the cost competitiveness , the intensive and extensive research on latest technological aspects is on the cards. We will also explore better and reasonable options for creating the similar quality products so as to position the company in a different way . It will help the company overcome various problems that are the part of business expansion.
Though the African market for fortified food looks promising, it is not devoid of challenges and risks. The foremost thing is to convenience the people about the health benefits of the product. Lower awareness combined with lack of disposable incomes may make it difficult for the organization to find a niche. This is the reason the focus has been on developing cheaper products so that the potential customers find a reason to purchase these products. In addition, social factors may also a negative role and affect sales. Preliminary research has revealed that a large chunk of population still has doubts in the efficacy of fortified products. So, convincing the population may be a daunting task but it has to be done to sustain the business there in long run.
Also, there are regulations governing the fortified food products in Africa. These laws and regulations concern the quantity of ingredients of micro-nutrients in the particular product. Adhering to these regulations is mandatory to get the government support and any laxity in it may erode consumers' trust thereby affecting the sales.
Lack of internet usage is another negative aspect concerning business in Africa. As very less population use internet, online sales may not be a feasible option. This is the reason the organization has planned to sell product via shops and supermarkets. In my personal opinion, lack of online distribution channel is a big obstacle in business expansion. To overcome these lacunae, the organization needs to have:
- The right product
- The right price
- Suitable distribution channels
- and suitable promotion strategies
In short, hindrances can be overcome with the help of suitable marketing mix strategies. For instance, the right product category should reach the target customer at right time. It requires developing a campaign that includes market research plus field experiment. The organization has focused on the lowest price possible to penetrate faster among the customers. At the same time, it will have to strategically look at the competitors, their promotional tactics and pricing methods. The following table details out the campaign for marketing mix that may help the organization meet the organizational goals.
Developing the appropriate marketing mix requires extensive and intensive market research in African market whereas executing the plan requires a dedicated team, broad and futuristic vision plus flexibility in strategies so that these can be changes as per the changing business environment.
References
Edoho, F. M. (2001). Management Challenges in Africa in 21st Century. Greenwood Publishing Group.
Lawrence, M. (2013). Food Fortification: The Evidence, Ethics and Politics of Adding Nutrients to Food. Oxford: Oxford University Press.
Ndulu, B. (2007). Challenges of African Growth. Washington: World Bank.
Preedy, V. R. (2013). Handbook of Food Fortification and Health. London: Springer Science & Businesses.
Sadler, P. (2003). Strategic Management. Kogan Page.
