Africa rising in an emerging world: an international marketing perspective

Abstract

Purpose

The purpose of this paper is to highlight important contemporary themes in international marketing strategy from the perspective of Sub-Saharan African firms.

Design/methodology/approach

The approach adopted is a review and synopsis of the existing body of research on international marketing research in Sub-Saharan Africa, and a discussion of the manuscripts included in the special issue.

Findings

International marketing in Sub-Sahara Africa is growing steadily, driven largely by rapid changes in socio-economic and demographic characteristics of consumers in this market. The growing appetite of multinational enterprises to explore new growth opportunities on this continent and the increasing intra-Africa cross-border transactions is driving unique approaches to international marketing that are predicated on using non-traditional means to produce, communicate and distribute products and services.

Research limitations/implications

While the international marketing opportunities and challenges discussed in this paper are not exhaustive, the paper highlights important research themes that need consideration regarding international marketing research in Sub-Saharan Africa.

Originality/value

This introductory paper emphasizes the unique international business landscape in Sub-Saharan Africa and discusses its international marketing strategy implications. The paper further draws attention to a number of unanswered research questions that require additional research, and thus bring Sub-Saharan Africa to international marketing scholarly enquiry.

Citation

Amankwah-Amoah, J., Boso, N. and Debrah, Y.A. (2018), "Africa rising in an emerging world: an international marketing perspective", International Marketing Review, Vol. 35 No. 4, pp. 550-559. https://doi.org/10.1108/IMR-02-2017-0030

Introduction

The last four decades have witnessed major transformations in the business landscape in many Sub-Saharan African markets (Addison et al., 2002; Amankwah-Amoah, 2016; Frynas and Mellahi, 2003). Although disastrous events in the African continent have dominated scholarly and policy discussion on the state of affairs in Sub-Sahara Africa and its implications for businesses, the continent has witnessed substantial progress in business, industrial and social-economic growth in recent years (Kamoche et al., 2012; Pinkovskiy and Sala-i-Martin, 2014). For example, Africa is now a home to some of the fastest and vibrant global giants such as the Bidvest Group and Sonatrach, with an estimated sales in excess of USD 72bn (The African Report, 2013). These Africa originating businesses are prospering largely because Sub-Saharan Africa is currently one of the fastest-growing regions in the world in terms of economics and demographics (World Bank, 2016). These growth prospects are forcing major investors to review their perspectives about the continent as many are beginning to view Sub-Saharan Africa as an attractive location for foreign direct investments (FDI) (UNCTAD, 2012). In fact, in view of the changing dynamics and increasingly welcoming business-friendly policies adopted by many African Governments in recent years, an increasing number of industrialized Western and Eastern multinational enterprises such as Microsoft, General Electric and Haier have begun to look to Sub-Saharan Africa to scale up their growth (Khanna et al., 2005; Ozawa and Bellak, 2011). This ensuing competitive landscape taking shape across Sub-Saharan Africa has an increased pressure on local African firms to adopt market-centric principles while at the same time leveraging their local advantage to strengthen their competitiveness at home and abroad.

Although contemporary marketing strategies deployed by Sub-Saharan African businesses seems rooted in the long-held marketing principles of industrialized market firms in Western Europe and North America, an imperative is that the marketing practices of Sub-Saharan African firms are unique in many respects. Specifically, the unique socio-cultural and historical circumstances underpinning the formation and growth of many African businesses and the consumption environment within which these firms compete suggest that the type of marketing undertaken by Sub-Saharan African firms might be unique (McFarlin et al., 1999). These contemporary advances in international marketing strategy development in Sub-Saharan Africa firms make it increasingly difficult to generalize marketing practices in Western societies to the Sub-Saharan African context.

Beyond the unique feature of the Sub-Sahara African market, there are enormous opportunities occurring in this market. As “the world’s fastest-growing continent” ((The) Economist, 2013, p. 12), this market is experiencing rapid reduction in extreme poverty (World Bank, 2016). The steady growth in middle-income consumption and a growing young population are providing Sub-Saharan African and foreign firms a real opportunity for growth. Additionally, the widespread use of advanced technological gadgets, widespread use of mobile devices and the growing deregulation and reduction in the cost of international communication and financial transaction have unleashed new opportunities for companies seeking to expand on the continent. While these growth opportunities have largely been overlooked in the international business and marketing literatures, this special issue provides a platform to begin a scholarly discourse on the growing confidence in Sub-Saharan Africa and the international marketing practices of Sub-Saharan African firms, highlighting the potency of Africa’s unique socio-cultural context to influence contemporary international marketing scholarship and practice.

Against this backdrop, our focus in this introductory paper is to explicate a number of core issues in international marketing research on Africa. It is our hope that this exposition would help international marketing scholars and business leaders understand how Sub-Saharan African firms practice marketing, and how foreign firms aiming to do business in Sub-Saharan Africa can learn to practice Africa-focused marketing to compete successfully in African markets. We begin by providing a brief overview of important trends, challenges and opportunities in contemporary business environment in Sub-Saharan Africa and their implications for international marketing practice. We then summarize the papers included in this special issue and discuss a number of fruitful avenues for future research on international marketing in Sub-Saharan Africa.

An emerging Africa: trends, challenges and international marketing opportunities

Several non-business-friendly events (including incidence of civil conflicts) have disrupted efforts by many Sub-Saharan African countries to increase their global market competitiveness. In recent years, however, several Sub-Saharan African nations such as Ivory Coast and Rwanda, which have experienced civil conflicts, have dramatically recovered and are undergoing rapid economic transformations (De Vries et al., 2015). Good governance, political stability and economic and institutional reforms have supported much of this progress (The Economist, 2016; Noman and Stiglitz, 2015). Furthermore, it has been argued that the rapid growth that many African countries are experiencing is premised on a growing young population, estimated to be about 1.2 bn and projected to be more than 2 bn by 2050 (The Economist, 2016; United Nations, 2015). This prospect of economic growth and demographic advantage provides opportunities for new business formation and growth in Sub-Saharan Africa (Nyuur et al., 2016; Darley et al., 2013). The evolving socio-economic and demographic landscape in Sub-Saharan Africa has also provided opportunity for existing businesses to explore new consumption patterns across the continent for new revenue streams and growth drivers.

Additionally, several studies have revealed that Sub-Saharan African consumers are quickly embracing contemporary technology such as mobile gadgets and solar energy (Aker and Mbiti, 2010; Amankwah-Amoah, 2015a). For example, information and communications technology has become one of the fastest growing business sectors in Kenya, with internet access rates being one of the highest in the developing world. This technology savoury has made Kenya a regional hub for value-added mobile services, most notably Safaricom’s M-Pesa mobile banking service, which has revolutionized mobile payments in many parts of Sub-Sahara Africa and the Middle East. This embrace of technology coupled with decreasing communication cost and regulatory overhaul in many Sub-Sahara African countries is helping minimize social exclusion while also providing marketing opportunities for businesses seeking expansion in Sub-Sahara African markets (Asongu and Nwachukwu, 2016).

Although inadequate transportation infrastructure has been a major driver of Africa’s inability to attract major foreign investments (Aker and Mbiti, 2010; The Economist, 2008), significant progress has been made in recent years, particularly in the air transport sector, and projections are that the railway sector will receive major public-private sector investments (Shen, 2015). For example, while in the past poor flight connectivity makes air travel in Sub-Sahara Africa hard and costly, the open-air policy in many African markets has significantly reduced the cost of travel in many Sub-Saharan African markets (The Economist, 2008). Backed by the Chinese Government and private investment funds, many African markets are beginning to be linked by high-speed electric railway lines (Morlin-Yron, 2017); the first being the 466 miles line from Djibouti to Ethiopia at an estimated cost of USD 4bn (Jacobs, 2017). An implication of this decreasing travel costs and efforts to increase connectivity of African markets is that it is now becoming easier for businesses to connect with local distributors and consumers in many African markets that were previously cut-off from mainstream international business transactions.

Low diversified economic activity and concomitant over-reliance on extractive natural resources (or commodities) have exposed many African markets to global commodity price volatility (Le Billon and Good, 2016). Indeed, it is estimated that about a third of the continent’s GDP growth is accounted for by commodity exports (The Economist, 2013): eight major markets on the continent including Angola and Nigeria derive more than 90 per cent of their export revenue from oil and natural gas (The Economist, 2016), exposing these markets to external shocks in commodity prices. However, although many African nations continue to invest in the extractive industries, largely with investment money from China (Pigato and Tang, 2015), many are now diversifying their productive sectors, with greater attention given to value-added economic activities. For example, while Nigeria has relied on export of crude oil and natural gas for years, there is a growing recognition among policy makers that the country needs a new strategic economic direction that emphasizes export of non-oil value-added products and services. Additionally, Kenya and Rwanda that have relied heavily on agricultural commodities in the past have now become major exporters of value-added products such as petroleum products, capital goods, processed food products and chemical fertilizers. These East African markets have also become hubs for sophisticated financial, manufacturing and renewable energy industries (KPMG, 2016; Berg et al., 2015). Furthermore, Burkina Faso has been remarkably successful in diversifying its high dependence on cotton exports and Tanzania’s successful transformation of its closed economy to a vibrant market economy has made its market more diverse. Several other Sub-Saharan African markets have also made significant progress in agri-business, manufacturing, tourism and financial services, thus fuelling growing interest of international businesses in Sub-Saharan African markets. Indeed, it has been argued that the new growth opportunities opening up in many Sub-Saharan African markets have been driven largely by emerging market (e.g. Brazilian, Chinese, Indian and Turkish) multinational enterprises moving to African markets; and the increasing intra-African cross-border activities are credited to account for the growing entrepreneurial spirit sweeping across many African markets (Adeleye et al., 2016).

This increased linkage between internationally active Sub-Saharan African and non-African businesses competing for growth opportunities across Sub-Saharan Africa has created unique and interesting international marketing challenges for firms on the continent. For example, in Western developed markets, firms are accustomed to targeting high income consumers with high value and sophisticated new market offerings, using largely traditional marketing communication approaches (e.g. TV advertising), and well-programmed marketing channels (e.g. larger supermarkets and department stores). However, in Sub-Saharan Africa, customer needs are highly fragmented, consumer-spending power continues to be extremely low and marginal market segments continue to dominate local and cross-border transactions. The marketing channel system is continuously in flux (Martel and Klibi, 2016), and informal social networks continue to be a conduit through which marketing communication messages are delivered to consumers (Acquaah, 2012). These unique African marketing challenges suggest that foreign firms need to rethink their marketing strategies when competing in Sub-Saharan African markets.

Specifically, in addressing the needs of Africa’s low-income consumer market local and foreign firms need to develop a capacity to be frugal: an ability to reduce the complexity and cost of producing new products and services for this market, with an underlying mindset of doing more with less (Radjou et al., 2012). This argument is backed by the resource improvisation advantage perspective (Sheth, 2011) and resource parsimony logic (Gibbert et al., 2007) that argue that firms are able to serve in chronic resource constrained environments by deploying the least resources necessary to achieve the desired market goals. In other words, by learning to improvise with limited resources a firm operating in Sub-Saharan African markets is able to produce affordable products and services economically to the extent that the products and services can be consumed in efficient and versatile manner, and accessed and exchanged in alternative ways by a large number of consumers. Furthermore, Sub-Saharan African markets often experience uncertainty, with a great possibility for unexpected changes to occur within short notice. A key success factor for foreign firms entering this market, therefore, is an ability to consider all market offering options open with a tendency to respond quickly to unexpected changes in the environment with adapted new product and service offerings.

While middle-income consumer market segments are growing quickly in many Sub-Saharan African markets, it is still the case that subsistence consumption is prevalent (Viswanathan et al., 2010), and most consumers continue to buy products and services to satisfy basic daily needs (Ravallion, 2010). This raises the question of whether firms operating in Sub-Saharan African markets should be offering simple as opposed to sophisticated products or services. We contend that another important key success factor in Sub-Saharan African markets is ability to market products that are simple and capable of addressing basic consumer needs, or services that provide simple solutions to important market problems. The success of such simple market solutions is strengthened when firms make the products and services easily accessible and useable by large number of subsistence as well as high-income consumers. For example, Unilever, a global fast-moving consumer goods manufacturer with several years of operation in Sub-Saharan Africa, has a propensity to adapt its standard products for use by an entire household. Specifically, Unilever created its Cacao Butter Vaseline specifically for use on black skins in Sub-Saharan Africa, and this product is marketed to both men and women of all age categories, making it possible for an entire house to use it.

Additionally, although the resurgence of Sub-Saharan Africa (and other emerging) economies has helped alter the dynamics of global marketing channels (Avittathur and Jayaram, 2016), it is still the case that marketing channel system in Sub-Saharan Africa is largely inefficient and patchy, limiting the flow of goods and services from producers to end-users (van der Laan, 1993). To navigate the marketing channel system in Sub-Saharan Africa, therefore, firms require a capacity to develop flexible distribution networks to distribute products and services to fragmented marginal market segments efficiently (Sheth, 2011). A willingness to rely on “nontraditional channels and innovative access to consumers may be both necessary and profitable” in Sub-Saharan African markets (Sheth, 2011, p. 169). For example, Sub-Saharan Africa has become a profitable market for Coca Cola largely because the company is able to identify and organize more than a million independent agents as its sales and delivery force in both upscale and marginal markets. In Kenya, Unilever relies on a microfinance model to distribute its products to unserved rural communities. Multinationals are also learning from local African firms the value of partnering with local community leaders as vendors to access wider consumer segments. For example, Dufil Prima Foods, a start-up in Nigeria, is able to generate more than USD400 mn sales within a year by partnering with local food vendors to market its Indomie Instant Noodle brand as a healthy, affordable and easy to cook food. The Indomie brand is now widely available in major grocery stores in Western Europe, demonstrating what is currently referred to as reverse innovation (Govindarajan and Ramamurti, 2011).

Local governments in many Sub-Saharan African markets are adept at community mobilization, communication and messaging, and some multinational firms are using local government platforms to build their brand recognition and trust. Along this line, a Boston Consulting Group report shows that while many multinational enterprises struggle with lack of new product adoption in Sub-Sahara African markets, smarter multinationals are able to overcome this challenge by forming alliances with local firms and local governmental and non-governmental agencies in Sub-Saharan African markets to increase consumer awareness and adoption of new products and services (Spivey et al., 2014).

Thus, in Sub-Saharan Africa, international marketing strategy success is a function of five key drivers: ability to understand diversities within the value chain system in different Sub-Saharan African markets; a propensity to adjust marketing strategy models constantly to respond to unexpected market changes; a willingness to innovate with targeted African consumers; ability to devise innovative ways to access consumers; and a capacity to partner with local governmental and non-governmental agencies to leverage the brand and communicate high-impact marketing messages.

Overview of the special issue articles

The papers, which survived the review process and made it into this special issue, are insightful in their own right and present exciting scholarly works that explore international marketing activities within the unique contexts of Sub-Saharan African markets. In particular, the seven papers included in this special issue draw insights from multiple theoretical and methodological perspectives to present interesting scholarly discourse on international marketing practices of African firms. For example, Narteh and Acheampong (2018) use data from World Bank enterprise surveys to explore the relationship between foreign participation in African enterprises and internationalization intensity, and examined a number of interesting boundary conditions. The authors find that increased foreign participation in African enterprises helps boost internationalization intensity of African firms. A more interesting finding from this study is that as African firms become more successful in terms of financial performance and as their financial management skills, product quality levels and local market competition increased, the potency of foreign participation in the management of these enterprises diminishes. Interestingly, foreign participation is heightened as the African firms become larger and more inclined to venturing into foreign markets beyond Sub-Saharan Africa.

Anning-Dorson (2018) draws insights from the resource-based theory to conceptualize firm innovativeness as a dynamic organizational capability, and examines the role of organizational leadership in intervening the effect of firm innovativeness on competitive advantage creation. The authors use primary data from Ghana (and India) to show that innovation is a key determinant of competitive advantage of service organizations, arguing that organizational leadership mediates the extent to which a propensity to innovate is related to competitive advantage creation in Sub-Saharan African markets.

Another interesting article is Mwiti and Onyas (2018) that explores the notion of hybrid exchanges in subsistence consumption context in Sub-Saharan Africa. The authors utilize ethnographic approaches to examine subsistence consumption exchange practices in Uganda and Kenya, two major East African markets. The study broadens scholarly understanding of international marketing by showing how embedded marketing practices are employed in subsistence market contexts by international firms. Within this same subsistence consumption setting in Sub-Saharan Africa is the question of how firms can manage distribution networks efficiently in the face of severe infrastructural deficiency (Sheth, 2011). To this end, Elliot et al. (2018) tap into the growing microfinance and telecommunication sectors in Sub-Saharan Africa to explore how mobile phone technology is customized to mitigate marketing channel inefficiencies. Using microfinance enterprises in Ghana as a context, the authors find that microfinance companies use mobile technology to facilitate customization of marketing channels, enabling the companies to overcome the institutional and infrastructural challenges in the marketing channel system.

Olabode et al. (2018) use longitudinal survey and archival data from Nigerian exporting firms to examine how and when an export market-oriented culture influences export performance. The study’s thesis is that how export market-oriented culture influences export performance is dependent upon how it is used to develop export learning capabilities when export market environment is more or less turbulent. A key contribution from this study is that variability in export performance of Nigerian exporting firms is a function of interplay between export market-oriented culture, export learning capabilities and export market environment turbulence. Relatedly, Sharma et al. (2018) explain variability in export performance by examining an interrelation between foreign market attractiveness and export promotion programmes. Using primary data from exporting firms in Ghana, the study concludes that export promotion programmes enhance export performance when they are targeted at identifying attractive foreign markets.

A unique article included in this issue is a literature review paper that explores FDI motives of nascent multinational enterprises from West Africa (Ibeh et al., 2018). In exploring the location and entry mode decisions, the paper provides insights into the unique characteristics of this group of Sub-Saharan African multinational enterprises, helping broaden scholarly perspectives on the MNE literature.

Conclusion and future research opportunities

This introductory paper sets out to review and synthesize the burgeoning streams of African marketing research with a focus on exploring how marketing strategies deployed by Sub-Saharan African businesses help inform scholarly knowledge on the international marketing management. Based on the review of the existing literature on marketing research on African firms and the papers included in this special issue, a number of promising avenue for future research are proposed. First, there remains a need for the development of indigenous concepts and issues to explain the effects of institution-based factors such as culture, language, norms and local traditions on marketing management in Africa (Newenham-Kahindi, 2009). In this direction, the question of how local culture influences the international and domestic marketing strategy of African firms represents a promising area of research.

Second, although a vibrant informal sector and subsistence consumption pattern remains a major feature of many African markets (Debrah, 2007; Morris and Pitt, 1995; Smith, 2009), the literature has largely focussed on the formal and non-family-owned enterprise sectors (Fadahunsi and Rosa, 2002). An important research theme that needs further investigation is how internationalizing small businesses (largely micro-enterprises and family-owned businesses) across Sub-Saharan Africa formulate and implement marketing strategies in the midst of severe infrastructural constraints (e.g. lack of electricity, roads and telecommunication). Some of these enterprises operating in African markets engage in strategy development process never seen in the industrialized markets of North America and Western Europe, and it would be refreshing to learn the comparative advantages these firms enjoy when they market their products and services beyond their national borders.

Third, there is a need to push the frontiers of knowledge towards assessing the limitations of existing mainstream business and management theories as well as bringing into focus the evolution of indigenous concepts. Such scholarly discourse would help increase the understanding of how the notion of humanness and the belief in a universal bond of sharing can be developed and leveraged to boost the value of marketing human resources in Sub-Saharan African firms (Mangaliso, 2001). In other words, do the principles inherent in African concepts such as Ubuntu offer any marketing lesson for corporations in other markets? In this direction, we want to draw scholarly attention to the issue of marketing human capital development as a source of competitive advantage creation for internationalizing African firms (Cleeve et al., 2015).

In addition, to enhance the practical utility of studies, we emphasize the importance of managerial and technical talent cultivation as an essential element in delivering superior organizational outcomes, improving competitiveness of Sub-Saharan African firms and helping bring about improvement in people’s livelihood. Our analysis also hints on the need for firms to marshal the organizational attention and resources to diversify their risks, which is inherent in doing business in Sub-Saharan Africa, not risk aversion. By conceptualizing the current streams of research and advancing a novel perspective, we hope that the issues highlighted in this introductory article would help ignite a new conversation and lines of inquiry into African marketing management research.