Marketing South Africa in Mozambique

Table of Contents Mozambique within the SA Tourism portfolio Market Landscape Travel to South Africa Consumer Segmentation Messages and Channels Options Key Product Elements Slide no. 2 South African Tourism 2012

Global Channel Manager Stakeholder Manager Regional Director Country Manager Context: Africa is Important Focus Markets Within Africa Below is the outcome of the fourth portfolio review process that took place during July/August 2009 and which covers the period 2011/12 to 2013/14 Responsibility Core Markets Investment Markets Tactical Markets Watch-list Markets Strategic Importance Strategic Air Links/Hubs Africa Americas Asia & Australasia Europe Angola Botswana Kenya Nigeria South Africa 1 DRC Mozambique Lesotho Swaziland Malawi Namibia Zambia Zimbabwe Bahrain, Oman, Qatar, Saudi Arabia Egypt, Ethiopia, Ghana, Mauritius, Senegal, Tanzania, UAE USA 1 Brazil Canada Argentina Australia 1 Slide no. 3 South African Tourism 2012 Note: 1 indicates business tourism hubs India China (incl. Hong Kong) Japan New Zealand Republic of Korea Malaysia Singapore France 1 Germany Netherlands UK 1 Belgium Italy Sweden Ireland Austria Denmark Portugal Spain Switzerland

Market Landscape Mozambique has a large population, a stable political environment, a growing economy, growing penetration of technologies and large growth forecast in travel to South Africa Political Mozambique suffered a 15 year civil war from 1977, after independence from Portugal in 1975 First democratic elections were held in 1994 In 2006, the World Bank, IMF 1 and AfDB 2 wrote off USD 1.8 billion worth of debts In 2010, rising food and fuel prices sparked riots in Maputo Economic Drivers of Economic Growth: 47.8% of government budget in 2010 was donor-funded Sector Contribution: Agriculture is the largest contributor (~30%) to GDP, and the key driver of growth in 2010 Economic Wellbeing of People: GDP per capita is still fairly lower than peers GDP (USD Bn) GDP per Capita (USD) GDP Growth Rate ( 05-10) GDP Growth Rate ( 10-15E) 9.5 440 7.6% 12.8% Population Large population of 22.95 mn people, highly concentrated in the 0-19 age group ~22.95 Mn 9% 7% 16% 11% 57% Population by Age 50+ 40-49 30-39 20-29 0-19 Technology Penetration of technologies is low in Mozambique, compared to other SADC nations, but is on the rise Mobile Phones: As of March 2012, there were ~7.2 million mobile phone subscribers, a 31% penetration rate Internet: As of 2010, there were 4 internet users per 100 Social media: Facebook is the most popular social networking site and had a penetration of 31.2% among the online population in 2011 Travel Volume of trips to South Africa have been growing and are projected to continue, South Africa claims 68% of 2010 volume Volume and Growth of Arrivals to South Africa (000 s) 926 2006 1,080 2007 9.9% 1,226 2008 1,362 2009 1,352 2010 Projected Growth (2010 2015) 11.8% Note: 1 International Monetary Organisation; 2 African Development Bank Slide no. 5 South African Tourism 2012 Source: Monitor and Grail Research and Analysis; Mozambique Profile Timeline, BBC News, Jul 2011; Mozambique Country Brief, World Bank; Deadly Riots in Mozambique Over Rising Prices, BBC, Sep 2010; African Economic Outlook; Instituto Nacional de Estatística; Internet World Statistics website; Social Baker Website; SAT Departure Survey 2008, 2010; CIA World Fact Book

Tourist arrivals to South Africa for Jan to Jul 2012 grew by 10.5% over 2011 to reach 5,209,618. All regions showed positive growth, Central & South America showed highest growth and recorded 49.8%. Europe North America 227,672 arrivals 15.6% up from 2011 742,952 arrivals 9.7% up from 2011 Middle East 31,379 arrivals 14.3% up from 2011 Central & South America 69,954 arrivals 49.8% up from 2011 GRAND TOTAL 5,209,618 arrivals 10.5% up from 2011 AFRICA 3,812,669 arrivals 8.5% up from 2011 Asia 222,069 arrivals 37.5% up from 2011 Australasia 76,107 arrivals 13.6% up from 2011 Indian Ocean Islands 11,865 arrivals 8.1% up from 2011 Slide no. 7 South African Tourism 2012 Note : Tourist Arrivals figures shown above for Jan - Jul 2012 Source: Table A Tourist Arrivals Jan - Jul 2012

Tourist Arrivals There was a 8.2% growth in tourist arrivals from land market, Zimbabwe was the biggest contributor in this region with 20.4% growth, 179,663 more tourists than same period in 2011. Tourist arrivals to South Africa from Africa land markets, Jan - Jul 2012 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Africa - Land Botswana Lesotho Malawi Mozambique Namibia Swaziland Zambia Zimbabwe 2011 3,354,075 271,919 896,332 72,041 650,505 107,879 385,775 90,269 879,355 2012 3,629,820 236,682 956,147 81,007 652,283 110,082 440,338 94,263 1,059,018 Difference 275,745-35,237 59,815 8,966 1,778 2,203 54,563 3,994 179,663 % 8.2% -13.0% 6.7% 12.4% 0.3% 2.0% 14.1% 4.4% 20.4% Note: Africa Air Markets are markets where at least 60% arrives to SA use air transport; Africa Land Markets are markets where at least 60% of arrivals to SA use road transport. Long-haul markets include all countries outside of Africa Slide no. 8 South African Tourism 2012 Source: Table A Tourist Arrivals Jan - Jul 2012

Aspirants Aspirants are low income consumers with no children; they travel mostly to Southern Africa and seek value for money cosmopolitan activities Formal and Informal Environment Aspirants have income between MZN 600,00 and MZN 900,000 Some are married but they all have no kids The absence of kids makes them less price sensitive and allows them to spend more on leisure trips They primarily travel by personal vehicle Desired Experience Their travel is mostly in Southern Africa Much of the travel is driven by business, VFR and personal need but they try to take at least one leisure trip per year They seek value for money cultural and cosmopolitan experiences as well as traditional tourist activities They enjoy the city and customise the experience to their budget Resulting Actions and Behaviours Beliefs and Associations They tend to travel almost entirely with friends They tend to stay with friends and family even when VFR is not the main driver of the trip They view South Africa as a developed nation that is similar to European countries They aspire to travel abroad but are limited by available finances South Africa is the most frequented destination for all purpose visits Most trips are spontaneous and will be taken with a group of friends They get information from their experiences and those of others Private cars are the most common mode of travel They mainly travel within Southern Africa but they sometimes visit other parts of Africa Aspirants spend ZAR 5,000 9,000 per trip and mostly engage in value-for-money activities as well as traditional tourist past-times and cultural assimilation Money was stated as a constraint but many aspire to visit places in South Africa that they have not yet visited such as Cape Town Travel is important because it helps you relax and enjoy a new environment. I would travel more if I had the finances to do so. -Aspirant Slide no. 10 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Budget Families Budget Families are lower income consumers who are very price sensitive since they have kids; they seek value for money cosmopolitan activities and traditional pastimes Formal and Informal Environment Budget Families span all ages and have incomes between MZN 600,00 and MZN 900,000 Whether married or single, the majority have dependents They work in lower income jobs and typically supplement their income through informal ventures They depend a lot on word or mouth for information Desired Experience They enjoy travel and but are financially constrained They typically travel for necessary reasons such as household shopping, medical treatment and business but take advantage of these trips for leisure activities as they aspire to be able to travel for leisure They seek a bright lights experience Beliefs and Associations They value family and try to include them in trips, but usually it is just more economical to travel in numbers Travel is a luxury for them and comes second to more pressing matters They view South Africa as a bright lights destination but worry about crime or being ill-treated as foreigners They associate domestic destinations more with VFR than tourism Resulting Actions and Behaviours They take frequent multi-purpose trips to South Africa Trips are often planned in advance but are sometimes driven by need, availability of resources and availability of friends and relatives to stay with They get information from their experiences and those of others Often travelling in private cars or by bus, they do not make advance bookings They also travel regionally to Zimbabwe, Malawi and Swaziland Spending only about ZAR 3 5,000 per trip, they mostly engage in value-formoney activities such as restaurant meals, spending time with family, shopping at malls and visiting cheaper night clubs - Budget Family Despite fears about crime, most of them have not personally experienced it and Member Slide no. 11 South African Tourism 2012 Source: Monitor and Grail Research and Analysis recommend South Africa unreservedly to others When my husband travels to Durban for business, we drive there as a family. While he works, I go shopping and have fun with the kids. Last time, we even went to the casino suggested to us by my husband s friend

Affluent Explorers Affluent Explorers travel frequently in Southern Africa; they want to see the world and aspire to visit Europe, Asia and other world destinations Formal and Informal Environment Affluent Explorers have incomes exceeding MZN 900,000 annually and have no kids Most of them have a degree or professional qualification and a high paying job They have high exposure to internet and social media and use these to find and share information Desired Experience Travel for leisure is a priority at least once a year and would take more trips if time allowed Vibrant cities, tourist attractions and an assortment of cosmopolitan options are the desired experiences They visit a wide range of destinations around the world and aspire to visit the most well known cultural and historical attractions Beliefs and Associations They value themselves and want to broaden their perspective by travelling Travel is extremely important and they tend to travel alone, with friends or their spouse They associate South Africa with cosmopolitan vibes and fun They care about trends and want to visit popular international destinations Resulting Actions and Behaviours Leisure trips are taken once a year and are planned for in advance They look for information about destinations from friends and family and book directly with service providers or through the internet The Affluent Explorers travel to a wide range of worldwide destinations (either alone, with a friend or spouse) especially destinations that are popular or trendy With a high spend of typically R20,000 per trip, they engage in luxury activities such as shopping for specific brands and eating at exclusive restaurants They typically travel by land for shopping and by air to leisure destinations Language is not a barrier to travel but bureaucracy around visas is an obstacle Travel is a necessity, it relieves stress and gives you an opportunity to relax. I love spending a night on the town in a new city. I travel as often as I can in order to get exposure to many cultures. -Affluent Explorer Slide no. 12 South African Tourism 2012 Facebook and word of mouth are used to share experiences with friends and family Source: Monitor and Grail Research and Analysis

Wealthy Family Travellers Wealthy Family Travellers frequently visit South Africa and Portugal to meet family and engage in leisure activities; they value holiday travel and typically plan for it in advance Formal and Informal Environment Wealthy family travellers have annual income exceeding MZN 900,000 These consumers are often married and have dependent children They work in high income jobs and typically have extended families settled in Europe and South Africa They depend a lot on personal contacts for information as well as the internet and travel agents Desired Experience They typically travel at least 2-3 times a year and aim to take a long vacation at least once a year For these consumers, travel is necessary primarily for relaxation and stress release and hence they travel to destinations to engage in leisure activities, where they can spend time with family and friends They seek an enriching experience Resulting Actions and Behaviours They take frequent leisure trips to South Africa Trips to South Africa tend to be more spontaneous and trips are taken primarily to Cape Town and Johannesburg They get information from their own experiences and those of others Mode of travel is primarily by air or private vehicle They also travel regionally to Swaziland and Zimbabwe Spending above ZAR 35,000 per trip, they mostly engage in activities such as staying in hotels, shopping for high-end goods, enjoying natural scenery, eating at restaurants, and exploring culturally enriching activities The majority of the consumers plan to visit South Africa again and even recommend it to others Beliefs and Associations They value their family the most and include them in their leisure trips Leisure trips are typically planned for in advance Travel is indispensable for them and is an integral part of their lifestyle They view South Africa as a Europeanstyled destination They travel frequently to Portugal because of the cultural and historic ties Leisure travel is very important and holidays are a time to relax with the family, I also want my kids to be exposed to the different places and get a broader world view. Wealthy Family Traveller Slide no. 13 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Key Elements of the Communication Message South Africa should be highlighted as a destination that has a diversity of offerings beyond shopping and services, with both luxury and value for money activities that suit varied audiences Purpose of Travel Experience Sought Objectives Most Mozambicans come to South Africa for multi-purpose visits driven by personal need Increase frequency of travel and length of stay by incorporating leisure components into trips driven by personal need Increase spend on leisure activities on all trips to South Africa Cosmopolitan experiences, shopping options and culture are the desired activities across all consumer groups Increase volume by diversifying the South African destinations known or travelled to Diversify mental associations with South Africa through increased awareness of products and activities in South Africa Key Elements to be Communicated South Africa has a diverse set of leisure offerings that can be enjoyed by visitors, in addition to its amenities and facilities There are various tourist activities within driving distance along the well travelled routes that Mozambicans are accustomed to Travellers can easily add leisure activities onto a trip whose primary purpose is not leisure There are a wide variety of value for money experiences that can be customised to any budget and taste Key activities include: visiting World Class cosmopolitan experiences and rich cultural experiences South Africa has offerings suited to families as well as singles / groups of friends Slide no. 15 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Awareness Even though most Mozambicans are aware of South Africa, different media can be applied to help them become more aware of specific offerings in South Africa in order to increase leisure participation Word of Mouth Mass Media Social Media Word of mouth is wide spread in Mozambique and can be leveraged It can be used to increase the effect of other awareness media However, it is passive and difficult to control Television: Has a high recall compared to other media but is high cost and would have to be used for targeted messaging preferably in Portuguese Radio: Relatively low cost and higher penetration but is limited by the lack of visuals and distracted viewership which results in low recall rates Newspaper and Magazines: Travel magazines have the greatest potential since they were vividly recalled by interviewees and there is the opportunity for diversified distribution Outdoor: Has low recall and is difficult to use to reach particular consumer groups and its effectiveness is difficult to measure Brochures: Can be effective if placement is considered carefully and if a means to purchase is made accessible Social media has great potential in Mozambique as the number of users is beginning to grow As more Mozambicans use the internet and social media, they can be more easily targeted Even though Mozambicans know of South Africa, mass media, particularly television, radio, travel magazines and brochures will be useful in informing them of South Africa s offerings beyond the ones they know All forms of communication should leverage word of mouth to dissipate information to a greater number of people Slide no. 16 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Information Gathering Even though most Mozambicans are aware of South Africa, different media can be applied to help them become more aware of specific offerings in South Africa in order to increase leisure participation Word of Mouth Travel Agents Internet Mobile Phones Word of mouth is wide spread in Mozambique and can be leveraged to increase the effect of other awareness media However, it is passive and difficult to control Travel agencies are not typically used by Mozambicans travelling to South Africa and are mostly used by business travellers There would be significant channel development and awareness building necessary if this channel were to be relied on for Mozambique Internet penetration is still low, though growing, in Mozambique There is a lot of mistrust of information found online among Mozambicans but it is the primary information gathering channel used by most holiday travellers Mozambicans rely on SMS for a lot of their communication and there is opportunity for use of mobile phones for internet access as both major service providers offer 3G connectivity Mobiles have reach and can be used to access consumers in the long run A combination of channels can be used to both steer Mozambicans towards the types of information they should be seeking for South Africa, while providing them access to reliable information about activities and offerings Slide no. 17 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Travel Booking All purchase channels can be leveraged as information conduits to introduce leisure opportunities to the specific subset of consumers that use that booking channel Direct Bookings Internet Booking Travel Agents 14% of travellers use commercial buses and primarily make bookings directly with coaches For air travellers, multi-purpose travellers and VFR travellers mostly contact service providers directly There is an opportunity for airlines to introduce leisure options to consumers in contact Internet bookings among Mozambicans are still very few but have been growing over the past few years Majority of internet bookings for air travel are made by holiday and VFR travellers It is therefore worthwhile for service provider websites to have information on leisure activities in proximity Business travellers are the majority users of travel agencies Travel agencies could use this as an opportunity to introduce business tourism elements to business travellers Land (88.3% of trips in 2010) Land Mode of Travel, 2010 1 Air (11.7% of all trips in 2010) 85,440 65% 16% 14% 4% Travel Agent 86% Private Car or Van (No Booking) Commercial Bus (Direct Booking) Purchase Channel by Purpose, 2010 1 25,334 12,361 18% 31% 36% 14% Internet Booking 25% 28% 0% 47% Directly with Airline 14% Other 2 Business VFR Holiday Others 1% Slide no. 18 South African Tourism 2012 Notes: 1 Tourist weight (weight 2) has been used for the year 2010; 2 Others include truck, tour bus, rental car, minibus taxi, and motorcycle Source: Monitor and Grail Research and Analysis; SAT Departure Survey

Accommodation Booking Accommodation booking channels and preferences vary quite distinctly with purpose of travel, providing the opportunity to target specific consumer groups based on the booking channel used Direct Bookings Internet Booking Travel Agents Direct bookings are mostly made by travellers for other purposes and business travellers Travellers for other purposes mainly stay at hotels, self catering accommodation and hospitals when they travel for medical Majority of internet bookings are made by holiday travellers Holiday travellers typically look for information online and often end up making bookings online Travel agents are primarily used by business travellers These travellers mainly stay in guest houses and hotels Accommodation Booking Channels, 2010 1 62,203 17% 74% 5% Travel Agent Accommodation by Purpose of Travel, 2010 1 755,863 186,495 90,898 23,460 22,080 11,513 7% 24% 34% 8% 3% 1% 72% 77% 24% 97% 63% 13% 82% 15% 2% 3% 29% 9% 0% 10% 12% 12% 3% Hotels 4% Other Friend / Family 28,612 2% 37% 46% 16% Direc t Business Guest House 27,367 4% 4% 83% 9% Stayed With Family VFR Self Catering Game Lodge 9,646 1% 28% 0% 71% Interne t Holiday Other Business VFR Holiday Hospital Slide no. 19 South African Tourism 2012 Notes: 1 Tourist weight (weight 2) has been used for the year 2010; Source: Monitor and Grail Research and Analysis; SAT Departure Survey 2010

Opportunity After Booking Once people have decided to travel, there is a good opportunity to use service providers to increase awareness of leisure activities in and around the intended destination Encouraging Leisure through Information Airlines Once tickets have been purchased, share information about potential activities in the destination they will be visiting in order to increase leisure participation Offer simple add-on activities to business travellers Highlight family-friendly activities for group travellers Give information on connecting flights and fares to increase awareness of affordability and accessibility of destinations beyond their current Coach Booking Agents Add coupons and brochures to leaflets that hold bus tickets in order to increase leisure participation by highlighting affordable options Hotels and Other Accommodation Once bookings have been made, share information about upcoming events in the area and activities that can be done around the vicinity of the hotel Also share information about how to get tickets and gain access to events and sights I don t have information about fun activities to do in most parts of South Africa. I usually just hear from friends about what they have done in the past and I try it too if it interests me. - Aspirant The last time I went to Durban, I went with just my wife and not with the kids because things are so expensive in South Africa. If they could make affordable alternatives available to us, I would travel more and travel with the family. - Budget Family Member I like live music and I spend a lot of my evenings out on the town. I am not sure how to get the tickets in South Africa. - Affluent Explorer Slide no. 20 South African Tourism 2012 Source: Monitor and Grail Research and Analysis; In Depth Interviews

Purchasing Channels When travelling by air, Mozambicans primarily make bookings via a travel agent. Booking directly with airline is also significant through popular airlines South African Airlines, LAM, and Royal Dutch Airlines Travel to South Africa Land Mode of Travel by Land, 2010 1 Air Airline Purchase Channel, 2010 1 Private Car or Van Other 2 Travel agent Directly with Airline Commercial Bus Direct with Airline via Internet Other 86% 14% 1% 67% 20% 10% 3% Top Tour Operators and Travel Agencies Airlines Slide no. 21 South African Tourism 2012 Note: 1 Traveller s weight (Weight 2) has been used for the year 2010; 2 Others include truck, tour bus, rental car, minibus taxi, and motorcycle Source: Monitor and Grail Research and Analysis; SAT Departure Survey 2010

Targeting Opportunties Through Products Designing products that link directly to identified opportunities for Mozambican consumers will help achieve key objectives Defend Existing Markets Mozambicans visit South Africa frequently and it is important to maintain volumes by increasing awereness on offerings they have not yet experienced Mozambicans should be made aware of leisure offerings in destinations they visit for other purposes as well as new destinations they do not typically consider Increase Frequency of Travel Increase access to value for money activities that could encourage Mozambicans to travel to South Africa for holiday more frequently xxxx Making Mozambicans aware of the geographic diversity of offerings that appeal to Mozambicans could make South Africa more appealing as a repeat leisure destination Increase Spend Impress upon Mozambicans that it is feasible to have multi-purpose trips that include leisure activities could increase spend on leisure Encouraging Mozambicans to push their boundaries and travel further into South Africa could increase spend Slide no. 23 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Overview of Product Categories Three types of key product offerings to attract Mozambicans to South African are defined as follows: Why Not products that highlight leisure options on frequently travelled routes, Drive-to products that are within 5 or 10 hours of Maputo City and Fly-to products in cities linked to Maputo by air Drive-to Products 1 Why Not Products These products will be crafted as add-ons to existing trips to leverage shopping, medical and other travel purposes to include leisure activities They should highlight activities along frequently travelled routes The products should encourage add on leisure activities in Johannesburg and Nelspruit since they are the popular destinations Inclusion of leisure activities onto existing trips will also result in an increase in overall spend Cape Town Kimberley ` ` Port Elizabeth Bloemfontein East London Pretoria Johannesburg 1,000km Nelspruit Durban Maputo 600km 2 3 Drive-to destinations are within a driving distance from Maputo Two options are given to suit different travellers - ~600 km or ~1,000 km These will increase the geographic spread by encouraging travellers to explore activities from a wider geographic area that is still quite accessible Fly-to Products These products will be around destinations that are linked to Maputo by air and highlight activities that can be carried out in these destinations and close surrounding areas Slide no. 24 South African Tourism 2012 Source: Monitor and Grail Research and Analysis

Johannesburg Offerings Johannesburg is a first class cosmopolitan city that also has a variety of value for money activities that would appeal to Mozambicans and encourage the inclusion of leisure activities World Class Cosmopolitan Activities Gold Reef City is a fun place to have a day out with the whole family (ZAR 160) Monte Casino, a first class gambling facility (ZAR 25 250 per bet) Fine Dining in a delightful environment e.g. Signature Restaurant (ZAR 350) Exciting shows at the Peter Torien Theatre (ZAR 80 300) Exclusive Nightlife experiences (ZAR 200) entrance fee & ZAR 200 for drinks) Value For Money Zoo Lake for Sunday afternoon picnics with the family (Free) Johannesburg offers an array of affordable eating options (ZAR 30 100) Lion and Rhino Park allows you to pet lion cubs (ZAR 120) The Hector Pieterson Museum recounts the struggle against apartheid (ZAR 30) Lesedi Cultural Village exposes one to South African cultures (ZAR 140) The objective is to broaden the scope of exisiting options and encourage exploration of leisure activities in Johannesburg among all consumer groups These activities may convince Mozambicans to spend an extra night in in Johannesburg before embarking on the drive back Mozambicans enjoy World Class Activities and value for money and these activities highlight the presence of both Basic Costs Two night stay at the Taranga Bed & Breakfast in Edenvale (ZAR 680) Petrol and Toll fees (ZAR 887) Slide no. 25 South African Tourism 2012 Source: Monitor and Grail Research and Analysis; VW Website; Engen Website; SA Venues; Monte Casino Website; Lesedi Website

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