by Oluwafemi Oyefeso
Oluwafemi Oyefeso
I
recently read an interesting report from the McKinsey Global Institute
and it presented some thought-provoking data on the enormous potential
that are inherent in the Nigerian market.
Nigeria has been termed by some analysts
as a rhinoceros held down and waiting to burst loose; and from all the
statistics given by MGI, this cannot be far from the truth.
According to the report, the Nigerian
consumer market is worth nearly $400bn per year and based on this, the
expanding consuming class could reach $1.4tn a year by 2030. Also, it
indicated that “food (including beverages) and non-food consumer goods
will account for $1tn of the total, and by 2020, more than half of
African households (128 million) are expected to be in the consuming
classes, expanding markets for everything from mobile phones to
refrigerators to soft drinks”
The report also disclosed that Nigeria
and other developing economies had large and growing working-age
populations, which could be drivers of growth. “Nigeria already has the
ninth-largest working-age population in the world; and by 2030, the
number of Nigerians of working age (15 to 64) is expected to be 50 per
cent higher than today,” it stated.
The report posited that by 2030,
Nigeria’s economy could more than triple in size, growing to over $1.6tn
from $510bn in 2013, or by about 7.1 per cent per year. Such growth
will make Nigeria one of the world’s top 20 economies by 2030, larger
than the Netherlands, Thailand or Malaysia.
From the analyses above, the country and
the consuming class provide huge potential for discerning investors and
people with the right mindset and grit to be able to overcome the
challenges within the operating environment of Nigeria. However, despite
the interesting statistics, navigating this terrain requires a
differentiated strategy to gain traction and effectively take charge of
this market and its potential.
Below are some key points I got from the McKinsey Global Institute’s report:
Customer experience is key
To properly take advantage of this
market, differentiation from below par service is very crucial, as a
large portion of our economy is service oriented. Firms that want to
stand out can do so by leveraging on the experience customers get when
they patronise them, as a positive experience sells itself any day.
Customers are loyal and promote brands that treat them well. Some
international companies have been able to differentiate themselves
solely on this strategy. The positive experience customers get will make
companies stand out from the clutter and get them word of mouth
referrals, causing organic growth and adding more value to the bottom
line.
According to an expert, Josh Linkner,
only 26 per cent of companies have a well-developed strategy in place
for improving customer experience, leaving a huge opportunity to leave
74 per cent of competition in the dust.
No one size fits all
Nigeria is a country with a diverse and
homogenous background with over 500 ethnic groups. Proper segmentation
is very key to properly capture the pockets of these distinct entities.
Companies that intend to cover the landmass of this topography need to
develop messages that will appeal to a diverse and varied audience.
Different ethnic groups and tribes have their peculiar idiosyncrasies
and traits that differentiate them. To properly capture this audience,
these traits have to be worked upon and crafted into advertising and
media messages, which captivate and engage the audience and make them
consider a purchase.
Hitting the market at the right time
To further buttress the above point, I
like to take the example of the e-commerce companies. What better time
to hit the market. The e-commerce companies have been able to
effectively leverage the market by taking advantage of the nature of the
upwardly mobile sector of the population who have some disposable
income to play with and are time starved. Selling convenience has become
the buzzword. These companies have also been able to seize the moment,
created by the strength of the banking sector and debit cards, bridging
the gap between the producers and consumers. At the same time, these
companies build up their own logistics and distribution chains. The
market scenario without the e-commerce companies would have meant that
shopping malls will be more crowded and more traffic on the streets.
With mobile and Internet penetration gradually increasing, this has
enabled customers to do their transactions on their phones, including
comparing prices and looking through product reviews.
The downside of this e-commerce
companies are the potential threats they pose to the brick and mortar
business and commercial real estate in the near future. With the rate of
patronage they get, the traditional brick and mortar stores might end
up being distribution and fulfilment centres, utilised by the e-commerce
companies.
With these new developments, there is no
better time for digital and Internet savvy entrepreneurs to bring in
more innovation than now. There are numerous openings for blue ocean
strategies in the health, retail, agriculture, media and transport
sectors. The agriculture industry in particular provides so many
opportunities for enterprising individuals to unlock more value from the
value chains and add more value to products, which can be sold as
refined products, thereby commanding higher prices.
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