Date: 2013-08-05

Doing Business in South Africa—Part 5: Recommendations

Part 5 offer some suggestions to companies looking to expand into that market. 

Recommendations 

In South Africa, many traditional, established companies have not adopted their products nor their distribution networks to the needs of low-income people. Instead, complex products and distribution methods designed for more affluent consumers have been pushed into the market. It is time to reevaluate the international business model and adapt products to meet the needs of specific market segments. 

Segmenting markets is the key to reaching black South Africans of all economic levels. This suggests that the attitudes and outlooks of consumers are more important than their incomes in determining their shopping behavior. To tap the bottom-of-the-pyramid market, it is important to launch affordable products that can be distributed via multiple small and medium enterprises and mom-and-pop stores. 

Many of the mom-and-pop stores will need to be educated and trained to support products and provide services after sales. New pricing models must also be developed to cater to the bottom of the pyramid market. Lower prices are not the answer to the challenges faced, since many segments of the market in South Africa tend to be brand conscious and are willing to pay a price premium if trust is developed. 

Final Words 

South Africa has a relatively stable economy, abundant natural and labor resources, and well-developed financial markets. Growth in the coming years will be driven by increased investment as well as an expansion of trade and domestic consumer markets. However, international investors cannot ignore the fact that they will face daunting problems due to corruption, social problems, weak political systems in the sub-Saharan region, and social tensions. Additionally global players must be mindful of the marketing, operational and logistical challenges in South Africa and develop proactive strategies to deal with these challenges.

 

( linda )22 Dec,2011

Previous: Doing Business in South Africa—Part 4: Operational and Marketing Challenges
Next: Importing Basics: Prototypes

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