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Technology and convenience define the new face of retailing

Retailing in South Africa is changing dramatically, with the evolution being led by technology and a greater need for convenience. The ‘IMM Journal of Strategic Marketing’ reports in its latest issue (Issue 2 2018) that, in an environment where consumer demands are becoming ever more sophisticated, retailers have turned increasingly to digital technology for solutions.

“Digital technology will be the biggest driver of change in retail for the next five to 10 years,” predicts Doug Murray, CEO of The Foschini Group (TFG). Among the group’s brands are clothing chains Foschini and Markham, sports retailer Totalsports, and homeware retailer @Home.

Indeed, TFG has prioritised the adoption of technology and Murray notes that two group directors are charged with keeping track of the latest technological developments and their application in areas relevant to the group.

Among these is the efficient use of big data gleaned from sources such as loyalty programmes and shoppers’ in-store and online product-buying preferences. “Our marketing is highly targeted to the preferences of individual customers,” explains Murray. “Using data analytics to understand our customers and communicate with them in a meaningful way is a key element of our strategy.”

There are other challenges too. Clicks, for example, is working to resolve the often lengthy queues at its in-store pharmacies. “They are the biggest source of complaints we have from customers,” observes CEO David Kneale.

Turning to technology for a solution, Clicks has recently introduced a mobile app which enables pharmacy staff to inform in-store customers when their medication is ready for collection.

Other articles in the latest edition of the magazine include an analysis how artificial intelligence (AI) may impact the future of advertising, and a look at breakthroughs in neuroscience that will benefit marketing and sales professionals.

The ‘IMM Journal of Strategic Marketing’ is published by the IMM Graduate School and is available in print and digital formats.

MTN remains SA’s most valuable brand

MTN’s brand value has grown by 8% over the last year to R44.2-billion, maintaining its leadership as South Africa’s most valuable brand, according to the latest report by Brand Finance, the independent brand valuation and strategy consultancy.

MTN’s brand value grew primarily because of customers spending more on data services, consistent with a global trend of mobile phones being used to transmit more data at the expense of traditional voice traffic. As a result, MTN’s overall revenue grew by 7.2% last year, with data revenue growing by 34.2%.

David Haigh, CEO of Brand Finance, commented: “MTN is South Africa’s most valuable brand because of their industry leadership, both domestically and further afield. They are increasingly recognised throughout Africa by their customers as providing a high-quality service, because their brand image is deeply rooted on more than just marketing campaigns.”

First National Bank was the big winner over the last year with its brand value rising 22% to R19.4 billion. This earned First National a jump from being South Africa’s 7th biggest brand to now becoming the 3rd most valuable brand in the country.

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Along with the level of revenues, brand strength is a crucial driver of brand value.

According to these criteria, Capitec Bank (brand value up 35% to R6.8 billion) became South Africa’s strongest brand, taking over from First National Bank. Capitec’s brand strength has benefited from positive perceptions amongst its core customer base, which is consistent with their introduction of more unsecured credit offerings with interest rates as low as 12.9% in some circumstances. A focus on reducing legal and administration costs are particularly.

South Africa’s top 10 brands by brand value are:

  • MTN
  • Vodacom’
  • FNB
  • ABSA
  • Standard Bank
  • Woolworths
  • Sasol
  • Investec
  • Nedbank
  • Multichoice

What matters when marketing to modern moms

Mothers are a powerful and discerning group of consumers, whose diversity demands nuanced consideration by marketers. But, asks the ‘IMM Journal of Strategic Marketing’ in its latest issue (Issue 1 2018) are brands listening to moms?

While statistics are hard to come by and consumers are still regularly presented with clichéd images of smiling, supportive moms, Dr Sarah Britten, of marketing agency Labstore South Africa, says that change is afoot in this sector. “Behind the scenes there’s a lot of research into how mothers see the world and what matters to them,” she observes.

An example is research undertaken every 2-3 years by clothing retailer Ackermans into the evolving priorities and challenges of mothers in the mass market. “What became evident to us is that many marketers are guilty of tailoring their communication to mothers based on outdated ideas about what it means to be a mom,” says Customer Marketing Manager, Karin Lombard-de Kock.

Part of the challenge for marketers, she believes, is to stop thinking of moms in traditional or one-dimensional roles. For example, whereas marketers regularly trot out the hackneyed and patronising phrase, ‘Motherhood is the toughest job in the world’, mothers argue that they do not think of taking care of their kids as another job. The trick, advises Lombard-de Kock, is to remember mothers are multifaceted individuals.

The most effective way of communicating with mothers, believes Britten, is by using an omnichannel strategy through which some touch points communicate the brand message. Other touch points ensure products are available and visible at the point of purchase, while further touch points allow for more meaningful engagement. “This is where social media is really useful,” she says.

Mothers and expectant mothers rely on social media for information and support – particularly when they are on maternity leave, observes Britten. In addition to sharing updates and asking for advice on Facebook, mothers are also influenced by so-called ‘mommy bloggers’. “More and more budget is shifting to influencers, and this is especially true of brands that want to reach mothers,” she says.

CHOOSE THE RIGHT DISTRIBUTION PARTNER ON THE CONTINENT

Companies looking to choose a distribution partner in countries on the African continent face a number of notable challenges – but none of them are insurmountable, the ‘IMM Journal of Strategic Marketing’ reports in its latest issue (Issue 1 2018).

Quoting from a Boston Consulting Group study entitled ‘Drawing a Route to Market for Multinationals in Africa’, the magazine says that companies need to be clear on what they expect and must determine the type of partner and type of arrangement they want to pursue. Options that suppliers should consider include the following:

  • Do you opt for end-to-end distribution or last-mile delivery only? Most multinationals and other big companies require partners for at least last-mile distribution, which is very costly. Some, however, want partners to handle the full distribution ch
  • ain. Product and brand development efforts or pure trading? Some partners have the capability only to push products into retail distribution; they lack the relationships or resources to support retailers or engage in brand building or promotional efforts.
  • Do you use the company’s own infrastructure or rely on the distributor’s existing assets? If a company wants its own infrastructure – such as warehousing and transportation – it will require significant investment and distributor support.
  • Large distribution network with existing relationships? Typically, only large companies with their own capabilities on the ground can grow and develop smaller distributors.
  • Do you opt for direct employment of a sales force? The size and exclusivity of the sales force, route planning and level of sales force training are all subjects for negotiation.

“In Africa, opportunity and complexity go hand in hand. Companies need to master the latter to take advantage of the former. Taking the time to understand the continent’s individual markets, choosing the right partners and establishing an effective structure and distribution setup can make the difference between a failed experiment and a successful long-term business,” concludes the study.

THE COST-EFFECTIVE BENEFITS OF CONTENT MARKETING

Creating relevant content that assists and entertains your target audience has become increasingly important for marketers, the ‘IMM Journal of Strategic Marketing’ reports in its latest issue (Issue 1 2018).

“Content strategy isn’t Facebook,” writes content marketing expert Pabi Rampa. “Facebook is just one of the many channels of content strategy. The others are blogs, white papers, case studies, PR, social media marketing, inbound marketing, PPC, SEO, websites, content strategically placed on third-party websites, and more.”

According to research company Sirius Decisions, 67% of global customers will go through the following five stages during the decision-making journey: awareness, consideration, intent, purchase and retention.

For each stage, says Rampa, specific content will have to be created. For the potential buyer who starts their journey in the ‘awareness’ phase, ensure your brand is easily discoverable through organic and possibly paid search. Since in the ‘consideration’ phase, customers are trying to figure out if your product is for them and are comparing you to competitors, have reviews on several platforms, as well as blog content which speaks about how your product is the answer to their needs.

As an example of the above, Netflix offers potential customers a free month-long trial to help them decide if they’d like to subscribe. To encourage subscription renewals, the company keeps in touch with customers via e-mail, app and social media.

“A good content strategy can, for instance, help bring out a different side of your brand if it is already being seen as stiff and boring. You can come up with a brand personality that connects with your target market by being seen as more modern and informal,” Rampa notes. “When done correctly, content marketing costs far less than traditional marketing. It is possible to achieve great reach, conversions and leads without breaking the bank.”

The ‘IMM Journal of Strategic Marketing’ is the official publication of the IMM Graduate School.

THE NEW ROLE OF THE CHIEF MARKETING OFFICER

The key role of the Chief Marketing Officer (CMO) is to look beyond mere marketing and rather focus on the wider growth of the business, the ‘IMM Journal of Strategic Marketing’ reports in its latest edition (Issue 1 2018).

Writing in his regular column, US-based academic, Professor Michael Goldman says that ‘Forbes’ business magazine’s second most influential CMO of 2017, Antonio Lucio, has challenged marketers to be business people first and marketing artisans second. Lucio warned marketers not to be too internally driven by the function of marketing, but to balance this with the role of marketing. He described this risk as marketers being “islands surrounded by mirrors”, becoming isolated and ultimately irrelevant due to their inability to deliver revenues today and growth tomorrow.

Lucio also warned marketers not to be obsessed with the technical aspects of digital media or to be consumed by marketing-specific debates. Instead, they should demonstrate how marketing activities deliver against their intended business objectives.

He called for strategic marketers who: “… are culturally bilingual, capable of translating highly technical functional terminology into business impact. They speak up on all issues affecting the business and design customer-centric solutions. They can demonstrate the value of marketing in every action.”

Writes Goldman in his column: “Lucio’s views reinforce a CMO Council and Deloitte report from December 2016, which highlighted the required shift for CMOs from brand-centric advertising roles to being the primary custodian of the customer and driver of growth and opportunity.”

The ‘IMM Journal of Strategic Marketing’ is the official publication of the IMM Graduate School and is published quarterly.

MARKETERS AND THE GLOBAL E-SPORTS WAVE

Is it credible that there’s a form of entertainment destined to be bigger than the global movie industry – yet South African consumers and marketers remain largely unaware of it? This is a question the ‘IMM Journal of Strategic Marketing’ seeks to answer in its latest issue (Issue 1 2018).There is, says local marketing executive and gaming enthusiast Gareth Woods. It’s called e-sports. Competitive video gaming – the ‘sports’ name is largely a misnomer as few of the top games have anything to do with traditional sport – is destined to be more valuable than Hollywood, Bollywood and Nollywood combined, he believes.So how big is the SA e-sports scene and does it justify significant marketing spend? Woods says there are around 7-million gamers in the country, spread across PCs, consoles and mobile. Twitch.tv, the massive (10-million daily active users) global website dedicated to streaming gaming worldwide, has
200 000 SA-registered users. Other, unregistered, users in South Africa watch gaming via YouTube, Facebook and similar platforms.

Watching games being played by experts or professionals is one of the key aspects of e-sports marketing. It’s how you build audience numbers, particularly when it comes to live streaming of big tournaments and attracting people to venues – including sports-style stadiums – to watch the tournaments being contested.

Why should South African marketers care? It’s one of the few ways of tapping into the elusive Millennial and Gen Z markets. These younger, tech-savvy consumers who tend to turn away from traditional media platforms like radio and TV, are likely to use ad blockers and other tactics to avoid advertising messaging content targeted at them.

“Marketers worry about reaching this group,” says Woods, “because their media consumption habits are different. The only TV they’re likely to watch, for example, is Netflix. Yet they consume enormous amounts of screened content via multiple screens including laptops, PCs and mobile phones. Gaming can be the Holy Grail giving you access to this audience.”

INSTAGRAM OFFERING BRANDS GOOD SOCIAL ENGAGEMENT

While Facebook continues to dominate the social media scene for South African brands, many companies get more bang for their buck on Instagram, which also has more influencers than expected for its size.

By contrast, Twitter, which has a similar audience size, has negligible engagement compared to Instagram. However, many brands have an audience on Twitter that they do not appear to be leveraging at the moment.

These are among the findings of a study released this week by technology companies World Wide Worx and Continuon. The study analysed the social communities of 50 of South Africa’s most recognised brands.

According to the study, Facebook is the best social network for brands to reach mass markets in South Africa, but Instagram offers much better engagement. “Twitter has become a medium driven by politics and events. This means the short-form social network works best for authentic brands that are clearly differentiated, that represent social movements, are political, or are uniquely authentic,” say the researchers.

Looking at the power of social influencers, Arthur Goldstuck of World Wide Worx notes that real influencers, rather than supposed celebrity influencers, can be harnessed and turned into advocates for brands. “They can also help recruit audiences that can be migrated out of the big social networks and into branded CRM, loyalty, ecommerce and other programmes that are owned by businesses,” he says.

The study also observes that one of the big problems for brands is that they’ve spent large sums of money building audiences on big social networks, but have no control of those audiences. “Despite the massive investments in social media, brands have no control over the algorithms or management of these platforms. And they certainly don’t own the data for the audiences that they connect with on social media – Facebook, Twitter and LinkedIn do.”

Radio still has a strong future as a marketing medium

Like every other traditional media platform in South Africa, radio is evolving and facing a host of new challenges in an effort to remain relevant and continue to be a viable consumer channel for marketers and their agencies, says the ‘IMM Journal of Strategic Marketing’, the official publication of the IMM Graduate School.

In its latest issue, the magazine reports that music downloads, Internet radio, podcasts, younger consumers without a natural affinity for radio, and listeners who are moving away from traditional racial and language groupings are all challenging the status quo of radio as we know it. Yet the consensus is that radio will remain a viable medium in the foreseeable future – albeit with programme managers, advertisers and marketers having to be on their toes to keep track of this changing landscape.

“Radio will always be an integral part of South Africa because it reflects us,” says Kgaugelo Maphai, Johannesburg Managing Director of media buying agency, The Media Shop. “While the biggest stations have audiences proportional to the ethnic group they serve, the commercial stations are starting to battle it out for the evolving consumer who is not stuck on a particular language or ethnic group.”

His colleague Gareth Grant, Business Unit Manager at The Media Shop, agrees that there’s a growing trend for certain radio stations to cut through the traditional colour lines in the audiences they’re attracting. “Content and relevance to the audience are what’s important.” he observes.

Chris Turner, CEO of LM Radio, which only officially began broadcasting in South Africa in July, is also bullish about the future of radio as a medium. “The official figures tell us that 90% of SA adults listen to radio at least once a day, so I believe there’s a continuing market,” he says.

Make savvy use of your online sales channels

Selling inventory online, whether it’s hotel room nights or electronic gadgets, is a complex process – even more so when you’re doing it via a third party, reports the ‘IMM Journal of Strategic Marketing’ in its latest issue.

In an article written for the magazine, Noëleen Bruton, Director of Marketing for the Tsogo Sun Group, says that it’s crucial for businesses to be extremely savvy when contracting with third parties or affiliates to sell your inventory online.

“The modern online market is a hotbed of competition, with traditional bricks-and-mortar retailers facing both opportunity and threat from various meta-data or price aggregator sites, as well as other online agents or affiliates. In the hotel industry, for example, chains and independent hotels are battling it out with online travel agencies and online tour operators for sales of their own room stock,” notes Bruton.

“The minute you have inventory online, there are those who want to sell it for you and to obviously make money out of the transaction. That in itself is not a bad thing. Because often these online companies have access to different markets or are able to compete more effectively in general online spaces than you are as a hotel group. The challenge is when they actually compete against you … with your own product.”

Bruton says that, as a result of horizontal and vertical integration, there’s been a complete shift in the sales process. Competition is coming from all angles and price-checker websites are pitting retailers against one another in a ruthless battle based on price comparisons.

“In the hospitality industry, for example, price-focused online travel agents (known as OTAs) are a reality. Brands need to find a way to cohabitate and work with them to their advantage, or lose out on sales.”

She adds that the benefit of finding common ground with these operators is especially evident when it comes to accessing new or untapped markets where an OTAs brand-name has already been established, and where it has both the marketing muscle and critical mass to secure incremental business at a reasonable commission. The site then becomes another sales arm or sales channel of your business.