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Wednesday, July 18, 2012

BRAND BUILDING IN NIGERIA CHOATIC BUSINESS ENVIRONMENT


     Nigerian business environment is indeed very unique not your typical business atmosphere in the develop world of Europe and America. The same way that when you are doing business in Asia you have to put the uniqueness of the Asian environment at the back of your mind, the same apply to Nigeria, you have to know that you are in Nigerian part of Africa. Factors such cultural background, religious practices, geography must be included in your strategic master plan for penetrating the market. There are over three hundred and fifty (350) ethnic groups in Nigeria, different religious practices and varied climatic conditions from the rainy rain forest in the south to arid climate of the extreme North. Likewise the distribution of wealth between these diverse areas is not evenly distributed, while the North is full of poor peasant farmers, the South is crammed with semi employed graduates. While the average Hausa man in the North get most of his news and entertainment from radio, an average Yoruba man prefers to read the daily paper for the same benefits; but for an Igbo man in the South TV is more important to all these, if anything he wanted to watch his favourite Nigerian film. While a typical northern elite is politically inclined the northern poor is not as he is more of a farmer; as for Yoruba elite he/she is more of corporate individual and for his lower ranking tribesman he/she is a civil servant. But for the Igbo elite he is a successful businessman who transform into a politician, while his poor Igbo brother is a trader. In the North religion is an important barometer in measuring any brand, but in the South religion play a lesser role as cultural and economic considerations compete with it for prominence. Corruption is endemic in the Nigerian public sector making some big brand names to go out of their ways in order to get government approval of the products or services they are selling.
    There are hundreds of brands in the Nigerian market; some very popular brands in Nigeria includes Dangote, GTBank, First Bank, Nestle, MTN, Glo, Coca Cola, Cadbury, PZ Cussons, Unilever, Zenith Bank, UBA, Thisday, Daily Trust, Oando, AP, Total, to mention to just a few. Like in any other economy around the world building a brand is not a one day affair, as it takes years to build a strong brand. None of the brands I have mentioned above has been built in less than 10 years in the Nigerian market. Some like First bank are over a century old, while others like the telecommunication giant Glo take about a decade to built their brand; but take a lot of hard work, creativity, and money to achieve that. In all of these brands, the vision is long term not short term profit; for example, Daily Trust a newspaper that originated from the northern town of Kaduna in 1998 and later moved to Abuja, has the long term vision of being a world class media company that earns public trust. To be world class and earn public trust cannot be achieved in one day or even a decade; some of the biggest media companies in the world like the Economists magazine of London and New York time have been in existence for over a century. Dangote brands in the Nigerian market are known for their superior quality, like wise the goods produced by Nestle. An ordinary Nigerian consumer value quality over everything, this is because of the economic conditions they found themselves that made valuable commodities to be very scarce and important leaving consumers with no option than to look for value for their scarce money. But, there are certain contexts in which the Nigeria consumer manages with goods of lower quality because of the price charge for high quality goods or services.
    The position a particular brand has in consumers’ consciousness and the impression it made on them is very important for brand long term sustainability. As if it is a religious obligation an average Nigerian value word of mouth very highly, if a friend or neighbour says that he has tried a particular product and found it very good, the impression last in his mind. He keeps the same perception of that what others said and what he himself tried, even when others brings counter idea about the usefulness of that products. Many brands names have used that to continue to maintain their market lead; take for example first Bank, many Nigerians believe that First bank is the safest bank in the country; they don’t care much what the current Central bank supervisory report says about the bank. The same is true of Panadol, the pain killer; people still believe that if a pain killer is not Panadol then it is not a pain killer. Even when there are other new tablets that perform better than Panadol, which I am sure was what the makers of the product noticed in those years that made them to come with their more powerful pain killer called Panadol Extra( a kind of brand extension). Some major Nigerian brands made it because they are the first in that particular segment of the market; this is where Panadol comes in again. All paracetamol are called Panadol irrespective of their brand names. It is normal to hear an average Nigerian entering a pharmacy to ask ‘give me Panadol’; the shop attainder know that what he means was paracetamol, and therefore, gives him any brand of paracetamol. Another product which is first in the market and its name has become synonym with goods in that segment of the market is OMO a powder detergent. Today in most part of the country every kind of detergent is call OMO, whether it brand name is Klin, or Elephant.  Who is first to enter the market, like in all other market around the world, still has important role to play in building a brand. That also explain why late enterers find it difficult to get establish in that market segment, unless they come with something very innovative
    We now come to the role of communication in this whole agenda; as the most populous country in Africa with over 160 million people a brand needs a widespread mediums to take the story of its brand to it potential customers. Like I made mention in the first paragraph of this article, each region or tribe in the country have it popular medium of receiving information and advertisement. Radio dominates in the north, TV and newspapers in the south; though as the economy of the country grows this line of distinction is blurring. There are over twenty national newspapers and magazines in Nigeria; some of the big ones include The Guardian, The Punch, Daily Trust, Thisday, Vanguard, The News, The Tell, News watch, The Sun, Leadership, The Nation, People Daily, National Mirror, and Blueprint. Likewise TV and Radio stations, there are over sixty of them from Lagos to Kano, and Port Harcourt to Abuja. There are also satellite channels that are coming on stream, as well as many internet mediums for advertisers to sell their brands. Of the major brands mentioned here, for example, MTN, Glo, GTBank, and First bank are among the major advertisers in the country spending billions of Naira in advert budget, and using most of the mediums mention here including outdoor advertising to achieve their goals. It is not surprising; therefore, that these brands have become what they are today looking at the diverse strategy they are using to communicate their brands messages to their target audience. Newspapers in the country make billions of Naira from advert annually making it their major source of revenue more than what they realized from sales. These big brands also sponsor major programs and events such as sport (MTN and Glo), entertainments shows (MTN, Glo, and Etisalat), Carnivals (Dangote and Etisalat), Musicals (MTN, Glo, Etisalat), and foundations (Dangote and MTN). The marketing communication industry in Nigeria is yet to mature like is seen in the developed countries, but it is playing an important role in the brand communication program in the country. There is no way a brand can sustain it appeal in Nigerian market for the long run without involving the media, looking at the competitive nature of the Nigeria market environment.

Friday, July 13, 2012

STRATEGY AND INNOVATION: THE CASE OF NIGERIA’S RETAIL MARKET


    Though some substantial number of Nigerians live below poverty line, about 65% according to some estimates the population of middle class in Nigeria is still very big. Assuming that the population of Nigeria is 160 million, base on the 35% population that is above poverty line, you have some 56 million people with some kind of big pocket to make purchases in the Nigeria vast retail market. This number is more than the entire population of South Africa, the biggest economy on the continent. With GDP of over $450 billion, Nigeria is indeed a big retail market in Africa; though many investors around the world failed to take this into consideration when they are drawing their investment plans. In the minds of many western investors Nigeria is still a chaotic place to do business, cramped with people who barely understand the working of the modern world. This impression is wrong; I agree that Nigeria is a chaotic place, but when you summon the will power to look beyond the headlines there is a lot of profit underneath, what economists called abnormal profit. If you do not belief my optimism ask Aliko Dangote, the richest man on the continent who made his billions in Nigeria. Yes, I concur there are some risks involve in investing in Nigeria but tell me where in the world does one invest without facing one form of risk or another. The law of profit as we all knows says that where there is much profit there is risk, not necessarily the kind of deadly and toxic risk that hide like virus in the body and surface later as we have seen during the last global economic crisis. Despite the way some investors view Nigerian market, there is still large number of people who see the country differently. The annual total number of foreign direct investment (FDI) that is coming into Nigeria is still in billions of US Dollars, and a lot of foreign retail companies are coming into the country.
    I am foreseeing the Nigerian retail sector becoming the third most dynamic sector after banking industry and telecommunication in the country. In few years time it growth in term of revenue and profit will multiply as the current economic grow continue and the size of the middle class expanded. All ready foreign retail companies are rushing to set up shops in Nigeria with first to do that to include, Shoprite, Mega plaza, Spar etc., the numbers of local companies that are modernizing and expanding are increasing in number daily. Shoprite the South African giant is planning on opening 700 shops in Nigeria in the near future; already it has presence in five locations three in Lagos, one in each of Abuja and Enugu. A new shop is to be open in Ilorin in Kwara state in August of this year, while the second shop for Abuja and entry into Kano vast retail market is to come very soon. Though, small retail stores still account for substantial number of the retailers in Nigeria, big corporate entities are making inroad. The country’s growing pool of young population and higher grow rate is the main magnet for attracting future retail investment into the country, making the potentiality of her economy to become the biggest in the continent more apparent. A recent 2011 study, by Jude Uzonwanne for Monitor Company, put the fast growing key industries with diversification benefits as electricity, housing and retail further driving home the potential of the retail industry in the most populous country on the continent.  One advice for Western multi nationals that are planning to enter into the Nigerian market is that they should study the environment very well, looking at its important peculiarities. For example, unlike in typical rich countries of the world there is a serious infrastructural deficiency to the extent that one has to provide for many of his infrastructural needs like power production, water supply, security and access roads in some instances.
     Though most of the big malls are located in Lagos and Abuja other parts of the country that hold great promise for the retail industry includes Kano, Port Harcourt, Kaduna, Enugu and Ibadan. Due to the fact that these places have substantial number of middle class families residing in them, and substantial number of other supporting businesses. In Kano there is, currently, the construction of Ado Bayero mall going on which, according to it originators, will be the biggest mall in Northern Nigeria including Abuja when completed. The mall building is expected to cost over 11 billion Naira when completed, covering the land area of the permanent site of Kano trade fair complex along Zoo road, and with parking space to accommodate thousands of cars. Other big malls currently operating in the Kano city include Country Mall, Well Care, Sahad stores, and Jifatu.  The informal retail market in Nigeria, though, unorganized is very big worth billions of dollars. Nigeria is a nation full of people with average to high level of brand recognition and loyalty; because when a Nigerian says he is for Dangote or Nestle he means it and follows his word with action. This explains the reason why some retail stores succeeded better than others, people patronize some stores because of the low price of their products, others because of the quality of the product in display. While for others it is the location and the structure that housed the store that hook their pockets. Sahad stores, an indigenous super market that originated from a small location in Kano decades ago, boast one of the biggest shopping mall in Abuja and Kano making hundreds of millions in annual revenue. One of the major attractions of Sahad stores according to shoppers that patronize the store is their lower price compare with other stores. But, that should not be surprising taking into consideration the back ground of the owners and the original location from which they started the business, Kano, which is known nation wide for it retail trade and low price products.
    The famous big stores that were available in most big towns in Nigeria in the 70s and 80s such as Leventis, and super stores are no more; leaving behind them old ware houses. The economic problems of the 1980s were responsible for the demise of these brand names that still ring some kind of alarm in the mind when their names are mention in front of people who knew the experience. Structural adjustment program (SAP) of Babangida regime, together with the recession that accompanied it combine to kill the middle class of the period, leaving the country with only two extremes, the upper rich and the lower poor. This trend particularly led to the growth of the informal retail sector at the expense of big retail stores. But, as the economy grows and middle class population increase in size, so does the big retail stores. According to a recent report by Euro monitor on the Nigerian retail industry, the formal retail market replaces the informal retail segment which the report has attributed to the growth in the economy. Despite, the fact that Nigeria is among the top three countries in Africa in term of internet usage, the country’s retail market lags behind in innovation and adaptation of internet for online sale.  For example, there is yet to be a Nigeria’s equivalent of the American online giant Wal-Mart, that sale every thing online. While we have seen the proliferation of versions of Wal-Mart and Amazon in such countries as China, Indian and Russia, Nigeria has none. Though, I knew of many efforts toward the development of such a flat form, but it is taking time. The world of internet revolution that is currently overturning the modus operandi in such industries as Newspaper business, Television broadcast, Music sale, and Airlines operations is doing the same thing to the retail business world wide, the earlier the Nigerian retail sector understand this the better for it. Lastly, a piece of advice to those intent of entering the Nigerian retail market is for them to explore this angle of the modern retail market, that is online retailing like is done by Wal-Mart. For a start, they should begin with Abuja and Lagos, two places with high concentration of internet users and facilities as well as large population of rich families.

SOURCE:

Uzonwanne, Jude (2011), “Investing in Nigeria: A brief Strategy Guide”, Monitor company Group

Country Report, 2012, ‘Retailing in Nigeria’, Euro Monitor International

Businessday, Nigeria, “Would informal retailers remain relevant in Nigeria?” Wednesday 11 April, 2012

Wednesday, July 4, 2012

JONATHAN GOODLUCK’S UNLUCKY YEAR OF INSECURITY AND UNEMPLOYMENT


   It has been some months since last I write an article with the name of President Jonathan in the title, but today I am giving you another one that discusses the two fundamental problems of this regime. The problems of insecurity and unemployment that have so far beaten all the narrow solutions put forward by Jonathan’s team in order to solve them. Just last two weeks Jonathan sack his chief security adviser General Andrew O. Azazi and replaced him with a retired colonel in person of Sambo Dasuki, which according to Jonathan was necessitated by the need to change strategy in face of the continue change of strategy by Boko Haram, the main security headache of this regime. In the last two years, Boko Haram that originated from the North Eastern state of Borno has spread into other parts of the country causing many damage and destruction to people and properties. And from the look of events over that period, Jonathan’s government has remained clueless on ways to tackle the insurgency. Last June is one of the most deadly months in the history of Boko Haram insurgency in the country, which saw the bombing of many security outfits and places of worship in the resulting violence. We all remember the beginning of the year when Jonathan on a visit to South Korea was quoted to have said that Boko Haram insurgencies in the country will be brought to an end by June of this year, repeating the same mistake former inspector general of police Hafiz Ringim made; when on a visit to Maiduguri the capital of Borno state, said that Boko Haram days are numbered. The resulting inferno nearly consumed him when Boko Haram lunched an attack on the police headquarters located in Abuja, with Hafiz Ringim as their main target. Therefore, it did not come as a surprise to many analysts that the group lunched one of their deadly attacks in the month of June, 2012 to prove Jonathan forecast wrong.
  A hungry man they say is an angry man, according to some estimates about 70% of Nigerians live below poverty line, despite the abundance of riches in form of natural and human resources. The number of unemployed graduates roaming the streets of the nation is in tens of million s. Thus, it is not very difficult to figure out the connection between the insecurity in the country and unemployment. Though, many of Jonathan’s advisers such as the sack security adviser Azazi, have continued to feed the president with the theory of the violence being there simply because Jonathan comes from a particular region that is not suppose to be in power at Aso rock. The understanding of the violence has become very complicated matter to the comprehension of Azazi, apart from the angle of the insurgency being as a result of Jonathan coming from Niger Delta region that has never produced the president of the country before the ascension of Jonathan into the throne in 2010. The failure of the Jonathan regime to understand the socio-religious and economic cause of the insecurity is at the heart of his government failure to find the lasting solution to the menace. The North east of the country, where Borno state is located is the poorest part of the country, full of hopeless and poverty stricken individuals who have little or no hope in the various level of government both at state and federal level. The number of jobless people and tugs running the streets in that part of the country are in high numbers; where you have such local tugs as area boys in Borno, Yan Kalare in Gombe, to mention just a few. Thus, many of those that were recruited to such organisations as that of Boko Haram needed little persuasion to join those groups, looking at the fact that governments has abandon them. The case of Nigeria’s Boko Haram, for example, is not like that of Al Qaeda in say Saudi Arabia where most of their members are recruited on ideological reasons and the issue of wider Middle Eastern crisis that refuse to go. In those countries there is no high level of poverty and unemployment as is obtained here in Nigeria.
    It has been reported in our media that retired Colonel Sambo Dasuki, the new NSA, is highly connected to the security networks in the country, especially the retired army Generals who are seen by others as relevant to finding a lasting solution to the current security conundrum in the country. As a former ADC  to the former President Babangida, In-law to retired General Gusau the spy master, and grand, grand son of Usman Dan Fodio the founder of over 200 years old Sokoto caliphate, it is said in many cycles that Dasuki is the right man for the job. It is been speculated that Jonathan purposely appointed him because of his connections and links to these individuals who Jonathan previously neglected in favour of listening to those very close to him. Some other analysts also see an American connection in the appointment, because of the past rumors that the US government has been pressurizing Jonathan to relief Azazi off his appointment and put some one more relevant to the issue and it environment. The fact that Azazi has on various occasions in the past disagree with many US views on Boko Haram add credence to this school of thought. Sambo Dasuki is also known to have acquired his post graduate education and trainings from the US. But, the job should not only be left in the hand of people who are only competent in gathering raw security intelligence forgetting the other intelligence that is necessary to solving the security challenge of the country. The problem of joblessness has become endemic in this regime; we should not forget last year when Jonathan promised that he would create 3 million jobs in one year. I am now sure that Jonathan could not create 500,000 jobs in the same period, if not for the many people that continue to lose their jobs in the face of mass sacking that endures in sectors such as the banking industry. President Jonathan has failed on his promise to provide jobs to the unemployed.
  Therefore, like we are currently seeing in other countries around the world, this regime must be serious with the issue of unemployment if it wanted to get it other acts right. The problem of poverty in the Northern part of the country has continued being the source of much disaffection among the different ethnic groups that are found there. The issue of kidnapping for money that has become a notorious business in the South Eastern part of the country has it root in unemployment in the region, likewise the case of oil thieves in the Niger Delta. As President Jonathan has seen the need to change his top security advisers, there is also a need for him to do the same thing with his economic and labour advisers for their failure to create jobs. Let have a new economic management team now! A team that is to be consistence, and that comprises of tested and capable individuals, other than those that were appointed because of their political connections. Though, Mr. President is yet to make public his next minister of defence, he should to do better by avoiding the repeat of the same past mistakes. The period when an appointment should be made to the most sensitive ministry in the present regime base on political considerations or the region some one came from is over. The next minister of defence should be some one who is competent and not anyone else. On the issue of Boko Haram, dialogue is still the only lasting solution to the crisis not brutal use of force; as former governor of defunct North Eastern state, Colonel Umar Farouk has argued in a newspaper report that even the Nigerian civil war was brought to an end by dialogue and not by the simple use of an army. The earlier this regime begins to see the incorporation of dialogue and job creation into it security master plan the better for it, and the country at large.