Post on 09-Jan-2017
DEVELOPING A DISTRIBUTION NETWORK
In collaboration with
In Southern Africa
What you will learn in this workshop
Sonia Galat,CEO & Co-founder Africa Business Venture
What is your experience in Africa?
• Specifics of Africa Southern region• Key challenges • Solutions to develop an effective distribution network• Role of intermediaries in your strategy development
Introducing Africa Southern region
A COMMUNITY
• SADC: Southern African development Community (1980-1992)• 14 States• Goals: achieve regional integration; economic development• 3 main languages: English/French/Portuguese
REGIONAL TRADE*
• Total imports (up to date) : USD $91,608.15 (million)• Total exports (up to date): USD $89,151.33 (million• Total population (up to date): 277 million
GROWTH PERSPECTIVES**
• Real GDP growth in 2016:- Angola: 3.5%- South Africa: 2.2%- DRC: 5.5%- Madagascar: 5%- Zambia: 5.5%- Mauritius: 3.9%- Mozambique: 6.8%• Source: www.sadc.int, 2016
** Source: www.IMF.com, 2016
key challenges for establishing a distribution network?
• Market data and information• Develop a strategy • Finding a distributor; sales agent and other intermediaries• Expanding a business
Market data and information
• End Consumers behaviour defer from Europe• Prevalence of small retail units• Consumer goods: need for manufacturer to reach large volume• Difficult for companies to gather data = poor sales growth as products do not get to the
right places
Travel
How to develop an understanding of the local markets?
Do research
Learn about local
Distributi-on
Challenges
Read about
the country
Developing a strategy
Market research Strategy Local partner
Questions to answer:• Where is a need for your products and services?• What is the good country to do business in?
Step 3:Position
your offering
Step 1:Define your
strategy
Compared with local producers, you will be disadvantage. Make sure that your offering is: • Unique• Better• Cheaper or equivalent to local products
What is my product/ service?
• Simple products• Services that can be
provided electronically or from homeland
• Product with installation• Customised product• Customised service or
solution
Step 2:Identify
your offering
Characteristics
• Not client specific, possibly country or region specific (examples: wine, cheese, regional product)• Can easily be sold through a distributor, no additional service
I am selling a simple product
Finding a local partner
• Create awareness with potential foreign distributors• Internet marketing• Trade shows
• Sell directly to the distributor and leave the rest to him
What could be my approach?
Characteristics
• Delivery follows the same process as for local customers (software; machinery for example)
I am selling services that can be provided from abroad
Finding a local partner
• Internet sales, local distributors/agents or a combination• For internet sales: set up payment process• For local distributors/agents: set up an incentive structure and provide them with marketing tools
What could be my approach?
Characteristics
• Not client specific (equipment etc..)• Distributors need to be trained before they can sell or deliver the product
I am selling Product with installation, integration or training
Finding a local partner
• Identify potential distributors and select one or a few• Train the distributors and help them market your product• Manage and evaluate your distributors
What could be my approach?
Characteristics
• Client specific, made to order (bespoke)• Distributors serve as the channel for your contact with the customer
I am selling customised products
Finding a local partner
• Decide upon distribution or agency agreement• Set up exclusive distribution per country/region/market segment • Negotiate a distribution margin • Train distributors in the sales process
What could be my approach?
Characteristics
• Although standard components may be used, strong interaction with the client is needed to get to the right results
• Consultative selling process
I am selling customised service or complete solutions
Finding a local partner
• Work with a dedicated and specialised local sales partner• Fly in or relocate own sales support and project delivery staff• Work on a joint marketing and sales plan that involves presentations, exhibiting at trade shows and collaboration
with industry organisations
What could be my approach?
Growing your market
2011: creation of the COMESA-EAC-SADC Free Trade Area (FTA)• Common Market for Eastern and Southern Africa (COMESA),• East African Community (EAC),• Southern African Development community (SADC) met and signed a
declaration launching negotiations for the establishment of the
Key numbers:• 26 countries• Combined population of nearly 600 million people• Total Gross Domestic Product (GDP) of approximately US$1.0 trillion.
Main goal:• strengthening and deepening economic integration of the southern
and eastern Africa region.• Reduce barriers at customs
How to know if my product is subject to tariff barriers?http://www.tradebarriers.org/
SUMMARY OF KEY MESSAGES
The SADC region is a very attractive region for foreign businesses and continues to generate interest
South Africa is the main market in the region
Development of a distribution network shall take local constraints into consideration and necessity to gather
market information to define an effective strategy
Be careful when selecting your distributors and consider the support you will need to provide to assist your
distributor
Importance of intermediaries:
Definition of a strategy and market data
Finding relevant distributors
Be an extension of your team
In collaboration with
Thank you very much for your attention!
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www.africabv.com
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