How to succeed in selling to consumers in South Africa
Doug Smart says KFC has had to take special steps to appeal to South Africa's very different consumers
Doug Smart, KFC's general manager in Africa, is mulling the challenges his company faces in appealing to a cross-section of South Africans one morning at a restaurant in Johannesburg.
"The biggest challenge for us is to stay attractive to both families with low incomes as well as rich business people in their BMWs," he says.
Twenty years after the end of apartheid, the disparities in wealth in South Africa are still stark and the fractured market represents a particular challenge for foreign businesses seeking to succeed.
"A large part of our growth is coming out of small towns and townships, where we have opened many of our new restaurants," says Doug,
KFC has given customers the option of taking the drinks out of their packaged meal deal or "combo", giving it a price point that more South Africans would be attracted to and has introduced local dishes, such as the popular porridge-style recipe known as "pap".
It is a strategy that seems to be working, as KFC is the second-most powerful foreign brand in the country, according to research undertaken for the BBC.
Top commercial brands
Though South Africa lost its position as Africa's biggest economy to Nigeria earlier this year, it is still seen as the springboard into the rest of the continent by many multinationals.
Its middle class is also growing rapidly, the number of individuals with an annual income of 25,000 rand (£1,400) doubled between 1993 and 2013.
Winning in the country is a big prize for those looking for growth in emerging markets, with potential for big increases in consumer demand in the coming decades.
The global consultancy Millward Brown analyses more than 5,000 brands in South Africa by asking consumers to rate how meaningful they are to them as well as other factors.
For the BBC they have identified the top 20 most powerful foreign brands in the country.
Different people, different products
With a population of 52 million, speaking 11 different languages and with a sharp history of division, appealing to a cross-section of South Africans is no easy task.
"The trick is to know your customers," says Masingita Mazibuko, beauty marketing director for South Africa's most popular skincare brand, Pond's.
"Though having a diverse population isn't something unique to South Africa, the pallet of different skin types over here prompted us to conduct a lot of research into the needs of all those different South African women," she says.
"With our ageing line, for example, we have to be aware that white skin, when ageing, regularly starts to show wrinkles - while many types of darker skin start to become more dry and show pigmentation."
While the company's big competitor Avon uses special Avon representatives to connect with less prosperous South Africans, Pond's educates so-called "beauty advisers" who help customers in local retail shops and who also go into communities to organise roadshows.
Coca-Cola's "a rainbow for a rainbow nation" campaign, celebrating the 20th anniversary of the end of apartheid
While cosmetics firms concentrate on the different needs of different parts of the population, other brands have succeeded by tapping into the optimism created by a more unified society.
For three weeks in April, Coca-Cola used recycled water to create rainbows over its billboards in Johannesburg. The campaign was launched to mark the 20 years since the end of apartheid.
"By creating these rainbows, we managed to put a smile on the face of so many South Africans and made them feel good about themselves," says Sharon Keith of Coca-Cola Southern Africa.
It certainly achieved an industry buzz as the campaign has won several international awards.
Matt Gennrich of VW says that inflation and industrial action are particular challenges for operating in South Africa
However, the South African market also has its disadvantages. "We face high inflation, relatively expensive labour and industrial action," says Matt Gennrich of Volkswagen South Africa.
"We had a six week-strike over wages last year and this year our suppliers also faced strikes."
Every year, 115,000 vehicles roll out of its factory in Uitenhage - nearly half of which will be destined for other countries.
"Because of the popularity of SUVs and pickups, and the enormous amount of second-hand Japanese cars, there's still not a very big market for us in other African countries," he says.
But with Africa's emerging middle class, Mr Gennrich thinks this situation might change.
"Interestingly enough, some companies are now thinking about setting up a car factory in Nigeria."
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