[BLOG] Shaping Value to Enter Emerging Markets Like Africa
In Redefining Business in the New Africa, I shared about leveraging trust networks to do business in Africa, offering a straight-forward framework. But, I also noted that trust is not enough. Leveraging any network in global business needs to incorporate value and trust, hence, the name “trust-value” networks.
In trust-value networks, the aim is to have high trust/high value networks. Networks with high trust and low value, or low trust and high value, are not healthy and have problems growing in an organic fashion. In today’s world of rapid change, only networks and organizations that can move fluidly and dynamically will remain strong.
Let’s look at a few basic concepts related to value to start. First, an economy is driven by delivery of something of value to end consumers – things that they cannot do or produce for themselves, or prefer not to. When a consumer finds something of value that he or she wants or needs, the person transacts an exchange to acquire that value. The currency of the exchange can vary from money to information to resources to other tangible assets. In the end, however, a value exchange has occurred.
Second, it’s important to know that value is defined by what the consumer perceives not you as the provider of that value. In general, we can say that the higher the value the more people will pay for it. However, in strained economies and emerging markets, you need to factor in how much people are willing and able to pay. People may think what you provide is of high value, but they may also think the price is too high to acquire it or they cannot afford it.
Third, businesses are responsible for adding value to consumers, but that should translate to revenue and profit for the businesses. The other part of the equation is that businesses need to educate consumers on the value they bring. You can have a great product, but if consumers don’t know about it, don’t understand it, and/or don’t know the value it brings them you cannot tap into the potential of the market.
There are three waves of expressing value to others – all benefits, favorable points of difference compared to your competitors, or key differentiators that provide the greatest value to the customer. The first wave, all benefits, focuses on translating all features of a product or service to language that expresses the benefits to the customer. The key question answered is “Why should the customer purchase your offering?”
The second wave, favorable points of difference, focuses on identifying all favorable points of differences between your offerings and that of your competitors. It builds on what you have done in the first wave. The key question answered is “Why should the customer purchase your offering instead of a competitor’s?”
The third wave, key differentiators, focuses on identifying the one or two points of difference that provide the customer the greatest value and on which your competitors cannot match or exceed you. It builds on what you have done in the first and second wave. The key question answered is “What is the most worthwhile, distinct, and unique aspects of your offering that customers should keep in mind?”
If you haven’t noted already, this is a process. You must first understand and be able to communicate all benefits of your offering, then you must understand and be able to communicate the differences in favor of you against your competitors. Then finally, you can hone or refine to a few key differentiators that make you stand out amongst all the competitors. All of this is based on dynamics, e.g., customer characteristics, of the market in which you want to enter. For example, customer characteristics differ in Africa compared to Europe or North America. So, the importance of being able to adapt the expression of your value to different customer segments or markets is important.
Through this process you are conceptualizing and formulating a value proposition. The basic definition of a value proposition is the total package of benefits a customer receives for paying you. However, as I have stressed before, you want to focus on unique competitive space (UPS), so you want to create a unique value proposition (UVP).
Note that you may have offerings that offer very similar benefits to those of your competitors, however, the way you package, or configure, them may create that UVP. In this case, you want to try to make it something that competitors cannot easily duplicate, at least in the short run. This is where leveraging your strengths help you create UVP that your competitors find it difficult to compete with.
The unique configurations of offerings you create, based on your strengths, can give you an edge over competitors. Networks in which your organization is a significant member is an example. In our case, we have developed good partnerships with networks that others have ignored or haven’t served well. This is another point about creating UVP – also create your own unique market in the open space no one else is serving appropriately.
In Africa, there are more obvious open spaces in markets than in any other region, I think. There are enormous amounts of valuable assets that are underdeveloped in Africa – human capital, land, water, etc. Africa’s problem is not poverty, but wealth potential that is lying fallow because it hasn’t been developed.
One example is mangos that grow wild in several countries in Africa like Mozambique and Sierra Leone. Each season mangos rot because they are not harvested and processed. In Sierra Leone, Juice Felix developed a processing plant to transform these mangoes into juice which is sold in the local markets because there is strong demand. The supply chain incorporates villages in which the wild mangos typically go to waste because they are not good to eat, but are suitable for juice. Juice Felix has added value to what was going to waste while bringing revenue to poor communities.
There is tremendous potential for small and large enterprises that can operate in the open space in Africa. Being able to do so is actually a competitive advantage itself.
Taking this approach will help you accelerate entrance into markets anywhere on the globe. It will also save you finances and resources to ramp up against competitors. If you top it off with strong partners, who can help deliver the market to you, you are way ahead.
Featured image is wild mangos, an example of raw products that can be transformed into value to tap open market spaces. Source: Wikimedia.
This article was originally posted on South Africa Business Communities