Tanzania’s recent economic slowdown due to electioneering period that culminated in the election of country’s most popular President since the late founding father of United Republic of Tanzania Julius Nyerere, President John Magufuli, underlines the importance for business of competitive advantage. Although the long-term outlook for Tanzania’s consumer market remains positive driven by long-term demographic and income growth understanding how Tanzania’s consumers think and what drives their preferences is, and will continue to be, increasingly important. In the event of economic slowdown, businesses need to sharpen their competitive edge and target customers effectively. In the long run, Tanzania’s growing consumer market will also mean greater competition for market share from existing and a growing number of new entrants. It is only by having an in depth understanding toward their unique preferences, innovative promotion and targeted campaign, will the local businesses succeed.A recent survey of more than 1500 Tanzanian consumers across all socioeconomic groups regarding their shopping behavior, spending levels, channel preferences, and brand experiences to understand how consumers reviews products and make purchasing decisions.The drivers of Tanzania’s consumer market for both consumer durables, products purchase infrequently and are made to last and fast moving consumer goods market are middle class and affluent consumers. They make up to 22 million people in 2015 and are set to increase to 28 million by 2020. This demographic group possesses at least US$1,900 in assets, and consists of two main consumer segments namely the young professionals and modern housewives. Young professionals are working individuals or young couples living independently. In the past, this consumer group would likely have continued to live in their parent’s household in area like Tabata, but due to factors including urbanization, many recently start to live independently and began to purchase relevant goods and now are know in inhabit areas like Kimara, Mikocheni, Sinza, Mabibo and Kinondoni.
Meanwhile, modern housewives are married women aged 20 to 35, influencing the purchase of household groceries and personal products. These two consumer groups are both important and a growing consumer segment for consumer businesses, which brands will need to understand in order to tap into.Tanzania’s consumer durables market faces several upcoming challenges in the near time. On average, less than one third of consumers actually end up making a purchase. Consumers value the functional benefits of products and brands that create a consumer need, and then can clearly show how the product addresses those problems and needs. However, consumers also have low levels of brand loyalty and more than one-third plan to try different brand on their next purchase regardless of experience. One other challenge businesses faced is consumers are sensitive to the rise of electricity costs that are expected to come down according to Tanzania Electric Supply Company Limited once the gas electricity generation is connected to national grid, hence, they may alter the way they use high volume electricity products and are looking for efficient products that add value products that do tasks more efficiently, for example washing machines that use less electricity and water .Another shift in the Tanzania consumer durables market is Tanzanians are becoming more willing to borrow money to finance and purchase durable products. In 2015, 40 percent more consumers than in 2014 were willing to finance a durable product with credit. Greater affluence and affordability is leading to a greater penetration of durable goods.
In the major durables category, the ratio of a product’s price to overall household expenditures has fallen steadily since 2010, which means both household durables and consumer electronic products are becoming more affordable each year. This goes to show the significant and growing opportunity there is for brands, business and manufacturers, but only if they target these consumer effectively.Consumer durable businesses need to focus on the preference of young professionals and modern housewives. They are key opinion leaders within their families and communities, therefore are crucial drivers of sales for first time buyers ‘ their opinions and experience toward certain products and their recommendation is highly influential on the decision making process of others. Though Radio and Television remains the primary source of product information, but digital is growing fast in influencing brand choices. The Tanzania market began to use online digital sites for product comparison on features and prices, e-commerce and online purchases are rising dramatically. Nevertheless, in store marketing still plays a significant role, by introducing consumers to the brand and demonstrating the efficiency, features, and durability of the product and making up 47 percent purchasing decisions. As for the fast moving consumer goods market, modern housewives are still a critical segment for many fast moving consumer goods categories over the next four years. They are considered to be the main influencer in the discussion and purchase of products within their family and community members. Even though promotions for fast moving consumer goods products are still effective, Tanzanian consumers only respond to offers for brands that are already within their preferred fast moving consumer goods category to purchase products and promoted brands have to be already known and desired. Furthermore, Tanzanians are also willing to trade up to more expensive product versions within their preferred brand category.Another key trend is that Tanzania fast moving consumer goods consumers make purchases across a wide range of retail channels and purchase products at different types of stores and establishment, depending on the product category. For example, when asked about their last consumer purchases, most Tanzanians purchase cigarettes and powdered coffee at local grocery stores, whilst other products such as cosmetics, baby formula and food are frequently purchased at convenience stores in the estates.But, consumers shop for products in the likes of diapers at supermarkets like Imalaseko and Nakumatt supermarkets. According to recent findings, a typical Tanzanian consumer doesn’t do their shopping in one place or type of store.These unique preferences for both consumer durables and fast moving consumer goods market, will drive and determine the outcome of sales over the coming years. Businesses, brands and manufacturers need to stay ahead in the competition by having a round the clock understanding of the needs as well as decision making drivers of Tanzanian consumers generally, whilst paying special attention to the shopping preferences and behaviors of Tanzania’s growing shoppers and begin to tap into massive current opportunities and potential profits for manufacturers and consumer businesses.