IMM Graduate School lecturer: Supply Chain Management.
Dior’s shift from designer clothes to designer face masks. How Supply Chain re-invent themselves to survive this pandemic.
IMM Graduate School lecturer: Supply Chain Management.
Dior’s shift from designer clothes to designer face masks. How Supply Chain re-invent themselves to survive this pandemic.
The competition is no longer between brands or even between companies; it is between supply chains (networks). Supply chains in the time of coronavirus have changed, possibly forever. MARZIA STORPIOLI reports.
Supply chain management has been likened to a philosophy, a concept rather than an essential service.
Historically, companies relied on strong brands and good products to win over the consumer. Competitive advantage was gained by the organisation based on the strength of its brands and its reputation for quality products.
But as the COVID-19 pandemic continues its inexorable march across the globe, supply chain management is no longer being considered merely a concept, but rather a life-saving essential service used for the cohesion of all supply chains so that they may work in concert with one another in order to satiate the needs and wants of people and businesses at all times, including times of crises.
It’s useful to remember wars have been won and lost by the implementation and control of either effective and efficient supply chain management, or the lack of using it to its full potential, as was experienced during the Napoleonic Wars and World War ll. There is little doubt that the post-COVID-19 world will be decidedly different to life as we knew it prior to this scourge befalling us.
There’s no doubt most nations were caught unprepared by its rapid advance. In South Africa, consumers – like those across the globe – adapted their buying behaviour to “cope with this rapidly evolving situation”, as Nielsen researchers put it.
Retail outlets – supermarkets, pharmacies and wholesalers – were unable to satisfy consumer demand for sanitiser products, demonstrating the inability of supply chains within South Africa, and globally, to respond to a meteoric increase in demand for hand washes and sanitiser products, household and industrial bleaches and surface cleaning solutions driven by the global crisis.
Just-in-time (JIT) and lean manufacturing, once seen as the pinnacle of achievement in supply chain performance, may no longer be effective. They were implemented across most global supply chains in the face of mounting pressure to reduce supply chain costs – the aim being to continually strive for increasing levels of efficiency while reducing costs overall.
Efficient, but not robust
These supply chains are operating on razor-thin margins, so much so that they are no longer robust and unable to respond to ‘shocks’ in the system, and have limited capacity to respond to disruption in their supply chains. They are efficient, but they are not robust.
If the disruption continues, eventually these supply chains will stall – manufacturing will stop due to a lack of raw materials or spare parts.
Today, companies that achieve a sustained competitive advantage (Zara, 3M and Dell) are those who have invested significantly in developing responsive logistics capabilities. They are demand-driven and designed from the customer backwards (rather than from operational capability forward – forecast driven). Their supply chains are agile and responsive to changes in consumer behaviour.
Talking of consumer behaviour, self-preservation reigned ahead of South Africa’s national lockdown as the ‘haves’ stockpiled goods at the expense of the poor, the needy, the aged and the sick.
Imagine if the world did not have an effective and efficiently run supply chain to constantly channel food, fuel and other essentials to replace those that have been exhausted because of this ‘feeding frenzy’. There would be further chaos, indescribable misery, an uncontrolled mortality rate and above all, a world economic recession that would surpass the 1929 financial crash!
With the pandemic spreading to South Africa a few months after the initial outbreak in China, Nielsen was able to research global markets, delivering insights into how retailers are dealing with challenges brought about by coronavirus.
Turning a crisis into an opportunity
The research shows that retailers are facing three primary challenges: insufficient inventory of some categories, difficulty in logistics and distribution, and inadequate staff to deliver orders.
Those able to organise resources and respond actively to the epidemic and launch measures to “help turn crisis into opportunity” will thrive. These, Nielsen reported, included “flexible co-ordination of participants in the supply chain, ensuring the efficiency of product supply, showing care and concern for employees, rationally deploying staff, adjusting the store’s operating hours, expanding businesses through online channels and in community and strengthening corporate brand marketing to enhance consumers’ trust and creating a favourable impression”.
Nielsen has identified six key consumer behaviour threshold levels that tie directly to “concerns around the novel coronavirus outbreak. These thresholds offer signals of spending patterns, particularly for emergency pantry items and health supplies with these patterns being mirrored across multiple markets”.
As African countries such as South Africa and Kenya announced their country-specific responses to the outbreak, Nielsen found that global consumers were adapting their purchase behaviour to cope with the rapidly evolving situation.
“As patterns begin to emerge in response to news events of this nature, it will be imperative for companies to learn from these scenarios so they can sustain growth even in times where COVID-19 is deeply impacting people’s lives. These patterns will help provide leading and trailing indicators to those trying to understand how people will respond as developments continue to play out at different times in different countries,” said Scott McKenzie, Nielsen’s global intelligence leader, adding that this would be critical to understand as stores worked to maintain supply levels of in-demand items.
South Africans entered threshold #5 ‘Restricted Living’ on Friday 27 March 2020. Consumer behaviour at this stage was characterised by severely restricted shopping and constraints due to supply shortages, delivery fulfilment challenges and caps on product quantities, Nielsen reported.
The lessons learned
Of the retailers surveyed by Nielsen on their attitudes towards business for the rest of the year, 67% said they would make efforts to expand online channels and accelerate home-based business / retail warehouse layout.
“Fifty-three [percent] said they would change their product mix according to the shopping habits of consumers and increase the inventory and on-shelf number of health, disinfectant and protection products,” Nielsen reported. “Forty-three percent of the retailers say that they would work on their supply chains, especially those for fresh food, strengthen the ties with various brands and enhance communication efficiency.”
Ads24 won a bronze in the 2019 Assegai Integrated Marketing Awards for its Food for Thought experiential media campaign. In its third year, the 2019 event was themed Robots vs Humans. This is the case study on how the award-winning activation was conceptualised and rolled out.
To cut through the plethora of activations and events aimed at media agencies and advertisers, Ads24 required a single-minded reason for its existence. It was out of this that Food for Thought was conceptualised, packaged and promoted to inspire and inform targeted individuals about cutting edge developments impacting on their careers and their lives.
In Food for Thought, Ads24 created a brand and a vehicle for giving back in an impactful and memorable way, with a healthy return on effort and investment.
In an industry consistently exposed to trends, strategies and knowledge about its field of expertise i.e. media and advertising, Ads24 wanted to create a campaign in which it could influence business and leadership thinking as well as refocus attention to the critical role media owners, brand owners and advertisers play in bridging the gap in the minds of consumers between the now and the future.
The objective of the campaign was to position Ads24 as tribe leaders and critical business influencers within the communication space. It should strengthen business relationships and encourage collaboration through a powerful and impactful experience while reminding key industry advertising leaders about the influential nature of media. Ultimately, the company wanted to grow high-level involvement with top decision makers at media agencies and direct advertiser clients.
The strategy was to ensure Food for Thought stood out from industry clutter via a media industry event that encouraged progressive learning as well as debate around the economic, political, environmental and technological forces shaping the future of business in South Africa. Ads24 had to ensure that the event challenged everyone’s thinking and drove curiosity in an impactful way.
Enormous attention was paid to creating details that provided a full sensory experience. Tactics used to achieve this was through a hyper-personalised and carefully planned invitation process; creating a thought-provoking experience and journey on the day for all attendees; developing an integrated PR plan during and post-event, and maximising social media during and post-event
The big idea and its implementation
The world and its economies are experiencing unprecedented times. In every aspect of life, humans face a complex array of sensitive challenges that call for extraordinary responses and creative leadership. There is a massive shift in consumer mentality and media organisations need to proactively adapt to lead this dynamic environment.
Ads24 created an event positioned between a world dominated by artificial intelligence and technology, and one desperate for human connection.
The invitation was issued in the form of a book written by one of the speakers called We Are Still Human, by Brad Shorkend and Andy Golding. The book led to a hidden message in one of its pages, creating engagement and appealing to the natural human inquisitiveness. It also led to another very important feature: the RSVP
For this, Ads24 used hyper-personalisation by using real time data and leveraging of artificial intelligence to deliver a more relevant and surprising experience for the audience. This was done through creating an algorithm as part of the RSVP which predicted a personal surprise for guests to take home, further illustrating the impact of personal consumer centered communication.
This event was designed from start to finish to engage every sense and challenge thinking. Every aspect was created to juxtapose the human touch with robotic interpretations. The starting point was a taste bud hack. Each person was invited to take a pill made from the ‘miracle berry’, synsepalum dulcificum. A glass of freshly squeezed lemon juice was then offered. The pill had the ability to mask taste and instead of eye-watering, tart lemon, each person experienced a sweet orange juice flavour.
This served as a metaphor on how we consume news and how easily we are fooled to digest fake news – the very opposite of what we pride ourselves in – the facts, the news and the search for truth.
Each food experience contrasted artisanal, handmade delights with a robotic version of the same. Fresh flapjacks topped with creamy mascarpone cheese and rich berry jam was paired with 3D-printed mascarpone cheese on spirulina-infused flapjacks with pipettes of berry compote. The delicious aroma of fresh-pressed coffee was served side-by-side with coffee cubes.
Each table setting was also designed to represent robots or humans and each attendee was assigned one or the other version of the main meal. Although the outcome of the meal was the same, each component was created by hand or by machine. This created an exciting atmosphere of curiousity and experimentation, culminating in desserts delivered by drones.
Content and speakers
Ads24 focused on different aspects of the future by looking at the incredible pace of AI and technology and how it’s reshaping our existence in an increasingly automated economy. With so many areas in which the media and communication is changing, from how we consume news to social media, fake news, hyper-personalisation and programmatic buying, if we don’t keep pace and remain agile to these changes, we face professional extinction.
The line-up included public speaker, entrepreneur and author of the best-selling business book, Legacide, Richard Mulholland, Brad Shorkend, one of the authors of We Are Still Human, and computer scientist, Rapelang Rabana.
Each shared their views on how to stay ahead of the game in a world where the word, ‘phigital’ (physical and digital), is the new normal. Comedian, author and speaker, Don Packett, refereed the debate by posing the questions: Where are we today in the fight between humans and robots? Where will our businesses be by 2030? And, how do we prepare for the journey? We explored the dangers of legacy thinking, how AI can be a tool to advance civilisation and how to be a good human in a technologically shifting world. They raised a few eyebrows, challenged the way we see our industry and our world, and opened the door to a spirited conversation around the future of media in 2030.
PR and social media
A series of thought leadership pieces were created based on each of the topics discussed at the event. Every week, for four weeks, a piece was circulated to media. Included in the pieces was a short 30-second video taken at the event relating back to the specific speaker/topic. This insured that when the article was published, readers would have full context to what was discussed/debated at the event.
Key messages were taken and posted on social media with either images or short 30-second videos from the event.
Return on investment
Ads24 Food for Thought 2019 provided insight into a world where human connection and artificial intelligence create new opportunities and challenges for the media industry and our world. The event solidified Ads24 as a thought leader among influential media partners and as a competitive media owner in a dynamic and constantly evolving industry.
We achieved an overall PR value average of R6.8 million
Research has shown middle-income South Africans are members of at least nine loyalty plans, while membership is set to grow as smartphones penetrate more of the market. JUSTIN BROWN finds out more about what makes a rewards programme successful, and where opportunities lie.
Over 24 million South Africans are members of rewards and loyalty programmes, of which there are more than 100 in existence.
The most popular schemes are those offered by grocery, health and beauty retailers.
Steve Burnstone, CEO of Eighty20, a Cape Town-based consultancy, says his company’s research found that middle-income South Africans were members of, on average, nine loyalty plans.
Burnstone believes rewards plan memberships will rise significantly as smartphone penetration increases in South Africa.
A key consideration in South Africa is how to provide loyalty offerings to low-income consumers, he says. If a customer does not spend much, then it is hard to reward them, but Burnstone believes it is possible to reward all types of customers.
But rewards programmes are crucial, no matter what the economic circumstances.
“In good times they help grow the business beyond what would normally be possible; in more difficult economic times they should help to defend existing profitability,” he says.
One of the key benefits of any loyalty plan is data analysis and the segmentation opportunities that arise.
For a grocery retailer, a rewards member will swipe their card more than 80% of the time when they shop, giving a detailed view of how that customer is spending their money, Burnstone explains.
A loyalty scheme can provide a lot more information about customers (e.g. birthday, lifestyle preferences, life stage, etc.), he adds.
eBucks Rewards CEO, Johan Moolman, explains eBucks’ segmented rewards plan in which different sub-segments have been developed using specific criteria.
It is worth noting that eBucks, the loyalty programme for First National Bank (FNB) and Rand Merchant Bank (RMB) Private Bank, started almost 20 years ago in the year 2000.
“There are 6.5 million customers that have got eBucks accounts of which between 2.7 million and 2.8 million members are active,” he says.
eBucks pays out close to R2.5 billion in rewards each year, and since its inception, has paid R13 billion to its members, Moolman says.
Yumna Frizlar-Wyngaard, Kauai marketing manager, outlines how the company’s loyalty plan allows for segmentation by geographical region, by demographics and by behaviour. Kauai, which has 162 stores, has over 100 000 people signed up to its scheme.
Rachel Wrigglesworth, Clicks chief commercial officer, says the data gathered from the Clicks ClubCard members allows the company to enhance its customer experience. To put ClubCard in perspective, Wrigglesworth says that at the end of August last year, the offering had eight million active members.
Clicks introduced ClubCard to the Western Cape in 1995, and in 1996 it was launched nationally.
A rewards programme can generate extra revenue, through advertising for example, but eBucks and Kauai haven’t gone this route.
Moolman says: “eBucks is there to gain new customers, entrench customers and cross-sell [for FNB and RMB]. eBucks is not there to make money.”
Given the insights that loyalty plans provide, there is an opportunity for a company to cut costs or hike revenue by bringing about change to clients’ behaviour, he explains.
“There are massive cost savings to be had by getting a customer to take up a product digitally rather than going into a branch,” he says.
A big plus for the retailer offering a rewards scheme is the ability to move stock or products quickly by special offers aimed at loyal customers. Burnstone agrees that this is a benefit but warns that these offers need to be relevant, otherwise customers will feel spammed and will disengage.
Kauai rewards programme offers its loyal customers specific promotions, says Frizlar-Wyngaard. The power of a loyalty plan is that it enables the owner of the plan to communicate swiftly with members. Kauai has the ability to reach its customers through its app, via texts and e-mail. “This allows us to be agile and keep customers informed,” she adds.
The personalisation touch
Another opportunity offered by a rewards plan is personalisation for each member, a key trend in the rewards industry. Mobile convenience is another important trend, says Wrigglesworth.
“Loyalty programmes must be accessible on mobile. This requirement will become increasingly important, especially with the advent of mobile payment,” she adds.
It is vital that rewards and incentives are individualised and relevant to the consumer. A report by US market research company Forrester, released in January this year, says that personalisation implemented by rewards schemes are usually too obsessed with the purchases that members make.
Loyalty schemes must ensure that marketing personalisation delivers relevance, builds resonance, and shows resilience to get the attention of customers, according to Forrester.
The best place to improve personalisation is with a rewards schemes’ best customers, the report adds.
Burnstone says he has seen an increase in attempts at personalisation by loyalty plans.
“App-based programmes have an advantage here as they can be used by businesses to set targets or challenges for customers with a range of relevant rewards available,” he says.
Frizlar-Wyngaard says that Kauai includes personalisation in its loyalty scheme. These campaigns include compensating customers when they move up to the next loyalty tier and rewarding them on their birthday. “Customers are seeking personalised messages more than ever,” she adds.
The bottom line
Rewards schemes build loyalty within a company’s customer base, and this has a positive impact on a company’s bottom line.
Burnstone says that his company’s research showed that members of rewards plans acknowledged that specific programmes helped changed their behaviour.
For effective schemes there was often as much as five to 10% increase in turnover from members while some plans see around 10% uplift, he adds.
“We believe this then makes an incredibly compelling case for loyalty programmes,” Burnstone says.
Wrigglesworth believes a benefit of loyalty is that Clicks ClubCard customers shop more frequently and will spend on average more on each trip to the shop than an ordinary Clicks customer.
What had proved successful for loyalty programmes was the fact that they deliver transparent financial rewards, she says.
Turning to what has been successful, Moolman says digital enablement of rewards had worked well for eBucks.
POPIA and privacy
Part of running a loyalty programme is complying with the Protection of Personal Information Act (POPIA).
Burnstone says that he has found that South African corporates tend to be very eager to comply.
In addition, most of Eighty20’s clients look to the European Union’s General Data Protection Regulation as a guideline about how to treat customer information.
Moolman says that eBucks takes all laws seriously. “The security of that data is of the utmost importance to us.”
Kauai consulted with a POPIA specialist when setting up its app, and ensured that the terms and conditions clearly state how the company will use customers’ data, Frizlar-Wyngaard says.
Kauai does not sell customer data or share it with third parties, while Clicks ClubCard continues to follow stringent guidelines relating to customer data.
The ‘father of open innovation’, Henry Chesbrough, has just published a follow-up to his ground-breaking first book. He believes business must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. GLENDA NEVILL reports.
‘Open innovation is a term used to promote an information age mind-set toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs.’ ~ Wikipedia
Right now, think tanks and scientists and researchers across the globe are collaborating in the search for a coronavirus vaccine (or cure).
This is a timeous reminder, says Irving Wladawsky-Berger, Research Affiliate at MIT’s Sloan School of Management and Fellow of the Initiative on the Digital Economy and of the MIT Connection Science initiative, that the open innovation model is “the perfect vehicle for today’s fast-moving environment, which includes the current race for a coronavirus vaccine”.
Wladawsky-Berger was blogging about adjunct professor and the faculty director of the Garwood Centre for Corporate Innovation at the Haas School of Business at the University of California, Berkeley, Henry Chesbrough’s second book (the first was Open Innovation: The New Imperative for Creating and Profiting from Technology, published in 2003). Seventeen years after his groundbreaking publication first hit the stands, Chesbrough authored the follow-up, Open Innovation Results: Going Beyond the Hype and Getting Down to Business.
In it, he writes: “We must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. We distract ourselves with the ‘shiny new objects’ that arise from the advance of technology.
“All too often, the front end of the innovation process is not connected to the businesses that are to commercialise any new technologies. To realise the potential from exponential technologies, we must refocus our attention on the things that really matter in innovation (instead of simply starting another one and blithely ignoring what happens afterwards). That will require us to rethink innovation, both inside organisations and in society as a whole.”
Essentially, he argues that generating technology alone is not enough. It must also be broadly disseminated, and then absorbed and put to work before its full value is realised. The three facets of innovation, he says, are generation, dissemination and absorption. He uses real examples of global businesses to illustrate both successes and failures of open innovation.
|Closed innovation principles||Open innovation principles|
|The smart people in the field work for us.||Not all the smart people work for us, so we must find and tap into the knowledge and expertise of bright individuals outside our company.|
|To profit from R&D, we must discover it, develop it, and ship it ourselves.||External R&D can create significant value: internal R&D is needed to claim some portion of that value.|
|If we discover it ourselves, we will get it to the market first.||We don’t have to originate the research to profit from it.|
|The company that gets an innovation to the market first will win.||Building a better business model is better than getting to the market first.|
|If we create the most and the best ideas in the industry, we will win.||If we make the best use of internal and external ideas, we will win.|
|We should control our intellectual property (IP) so that our competitors don’t profit from our ideas||We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.|
The global fashion brand and its foundation wanted to reinvent the fashion industry (a ‘planet intensive’ industry), and turn it into one that eliminates waste. H&M collaborated with Accenture and KTH Royal Institute of Technology in Stockholm to apply and accelerate innovation at scale through a Global Change Award. It offers an innovation accelerator and coaching to help the winners turn their ideas into reality, while Accenture delivers knowledge and insights into the future of fashion and retail. Analytics and thought leadership are used to identify the trends shaping sustainable fashion, and Accenture creates reports on the trends in circular fashion and open innovation to share with the broad industry.
Keeping within the concept of open innovation, H&M has also opened up its supply chain to rivals. Using Treadler, its B2B service that helps clients “accelerate sustainable change”, it will “enable its clients to benefit from H&M Group’s expertise, long-term supplier partnerships and strategic sustainability work, thereby helping them to overcome initial business barriers and accelerate sustainable change”.
“We see the opportunity to utilise the full potential of H&M Group’s extensive investments and progressive sustainability work by catering to clients’ needs and contributing to driving long-term growth for H&M Group, while driving change in our industry. In discussions with other companies, we have experienced a demand for these kinds of services,” said Gustaf Asp, managing director of Treadler, in March. Treadler will “initially work on a small scale and provide a service that is tailored to suit the need of each client, covering all steps from product development to sourcing, production and logistics”.
The Amazon story
Amazon relied on open source innovation to build the capability of its cloud based voice service platform, Alexa. In an article on Open Innovation within Business Ecosystems: A Tale from Amazon.com, published on researchgate.net, writers Isckia Thierry and Denis Lescop detail how the massive tech and ecommerce company used outside developers to create “more than 30 000 skills for Alexa, allowing the customers to control more than 4 000 smart home devices offered by 1 200 unique brands”. Amazon, they point out, “has to rely on open source innovation to ensure widespread adoption of the platform”.
Recently, Amazon opened a 966 square metre cashier free grocery store in Seattle. As the Wall Street Journal reported, the store will “serve as a showcase for its technology as it seeks to sell its system to other businesses”. The technology would likely be offered as a service, either under a licensing or profit sharing model. Currently, twenty-five smaller Amazon Go stores operate in the US.
The Philips story
Back in 1998, Philips established the Philips High Tech Campus. The idea was to centralise its research and development in one place. Later, it was renamed High Tech Campus Eindhoven after Philips allowed access to other companies and a technical university. Philips was able to use knowledge and insights from other experts, a “fruitful and intriguing experiment in open innovation”, as Atte Isomäki wrote in a blog on the Viima platform.
As an example of useful open innovation collaboration, Philips launched a joint venture with the technical university and other organisations to tackle major challenges such as affordable access to high-quality healthcare and energy-efficient lighting for densely populated cities. “This is a great example of open collaboration between the private and public sectors in order to cross-link research topics and knowledge to make amazing discoveries,” Isomäki wrote.
It also has MiPlaza, an open innovation lab where companies can develop applications using Philips research. In return, Philips can use the lab inventions to improve its own products.
Back in 2006, Netflix launched an open innovation challenge, the Netflix Prize, open to the public. It wanted to find a filtering algorithm to improve user movie or series suggestions by 10%. There was a $1 million prize attached. Forty thousand teams from 186 countries entered.
In just under three years, two teams managed to live up to the challenge. “However, as the algorithm of the grand-prize-winning team was too costly to engineer, Netflix decided to go with one of the runner ups instead who had an improvement rate of 8.43%,” Isomäki reported.
“Netflix’s R&D open innovation challenge targeting the public and professionals on the field was quite successful in the end,” he reckoned. “The only problem was that the original execution of the challenge did not appropriately account for potential privacy concerns. On a positive note, Netflix were also able to find talented programmers and market their product and new suggestion feature.”
So what of marketing and open innovation? Certainly from a PR perspective, the wider outreach is a major plus. And for brands, there is recognition in a positive light, which increases brand value, something vitally important in competitive markets.
Back to Chesbrough and his new book. Last word goes to Carlos Moedas, EU Commissioner for Research, Science and Innovation, who wrote: “Henry Chesbrough has this unique ability to transform complex concepts into messages that everyone can relate to. Open Innovation Results links for the first time the effects of the financial crisis on innovation and therefore on long-term productivity. It is a must read for politicians, policy-makers and business leaders that want to make a difference by designing the right policies that drive not only the generation of new ideas but more importantly their broad dissemination and adoption by society.”
If you were to ask consumers regarding whether or not they value their personal information, the answer will undoubtedly be yes. Consumers are no longer naive about how their personal information should be protected and they are starting to expect businesses to respect their constitutional right to privacy.
When the POPI act comes into full affect this year, customers will assume that their information will be more secure than ever before. This Act has been developed with the intention to place significantly more restrictions on how information is gathered by businesses and what can and can’t be done with it once it is gathered, for the sake and protection of the South African consumer.
What exactly is the POPI Act ?
The Protection of Personal Information Act (POPIA), also referred to as the POPI Act, is a mandatory code of conduct signed into law in November 2013. It was put into place to ensure that all South African organisations act responsibly when collecting and handling a public or private citizen’s personal information.
It acknowledges the value attached to such information by granting South Africa’s “data subjects” more control over their data in terms of when and how it will be collected, used, and shared.
In short, its purpose is to prevent the collection of personal information without the subject’s prior knowledge and consent. It safeguards every South African’s constitutional right to privacy by ensuring that, if and when their personal data is collected and processed, it is done so fairly, securely, and responsibly.
But how does this impact business?
When you look at it from a marketer’s perspective, it might not receive such a warm welcome. It’s not that marketers disagree that personal data must be protected, it’s just that data collection is such a vital part of the marketing process and limitations to its collection could have far reaching consequences to some companies’ marketing strategies.
In fact, database marketing strategies are based entirely on the collection and analysis of data, so let’s take a look at how they will be impacted.
Although the POPI Act ultimately applies to anyone who collects data for any reason, it zeros in on database marketing with dedicated sections (Sections 69 through to 72) regarding the regulation of the information-handling process – from the moment the information is collected to when it’s been disposed of.
These regulations don’t ban email and database marketing entirely, but it might affect the industry’s dependence on these platforms as the act prohibits the collection of personal information without obtaining prior consent from the subject.
Right now, marketers are essentially free to send marketing messages to anyone, whether it’s via email or SMS, as long as the recipient is given a clear point of exit (the option to opt-out).
However, a few things will need to change once the POPI act comes into full effect.
To keep their databases fully compliant, marketers must receive the subject’s expressed permission before adding them to the communications list.
When it comes to unsubscribing from a mailing list, email and SMS recipients must be given a clear, easy, and most importantly, penalty-free opt-out method.
To make sure that data is collected and processed legally, public and private entities are required to comply with these 8 conditions:
When will it come into effect?
This part is still unclear. Despite rumours that POPIA will come into effect in April 2020, no one is 100% sure when it will be fully implemented. It has, however, been released in segments since its announcement in 2013. This uncertainty leaves businesses and marketers in a somewhat panicked state since many business practices rely on the collection of user data to improve operations.
One thing is for sure though, following its release date, businesses will have 12 months (1 year) to get their ducks in a row.
How far is SA from being fully compliant?
A survey conducted by Sophos, a frontrunner in global network security, says that only 34% of South Africa’s organisations are prepared to fully comply before the deadline.
Regional manager of Sophos South Africa, Pieter Nel, says that the best way to prepare for the POPI Act is to “implement a solid data protection strategy that guards against loss of data whether through malicious or accidental methods.”
Nel warns that “creating a data protection strategy can be a daunting process, especially if it hasn’t previously been a focus area for organisations. Securing against major threats that cause data breaches is a great place to begin.”
What will happen if businesses don’t comply?
In short, anyone found guilty of misusing this information will be held liable to pay a fine of up to – brace yourself – R10 million and/or serve a prison sentence of up to 10 years.
It may not seem like it now, but marketers that comply with the POPI act will not only see an increase in engagement and ROI due to increased trust and the fact that their marketing efforts will only be directed at prospects that have indicated an interest, but they will also be able to streamline their data collection process
Disclaimer: This is by no means a complete overview of the POPIA, but rather a summary of the parts affecting the marketing industry. If you’re interested in reading the complete document, you can find it here https://www.justice.gov.za/inforeg/docs/InfoRegSA-POPIA-act2013-004.pdf
If you want someone to buy you an ice-cream you don’t just walk up to them and say “Hey you buy me an ice-cream”. You would first introduce yourself and strike up a conversation. The aim would be to develop a relationship with points of common interest, you would then introduce the right messages at the right time about how hot it is say, or perhaps invoke a happy childhood memory of having ice-cream and then when you can see his mouth is watering for an ice-cream you mention that the little gelato shop on the corner makes the best ice-cream in town and just happens to be having a two-for-one special. And hey presto! You have your ice-cream.
Lifecycle marketing works in much the same way.
Lifecycle marketing focuses on each customer’s unique journey through the buying cycle. This includes every interaction they have with the business along the way. It aims to provide meaningful communication and information to customers to help them move to their next stage in the buying process.
Because of how easily today’s hyper-informed consumers can conduct product research, access price comparisons, and make purchases online, the goal of “getting the customer through the door” isn’t as important as it once was. Lifecycle marketing emphasises that the buyer’s journey doesn’t end when they make their first purchase. Instead, it emphasises the nurturing of customers with the goal of forming long-term relationships with them and improving lifetime value to the company.
By creating unique messages based on where the client is on the sales funnel, brands demonstrate their appreciation to customers and show that they prioritise each customer’s unique buying needs. This makes customers feel valued and encourages them to keep coming back, turning them into loyal, repeat customers that will, ideally, become brand advocates over time.
Lifecycle marketing therefore has to focus on each customer’s unique experiences and interactions, as well as the content they interact with while engaging with the brand. It’s all about grooming the customer, nurturing and helping them to reach their desired goal – just like getting someone to buy you an ice-cream. It’s no longer about putting the business first ahead of the customers’.
A series of stages have been identified in the consumer buying process. Each of these has a different type of communication that is most appropriate. These stages and related communication for each are as follows:
In the first stage, the prospect discovers the business – either through SEO, paid ads, or social media. The best way to be discovered is to create content that relates to what people are looking for, as well as what the brand has to offer. Here the focus needs to be on the target’s informational needs rather than only creating sales messages.
The customer considers their purchasing options. This is where the brand needs to make purchasing its product or service seem like the obvious choice. Content types such as welcome campaigns, customer reviews, and detailed product descriptions are effective.
At the conversion stage, businesses need to persuade prospects to take action and purchase their product (instead of a competitor’s). They can achieve this by providing access to content such as product recommendations and calls-to-action.
This stage focuses on keeping the customer and bringing them back to purchase again. It encourages brand loyalty. This is the stage where loyalty programmes and exclusive discounts (based on the behaviour of the customer) make sense.
Here, the necessary steps are taken to turn loyal, long-term customers into brand advocates. The best way to do this is by encouraging brand followers to create and submit user-generated content on social media. This in turn provided ‘word-of-mouth’ or as some say ‘word-of-mouse’ which helps other customers through the consideration stage.
Lastly, the reactivation stage requires brands to employ strategies that get in touch with their “lost” or inactive customers by sending re-engagement emails to past, once-off customers to encourage them to “come back” to the brand.
It is important to note that a customer’s journey may not be linear and they may not pass through all the above stages in order. To make things even more complex these contact points can occur across multiple channels. An effective lifecycle marketing strategy takes this into account and develops communication based on each customer segment’s journey.
Brands that employ a lifecycle marketing strategy will be able to attract and retain new customers or turn existing customers into life-long buyers and advocates.
This means that brands will save money by focusing on existing customers, rather than periodically targeting new ones.
By sending customers a tailored message once they reach a new stage of the buying process, brands will make them feel valued knowing that the messages they receive are unique, rather than automated.
Brands can gain a better understanding of the target audience – who they are, how to reach them, their likes and dislikes, and how to keep them coming back.
Lastly, it saves time. By having a clear idea of exactly who the target customer is, lifecycle marketers are able to send messages to prospects who are genuinely interested in what the brand offers, rather than wasting time trying to appeal to “browsers”.
Lifecycle marketing shifts focus from selling products or services to developing long-term relationships with consumers by providing unique communications with individual clients at key points in the buying process and guides them from prospects to advocates, who will not only be loyal customers but also become an enthusiastic reference to new prospects.
Digital marketing is changing the marketing game rapidly and all marketers need to catch up. If you have not immersed yourself in the waters of the Fourth Industrial Revolution (4IR) yet, it is time to dive straight into the deep end. Not only has the 4IR changed the way businesses relate to customers, it has changed the way businesses relate to themselves.
To be relevant to people, and to remain relevant, businesses need to have a personality. They can no longer afford to just have a brand; they need to be a brand and subsequently business management becomes brand management.
“Your brand is your promise to your customer. It tells them what they can expect from your products and services, and it differentiates your offering from your competitors’. Your brand is derived from who you are, who you want to be and who people perceive you to be.“ (Williams, 2020)
Since the 4IR has digitised the way we do business (rapidly and so intensely), it is more important than ever to shift the focus from a product orientation to a consumer one. It is also important for brands to be able to adapt to changes in the market. These changes need to stem from within the business and starts with the marketing mix. The marketing mix (known by many as the 4Ps) has therefore been tweaked to be more appropriate to the shift in business towards prioritising the consumer.
The first C represents the Consumers wants and needs which should now become the focus of product development or, put differently, provide a solution rather than an object. A great example of a company failing to do this is Nokia who produced many products but failed to address what consumers actually wanted and as a result lost market share to the likes of Samsung and Apple.
The second C replaces the traditional Price ‘P’ with Cost to satisfy the need and places emphasis on the value the consumer attributes to not just the product but to other factors such as status, brand loyalty, obstacles to change etc. This explains why consumers are prepared to pay more for products they perceive to have a higher value, for example the loyal iPhone community.
The Promotion ‘P’ is replaced by Communication. Instead of a one-way message designed to manipulate a consumer into buying, social media and website chat applications now allow businesses to have live conversations with their customers and customers in turn can now communicate with the business and directly with each other, which provides the all-important social proof that brands need to be successful today.
Finally we replace the Place ‘P’ with Convenience to buy which highlights the importance of not just having the product readily available when and where the consumer wants it but also making it available online, thereby completely eliminating the need for the customer to go out and make a purchase. It also speaks to the importance of a smooth, easy to navigate purchase process with less complications. The convenience of being able to tap-and-go is a good example of this, or having your credit card details safely stored for repeat purchases.
When businesses begin to prioritise the consumer and build authentic ways to relate to them a few things become clear. Before, marketing was a segment of business responsible for creating adverts. Now, marketers need to build brands with the intention of creating relationships. With brand building comes brand strategy.
“Your brand strategy is how, what, where, when and to whom you plan on communicating and delivering on your brand messages. Where you advertise is part of your brand strategy. Your distribution channels are also part of your brand strategy. And what you communicate visually and verbally are part of your brand strategy, too. “(Williams, 2020)
With this new emphasis on consumer-centricity the only way forward for brands is to get close to their customers, get to know them and what they want and then strive to meet those needs, the brand must move towards interacting with customers on their level. The above proves that the traditional business-to-consumer model is dead and has been replaced with person-to-person communication.
Williams (2020), discusses a need for re-evaluation of the core aspects of your business, what you do and why you do it. He encourages businesses to answer the following questions as a starting point to building brand personality:
Businesses need to always remember that they exist for people and because of people. Digital marketing moves rapidly and one of the only elements of a business that can withstand this ever-changing environment is their brand.
Williams, J. (2020). The Basics of Branding. [online] Entrepreneur. Available at: https://www.entrepreneur.com/article/77408 [Accessed 25 Feb. 2020].
Distance Learning, the Keeper of Higher Education during a Worldwide Pandemic
The challenges facing institutions of Higher Learning during the CoVID-19 lockdown have left many with no option but to turn to online learning to avoid disruptions to learning and teaching programmes across the globe. Fortunately, the IMM Graduate School has not been caught off guard during the Coronavirus pandemic, nor has it been left scrambling to keep learning and teaching going. For the most part it is business as usual.
We have already spent the past several years, implementing cutting edge online learning principles, and as such “going online” has meant minimal disruption in our learning environment designed and built to encourage optimal student engagement for critical thinking and problem solving. For a number of years already, we have been embracing technology to provide opportunities for students who would otherwise not have the opportunity to study.
We have also during this time considered, monitored and reviewed various aspects impacting learning and teaching in the online environment to find what works best for distance students. In so doing, we have been able to fine-tune the online learning and teaching experience by acting on the feedback of all role players to our digital learning and teaching environment.
The attitude that online learning is a ‘watered down’ version of ‘real’ education couldn’t be further from the truth and such attitudes have the potential to compromise quality. Higher Learning Institutions, Industry and students all need to reflect on their own attitudes to online education. More and more, online learning is proving to be the better solution.
Digital learning and teaching do have some challenges, but also comes with many added advantages and provides a valuable alternative to traditional classroom-based models. Given current learning conditions (in our lockdown situation), South African Learning Institutions, students and teaching staff are being forced to become familiar with the digital education space. Just as with every other industry in 2020, education can never go back to what it was just a few short weeks ago.
Going online is not only a matter of, uploading the ‘paper version’ onto a learner management system and continuing with learning and teaching activities as would be the case in a classroom. There are a number of important points of consideration in digital learning and teaching.
For students who are not used to distance and/or online learning, social distance could present a challenge. Distance institutions are acutely aware of this and any distance institution worth their salt will build mechanisms into their courses to reduce the sense of distance and isolation and to create a sense of community among students who are geographically far removed from each other. For Students at residential universities catapulted into distance learning, the sense of distance and isolation may be more acute.
Also important is how the rapport between lecturer or tutor and student is initiated and maintained. In a distance learning environment, there is not the luxury of sitting in a group, discussing challenges. Several mechanisms to create a sense of community need to be built into an online course. Creating an online social presence of the lecturer goes a long way to making students feel more secure. Many are turning to webinars as an alternative to the contact class. But you need to consider, how to adapt learning and teaching in webinars to ensure that students are meaningfully engaging with their study material and their teachers? In the classroom, teaching staff tend to use lecturing as the method of teaching.
Then there is the question of how study material needs to be adapted to make sure students are fully engaged in the absence of a regular contact class. Learning material must be designed to encourage active learning. Technology provides diverse opportunities to design learning resources which are almost 3D in nature and most certainly more interactive than textbooks and class notes.
The digital space has opened up a whole world of opportunity for authentic real-world learning and teaching that produces 4th Industrial Revolution work-ready graduates, whether the world is in crisis or not. The IMM Graduate School has embraced these opportunities, and is continuing to provide fully accredited, internationally recognised distance education during the lockdown and beyond.