MarketPlace

Year of flexing sales muscles after 2017 of tight spending

stressed

Selling to Generation Z will be the ultimate test. file photo | nmg

A difficult 2017, which saw consumer spending tighten, and a surge in competition, saw 2018 open with companies facing a degree of market saturation, and sometimes fierce price competition.

“In order to compensate for the deficit in 2017, most companies that did not perform well or meet their objectives, will be looking to produce or to oversell what they have.

Yet the purchasing power may not have necessarily increased or may not be directly proportional to the availability of the product. Thus, in 2018, Kenyan companies may face market saturation,” said Bruce Gumo, marketing analyst at marketing solutions company Biztrace.

This element of oversupply of products, combined with static purchasing power, is likely to see companies searching for new ways of accelerating sales, including expanded promotions.

“The fast moving consumer good market may be the most affected due to the political instability that we experienced, so the companies could have a large amount of stock that they will look to sell this year, including what they are producing now. Thus, there will be a large supply available to the supermarket shelves, but the purchasing power may not increase,” said Gumo.

Another challenge that companies may experience this year, as part of a global vulnerability will be in ensuring the safety of their consumers’ data. Last year saw a rise in data breaches and cyber security threats, with research by Forrester Research predicting that this year consumers and businesses will face even more challenges in this area.

“It will be brought on by four primary forces: rising tensions in international relations, ubiquitous connectivity, digital transformation initiatives, and the increasing importance of the data economy,” said Forrester Research.  

“Therefore, the chief information security officer of any organisation must rapidly evolve to become business managers who protect their firm’s brand, strengthen its reputation, and build customer trust. To do so, they will need far more than just the latest technology; they need a team with the right mix of business and technical skills, a solid information security management system, a well-defined policy framework, metrics that demonstrate business value, and a business-aligned strategy that ties all this together.”

The transition in the channels used by the advertising industry is also set to continue. In 2017, companies sought alternative advertising mediums, including paying for content in publications that was meant to persuade consumers into purchasing a product or a service.

However, due to an increase in ‘fake news’ online, consumers trust in this sponsored content reduced, thereby affecting these new efforts by companies to reach target consumers.

READ: Why brand ingredients information raises sales

This falling trust is now set to play out further in 2018 as consumers avoid reading sponsored media to avoid being deceived, with research by Contently, a US technology firm, on consumers’ trust in mass media showing that 54 per cent felt deceived by sponsored content advertising.

Content creators and advertisers will, nonetheless, continue to face further challenges this year as advertisement blocker applications, both on smartphones and computers, become more popular with consumers, affecting display advertising.

Technology firm Google is now set to launch its own ad blocker in February, reducing intrusive advertisements, including full page ads, videos and auto playing sounds, further pushing marketers to find new ways to reach their intended audiences.

For brands operating in more competitive and congested sectors, such as the smartphone market, especially in Africa, the year may even bring survival challenges, as competition mounts from Chinese producers selling good quality products, but at cheaper prices.

As this battle unfolds, brand loyalty is decreasing, with consumers now reporting price as the main factor in buying decisions. A study conducted last year by management consultancy Accenture found that 77 per cent of consumers interviewed admitted that they now retract their loyalty more quickly than they did three years ago.

Kenyan brands, whose primary market is the young generation, will also be forced to change their marketing strategies in order to carter for the new and upcoming market, Generation Z.

Unlike millennials, who were the target market for most brands in 2017, Generation Z has a lower attention span, meaning that reaching them may require less than eight seconds of advertising online.

- African Laughter