Currently, South Africa is experiencing a rapid rise in demand for consumer goods by the black consumers in the country. The black population has shown increased aggressiveness in purchasing of products across various industries. Past study conducted by Iqani (2017) shows that the figure for black South African shoppers in emerging markets such as India is significantly high. This shows that the buying power of black South Africans is growing at a considerable rate. Best Buy will thus target the black consumers in the South African market on a larger scale.
The other reason to target the black consumers is that the number of upper-income black consumers is growing at an average rate of twenty percent annually in South Africa. This shows that in the next few years, black household consumers in South Africa will dominate the living standard measure in the country. Considering the effect that apartheid had on the black population, most of them are still cautious in their spending. They prioritize saving as a means to stay financially secure in case of any economic crisis. The company will thus ensure that most of the products provided are competitive in terms of cost and quality.
The black consumers believe that brand is an important factor in the determination of product's quality. As such they have low trust level in consumer and retailer goods. For instance, research shows that seventy-one percent of black consumers in South Africa pay more attention to goods sold by retailers to avoid being cheated (Schmidt, 2017). Also, sixty percent of the black consumers believe that electronic products with less known or no brand are unsafe to use (Schmidt, 2017). Therefore, for the company to penetrate this market, it must provide products from renowned companies such as Apple and Samsung.
Black consumers are also more personate shoppers as compared to their white counterparts. Blacks view shopping as a form of leisure activity. For instance, forty-five percent of black consumers upgrade their electronic products to keep up with fashion and current trends (Iqani, 2017). However, only eleven percent of Whites in South Africa do the same. The company will thus ensure that it avails trending products into the South African market, specifically to target the black consumers.
The other critical consumer segment that the company targets are the youths. Studies show that sixty-three percent of South African youths choose to invest their extra income on electronic devices (Porter et al., 2018). Typically, youths spend thirty-eight percent of their extra income on the acquisition of new electronic gadgets. Majority of youths view technology products as important tools that enhance their personal advancement, thus the heavy spending. Youths also constantly strive to keep up with the emerging trends in consumer products and specifically electronics, to feel as are part of the modern world (Porter et al., 2018). The company thus plans to provide the South African youths with trending products but at the same time being cost conscious. This is because most youths are not financially stable and therefore, they cannot afford premium products.
BestBuy also plans to exploit the upper-class White population by providing premium electronic products. Since Apartheid, Whites in South Africa have continued to be the dominant economic power in the country. Most of the wealthiest South Africans are Whites and as such, they form a premium product market (Porter et al., 2018). The company will also target organizations in the country, more so, those in the service sector. These industries are mainly owned by the Whites and thus the products supplied should be appealing to this market segment.
Best Buy will use both the low cost and differentiation strategies to penetrate the South African market. The success of this strategy will be grounded in the extensive product portfolio that the company possesses. The company distributes products from a wide range of recognized companies such as Samsung, Apple, and other electronic product manufacturers. It will utilize its cost advantage regarding economies of scale due to its large purchases. This economy of scale will allow the company to sell the products at a competitive price within the new market (Turban).
Best Buy plans to pull South African market base through push products and advertising with promotions and special sales. The promotional strategies that the company will adopt include media, publicity, and discounted pricing to push the products onto the consumers. However, the company will not adopt the gift offers such as buy one get one free to penetrate the market segment. This is because it believes the set promotional strategies will successfully enable it to penetrate a South African market.
This will form one of the most fundamental factors in the company's communication strategies. The advertising will target the technology-happy population who know about the importance of software and hardware as well as those who buy the products to have self-satisfaction in their living styles (Turban et al., 2018). Most of the urban population in the country have access to TV platforms thus the company will focus on TV commercial to capture this market segment.
The company will embark on discounted pricing to facilitate its penetration of the South African market. Even though South Africans are spenders, they are keen on a pricing of various products. Since there are many retailers dealing in consumer electronics, the population has a wide range of choices from where they can acquire their electronic gadgets (Turban et al., 2018). It is thus prudent for the company to appear friendlier in terms of its pricing. The discounted prices coupled with the fact that the company's products are from highly rated companies, the success of the company is highly possible in this new market. The company will, however, preserve the use of rebate as a means to promote sales of its products.
The company will create various retail outlets in the country to facilitate direct contact with the customers with the products before buying. The consumer electronics market in South Africa is currently dominated by specialist stores. Therefore, it is prudent for the company to be in close association with these outlets. The company can sell to the specialist shops who in turn sell the products directly to the consumers. Also, the company can utilize salespeople to ensure its products reach those in remote areas such as the rural population of the country (Turban et al., 2018).
The company will utilize service dealers, modern retail and distributors to distribute its products. In the majority of cases, the company plans to utilize zero stage channel of distribution through the direct online sales, door sales representatives and retail outlets. The distribution channels that the company is set to use will help reach most customers in South Africa thus boosting the projected profits of the company. The company will majorly use retail outlet because the products to be supplied are targeted at a variety of market segments.
Also, the company plans to use distributors as a means to boost its market penetration. Using distributors will help the company to reach established customer bases that the distributors have. Known distributors in the country have a good relationship with the customer base of resellers. The distributors are also experienced in marketing and sales expertise and thus they understand how best the products can be sold in the new market (Turban et al., 2018). The distributors will also save the company its logistics and storage operations. This is because they will be able to move the company's products at a faster rate thus freeing up space for storage of new inventories.
The company will not adopt the use of wholesalers in its product distribution. This is because the company will be using distributors and as such it will not need to sell its products in large quantities to the wholesalers. The other reason is that using wholesalers to distribute the products would be inefficient both in terms of market access and potential profits to be earned (Schmidt et al., 2017). The wholesalers are fewer in number and would buy the company's products at cheaper prices that reduce the potential profits that the company would earn from director retail sales.
The company will adopt competitive pricing in setting the prices for its products. The consumer electronics industry in the country is dominated by foreign players with high-quality products that are comparable to the ones supplied by Best Buy (Schmidt et al., 2017). The company will thus ensure that its products have slightly lower prices or prices that are nearly equal to its competitors to keep a considerable market share. The highly ranked electronics will be priced at higher prices since their market target are the rich and wealthy individuals in the country. The firm will use the general base products to target middle and low-class consumers. Therefore, such products would have relatively lower prices.
The competition based pricing will be more convenient for the company since South African consumer electronics industry is extremely competitive. Also, in most instances, the products from the company's rivals such as specialist stores are produced by similar manufacturers. As such, there will be no differences and if any, the difference will be so negligible in the quality of competing brands. Using this strategy will eliminate worries about demand and cost and the needed adjustments will purely be based on the changes made by the leading manufacturers of the competing brands.
The company will have to preserve the use of skimming in pricing its products. This strategy is applied in the U.S. but since the culture of the market in South Africa is a bit different, the pricing strategy has little chance of succeeding. Basically, the strategy is applied to fixing very high prices for specific products and selling them only to those who can afford them. This is a segment of consumers who give a lot of importance to their status and thus are normally willing to even offer higher prices for products that make them appear unique in the society. However, due to the diverse nature of the South African market, this strategy has little chance if any, to be successful. It will thus be standardized by the company.
Iqani, M. (2017). A new class for a new South Africa? The discursive construction of the 'Black middle class' in post-Apartheid media. Journal of Consumer Culture, 17(1), 105-121.
Porter, G., Hampshire, K., Lannoy, A., Bango, A., Munthali, A., Robson, E. ... & Owusu, S. (2018). Youth Livelihoods in the Cellphone Era: Perspectives from Urban Africa. Journal of International Development.
Schmidt, H. J., Mason, R., Steenkamp, P., & Mugobo, V. (2017). Does brand orientation contribute to retailers' success? An empirical study in the South African market. Journal of Retailing and Consumer Services, 38, 210-222.
Turban, E., Outland, J., King, D., Lee, J. K., Liang, T. P., & Turban, D. C. (2018). Marketing and Advertising in E-Commerce. In Electronic Commerce 2018 (pp. 361-401). Springer, Cham.
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