A version was published on 17 December 2013 at http://www.businessdailyafrica.com/Opinion-and-Analysis/Consumers-the-main-beneficiaries-as-firms-innovate/-/539548/2114156/-/item/1/-/13c2kb6/-/index.html
There is something in common between
stylish Africans, people who live in mud houses (but want to move up in the
world), and matatus equipped with Wi-Fi. And this commonality happens to help
point to what companies need to do to remain competitive, and how planners need
to see round corners. As usual, let me explain.
Japanese electronics manufacturer Panasonic
has been well-known in Africa for decades. Its television and stereo models –
including those that used to be under the old ‘National’ brand – were mainstays
in African homes (my mother still has a Panasonic television set she bought in
1986 – complete with a ‘remote’ control that was tethered to the television set
with a cable, meaning that we never lost it). Recently, though, the company has
been overtaken by more nimble rivals. First was Sony, whose Trinitron brands
were the television sets to have,
until even they got overhauled by South Korean brands such as Samsung and LG.
So Panasonic is plotting a comeback. It has
exited some slow-moving businesses, absorbed companies such as Sanyo (now there is a brand to warm your cockles if
you’re of a certain age), and come up with a renewed push into markets that
promise growth such as Africa. The products in this new strategy are
interesting ones, which is where the stylish Africans come in. One of the
products is electric hair trimmers. Unfortunately for most of the companies
that develop such products, hair is not just hair. Male African hair is a
special product. Cut it wrong and you will not just leave the man looking
silly, but you will also cause him painful pimples from ingrown hair. Recently,
the company’s head for the Middle East and Africa, Masao Motoki, told me how
Panasonic researchers had to spend significant time in Nigeria’s barbershops,
to ensure that they got the product right. The result is a line of hair
trimmers specific to the African male customer, and insights about usage that help
the company stay competitive in a very promising, but challenging, market.
On to the slumdwellers. Again, companies
eyeing Africa have realised that the fortune that is to be made at the bottom
of the pyramid (in that overused, but very relevant cliché) cannot simply be grabbed
without some hard work and some sturdy gumboots. An interesting conversation
brought this out. The CEO of French cement maker Lafarge, Bruno Lafont, stopped
over in Nairobi on a tour of some of the company’s branches (of which Bamburi
is one). He explained how innovation had to be sought out from the unlikeliest
of locations. Lafarge is looking at the frantic wave of urbanisation with great
interest. Many of the world’s people are moving to cities, but then ending up
in shacks that are barely fit for human habitation. Hence the brainwave: why
not mix mud with cement, and solve two problems at once? Mud houses are not
very long lasting, yet stone and concrete building blocks are too expensive.
Thus the mud and cement mix, which makes the houses better-looking and more
durable, but yet is cheaper than more conventional concrete. And, because slums
typically have streets that are too narrow to accommodate the lorries that
traditionally deliver concrete mix, Lafarge has also developed a distribution
system that involves peddlers moving through the slums with premixed concrete
in plastic bags (engineers had to develop a slower-drying concrete).
And now, Wi-Fi. If you spend any time in
Nairobi, you will realise that it is almost impossible to pry people’s fingers
from their mobile phones. Music and social media are driving usage of data on
smartphones at unprecedented levels, leading to double-digit revenue growth for
mobile phone companies. So Safaricom has gone to where the users are. Trips in
matatus, which used to be characterised by people bopping their heads to music,
are now full of young people with those heads bent low over their mobile
phones. The company is trying to make this easier for them, by providing a free
Wi-Fi connection to users, who can then browse to their heart’s content. When
they leave the matatu, they will purchase bundles to continue the browsing. And
it’s not just about Wi-Fi. Remember the music? The company has also partnered
with a DJ who does a monthly music mix that is distributed to matatus. Thus as
the passengers (whoever is not busy on their phone) listens to the music
(hopefully at lower volume), they receive subtle branding messages from
Safaricom.
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