Keynote Address by Olu Akanmu, at the book launch of “Nigeria Marketing Memoirs” authored by Mike Awoyinfa and Dimgba Igwe. (May 16, 2006)
The authors that we celebrate today have painted the past of marketing in a memoir; I want to paint the present of marketing in my presentation. The book is a great one, it has been well reviewed. It is a chronicle of the exploits of Kings of Marketing on the shores of Nigeria. It is a chronicle, for the learning of the new generation of marketers, to build on the standards of the past, to celebrate the successes of our elders and to learn from their challenges. It is to this new generation, these new practitioners of marketing who are writing their own history that I wish to direct my epistle. I will be speaking to you today on the contemporary challenges of marketing in Nigeria.
Competition across industries today has never been more intense in our land. The Nigeria economy has become more liberalized and markets are opening up. The international credit rating of the Nigeria economy by Fitch and Standard and Poor, that puts us in the same class as leading world emerging economies like Brazil and Turkey makes Nigeria, a good destination for foreign direct investment. Democracy has been good for Nigeria. Multinational companies that abandoned Nigeria in the days of military rule have come back. Others that were on the ground, that practically kept their investment at a minimum to prepare to divest on the long run, have upscaled their investments. What is interesting about this is that leading firms in the same industry are upscaling their investments at the same time creating a level of intra-industry or intra-category competition on a scale that has never been seen. We see this especially in industries like food and beverages, breweries and the telecommunications.
On the other hand, we see competition pressures driven up by the forces of deregulation and re-regulation. Monopoly powers which protected the in efficiencies of incumbent players are breaking down as we have seen in telecommunications, and we will see in other utility industries. Deregulation in financial services is leading to the convergence of playing fields of insurance and traditional banking that has been hitherto separated. And re-regulation as a result of the Soludo Solution in financial services has created new competitive situation of well resourced industry armies, consolidated firms with consolidated arsenals pointing towards each other. The marketing communications industry and the larger marketing profession has been one of the beneficiaries of this new competitive situation. The collective ad industry is estimated to have gone up by more than 250% over the last five years.
Digital technology which we call digitalization has also been a key driver of the new competitive pressure. It is creating substitute products with new economics that is forcing down prices in industries. In telecommunications, we can see the now established presence of international calling card business using new internet technologies that have forced down international calling rates from as much as N120 five years ago to about N15 today. Digital technology is creating convergence in industries that we will traditional consider as very distant from each other. A payment services nexus is emerging between the financial services and telecommunications industries. The two industries can bring different assets in market power and competencies to compete or co-operate in the emerging nexus.
Our simple story as we have pointed out at different marketing fora is that “the combined forces of Democracy, Deregulation and Digitaization which we call 3D forces are fundamentally changing the structure of many industries with potential seismic effects”. This presents a new level of challenge to marketing practitioners. This challenge goes beyond simple brand marketing which would be sufficient in stable industries. The challenge calls for harnessing the best traditions of brand marketing but elevating it to a new strategic level.
The defining paradigm of this new competitive situation is the rise of the power of the customer to new levels across industries. The customer is the beneficiary of the new competitive situation. The customer now has got real and many choices. He has also become more sophisticated. He is more widely traveled compared to the past. He is exposed to international media through satellite television, movies and DVDs. He knows the standards of advance markets and demands that his products perform to the same standards. He understands the economics of his relationship with your business at an amazing level. He is also becoming organized along with his peers in associations to protect their interests. We are witnessing a new phenomenon of organized customer power, something that we are not used to, in marketing practice in Nigeria. The GSM boycott of 2003 is a new development of organized customer bargaining power and the emergence of “Consumerism” as a new marketing factor. Consumer rights movement and advocacy groups are emerging, a feature of more advance economies. The customer may no longer be much atomized. The organized association of customers supported by Customer rights advocacy movements will challenge traditional marketing practice in Nigeria.
How has the business community and the new generation of marketers approached this new competitive challenge? In many industries, players have largely responded in the same way. We are all running after the same customers, offering them the same things, in the same way. Players are essentially copying each other with the result that customers can no longer see differences in offerings and services among players. There is a growing commoditization of industries especially in the service sector, a situation where we all run after the same customers, with the same offerings, in the same way. Price has become the only point of difference, which in itself is not a sustainable difference as players drop prices easily to match each other. Price wars are now on the increase, disguised as lotteries and promotions across industries. Even the banks are now doing lotteries. Industry value and profitability are being destroyed as a result of businesses not being able to deliver relevant, unique and tangible differentiation to customers. The consequences for re-investment and growth are serious if businesses cannot make good returns on their investments. Public savings mobilized into the stock market at an un-precendented level in the last two years may be threatened and even destroyed. The worst situation for savings and investments in Nigeria is for the public to loose confidence in the capital market because businesses have failed to give them good economic returns on their investments. It will take many years to rebuild public confidence in the capital market.
Businesses needs to return to the fundamental essence of strategy which is to elect to serve unique customer groups in a unique way with unique offerings based on the firm’s unique capabilities and competencies. Marketing has to lead the way in making this happen. The new generation of marketers must raise the level of conversations in their business to a strategic level around this fundamental essence of strategy. New generation marketers must leverage their knowledge of markets and customers to influence their organization policy level and their boards. Traditional front-end marketing skills will not be sufficient. The knowledge of back end operations including people and technology issues will be critical to engage the business on how to build unique capabilities that will deliver unique offerings to elected markets. We must engage our business leaders and the boards of corporate organizations that operational excellence is not the same thing as strategy. Many organizations today are confusing the two. They think that just by running an efficient, operational excellent organization, they will win in the market place. However, efficiency in serving the wrong markets is just a good as inefficiency on the long run. Even when organizations serve the right markets efficiently and they do so in ways that do not deliver unique values and offerings to their customers, their efficiency will not be effective on their bottom line. They will only become efficient, perpetual price -cutters who destroy economic value and the wealth of their shareholders.
If the power of customers is on the ascendancy, businesses will also need to have more dialogue with their customers. We will need to engage them at rational and emotional levels. Involving customers in products and service design could be a tool to building strong competitive edge. We will need to change our interaction with customers from mere transactions to relationships. Leading players in financial services have keyed into this and are seeing the effects on their bottom lines. Traditional marketing is product and transaction driven. New marketing is service and relationship driven. The emerging consumerism, organized customer-power and customer-rights movements provide one of the best opportunities in our history for businesses to differentiate themselves. Businesses can tap into the rising customer power phenomenon to differentiate themselves as “Customer Champions”. The customer-champion position is one of the best positions to own in any industry especially those witnessing unleashing of new competitive forces. The true merger of interests of the customer and the customer-champion firm will be such that the emerging customer right movements and advocacy groups will champion the interest of the customer-champion firm. When customers are the advocates of a firm, the market leadership of that firm is inevitable.
In conclusion, our simple story is that in the larger public interest, we need to de-commoditize our industries. We need to fight the commoditization tendency that could kill many businesses and destroy economic value. We need to raise a new slogan in the business community “Be Different or Die, Be Different or Die, Be Different or Die”. It is the task of this new generation such that when our own chronicle is written, we would not have failed the challenges of our time.
This is my epistle. Thank you for listening.
Olu Akanmu can be reached on email@example.com