Amid debilitating economic uncertainty fueled by intractable scarcity of petroleum products, declining income and job insecurity, marketers in Nigeria have been told to look beyond the apparent gloom for opportunities to grow.
It is both an advise and a warning from someone who should know. Lampe Omoyele is the CEO of Nielsen West Africa, a research company with reputation for reading the market and deciphering consumer insights most would not see even if they climbed a conventional knowledge tree.
It is an advice because most marketers during economic slowdowns are much more willing to call in the budgets, spend less, become less daring and engage the market in fewer, cautious ways. It is a warning because the consequences of withdrawal are usually dire for players in an ecosystem with severe myopia as marketing. People rarely ask what happened to the product of yesterday, especially when assaulted almost all the time with options and choices almost on a per second bases.
And that is why Lampe thinks the manta should be creativity, innovation and excitement.
The indicators are frighteningly numbing with dwindling crude oil prices, decline in Foreign Cash Reserves; weakened naira which stood at N321 to the dollar May 2016 compared to N197 for the same period in 2015; drop in foreign direct investment and galloping inflation which was recently placed at over 13 percent.
The direct consequence is decline in consumer confidence and its attendant direct impact on what people buy and what they decide they could do without. In whichever form it manifests, marketers are get the direct brunt.
It is something most people in the business have been worried about since the present nebulous economic climate began to gather soon after the general elections that took place in Nigeria in 2015.
Ever since, it has emerged that the past administration under Mr Goodluck Jonathan supervised a flagrant economic (mis)management regime that left the country precariously on the fringe of capitulation. Numbers from the Economic and Financial Crimes Commission (EFCC) in terms of how much was illegally and fraudulently taken from the economy have been pouring out in their mind-boggling proportions.
Nigeria was in a season of harvest with oil, the country’s sole revenue earner selling at over $100 per barrel for the better part of 2014/15 but for inexplicable reasons, there was no effort to save.
So when oil prices began to tumble, the first victim was the naira which slid to all-time lows. But the situation did not leave the currency alone as importers found it hard to access forex. Soon everything and everyone got entangled in the cobweb of frustration and when that happens, the consumer gets the harsh backlash.
Adjusting to survive
Hit by decreasing income and a lowered purchasing power of what remains consumers are naturally faced with the choice of readjusting their consumption pattern and lifestyle. According to Lampe, whose delivered the lead paper at the Marketers Conference organized by the Advertisers Association of Nigeria (ADVAN) at the Ikeja Sheraton Hotels, Lagos, consumers have been approaching the market with an increasing cautious spending pattern, preferring to withhold their little income.
To do this, they must have to avoid patronizing certain categories of products and services and slowing down on others. Luxury products are the worst hit here. Consumers, he noted are most likely to avoid spends on entertainment, loans, homecare and laundry, healthcare and even rent.
This is because of the pressure brought about by the need to feed (Maslow’s Hierarchy of needs once again). Food therefore will commend a very huge chunk of the family budget, taking as much as 25% with education, utilities and telecom services following in that order.
“Families are likely to spend more on: foodstuff, transport, school fees, telephone airtime and fuel,” he said. This is understandable. They have to eat to live, they must educate their children, they need to talk to be in business and sustain relationships and fuel their cars to move around for businesses and power their homes.
Items like, aso-ebi (party uniforms), clothes, hair do, certain food items (e.g. Beverages) and patronizing eateries will also drop while luxuries like Gold and other forms of jewelry may be eliminated from the family scales of preference.
“Families are adopting varied means of surviving the current crunch season, reprioritization their spend in favor of essentials such as staple foods, lowering their frequency of usage and the amount spent per occasion”, he noted.
But of all the FMCG product categories, only the alcoholic beverage segment, especially beer may not be very badly affected and that is for some funny reasons. Beer drinkers have a peculiar culture that makes them resort to the product when they are celebrating as well as when they are in need of escape.
Innovate or die
Kolawole Oyeyemi a General Manager with MTN Nigeria, recently published a book, Kill or Get Killed and that book title may just sum up the dilemma marketers are facing in the current economic situation in Nigeria.
Marketers, Mr Omoyele says will either have to innovate around the values consumers are searching for in these days of uncertainly or lose market share. Consumers, he said will be more inclined to patronize smaller pack sizes of certain brands or the value-for-money brands.
Their income are coming in trickles and as a result, they will very likely avoid the big packs. The “beers” are also not left out. As much as people run to beer in both good and bad times, brand choices will also have to change with more preferences favouring those in the value segment. What those in the premium segment will do in this season is what no one is sure. But those who own brands in this segment, he thinks, should work hard to push their value brands as a bridge to escape the tough times.
The key to survival, Lampe warned and advised, is to continue to engage.
“Despite decline in consumer confidence index, Nigerian consumers remain the most optimistic in sub-saharan Africa,” he noted. However, he warned that those who want to win will have to do things a bit differently.
For this to happen, the products must have to be available if, and when, wanted. The market will forget those who did not come to the party. It then means this is no time to bank on consumer loyaty. They also have to be affordable, very familiar and recommended by others.
To make this happen, marketers who wish to win MUST not slow on their advertising budget. Omoyele’s stats showed that 70% of consumers in Nigeria are “to a very large extent,” influenced by advertising in making purchasing decisions.
This is huge credit to an industry many thought have been losing its mojo in terms of how much they contribute to making one consumer take a product off the shelf.
But as much as this is the reality, he also called for innovation, especially since most ad content deployed are not memorable.
And his winning formula?
“Capture attention of the consumer & shopper by deploying memorable advertising content” and “reimagine pack/promotion strategies.”