Marketing and communication departments of various manufacturing and trade companies have great tasks this New Year. It is to create innovations and develop communication materials to engage and encourage consumer spending for their products in order to continue to remain in business.
Stimulating consumer spending this year has become significant as there was broad decline in 2017 across manufacturing, services sector, trade and other sectors largely due to sluggish consumer demand.
PwC reports late last year that the manufacturing sector contracted by -2.8% y/y in Q3’17, recording its worst performance in four quarters. “Our evaluation of the trends in Q3’17 corporate performance suggests that price increases across the manufacturing sector, particularly among the consumer and industrial goods companies, continue to weigh significantly on volumes. Hence, this suggests recovery in this sector remains fragile, and may be prolonged owing to sluggish consumer demand”.
The economic environment which entered a recession in the first half of 2016, continued to remain challenging in the second half of the year till most part of 2017. Analysts said the subsequent rise in inflation and the decline in compensation of employees, contributed to the reduction in household consumption expenditure.
With Nigeria exiting recession as announced in September 2017 by the National Bureau of Statistics (NBS, a development driven largely by improved performance of oil, agriculture, manufacturing and trade sectors of the economy, these sectors expect to continue to leverage this slight improved performance.
Projections for 2018
Again, according to analysts, there are hopes that political campaigns this year preceding 2019 elections and the possible full implementation of 2018 budget would bolster expenditure which would impact on manufacturing, service industry and trade.
Olusegun McMedal, Chairman of Lagos State Chapter, Nigerian Institute of Public Relations noted that operating environment in 2017 was really very tough as a result of recession which started last year but said that businesses are however hopeful for a boom in 2018 partly because of the general elections coming up in 2019. “Government is expected to pump money into the economy to convince the electorates. That is expected to trickle to businesses and households”
In his comment, the president of Outdoor Advertising Agencies of Nigeria, OAAN, Tunde Adedoyin who also acknowledged that 2017 was really difficult for businesses was hopeful that 2018 would be better because of the expenditure expected from political campaign and 2018 budget.
To further encourage consumer spending this year, analysts said that apart from other creative ideas and innovations, marketing and communication departments of companies would likely rely on well-crafted consumer activations, promotions, traditional and new media to activate consumers spending.
However, Dare Ogunyombo, an analyst and Group Head of Media in Brooks and Blake said that marketers and communication practitioners working on brands would rely more on consumer insight for marketing purposes as discretionary buying will still dominate in 2018.
“I believe 2018 will be interesting in terms of how consumers make their decisions. There is likely to be a very high level of discretional buying because the purchasing power of the consumers is on a steady decline according to available statistics. For instance, the IMF World Economic Outlook Database for 2017 revealed that Nigeria’s Real GDP per capita growth has been in the negatives in the past three years although there was a marginal improvement in 2017 at -1.9. Data from the National Bureau of Statistics also revealed the same trend. The purchasing power parity is of great concern so we should expect that consumers will simply be more cautious with how they spend”
Dare also said that interestingly, the World Bank Global Economic prospect for 2018 puts global GDP growth at 3.1%, a forecast of 3.2% for sub-Saharan Africa and 2.5% for Nigeria. So, brand managers may take solace in this relatively positive projections to up their games in terms of the offerings of their products.
He agreed that a great deal of research is needed to actually identify the meeting point between their products and what the consumers want so that the brand can stand a good chance of been the preferred brand.
“ It must be noted that 2018 started with a major challenge posed by the scarcity of petrol which resulted in a significant increase in the prices of commodities. So brand managers must ensure their product is right, available at the right price and places. To remain competitive, it is simply about rethinking the 4 Ps of marketing with a bespoke consumer and public relations campaigns”. Marketers must speak consumers’ language in 2018.
Some other organisations would rely on digital media to reach consumers but in its predictions for 2018, Kantar Millward Brown, a global research agency that assists businesses in brand building said that the New Year is poised to be another busy year for marketers, complete with continued evolutions in communication approaches, media targeting technology and ROI measurement.
Looking at digital marketing, it specifically said that following a year where many brands were questioning and rethinking digital investment, 2018 would see more focus on an integrated view of the overall mix, including digital, while measurement and optimization approaches will be modified so that ROI becomes more of journey and less of a destination.
According to the research agency, in 2017 most advertisers started to reconsider their digital investment and scrutinize its impact. “They will go one step further in 2018 and start to question the role digital plays within the entire media ecosystem; media agencies, publisher and research partners will have to be ready to give an answer”, it said.
Emphasizing that Media ROI will be about the journey, it said that in 2018, real media ROI will become a fast-paced iterative journey where creative (all content, not just Ads) and media (partnerships, not just insertion orders and exchanges) work more in tandem, with the express goal of achieving continuous improvement in sales and brand outcomes.
“Marketers are now keenly focused on ensuring that they understand the impact of their investment, particularly given that digital now accounts for more than 30% of global share of investment,” said Pablo Gomez, Media and Digital Director, Kantar Millward Brown NASEAP in the report.