Grail Research Assessment of Market Potential Framework Africa

Framework to Assess Market Potential
Africa
Table of Contents
Need for Market Potential Assessment in Africa The Assessment of Market Potential Framework Case Study - South African Steel Sector Our Regional Experience in Africa Case Studies Additional Examples of Regional Expertise Subject Matter Experts
Copyright 2011 Grail Research, LLC
Need for Market Potential Assessment in Africa

Africa is poised for growth due to expected economic development, global expansion of regional companies and increased interest from multinational companies Growth Factors: 7 African nations were ranked among the top10 fastest growing
economies globally in terms of GDP for 201120151
Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia, Nigeria Expected economic growth has driven local companies to seek
opportunities to increase their global foot print and multinationals to evaluate growth prospects in Africa
Mar 2010: Metorex, De Beers, and Implat reported that they were
evaluating investment opportunities in the SADC region
Market Opportunity:
The current growth scenario in Africa creates a need to identify and evaluate opportunities in the market
Our Assessment of Market Potential Framework evaluates specific

opportunities in a market based on current offerings and growth interests
Grail Research has conducted such studies in 24 African countries

in the last 1218 months
Source: The Economist; 1IMF; World Bank Boosts Sub-Saharan Africa's Economic Growth Forecast to 5.3%, Bloomberg, Jan 2011; South Africa Resource Watch (SARW); South African Companies Unlock Sub-Saharan Africa, Bloomberg, Dec 2008
Table of Contents
What is the Assessment of Market Potential Framework?

A methodology which helps firms identify and prioritize a large set of markets, and within those markets assess potential customer segments, analyze competitive landscapes and craft effective marketing messages
Product Portfolio Assessment: Optimize the current portfolio based on market needs What types of Assessment? Potential Growth Opportunities Applicable in Sectors:
Consumer Segment Evaluation: Identify highest potential segment across various consumer segments
MANUFACTURING
Assessment of High Potential Geographies: Identify the most lucrative markets for growth
MINING
How does it work?
First the methodology identifies the most attractive market or markets for entry by
developing, defining, and evaluating a set of variables to benchmark across markets
This is done on an iterative basis, first by developing a high level overview of a

large set of markets, and then filtering out some markets and conducting progressively deeper dives on a subset of more meaningful markets
CONSTRUCTION
Then, it identifies the most attractive consumer segments and needs to target in
the defined geographies.
This is done through a variety of approaches, including secondary research, expert

interviews and discussions with end consumer segments
INSTITUTIONAL INVESTORS
Key Steps in the Framework

The framework evaluates markets and opportunities systematically by starting with a large set of potential markets and filtering to the most relevant opportunities
12 Weeks1 12 Weeks1 Analyze and Identify Specific Opportunities 45 Weeks1 Optional
Screen and Screen and Potential Prioritize Prioritize Potential Areas of Growth Markets
Evaluate Market Appeal
Develop Market Entry Plan
Identify and evaluate a

set of key market variables in order to create initial universe leading to a short-list of prioritized markets based factors such as:
For prioritized markets,

opportunities are evaluated based on:
Attractive opportunities
are sequenced for investment decisions based on:
We also support clients

in developing Market Entry plans by helping in assessments such as: Most-suitable distribution channel Potential partners to enter into a new market
Market and customer

landscape Value chain analysis Competitive analysis Opportunity identification and analysis
Appeal of each
opportunity Success potential based on clients abilities in these markets
Macroeconomic
indicators Size and growth of the sector Client preferences
Filtering a group of potential markets
In-depth evaluation of each prioritized market
Final sequencing of opportunities based on ability to win
Formulation of an actionable entry strategy
Note: 1Time frame is subject to change based on the number of opportunities to be evaluated
Screen and Prioritize Potential Markets

Filtering and Selection Process
We employ a three-stage prioritization process to shortlist opportunities offering maximum potential within the clients industry/business of interest
Geography-specific Opportunity Prioritization
Initial prioritization based on
macroeconomic indicators such as GDP, growth, and ease of doing business Level I General Attributes
Larger Set of Opportunities
Product-specific Opportunity Prioritization

First phase of prioritization
based on industry-specific indicators such as size and industry growth
High-level market potential

analysis based on attributes such as size of key consumer sectors and sector growth Level II Opportunity-specific Screening
Identify potential product

segments (across the initially shortlisted product categories) based on factors such as demand patterns and consumer growth
Final prioritization based on

clients immediate focus and preference
Level III Preference-based Screening
Final prioritization based on

clients immediate focus and preference
Potential Actionable Opportunities

Analyze and Identify Specific Opportunities

Approach and Key Components
We study the industry landscape within each prioritized market to identify specific opportunities and assess their potential as a suitable and sustainable business destination Market & Customer Landscape
To understand growth opportunity and upcoming trends
in the market, we study the following:
Value Chain Analysis

To analyze the industry value chain, we study: Key suppliers and end customers, and power
equations
Industry size and growth Drivers and barriers to growth Government policies and regulatory scenario Key influencers in consumers purchase process Profitable consumer segments Bargaining power of the consumers
Market split between domestic and foreign players,

and identification of intermediaries
Different distribution channels being employed and

their relevance
Competitive Analysis
we analyze:
Analyze Priority Markets and Industry-specific Opportunities
To understand the degree of competition in the market, Key players, their market shares, and business
strategies
Opportunity Identification & Analysis
Based on this analysis, we help identify potential

opportunities using the following criteria:
Current size of the opportunity and expected

growth
Major product categories, their contribution to the

business, and prevalent pricing
Current set of incumbents serving that market Specific abilities required to seize the opportunity
Current and expected future trends around product

offerings
Evaluate Market Appeal

Market and Business Attractiveness
Both quantitatively and qualitatively, we rank the opportunities based on their market, business and product category attractiveness
Market Attractiveness Business Attractiveness Product Attractiveness
We measure attractiveness of
markets based on factors such as:
We also evaluate the attractiveness

of doing business in each market on parameters such as:
We analyze the attractiveness of

various product categories across the value chain based on parameters such as:
Size and potential of market Degree of competition An overall weighted average

score is calculated to rank markets in order of attractiveness
Outlook of end industries Openness to foreign players Product offerings and pricing
expectations
Demand patterns for products Current market size for

categories
Competitive landscape
Assessment based on
upcoming technological innovations
Develop Market Entry Plan

Activation of Program/Office
Facilitation of discussions with key internal and external stakeholders to develop a market entry plan
Identify Relevant Entities
For the final selected opportunity, our team identifies the key influencers to
the market entry decision
e.g. Relevant government regulatory departments, industry associations,

and end consumers
Evaluate Purchase Process Facilitate Discussions with Stakeholders
To better understand the key decision making criteria, we conduct interviews

with senior industry officials and experts that have significant experience in the sector for the particular geography of interest
The Grail Research team facilitates discussions between key stakeholders

to develop and assess the appropriate entry strategy and key considerations related to market entry
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Methodologies for Gathering Research in Africa

Africa poses a number of research challenges, such as limited information availability, local languages and context, which we tackle through customized research methodologies
Deployment of Global & Regional Sources
Access to Broad Panel of Experts
Industry Associations Africa specific organizations such

as Africa Economic Outlook, Africa Development Bank, etc.
Meta Analysis
Through trusted research partners Rich experience within specific sectors

and industries
Paid sources such as Euromonitor,

etc Access to Subscribed Databases
Breadth and depth of knowledge about

specific geographies and markets
Panel of Experts
Network-based Approach to Executing Research
Bloomberg Thomson One Banker Lexis Nexis Thomson Research Who Owns Whom
Network Based Approach
Leverage clients existing contacts to

further liaison with senior executives having in-depth information
Create a network of industry experts

through adhoc calls and acquire rich insights through high-level information sharing
Provide incentives to experts, if

necessary, to gather relevant information
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Table of Contents
12
Case Study - South African Steel Industry

Assessment of Market Potential
South Africa is the largest producer of crude steel in Africa, accounting for 50.4% of the total crude steel production (in 2009) and hence ranks amongst the shortlisted markets in Africa
Shortlisted Countries Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Country Name South Africa Egypt Morocco Algeria Nigeria Tunisia Libyan Arab Jamahiriya Ghana Kenya Ethiopia Botswana Rwanda Angola United Republic of Tanzania Sudan
Country Rankings
Score
88.42 88.29 65.29 61.44 57.43 56.86 51.35 48.95 45.83 45.50 44.98 44.77 44.24 44.13 43.82
1-7
Across all African nations, 15 countries were shortlisted based on their macroeconomic scores, and the individual industry-specific scores for steel, manufacturing, construction, and mining and utilities
Tunisia Morocco
Algeria Libya Egypt
Mauritania Mali Niger Senegal Burkina Guinea Nigeria Cote Divoire Ghan a TogoBeni n Central African Republic Ethiopia Chad Sudan Djibouti Eritrea
Cameroon Rep. of the Gabon Congo
Equatorial Guinea
Democratic Republic of Uganda Kenya the Congo Rwanda Burundi Tanzania Malawi
Somolia
Angola
Angola Zambia
Selected for further indepth study (of the 15 initially shortlisted)
Mozambique Zimbabwe Namibia Botswana Madagascar
Lesotho South Africa
Swaziland
8-15
16-25
Over 25
Note: The heat map is based on country ranking among all the countries studied in the Africa region, determined by evaluating the macroeconomic scores, and the individual industry-specific scores for steel, manufacturing, construction, and mining and utilities, using an excel-based framework Source: UN Data; IMF; Transparency International; Ease of Doing Business World Bank; World Steel Association; Grail Research Analysis
13

Market Overview
The South African steel industry is expected to grow in the short term, driven by an increase in steel consumption by the manufacturing, building and construction sectors
Steel Industry Metrics (2009)
8
South Africa is the top exporter of steel, accounting for the 46% of exports in 2009
Market Dynamics
7.5
3.9
Production of steel is expected to grow owing to an increase in demand for steel products across
various end-user industries:
6 MM Tons
During 2010-2011, automotive sales are

expected to grow at ~12%, construction sales are projected to grow ~3-4% per year until 2015
2.7
South Africa is anticipated to be able to meet the increasing demand with abundant reserves of iron
ore
2 0.9 0 Stocks Exports Domestic Sales Production
In 2009, the country reported 1,000 MM tons

of iron reserves and was the 7th largest producer of iron ore globally, with 53 MM ton production (in 2009) Regulator increased The National Energy February 2010, to improve electricity tariffs in the power situation in South Africa -9.6%
Y-O-Y (2008-2009) -16.6% 36.2% -28.3%
This will have a major impact on the cost

structure of the steel industry, as it is a major consumer of electricity
Source: World Steel Association; UN Comtrade; South African Iron and Steel Institute (SAISI); South Africas Steel Industry, Creamer Media, October, 2009; Creamer Media; ANALYSIS: South African auto sector looks to build on positive 2010, Just-auto.com, January, 2011; South Africa to Lift Electricity Tariffs by 24.8%, Bloomberg, Feb 2010; South Africa Metals Report Q1 2011, BMI, Companiesandmarkets.com; Grail Research Analysis
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Value Chain
Large manufacturing and construction companies purchase flat steel directly from mills; the long lead time provides an opportunity for steel merchants to operate in this market
South African Steel Industry Value Chain
Producers
Suppliers
Skip mini merchants, to earn a better profit margin on the products; Does not exist when orders are relatively small
Customers
Steel Mills
Wholesalers and Steel Merchants
Mini Merchants
Fabricators
End Consumer
Supply bulk primary steel products to gain a price advantage (avoid price increment by merchants), however, lead time is relatively long Domestic manufactured steel products constitute the bulk of domestic consumption in South Africa Wholesalers and merchants supply steel products either directly to fabricators or they supply them to small merchants in the value chain Merchants such as Macsteel have acquired small merchants in the past to increase their footprint in the country Majority of fabricators and construction companies source their demand mainly from merchants to avoid longer lead times required by steel mills
Key Competitors1
Legend: Note: 1The list of competitors is not exhaustive but indicative Source: Grail Primary Research and Analysis
Predominant Path
Less Predominant Path
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Product Landscape
Primary steel products are semi-finished products that are categorized as flat steel or long steel products
Primary Steel Products
1
4 3 2 1 0 2005 slabs
Flat Steel Products

Local Sales1 of Primary Flat Steel Products (MM Tons), South Africa 4 2.9 2.8 2.8 CAGR: 2005-2008 7.4%
Long Steel Products
Local Sales of Primary Long2 Steel Products (MM Tons), South Africa CAGR: 2005-2008 9.9%
2.3
3 2 1 0 2.0
2.5
2.5
2.6
2006
2007
2008
Flat steel products mainly include plates, sheets, and
2005 2006 2007 2008 Long steel products include sections, bars, rods, tubes, forgings, blooms, billets, reinforcing bars, steel tools, railway track material, etc.
Long steel products, in South Africa, have a broader portfolio compared to flat steel products. During 2005-2008, long steel products witnessed higher growth in sales compared to flat steel products
Note: 1The sales figures represent the sales by SAISI members; 2Long Steel products are referred to as profile products by SAISI Source: South African Iron and Steel Institute (SAISI)
16

Competitive Landscape
Gauteng province is the hub for steel manufacturing in South Africa with Arcelor Mittal South Africa accounting for ~70% of the total steel produced in the country in 2009
Location of Steel Plants, South Africa
Arcelor Mittal South Africa Highveld Steel & Vanadium Corporation Columbus Stainless Steel Cisco North West Cape Gate Scaw Metals Group
Gauteng Limpopo
Major Steel Manufacturers
Company
Germiston Pretoria Middelburg
Flat Steel Products
Long Steel Products
Steel Production (in MM tons, 2009) 5.3
Arcelor Mittal South Africa Scaw Metals Group Highveld Steel & Vanadium Corporation Cape Gate
Johannesburg
Witbank Vereeniging Vanderbijlpark Mpumalanga Newcastle

Free State KwaZulu Natal
0.7
0.7
Northern Cape
Saldanha Bay
Western Cape
Eastern Cape
Cisco Columbus Stainless Steel
0.8 (includes Cape Gate, Cisco, Columbus Stainless Steel, and other small manufacturers)
Cape Town
Note: Steel production of Cape Gate, Cisco, Columbus, and other small manufacturers in 2009 is calculated as: (Total steel production in South Africa in 2009) (Steel production of Arcelor Mittal South Africa, Scaw Metal Group, and Highveld Steel & Vanadium Corporation in 2009) Source: South African Iron and Steel Institute (SAISI); Arcelor Mittal South Africa, Annual Report 2009; Highveld Steel and Vanadium Corporation Limited, Annual Report 2009; Anglo American, Annual Report 2009; Columbus Stainless Steel
17

End Consumer
Steel consumption in South Africa is mainly attributed to the manufacturing, building and construction, and mining sectors
Domestic Carbon Steel Sales by End-Consumer Industry, South Africa, 2009 Percentage Sales by End Industry1 54.8%
25.7% 14.7%
Manufacturing2 Building & Construction
4.8%
Mining
Steel consumption in the construction
sector is expected to grow due to anticipated decline in steel prices, as compared to the prices in 2009
Others3
The manufacturing sector

accounted for more than half sales in 2009 Major industries contributing to the sales include cable, wire products, and gates (14%), tube and pipe (9.5%), plate and sheet metal work (8.9%), packaging (6.2%), and automotive (5.5%)
Steel consumption in
the mining sector is increasing, which is evident from the increase in steel sales to the sector from 4% in 2006 to 4.8% in 2009
Sales in the building and construction

sector increased from 22.5% in 2005 to 25.7% in 2009
Note: 1Values include % of the total domestic dispatches and does not includes import and exports; 2Manufacturing sector includes Packaging, Structural Metal (tube & pipe, plate & sheet metal works, and roofing & cold forming), Automotive, Cables, Wire products & gates, Agriculture, Fasteners, Electrical Apparatus/ White Goods, and Others (government, hardware, furniture, railroad); 3Include % of domestic dispatches which is not allocated to any industry Source: SAISI; South African task team on steel prices to report in 2 weeks, Steel Prices China, Aug 2010; Grail Research Analysis
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Market Attractiveness
High product demand supported by the growing end-consumer industry increases the attractiveness of the market; however, a high degree of consolidation reduces its potential
Steel Industry in South Africa Market Attractiveness
Outlook of End Industries
Product Demand
Competitive Landscape
Openness to Foreign Players Market Attractiveness
Owing to expected shortand medium-term growth in key end-consumer industries such as construction and automotive, the demand for steel products in South Africa is expected to grow
Demand for steel products

such as steel sheets and sections is expected to increase, with the growth in construction and infrastructure sector projects Imports of steel products increased ~40% to 0.57 MM Tons during the first 10 months of 2010, compared to same period in 2009
The market for crude

steel has consolidated, with a few players occupying the majority of market share
Though foreign direct

investments (FDI) in developing nations increased 10% in 2010 compared to 2009, South Africa witnessed a decrease of 77.9% in the FDI inflows
Steel merchants are

looking to grow in South Africa through acquisition of smaller players, causing market consolidation
The doing business ranking

for South Africa is 34 in 2011
Domestic auto sales is

expected to increase from 0.49 MM in 2010 from 0.55 MM in 2011
However, the ranking

decreased by 9 places to 75 on the attribute starting a business
Medium to High
Medium to High
Low
Low
Medium
Source: Grail Research Analysis

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Opportunity Prioritization Matrix
Facilitate conversations with key stakeholders to evaluate the potential for success in each market, and ultimately prioritize/sequence growth opportunities
4.0 3.5 3.0 Market Appeal 2.5 2.0 1.5 1.0 0.5 0.0 0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 2.7 Ability to Succeed in the Market Legend: Size of the bubble represents the size of the opportunity
Country A Country B
Opportunity A
Partner with an existing player and use its distribution channel to sell new offerings in the market
Capture the broad consumer market through low cost offerings
Opportunity B
Opportunity C
Cater to the demand of a niche customer segment through an existing product
By combining market appeal and success potential, we balance the inherent attractiveness of a market with the clients ability to take advantage of the opportunity and ultimately make money in the market (i.e., be successful)
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Table of Contents
21
Extensive Regional Experience in Africa

We have completed over 80 projects in Africa and have strong research coverage across the continent, spanning several industry verticals
Experience in Industry
Analysis, Competitive Intelligence, Benchmarking and Best Practice Analysis, Investment Attractiveness Assessment, and Due Diligence Support Multiple projects across sectors including: Tourism, Government Support for Foreign Direct Investment, Utilities, Manufacturing and Oil & Gas, Retainer relationship with two consulting firms
Tunisia Morocco
Assessment of Market Potential Projects

Industry
Algeria Libya Egypt
Geographic Coverage South Africa, Ghana, Tanzania, Mali, DRC, Zambia Angola, Nigeria South Africa Kenya Kenya, Nigeria, Mauritius, Tanzania, Uganda, Rwanda
Western Sahara
Metals & Mining Construction/ Infrastructure
Mauritania Mali Niger Senegal Guinea Burkina Nigeria Ghana Somolia Cameroon Gabon Uganda Kenya Democratic Republic of the Congo Tanzania Ethiopia Chad Sudan Djibouti Eritrea
Food & Beverages Rail Market Real Estate
Experience in Customer Surveys

and Analysis, and Market Attractiveness Analysis Projects across Tourism, Aviation, Manufacturing and Construction sectors
Angola
Experience in Customer Survey and

Malawi Zambia Mozambique Zimbabwe Madagascar
Analysis, and Industry Analysis
Projects executed in Healthcare and

Tourism sectors
Namibia Botswana Lesotho
Swaziland
On the ground research experience Countries where we have conducted research since 2008 Countries where we have conducted Assessment of Market Potential study
South Africa
Office in Johannesburg Experience in Industry Analysis,

Customer Surveys, Segmentation, Benchmarking and Best Practice Research, and Due Diligence Support, Projects executed across Tourism, CT, CPG, Healthcare, Manufacturing and Education Sectors
22
Understanding and Addressing the Challenges

We have created a strong research offering in Africa through our local presence, exclusive partnerships and stringent quality control measures, resulting in a growing client base
Africa Region Research Challenges Grail Research Capabilities
Limited coverage of public information

and inconsistency in information across secondary sources: Inconsistency of information across available information sources increases the reliance on primary research
Thorough understanding and deep knowledge of information

Local Presence and Expertise
sources that offer specific data on the region Office and team in Johannesburg provides seamless interface for project execution and face to face interaction with clients Long term experience on how to access the knowledge leaders / experts in the region, e.g. conducting interviews with local experts and government institutions in the region
Limited coverage of public information

by secondary sources: Public information is not always published and needs to be extracted via primary research
Poor infrastructure and low Internet penetration imply that

Ability to Extract Difficult to Find Information
research must often be conducted offline in African markets Local partnerships and a solid vendor network to conduct the research offline and obtain hard to find data Stringent control measures to ensure high quality data collection and managing on-the-ground primary research The guidelines have been developed specifically for Africa region based on the past research experience in this market
A large amount of information is still

reported only in the local language
Lack of quality pan-African research

providers with experience and reach across Africa
The number of quality research providers

who have the ability to provide on the ground research support is very limited
Research providers in the region lack

global reach and hence the ability to conduct international studies for local clients
Nuanced Understanding of Cultural/ Business Context
Experience in obtaining information that might not be publicly

reported. This may involve speaking to the relevant person/authority, using unconventional research methodologies (blog search, answers forums etc.)
Awareness of the cultural context and a deep understanding

of the sensitivities related to the regions business context
23
Client Testimonials
We approached Grail Research because we needed accurate market intelligence about hard-toreach regions where there was very limited publicly available information. The Grail team worked closely with us to understand the specific questions we had about each region and the decisions we needed to make. They applied a variety of research techniques to gather and validate data. The quality of analysis and insights they provided was exceptional, and was packaged and delivered in a workshop format which ensured that our questions were answered and our team could quickly and confidently make decisions about each region.
Greg Maud, Manager, Value Based Management and Business Development SCAW Metals Group (A member of Anglo American plc)
City Lodge was considering entering a new market and we needed support developing a detailed understanding of the traveler behavior in the market and business case for entry. We engaged Grail Research because they understood our business, had expertise in the market we were considering and knew how to quickly gather the information we needed to make decisions. We were extremely pleased with the quality of insight the team delivered and with the way they helped us think through important positioning and branding decisions. The analysis Grail prepared was very powerful and appropriate for use by our senior executives when presenting the business case to our board. I highly recommend Grail as a strategic research partner for organizations that are evaluating high stakes decisions.
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- Henri Joubert, International Business Development Manager, The City Lodge Family of Hotels
Table of Contents
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Case Study
Assessment of Real Estate Investment Potential in Sub-Saharan Africa
Objective: Create an investor presentation for a PE firm in order to depict the thesis and potential of investing in the real estate sector (residential, retail, hospitality, and commercial) in Sub-Saharan Africa Grail Research Approach: Showcase the real estate investment potential in Sub-Saharan Africa by quantifying demand, analyzing growth drivers, examining recent investment/transactions in the sector, and evaluating possible exit options for investors
Conducted secondary research and expert interviews to collect countrylevel data on macroeconomic and demographic indicators, real estate supply and demand, and recent investments, transactions, and projects in Sub-Saharan real estate
Created an excel based model to quantify the demand, deficit, and investment required for each real estate sub-sector across the target countries
Verified the output of the model through expert interviews and client input. Created visuals to represent the research findings in a compelling and easily comprehendible layout for the investors
2 weeks
2 weeks
1 week
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Case Study
Evaluation of Market Opportunities in the Housing Sector
Objective: Global construction products manufacturing company seeking to evaluate potential market opportunities in the lowcost and affordable housing sector in Sub-Saharan Africa, and identify capabilities for successful market entry Role of Grail Research: Executed extensive primary and secondary research across Sub-Saharan Africa, in markets with limited information availability, identifying potential market opportunities in the housing sector and ultimately facilitating discussions with key stakeholders around market entry strategy for the final selected opportunity
Conducted exhaustive secondary research to develop an understanding and build an overview of the countrys macroeconomics, housing market, and government regulations vis--vis the low cost and affordable housing market
Conducted in-depth and short telephonic interviews with housing industry experts and government officials to gather insights into the market, product overview, competitive landscape, value chain, government regulations, and consumer landscape
Performed in-depth analysis of the market, product, consumer, and competitor landscape along with the value chain; conducted five forces analysis of the housing industry to generate insights; synthesized case studies on housing sector in other similar countries
Facilitated exhaustive workshops with senior client leadership to help understand the key opportunity area and provide actionable insights on how and where to play in the value chain of the housing sector
6 Weeks
27
Case Study
Assessment of Opportunities in the Manufacturing Sector
Objective: Global manufacturing company seeking identify and prioritize market opportunities in sectors such as mining, rail, construction, and infrastructure. The study was aimed at developing a market-entry strategy in the prioritized markets Role of Grail Research: Gathered and analyzed competitive intelligence information for key market-entry decisions through primary and secondary research across multiple shortlisted geographies, including countries in Africa with very low information availability
Shortlisted 7 key markets for deep-dive market assessment, based on parameters such as country macroeconomics, sector-specific growth and upcoming projects; identified experts and key stakeholders from each industry
Conducted in-depth interviews with experts, government officials, and purchase managers to gather insights into the market, product profile, buying behavior, major competitors, and the value chain of the various industries in the particular countries of interest
Performed in-depth analysis of the market, product, customer, and competitive landscape for each market based on multiple parameters; synthesized the output into detailed market profiles, outlining the market opportunity and entry strategy for each geography
Facilitated workshops with senior leadership to help design the market entry strategy; in addition, prioritized the markets on a 2x2 matrix based on the appeal of the market and clients success potential in those markets
8 Weeks
28
Case Study
Assessment of Steel Industry in Sub-Saharan Africa
Objective: Global steel products manufacturer seeking to assess the current state of the steel industry in Sub-Saharan Africa and understand the customers experiences related to the product/service offered by the client. The experiences were analyzed to identify the gap between current offerings and customers requirements Role of Grail Research: Conducted detailed secondary research, expert interviews, qualitative research and a quantitative study in order to gain competitive intelligence specific to the market and understand the customer experience
Key Questions
Key Areas of Concern Products
Which Product Offers Maximum Potential?
How to Improve Current Product Offerings?
8.4 Growth in Domestic 8.2 Consumption 8.0 & Exports (2010 - 2015) 7.8 7.6 7.4 7.2 7.0 6.8 6.6 6.4 6.2 6.0 5.8 5.6
High expected growth in exports due to growth in demand in the African region primarily driven by planned mining projects
Product 5 (48%)
Product 5 have a large market size, with 18% constituted by exports. Country A is one of the major importers for South African products
Product 1 (12%) Product 3 (17%) Product 2 (36%) Product 4 (8%)
Size of the bubble represents the size of exports (for 2009, in 000 tonnes). The figures inside the brackets represent the size of exports as a percentage of total size of the opportunity
Low growth in exports and domestic consumption due to availability of low cost imports primarily from the Asian countries
Market Size (2009)1
400 800 1,200 1,600 2,000 2,400 2,800 3,200 Note: 1Market size refers to a sum of exports and consumption. The growth figures are as per the June 01, 2010 forecasts Source: Grail Primary Research and Analysis; Steel on the Net
| Copyright 2010 Grail Research, LLC Confidential
Conducted in-depth qualitative interviews (face-to-face and telephonic) and quantitative survey among customers to assess the degree of satisfaction with current product offerings, and identify areas of improvement
Conducted exhaustive primary (ad-hoc calls and expert interviews) and secondary research to analyze the current state of the Sub-Saharan Africa steel market and gather insights into the market, product landscape, competitive landscape, and value chain
Performed in-depth analysis of the market, product, and competitor landscape along with customers satisfaction level; synthesized the output into detailed actionable insights from both assessment of current market and customer experience
Facilitated a 2-day workshop with senior client leadership and Managing Director of the firm to help design the approach to various business questions related to project objectives
12 Weeks
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Case Study
Assessment of Market Potential in Mining Equipment Wear Parts Industry
Objective: Leading steel castings manufacturer seeking to assess the market potential for mining equipment wear parts across geographies to help create and support the market-entry strategy Role of Grail Research: Applied Assessment of Market Potential Framework to gather intelligence for key market-entry decisions through primary and secondary research across multiple shortlisted geographies, including countries in Africa with very low information availability
Shortlisted 8 key markets, including 5 African nations, for deep-dive market assessment, based on parameters such as size and growth potential of mining and usage of specific mining equipment; identified experts and key stakeholders from the industry
Conducted in-depth interviews with industry experts, equipment manufacturers, and purchase managers to gather insights into the market, product profile, buying behavior, major competitors, and value chain of each market
Performed in-depth analysis of the market, product, customer, and competitor landscape for each market based on multiple parameters; synthesized the output into detailed country profiles and competitive analysis, outlining the market opportunity and entry strategy for each geography
Facilitated workshops with senior leadership to help design the market entry strategy through suggested models for market sizing, and key insights, and performed analyses for each market
6 Weeks
30
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Subject Matter Experts

Kurian Thomas brings 15 years of experience to his role at Grail Research. Kurian joined Grail from Monitor Group where he spent five years as a strategy consultant post his MBA from Kellogg. In his most recent role at Monitor, he managed large, complex projects at a number of the firms largest relationship accounts. His experience includes corporate strategy, M&A strategy (including due diligence and transaction advisory services), and marketing strategy. He has consulted across a number of different industries, including chemicals, energy, automotive, and healthcare.
Kurian Thomas
Rahul Sethi
Rahul Sethi is a Vice President at Grail Research, before joining Grail he was with Monitor Groups marketing strategy practice. He has been instrumental in leading a number of engagements in Europe, Africa and South East Asia. He is responsible for the commercializing the firms Africa practice . His primary areas of focus have been working with clients in the public and private sector regarding topics such as market growth strategy, market segmentation and tracking, competitiveness strategy, market entry planning and implementation. Rahul holds a degree in economics, a masters degree in communications and a MBA. Vivek Neb has research experience across various industrial sectors, including information technology, telecommunication, tourism, finance and FMCG. His work is focused on Industry analysis, market sizing, confirmative due diligence, market opportunity analysis, and competitive intelligence. He has worked on various assignments, including assessment of market opportunity for a global leader in farm equipments to help the client device the entry strategy for the Indian market, assessment of global market opportunity for a leading technology product for usage in ICT space, analyses of global mobile internet market to help a technology leader to identify potential growth opportunities. Shashank Dewan has a rich experience of working across sectors such as manufacturing, mining, finance, consumer electronics, etc. His work is focused on assessment of market opportunity, industry analysis, market sizing and competitive intelligence. He has worked on over 6 assignments to support clients in identifying opportunities across15 geographies, in the past 12 months. These assignments include assessment of market potential for an Africa based, manufacturing sector company, to identify new market opportunities; support an Africa based steel giant, identify opportunities in existing markets, etc.
Vivek Neb
Shashank Dewan
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For More Information Contact: Rahul Sethi

(rsethi@grailresearch.com) (sdewan@grailresearch.com)
Shashank Dewan
Copyright 2011 by Grail Research, LLC No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of Grail Research, LLC
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Grail Research Assessment of Market Potential Framework Africa

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Grail Research Assessment of Market Potential Framework Africa

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Framework to Assess Market Potential

Copyright 2011 Grail Research, LLC

Need for Market Potential Assessment in Africa

Our Assessment of Market Potential Framework evaluates specific

Grail Research has conducted such studies in 24 African countries

Copyright 2011 Grail Research, LLC

What is the Assessment of Market Potential Framework?

How does it work?

This is done on an iterative basis, first by developing a high level overview of a

This is done through a variety of approaches, including secondary research, expert

Copyright 2011 Grail Research, LLC

Key Steps in the Framework

Evaluate Market Appeal

Develop Market Entry Plan

Identify and evaluate a

For prioritized markets,

We also support clients

Market and customer

Filtering a group of potential markets

In-depth evaluation of each prioritized market

Final sequencing of opportunities based on ability to win

Formulation of an actionable entry strategy

Screen and Prioritize Potential Markets

Larger Set of Opportunities

Product-specific Opportunity Prioritization

High-level market potential

Identify potential product

Final prioritization based on

Level III Preference-based Screening

Final prioritization based on

Potential Actionable Opportunities

Analyze and Identify Specific Opportunities

Value Chain Analysis

Market split between domestic and foreign players,

Different distribution channels being employed and

Analyze Priority Markets and Industry-specific Opportunities

Opportunity Identification & Analysis

Based on this analysis, we help identify potential

Current size of the opportunity and expected

Major product categories, their contribution to the

Current and expected future trends around product

Copyright 2011 Grail Research, LLC

Evaluate Market Appeal

We also evaluate the attractiveness

We analyze the attractiveness of

Size and potential of market Degree of competition An overall weighted average

Demand patterns for products Current market size for

Copyright 2011 Grail Research, LLC

Develop Market Entry Plan

Identify Relevant Entities

e.g. Relevant government regulatory departments, industry associations,

Evaluate Purchase Process Facilitate Discussions with Stakeholders

To better understand the key decision making criteria, we conduct interviews

The Grail Research team facilitates discussions between key stakeholders

Copyright 2011 Grail Research, LLC

Methodologies for Gathering Research in Africa

Access to Broad Panel of Experts

Industry Associations Africa specific organizations such

Through trusted research partners Rich experience within specific sectors

Paid sources such as Euromonitor,

Breadth and depth of knowledge about

Network Based Approach

Leverage clients existing contacts to