Africa is home to approximately 1.2 billion consumers today, projected to increase to 1.7 billion by 20301 . The potential for future growth in consumer spending is significant. But in order to expand, companies require insights into how people in Africa choose the products and services they use and how consumer needs and interests are changing. What drives decisions around which bank to join, where to buy clothes or what legal advisor to use? And why are informal stores and street vending so popular? To answer these questions and more, market research is required.
Primary research refers to data that you have collected yourself, usually for a bespoke purpose by conducting in-depth interviews, utilising focus groups and surveys and many more. Secondary data refers to data that already exists, which has been collected and analysed by someone else. In many cases, market research combines both primary and secondary data sources to answer research questions more holistically and accurately.
In Africa in particular, compared to many other regions around the globe, conducting primary research is essential. Here are In On Africa’s (IOA) top four reasons why companies and organisations need to invest in quality primary research in order to succeed in Africa:
1. Very little secondary research is available
According to the European Society of Marketing and Opinion Research, Africa is home to approximately 15% of the world’s population, but combined, Africa and the Middle East account for only 2% of the global market research revenue 2 . Although this still represents a significant amount of consumer research in Africa, very little is in the public arena due to client confidentiality. Additionally, the research that is available may be outdated or too specific to the product, industry or sector it was undertaken for to be applied elsewhere. Together, these place limits on the value of using secondary data to support new market research in Africa.
When conducting market research in Europe or America, much can be gained simply by secondary data collection and analysis alone. Primary data can often be used to delve deeper into a particular client’s needs or to fill in the gaps in answering a research question. In Africa, however, this vast body of secondary data isn’t available, making primary research essential.
2. African consumers are a very diverse group of people
Africa is a continent of high levels of diversity. There are over 3,000 different ethnic groups, speaking more than 2,100 different languages 3 . Africans practice a variety of religions, including Christianity, Islam, Judaism, Hinduism and traditional African religions. Looking at physicality, Africa has the extremely tall Maasai and the very short Khoisan. Africa also has the highest gap between average incomes of the top 10% and incomes of the bottom 50%. It is often said that Africa’s diversity is its greatest resource and its greatest challenge.
This diversity means that the “average African consumer” doesn’t exist. Instead, there are many groups of African consumers who are all unique and different. Utilising findings from a study done in one area can’t be “copied and pasted” to another area. The diversity and complexity of Africa make it essential to have country-specific business and marketing strategies. This requires country-specific market and consumer research, conducted with large, diverse and representative samples.
3. Businesses in Africa face unique challenges
There are several unique challenges that businesses in Africa face. Many African countries lack basic infrastructure, such as reliable electricity, internet connectivity and transport systems. Certain regions of Africa face political instability, including conflict and corruption, making it a challenge for businesses to operate in those regions. There is often a shortage of skilled labour in many African countries, which makes it difficult for businesses to find qualified employees. The regulatory environment in many African countries can be complex and unpredictable, making it difficult to plan for the future. Therefore, businesses face very unique challenges and risks when operating in Africa. Having foresight and insight into these equip companies with the information they require to make good business decisions.
4. Africa is constantly evolving
Creativity and ingenuity in technology is driving a new generation of African innovators. New technologies include agri-tech, edu-tech, fin-tech, health-tech and insur-tech. New start-ups, international businesses and tech innovators are continually entering the market across industries. Additionally, Africa has the highest proportion of adults who are starting or running new businesses, albeit mostly small business development.
The political and economic landscape is also in flux. Many African countries experience currency and exchange rate fluctuations, government and institutional corruption, high levels of informal movement across borders and political and social instability. Consumer needs, wants and behaviours are changing to adapt to their ever-changing environments.
Africa offers great potential for business growth. The organisations best able to capitalise on these growth opportunities are those who understand African customers better than their competitors. As a proudly African-based and Africa-focused research firm, IOA is ideally positioned to help guide business decision-making in Africa. Staying abreast of the ever-changing African consumer and business landscape through good-quality research is our sole focus.
If you are considering conducting market research in the near future, there are some important steps that you should keep in mind. You can read about these steps here.