Professional Documents
Culture Documents
Kelly K Project
Kelly K Project
Kimberly Kelly
Table of Contents
1. Executive Summary
2. Situation Analysis
a. The Company
b. Product /service overview
3. Marketing Environment
a. PEST Analysis
i. Political and Legal Environment
ii. Economic Environment
iii. Social/Cultural Environment
iv. Technology and Infrastructure Environment
v. PEST Conclusions
b. Industry Trends
c. Competitive Analysis
4. Market Segmentation, Targeting, and Positioning
a. Market Segmentation
b. Geographical Market Segmentation
c. Primary Target Market Estimation
d. Positioning Strategy
5. Marketing Strategy
a. Product/service Strategy
b. Pricing Strategy
c. Promotional Strategy
d. Place/Physical Distribution Strategy
6. Market Entry
7. Summary Conclusions
8. References
9. Appendices
a. Map of Location
b. Appendix I
c. Appendix II
d. Appendix III
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 3
1. Executive Summary
Simplicity has great potential in the global market. South Africa will be an excellent
place to begin expansion. By using a joint venture strategy, the business risks will be minimised.
The economy of South Africa is on the up and people there are begining to have more
expendable income to enjoy non essential items like luxury soaps and lotions.
2. Situation Analysis
a. The Company
Simplicity is a US based company that produces all natural, organic soaps and lotions at an
affordable price. The company has recently begun planning to introduce its product
internationally.
Simplicity prides itself on using all natural, locally sourced products. We aspire for our
luxurious, yet affordable soaps to be highly sought after on a global scale. In South Africa, there
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 4
has been a great deal of recent growth in the area of men’s and women’s skin care products.
Also, the semi-recent modernization of several African countries makes it a good location for
new businesses (Redazion, 2017). The market is growing quickly, and people in the area are
beginning to find themselves with more disposable income to spend on things like fancy soaps
and lotions.
3. Marketing Environment
a. PEST Analysis
The government in South Africa is divided into three parts: the executive, the legislature ,
and the judiciary (SAHO, 2017). The executive branch is responsible for executing laws. The
judicial branch interprets the laws. And the legislative branch creates the laws. The US and
South Africa have strong economic and trade relations. South Africa signed the Trade,
Investment, and Development Cooperative Agreement (TIDCA) with the United States in 2008;
this “establishes a forum for consultative discussions, cooperative work, and possible agreements
on a wide range of trade issues, with a special focus on customs and trade facilitation, technical
barriers to trade, sanitary and phytosanitary measures, and trade and investment promotion”
(BOAA, 2016). Because of this an American soap company, like Simplicity, would likely be
welcomed.
Recent controversy surrounding President Jacob Zuma will likely increase economic
instability in the near future. “Endless political bickering constitutes the biggest stumbling block
to faster GDP growth, and it continues to weigh on business confidence and stave off future
investment” (FocusEconomics, 2017). That being said, in the twenty plus years since becoming a
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 5
democratic country, South Africa has grown immensely both socially and economically. The
charts in Appendix A show South Africa’s GDP and GDP per capita from the 2012 to 2016. As
of 2016, the country's GDP was 296 billion and the GDP per capita was 5229 (FocusEconomics,
2017). “Between now and 2040‚ the country’s Gross Domestic Product is predicted to increase
by 40% as its population increases by only 16%” (Jordan, 2017). The chart in Appendix B shows
how the value of the rand has changed since the year 2000. The current US to South African
It is difficult to generalize South African culture and etiquette because it is one of the
most multicultural countries in the world (Commisceo, 2017). The graph on Appendix C shows
the distribution of males vs females of different age ranges. The country has a noticeably higher
number of females than males; and the largest population seems to be 35 years of age and below.
The ethnic makeup of South Africa’s population is approximately 75% black, 14% white, 9%
Colored, and 3% Indian (Commisceo, 2017). The religious makeup consists of about 68%
Christian, 2% Muslim, 2% Hindu. The other 28% of South Africans are animists or have their
own indigenous beliefs. As far as language goes, there are 11 official languages. English is
spoken throughout, as well as Afrikaans, Ndebele, Northern Sotho, Southern Sotho, Swazi,
In preparation for hosting the 2010 Fifa World Cup, the government of South Africa
invested heavily on the energy, transport, and telecoms infrastructures needed to host such a
massive event. Because of this, the country is able to meet the demands of a growing economy
and population (Brand South Africa, 2017). A recent G2O Infrastructure Hub report estimated
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 6
that South Africa will need to invest $464 billion by 2040 in order to keep up with its projected
v. PEST Conclusions
Endless political controversies make the future economic condition of South Africa
uncertain. However, the US and South Africa have very strong economic trade relationships.
South Africa's principal foreign policy objectives are to promote regional economic integration
and to promote the peaceful resolution of conflict (BOAA, 2016). It is projected that GDP and
population will increase dramatically in the near future and as a result, the government will be
b. Industry Trends
The global soap industry reached a value of more than US$ 17 billion in 2016 (EI,2017).
This growth is due to a recent increase in disposable income, as well as a semi-recent increase in
c. Competitive Analysis
Unilever is the leader of the soap market in South Africa with a 32% share of value sales
in 2016 (EI, 2017). Unilever’s strong brands, such as Lux, Sunlight and Lifebuoy, are go-to
products in South African households (EI, 2017). In order to make Simplicity a contender in the
soap industry, heavy price promotions will be offered. This will help drive volume growth
amidst the tough economic environment (EI, 2017). Simplicity will also promote the fact that it
is locally sourced and made from ingredients that complement the darker skin types. This should
a. Market Segmentation
There are more females than males living in South Africa so Simplicity will gear its
marketing more towards women. In general, women are more interested in handmade soaps than
men anyway. 75% of South Africa's population is black, so the company will also make an effort
Gauteng is the smallest province in South Africa but it houses the largest percentage of
the population (SSA, 2014, p12). With almost a quarter of the South African population so close
together, it only makes sense to introduce Simplicity into that area first.
The current population of South Africa is 55,913,401. Of that, 28,208,888 are females. If
approximately a quarter of the people in south africa live in Gauteng, then there are around
7,052,222 in that province. In that province, about 75% of the population is black. Therefore, one
can estimate that there are around 5,289,167 black women in that area. This will be the target
market of Simplicity.
d. Positioning Strategy
Simplicity’s soaps will be made from natural products that are derived from Africa.
Ingredients such as cocoa butter and shea butter, that are popular with the target demographic,
will be used. The ads will generally feature black women in their 30s. These ads will be
distributed through multiple channels, but mostly on transportation. Simplicity will place
advertisements on the side of busses and inside trains. Simplicity prides itself in using all natural,
locally sourced products. This will appeal to the country and its target market.
5. Marketing Strategy
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 8
a. Product/service Strategy
Our company will be different than existing soap companies because we are passionate
about the environment and we strive to use only locally sourced supplies. Our packaging will be
minimal and made entirely from recycled materials. Because of this our scents and style will
truly reflect the local target markets. This will appeal to people with strong earth and community
loyalties.
b. Pricing Strategy
Soap is an obvious need, but I believe that the natural ingredients and exotic scents will
allow our company to stand out among its competitors. High-end cosmetics, such as MAC, are in
short supply in Africa, and they cost three times as much as they do in the United States (Powell,
2012). The pricing for Simplicity soaps will be on the higher end, because the company wants
the consumer to associate its product with more expensive brands and because pricing low may
cause buyers to think that the product is poor quality. Simplicity will, however, offer a number of
discounts and promotions because the company wants its product to be affordable to people with
c. Promotional Strategy
Simplicity will use colorful billboard ads on streets and public transit as its main avenue
of advertising. They will offer a number of rewards and coupons to repeat customers, and to
The most densely populated area of South Africa is Gauteng, so the physical location of
Products will be distributed by truck or train to locations throughout the rest of South Africa.
6. Market Entry
Simplicity will begin its journey into the global market by using the joint venture market
entry strategy. This will allow the company to learn about the new market environment more
easily.
7. Summary Conclusions
“Africa is the next frontier for global luxury goods brands, said Fflur Roberts,
Euromonitor’s global head of luxury goods, noting that the continent is projected to have double-
digit economic growth by the end of the next decade” (Powell, 2012). The economy, and
business opportunities are rising in Africa. This is a good time to start a business there, and by
using joint venture as the market entry strategy, Simplicity will be able to expand globally with
minimal risk. We believe that our product will be welcomed by the South African people.
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References
Bronkhorst, Q. (2016). How far the rand has fallen: from 2000 to 2016. Retrieved from <https://
businesstech.co.za/news/business/108555/how-far-the-rand-has-fallen-from-2000-to-
2016/>
global.com/country-guides/south-africa-guide
Euromonitor International (EI). (2017). Bath and Shower in South Africa. Retrieved from
<http://www.euromonitor.com/bath-and-shower-in-south-africa/report>
economics.com/countries/south-africa>
from <https://www.timeslive.co.za/sunday-times/business/2017-07-28-south-africa-
under-
pressure-to-invest-trillions-in-infrastructure-development/>
Powell, A. (2012). Finding the Beauty in African Sales. The New York Times. Retrieved from
<http://www.nytimes.com/2012/11/16/fashion/16iht-fbeauty16.html>
Redazione. (2017). Africa: the next frontier of cosmetics. Retrieved from <http://www.
kosmeticaworld.com/2017/04/01/africa-next-frontier-cosmetics/>
SAheritage. (2017). A Heritage trail through the provinces of South Africa. Retrieved from
<http://www.sahistory.org.za/topic/heritage-trail-through-provinces-south-africa>
org.za/article/structure-government-south-africa>
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 11
https://www.statssa.
gov.za/publications/P0302/P03022014.pdf
The U.S. Bureau of African Affairs (BOAA). (2016). U.S. Relations With South
Africa.Retrieved
from https://www.state.gov/r/pa/ei/bgn/2898.htm
FINAL PROJECT - SIMPLICITY’S MARKET ENTRY INTO SOUTH AFRICA 12
Appendices
Map of Location
Appendix A
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Appendix B
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Appendix C