BUS4019S
International & Strategic Marketing
Expansion of the Pioneer Food Group (PFG) company into more markets on the
African continent is a strategic and potentially very successful move for the brand as
these developing country have growing economies that are not as yet saturated by
other international brands. The team of strategic consultants assigned to the
planning of the expansion process have chosen Kenya as the next destination for
group for PFG. The specifical product which will lead this entry into the Kenyan
market is the Bokomo Oats breakfast range. Below the rationale for this decision will
be outlined along with a summary of the strategic and tactical considerations taken
under advisement during this decision making process.
Between the choice of Kenya and Cote de Ivoire, this team has chosen to begin the
expansion of the PFG brand in the capital city of Nairobi, Kenya. Research shows
that with a GDP of $12 billion in city with a mere 3, 299, 618 total population, Nairobi
is one of the fastest growing cities whilst simultaneously one of the smallest in size in
comparison to others in the region. This places it as the second largest city in the
African Great Lakes region. A rising population with a steadily growing economy is
the perfect starting place for this brand to grow and diversify its portfolio. These facts
are also only specific to the main urban center of the country, however Kenya is
much larger and holds greater potential as one moves towards the periphery. This
trend can be seen in the city's urban sprawl which is expanding the sizes of
neighborhoods and communities showing a knock off effect on the growth of the
economy and specifically the retail industry. Already known as one of Africa's
relatively affordable cities for retail space rental is expected to lower even more then
it's current low rates and the expansion of the retail space market into the periphery
communities will result in and unsaturated marketplace. This is perfect for the PFG
company as it means the threat of existing competitors is low and the threat of new
entrants is not a huge concern as their space in the marketplace. This is also good
for growth prospects in the future, given that the Bokomo Oats breakfast range is not
PFG’s only product that could do well in this international market. An unsaturated
retail space market will allow for the company to expand after seeing how the market
responds to the Bokomo Oats breakfast range making it a suitable and safe
environment.
As PFG initiates the process of expansion there are factors to take into consideration
that heavily affect the strategical and tactical play which the marketing team will
undertake in ensuring a successful entrance into the Kenyan market. These
considerations can be divided into three main parts looking at the segmentation of
the market, the targeting of specific customer groups as well as the positioning of the
brand in relation to competitors and the environment which the company aims to
infiltrate.

Segmentation
 Income –
 Age distribution
 Occupation

Targeting
Concentrated
targeting
Differentiated
targeting

Positioning
 Global
consumer
culture
positioning
Foreign
consumer
culture
positioning

Foreign
consumer
culture
positioning
Pestle analysis
Before a thorough analysis of the two markets PFG has considered for its expansion
and introduction of the Bokomo Oats breakfast range to the international market, the
team of marketers looked at the macro-environment of both markets. This is an
integral part of the initial analysis when researching a potential expansion into a
global market as it highlights the uncontrollable factors which will affect the success
of the venture. The macro environment is the remote and external environment in
which the firm exists that is largely understood to be unpredictable and thus the
success of the company depends largely on its ability to adapt it's existing features
and react to the changes in this macro environment (Toppr.com). A common tool of
analysis of macro environments is the Pestle analysis, which looks at the political,
economic, social, technological, legal and environmental contributors in the macro
environment.
Political
Economic
Kenya
The political climate in the
country has varied over
the years the best result
saying in various
economic reforms. the
opportunities which can
be seen for PFG lie in the
“removal of price controls,
direct importation, and
non-tariff barriers”
(Nandonde, 2019). This
has led to much foreign
direct investment in the
region largely benefiting
the retail sector as the
number of international
and cross border firms
increases.
Since 2017 the economy
in the general East
African region has seen a
steady growth of 5.9%
and is predicted to
continue on this trajectory
(Nandonde, 2019). There
has also been an
increase in income
indicating a change in
consumption patterns
particularly regarding
urban resident’s diets.
this will have a direct
positive effect on the
success of the
Social
Technological
introduction of the
Bokomo oats breakfast
range as many middleclass households are
migrating from traditional
staples to modern eating
patterns.
Social considerations are
important when analyzing
the business environment
as they dictate the
interpersonal actions that
take place in the
workplace. Between 2012
in 2013 University
enrollment in Kenya
increased by 34%
resulting in a large shift in
the social perceptions of
foreign investors
(Nandonde, 2019). Many
perceive multinational
firms in the region as a
form of neocolonialism
and thus are opposed two
such occurrences in the
economy, preferring local
business as a means to
promote local
employment. Though this
may seem as a threat to
many foreign direct
investors and cross
border retailers, PFG is
an African brand and can
be promoted as such to
better position its
attractiveness to the
Kenyan market.
Studies in Kenya have
shown that the diffusion
of new ideas in Africa
typically takes more time
than in other parts of the
world. To combat this
slow technological growth
and encourage suppliers
to use E business, some
international retailers
have been reported to
Legal
drop Agri food value
chains without ICT
facilities (Nandonde,
2019). This shows that
there is much potential for
technological
developments however
the lack of qualified ICT
personnel, poor
infrastructure, high costs
of services and security
problems pose a threat to
the growth rates at which
these developments
could be implemented
(Nandonde, 2019). The
2020 global covered
pandemic however has
forced many businesses
to realize the importance
of e-commerce and thus
one hopes this will
encourage a shift in
African retailer’s and
consumer’s mindsets.
In terms of policy in
Africa, business growth is
often slowed by the high
rates of taxation and
certification requirements
built into the system to
protect local value chains.
In addition, food
production is low and this
causes fragile mobility of
food supply around the
continent. This presents
an opportunity to PFG
that would be assisted by
trade agreements that
offer favourable import
tarrifs and legal barriers.
3. MARKET ANALYSIS
The Market Analysis on Kenya and Cote de Ivoire specifically in the cities Abidjan and
Nairobi is covered in this section. Based on a survey and study on the sample size of
approximately 700 participants in both and targeted to the middle-class group.The
demographic segmentation will be referring to key characteristics of the middle-class
population and from the sample that was interviewed from the report, 57% of the
participants were male and 43% were female (Ipsos Marketing, 2016). From the
demographic 50% were married and 46% were single (Ipsos Marketing, 2016). Age
distribution - 124 of the participants were Millennials between age groups 16-21 years
old (Ipsos Marketing, 2016). The middle-class group would earn on average $4 to $20
daily with an average of $10 a day (Ipsos Marketing, 2016). The population size of
Nairobi is 3.299 618 with growth rate of 4.1% and a GDP of $12 billion and labour
force of 37.5% employed and 18.1% self-employed(Ipsos Marketing, 2016). According
to the Ivory coast report, Abidjan’s population size is 4 707 404 with a GDP of $16.5
billion and a labour force of 1 600 000 (Ipsos Marketing, 2017). In Abidjan the booster
sample of 132 Millennials were between the ages of 16 and 21. In the report, the
personal income threshold was $4 daily in their national currency (Ipsos Marketing,
2017). 54% of the participants were male and 46% were female in the study (Ipsos
Marketing, 2017). The Porters Five Forces is a model that will be used in the analyses
to uncover the underlying competition with in the breakfast industry of the two markets,
potential profitability and how the industry structure may drive them depending in the
intensity of the forces (Porter, 2008).
Threat of New Entrants refers to the entrances of newer business in an industry and
the latest expertise and attention gained in market share. This leads to stress and
sensitivity on prices, expenses and investing-rate in order to compete. The risks of
entering the market would be dependent on the level of entry barriers of the country
or industry and potential reactions from the incumbents (Porters, 2008). In Kenya, this
would be high due to huge investments in the breakfast industry (Hyslop, 2017). The
demand-side of benefits of scale refers networking influence of how consumers would
trust larger corporations for goods that are essential while appreciating the being in a
network with huge customer base(Porter, 2008). In Nairobi, the middle class preferred
to buy goods and services with cash(Ipsos Marketing, 2016). These consumers were
more willing to pay for quality of brands that were well known and preferred local
brands or those from anywhere in Africa(Ipsos Marketing, 2016). The Threat of New
Entrants are high in Ivory Coast are due to no secure distribution channel and low
investments in the breakfast industry (Marcopolis, 2017).
Bargaining power of suppliers looks at how dominant suppliers capture more market
shares and value through high cost prices, quality and service limitations and altering
the industry prices according to the demands and needs of target audience(Porter,
2008). According in to the report Weetabix, a Kenyan brand, was the highest rated in
Breakfast category by 56% of the group and 60% amongst the millennials (Ipsos
Marketing, 2016). In addition, it is the leading breakfast brand in Kenya and distributes
to the neighbouring countries in Eastern Africa (Pioneer Foods, 2020). However in
Ivory Coast it’s not as intense with regards to the brand rankings as in the breakfast
category non-breakfast related (Ipsos Marketing, 2017).
In the breakfast category, threat of substitute products is relatively high in Nairobi. The
participants, in addition to the Weetabix, also displayed support for brands like
Ceravita and Cornflakes ranking second and third respectively (Ipsos Marketing, 2016.
In contrast the Ivory Coast was considerably low. According to the report, the brand
which the 32% of the participants were most likely to purchase was the Nestle, from
that 36% of the support was from the Millennials. In addition, the rest of the product
they chose a didn’t directly align with the category. The only breakfast related brand
is Nestle and the rest are lunch or dinner related foods.
The bargaining power of buyers refers to the influence of customers negotiation
leverage in relation to the businesses and participants industry, the consumer’s
sensitivity to price (Porters, 2008). According to the report, in Kenya Prices promotions
and sales were the least influential contributors in the buying decisions(Ipsos
Marketing, 2016). Quality of goods ranked first in the buying decisions and second is
their affordability(Ipsos Marketing, 2016). According to Porters (2008), consumers who
were cash-rich were less price sensitive if the goods weren’t contributing to most of
their expenses. In Kenya even though majority of participants were employed some
still needed external financial assistance(Ipsos Marketing, 2016). The group preferred
to purchase goods with cash(Ipsos Marketing, 2016). Their brand preferences were
Kenyan brands or those in Africa(Ipsos Marketing, 2016). They also preferred branded
goods, which influenced most of their buying decision and the quality of the
goods(Ipsos Marketing, 2016).
Abidjan displayed low bargaining power of buyers due to the little support the food
industry obtained as mentioned previously. The participants believed that the
international brands needed to adapt to the national market in order to display a form
of commitment to the society(Ipsos Marketing, 2017). They believed foreign brands
had better quality in the goods and services offered in comparison to national
products(Ipsos Marketing, 2017). The purchasing decision are also influenced through
word of mouth and in convenience terms of the brands(Ipsos Marketing, 2017). Most
of the cooking of the consumers is done on gas stove or on the open fire regardless
of the house having electricity (Ipsos Marketing, 2017).
The Rivalry Among Existing Competitors refers the competition amongst the sellers in
an industry through price adjustments, new product developments, intense marketing
and enhancement in service delivery(Porter, 2008). According to Porters (2008) the
intensity increases depending on the company’s power and size, high barriers to exit,
committed businesses, difficulty in predicting players moves and price competition
(Porters, 2008). The market leader in the Breakfast category in Kenya is Weetabix
(Pioneer Foods, 2020); second was Proctor & Allan East Africa breakfast cereals
following is Ceravita and forth is Kelloggs (Hyslop, 2017). Factors that increased the
growth were smaller portable and convenient packing sizes of the goods (Hyslop,
2017). In Ivory Coast the Breakfast industry’s competition is low. Kellogg is one of the
only breakfast related-brands that distributes to Ivory Coast (Gelski, 2015). The food
related industry that dominant in Ivory Coast are paste, sugar, butter, flour and other
primary food productions (Marcopolis, 2017).
CONCLUSION
Marketing Mix
Marketing mix refers to the set of activities, or strategies a company uses to endorse
its brand or product in the market (Singh, 2012).
1.
Product
Companies must research what customers want then develop the product (Rafiq and
Ahmed, 1995). Companies must avoid developing a product that is not wanted by
customers and hope it finds a market at a later stage.
According to the Kenya report, three main segments desire branded products and do
not necessarily mind if the product is local or international as long it is branded and its
quality is good. Thus, Bokomo Oats stands a chance of being the product the
customers wants. Looking at the typical dishes most preferable for breakfast, the
cereal is the main-stay dish and the cereal does not only plays part in the breakfast
range but in the snack (cereal bar) as well and cereal bar is mostly made out of Oats
kind of cereal.
Also in the report, Weetabix and Cornflakes are running between 21% and 60% as
most considered food packages for breakfast, this means the Bokomo Oats can find
a market in no time as similar products are already in the market. However, it will be
not difficult for customers to adapt to this new product and Kenya have Familia (muesli)
cereal as well. The brand relationship is between 40% and 66% and that means the
quality of the product is vital. Nonetheless, how the new product hits the market
determines the product life cycle.
2.
Price
According to Singh, (2012), a product must be cost what customers are prepared to
pay for it. Price must to provide profit but it must be competitive as it positions the
product in the market (Singh, 2012).
Kenya report shows that 37.5% is employed and 18.1% is self-employed and that
makes up to 55.6% of the population generating income in this country. As mentioned
above price consideration has to make a profit but be competitive as well. An average
price range more or less than the existing cereal product price would be
advantageous. At least half of the world population can possibly buy the Bokomo Oats
even though breakfast is 18%, meaning it is the least taken meal compared to lunch
and supper. Lastly, PFG and Bokomo breakfast must keep in mind that this product is
new to the country and need to position itself in the market. Thus keeping prices
reasonable wholesalers, retails and direct sales is advantageous.
3.
Place
The distribution of the product must be appropriate and convenient for the customers.
The place also means the ways of demonstration of the product, it could be via the
internet or it could be on the shop windows.
The counter-service 70% and roadside table-sellers 68 %are most preferred buying
outlets in Kenya and supermarkets 24%. Bokomo Oats distributing in a wholesaler or
supermarket does not guarantee profit since most segments prefer roadside tableseller and counter service. The best distributing point PFG and Bokomo breakfast
could consider in this regard are supermarkets. Getting the product from supermarkets
would make it convenient for roadside table-sellers, counter service seller and other
customers. The design, branding and packaging of the product is the key to catch the
customer’s eye whether the product is in the wholesale or street vendors.
4.
Promotion
This is a way of communicating the brand to the customers. Singh. (2012) believes
that the benefits and features of the product must be communicated to the customers.
The brand promotion helps to grab the customer’s attention.
According to the Kenya report, 50% of the segments prefer word of mouth and 50%
does not, but the overall segment collages are persuaded and convinced easily if a
brand uses internet, radio and television as prompting platform. For the customers
preferring word of mouth, it is recommendable that PFG and Bokomo breakfast
consider the in-store and mall campaigns using persuasive brand ambassadors with
a bubbly personality to promote the Bokomo Oats.
PFG and Bokomo breakfast would also benefit from working with Kenya local
newspaper as only 15% of the population is not into reading the newspapers. Social
media is the number one platform for brand awareness in Kenya as up to 90% of the
population owns smartphones and is on social media. Moreover, Joint ventures are
important in expanding the brand as well.
TECHNICAL DETAILS
● Groups of up to 4 members only.
● Written in Ms Word.
● Length: 1800-2500 Words (any longer and marks will be deducted).
● Ariel Font, 12 pt, standard MsWord borders (2,54/3,17), Single spacing.
● Pictures allowed
● Submit in soft copy only in the “assignments” tab on Vula labeled “Group
Project”
● Turn-it-in score must be calculated (flagged assignments will be given 0% and
reported). You do not need to check your score and resubmit, just submit your
final draft.
● Late submissions will be penalised as per the course outline.
REFERENCE :
Gelski, K. 2015. Kellogg invests in snacks, breakfast food in Africa.
BakingBusines.com. Available: https://www.bakingbusiness.com/articles/29367kellogg-invests-in-snacks-breakfast-food-in-africa [2020, 16 September]
Hyslop, G. 2017. Proctor East Africa target bigger breakfast stake with million-dollar
factory.
Bakery.
Available:
https://www.bakeryandsnacks.com/Article/2017/09/19/Proctor-East-Africa-targetsbigger-breakfast-stake-with-factory [2020, 16 September]
Ipsos Marketing. 2017. Understanding the African Lions in Abidjan, Cote de Ivoire.
Ipsos
Marketing.
University
of
Cape
Town.
Available:
https://vula.uct.ac.za/access/content/group/4146f0d8-bd39-4979-a0d98f4e5684b02c/Group%20Assignment/Ivory%20Coast%20Report.pdf
[2020,
September 11]
Ipsos Marketing. 2016. Understanding the African Lions in Nairobi, Kenya. Ipsos
Marketing.
University
of
Cape
Town.
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https://vula.uct.ac.za/access/content/group/4146f0d8-bd39-4979-a0d98f4e5684b02c/Group%20Assignment/Kenya%20Report.pdf [2020, September 11]
Marcopolis. 2017. Top Agriculture and Agribusiness Companies in Ivory Coast.
Available:https://marcopolis.net/top-agriculture-and-agribusiness-companies-in-ivorycoast.htm [2020, 16 September]
Panzani Côte d'Ivoire. 2020. < 𝗝𝗔𝗠𝗔𝗜𝗦 𝗖𝗢𝗟𝗟𝗔𝗡𝗧𝗘𝗦, 𝗧𝗢𝗨𝗝𝗢𝗨𝗥𝗦 𝗘𝗫𝗖𝗘𝗟𝗟𝗘𝗡𝗧𝗘𝗦>.
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September]
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Our
Joint
https://www.pioneerfoods.co.za/about/our-joint-ventures/
[2020, 16 September]
Ventures
.Available:
Porter, M. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business
Review. Available:https://vula.uct.ac.za/access/content/group/4146f0d8-bd39-4979a0d9-8f4e5684b02c/Individual%20Assignment/Porters%205%20Forces%20%20HBR.pdf[2020, September 11]
Rafiq, M. and Ahmed, P.K., 1995. Using the 7Ps as a generic marketing mix.
marketing intelligence & planning.
Singh, M., 2012. Marketing mix of 4P’s for competitive advantage. IOSR Journal of
Business and Management.