I recently caught up with Paul Drawbridge, who heads up Yellowwood's East Africa office in Nairobi. Paul left London early in 2012, taking his many years of agency and client-side marketing experience with him on a quest for adventure in brand marketing frontier country. He has recently been involved in segmentation strategy projects across the region for Yellowwood. He shares a few pointers for South African brands looking to make it big in East Africa.
Paul: The Kenyan market is an excellent source of growth for businesses. It is at the centre of a region which has some of the fastest growing economies in the world, such as Rwanda and Mozambique. There is money pouring in from oil in South Sudan, and from infrastructure investments from China. The middle class is growing quickly and it politically stable - the UN's Africa headquarters are in Nairobi. The place is teeming with innovation and there is a real sense of optimism and confidence.
East Africa is also a fairly homogenous region, much more so than West Africa. Kenya, Tanzania, Uganda and Rwanda have similar levels of economic development and, importantly, they have similar psychographics and consumer segments. A good strategy for East Africa is a quick win.
I wouldn't be surprised to see more companies bypassing South Africa and Nigeria when opening an African headquarters. I think Kenya is transitioning from the regional hub of East Africa to a continental hub.
With the increasing spending power of the Kenyan market, you're seeing a number of premium brands doing well. Johnny Walker has been successful. Their Keep Walking campaign was expertly adapted for Kenya, and the message appeals to Kenyan optimism. You find a lot of BMWs and Mercedes Benz cars. They're totally inappropriate for the roads in Kenya, but they tap into the sense of status and aspiration.
And then you're also seeing big Western blue-chips moving in, such as Cisco and IBM consulting. There has traditionally been very little planning and long-term thinking here, so the market is ripe for consultancies. Local brands are getting squeezed by global rivals - even in tea and coffee, where East Africans are very proud of their own brands - so there is increasing pressure for local brands to become competitive and refine what they are offering.
Surprisingly, the market research infrastructure is good. Most of the large global market research houses have offices in Kenya, and you can usually trust the results that they offer. The same is true for West Africa, although it is a few years behind East Africa in terms of research infrastructure.
Physical infrastructure is a challenge. The cities are not well connected. KFC had to build their own infrastructure, and as a new entrant you need to think carefully about where you will get your inputs from and how you will distribute.
This lack of infrastructure is not entirely a bad thing, though. It is breeding huge innovation. Kenya is the tech capital of Africa, largely off the back of telecoms and banking innovations. In developed markets with existing customers, there is less scope to play around with business models. In Kenya it is possible to leapfrog out-dated technologies and models because they never gained much traction in the first place. It's a blank canvas on which to design the best solution. Mobile banking (such as M-pesa) is the most famous example of this kind of innovation - it was pioneered in Kenya and now drives a large part of the economy.
As a foreign company coming into Kenya, don't think you can tell Kenyans what to do or how to operate. They are proud people, and take themselves seriously. They like being Kenyan and will not resonate with brands that try to impose on them what they think is cool. You need to find out what Kenyans think is cool and tailor your messaging to that. There are exceptions to this, in specific industries where certain countries have a reputation for excellence. For example, German engineering or the Italian love of food. But be careful not to imply that it's better than local.
Foreign brands also need to be wary of using satire in the Kenyan market; it doesn't really work. Where Western campaigns often poke fun at people or lose the message in metaphor, Kenyans think that poking fun of people is unacceptable. Communication needs to be straightforward, and you need to talk about the product and its benefit. The rules of engagement are very different.
Five years ago, it would have been a disadvantage being South African. South Africans were seen as arrogant and pushy. The attitude has shifted now, in that Kenyans view the presence of South African brands as a sign that Kenya is doing well - 'of course they would be here!' It is not a bad thing to be from South Africa, but you need to have a compelling, relevant proposition and you can't use market dominance in South Africa to sell yourself here. That doesn't mean anything. Be honest about where you come from, but don't try to trade on it.
I expect to see even more convergence between telecoms and banking, with acquisitions across these sectors and potentially the emergence of another Safaricom/M-Pesa success story. I think premium will continue to grow. And I would look out for the growth of Asian brands - Chinese investment so far has not been consumer focused, but this may be about to change.