Overview of the Internet of Things – Infographic.
Unfortunately I am not able to vouch for the veracity of the data in the Infographic above.
For Marketers taking a world-wide view.
Howard Fox is Executive Director Marketing at the Gordon Institute of Business Science and hosted the press launch of the GIBS Dynamic Market Index.
“The Last Iceman” strategy relies on being the last player left in a diminishing market. This strategy can be more profitable than might first be thought, provided you outlast all your competitors. Some markets last much longer than anyone would expect – take for instance vacuum tubes (the market remains in spite of decades of solid state transistor technology), or the return of vinyl records.
Article on the resurgence of vinyl:
The Unlikely Return Of Vinyl Records, And How Indie Musicians Are Making Money On Them by Jackie Shuman (@jackieprobably) an independent music supervisor and Head of Sync at Crush Management. http://tinyurl.com/ken9b38
Remember that redhead from school? Or that really tall, thin guy you used to see hanging around all the time? They were different. Memorable. Some would say unique. No one remembers “Neville”, that average, kind-of-invisible guy at the back of the class, who now, oddly, is the convener of your matric-reunion Facebook group.
How about your products; are they first-team players or “Nevilles”? It all comes down to just how unique your selling proposition is. A unique selling proposition (USP) is a description of the specific qualities or attributes that make your product or service different, so that customers want to buy it rather than its rivals. Think of it as the elevator pitch for your offering, a succinct way of describing what you have to offer.
A brief history of marketing
In the early days of the modern consumer economy, if you made a half decent product consumers would buy it. Our great grandparents, pleased to even get the opportunity to own the first domestic appliances, were less concerned about branding and marketing puffery than whether the new-fangled device would work.
Take the snappily named Modell A washing machine offered by German manufacturer Miele in 1903, for example. It came complete with “counterweights to simplify working the central agitator”. Untouched by a marketing practitioner, this exciting addition to the 20th century kitchen looked remarkably like the butter churn the company had been touting a couple of years earlier. This production orientation had manufacturers trying to increase product quality and reliability at an acceptable price.
As you can imagine, these happy times couldn’t continue forever. By the mid-1950’s (in western economies) markets were becoming more saturated, consumers had wised up, competition intensified and companies had to take on more of a sales orientation. However, companies still tried to simply sell what they were good at making. It wasn’t until the 1960’s that Professor Theodore Levitt (editor of the Harvard Business Review) pointed out to marketers that perhaps they should start off by finding out what consumers actually wanted, before making and trying to sell ill-suited products.
Fast forward to today. Unless you are a rare earth miner (outside of China), you face stiff competition. Your competitors can probably replicate your products relatively easily, patent protection is increasingly difficult and expensive to defend, production technology is often commoditised and “innovation” is increasingly really just incremental product improvement. What you really need is an offering your customers can’t get somewhere else – a unique value (or selling) proposition.
Being unique may lose you some customers
Your uniqueness may lose you some business, but it will gain you far more. The reason many business owners fear having a highly defined value proposition is that that it means that they can no longer try to be “all things to all people”. No one wants to exclude potential customers. But if you can’t define what is unique about your product, you risk becoming irrelevant. Neville from school was neither nerd nor jock. He offended no one, but no one wants to date Mr Average.
If you can’t outline what makes your product different in a couple of sentences, then, sorry, but you don’t have a unique selling proposition. If the difference from your competitors’ offering is so arcane that it requires a lengthy complex explanation, then you don’t have anything unique either.
Of course your product is only really differentiated if the “unique” attribute is important to the market. Just being different for the sake of being different isn’t enough. In business-to-business sales for instance, once your product has achieved the minimum purchasing spec, and is therefore fit for purpose, further differentiation is unlikely to offer the purchaser greater value. It goes back to the good Professor Levitt’s advice: ask the market what they want before you spend time and resources on differentiating on something irrelevant.
How unique do you really need to be?
In the perfect world, you would be able to offer something no competitor can. In today’s markets this is relatively rare, outside patented prescription medicines perhaps. Charles Holland Duell, commissioner of the United States Patent and Trademark Office, is famously misquoted as saying: “Everything that can be invented has been invented” in the early 1900’s. In reality your uniqueness relies on choosing to develop a specific, different attribute to highlight against those emphasised by a competitor, even though both might share a similar overall set of attributes.
Take Korean car brands in South Africa for instance. A decade ago, these cost-effective vehicles didn’t enjoy the quality reputation of their European competitors. This was exacerbated by the (otherwise attractive) lower price point. Astute marketers appeared to recognise this and introduced an extended guarantee, longer than those offered by European competitors renowned for “quality”. The market recognised that a supplier confident enough to extend a guarantee is unlikely to deliver a product that encourages warrantee claims. This has, in my view, repositioned the vehicles from being “cheap” to “reliable at a reasonable price”; an attractive USP.
How to create a new USP
Product features, how services are delivered, how your staff interacts with customers and your reputation and brand can all be leveraged to create a USP. If you’ve exhausted these opportunities, you may need to relook at your offering; here are a few ideas to get you started:
Highlight benefits rather than features or attributes. Caltex petrol contains a proprietary additive “Techron”. The differentiating benefit that interests consumers is “maximum performance and economy”.
Think about your proposition in a contrarian way. You could do this by offering fewer features. While your opposition are packing in more and more features, consider focusing on simplicity. Take cellphones for young children and senior citizens, for instance, in which fewer features and simplicity are a plus. Or think differently about “quality”. Plastic “brass look” house-numbers (rather than the real, metal thing), are suddenly attractive because they are less attractive to scrap metal thieves.
Focus on style and design. Philippe Starck made the humble lemon squeezer uniquely his own entirely through superb design. His famous “Juicy Salif” squeezer retails for about R750, a significant premium over cheap plastic competitors, while requiring exactly the same lemon squeezing effort from the user.
Conform to a stringent standard. Some products, chemicals for instance, increase significantly in value just by being tested and guaranteeing conformance to a more stringent specification. “Pharmaceutical grade” chemicals sell at a significant premium to “industrial grade”.
Personalise your offering. If you enjoy only a small market share and consequently low volumes, consider offering a customised product or service. Larger competitors will struggle to compete given the size and inflexibility of their production process.
Offer unusual combinations. Consider “WCBO” – the World Chess Boxing organisation. As its name suggest it has combined two very different activities into a truly unique sport!
Every business deserves to have “first team” product and service value propositions that are memorable and stand out from the crowd. They are the foundation of sustainable businesses. The time invested in defining exactly what makes your business unique will doubtless be rewarded through increased market share and profitability.
This article was first published in Your Business Magazine
First published by EntrepreneurMag.co.za on June 10, 2013
I have a “full service” (no additional costs on quoted rates) refrigerated truck rental business based in Cape Town. At present I have a sub-contract with a national transport company that rents the two vehicles for 3 days per week, there is no room for expansion with this customer. My first objective is to have the current two vehicles rented 6 days per week. Second objective is to build up to a fleet of six vehicles within 1 year. How would you approach the marketing of this business in the most cost effective way?
This requires business-to-business (often abbreviated as ‘B2B’) marketing. So we aren’t talking about television or newspaper adverts here, which target large numbers of consumers. Rather we want to communicate to the (select) few people who are interested in the refrigerated trucking business.
Identify your market
Firstly you need to identify prospective markets for your current and future vehicles. I’m not an expert on trucking and logistics but it strikes me that there are a few obvious markets:
- Trucking companies that already have refrigerated vehicles who may wish to augment their current fleet
- Trucking companies who don’t have refrigerated vehicles who have possible business for refrigerated loads but don’t have their own vehicles or who don’t have sufficient business to justify owning a vehicle outright
- Trucking companies outside of Cape Town (i.e. geographic expansion)
- Short duration / last minute “stand-in” business
Determine exactly what you are offering customers
Next you need to determine why your prospective customers should do business with you rather than competitors, or acquire their own trucks. This is the most critical part of marketing and the most overlooked.
If you define a truly unique value proposition (USP) it’s much easier to interest the market.
Do you intend competing on:
- Lowest price (perhaps for long contract periods)?
- Best service?
- Short rental periods (i.e. augmenting customers’ current fleet for capacity overflow)?
- Unique size or other attribute of your vehicles?
Don’t underestimate the importance of having a clear USP. Without it, no matter how much marketing communication you do, you are unlikely to create market interest and build the business.
Identify prospective customers
Given that your (prospective) customers are also looking for their own customers, they shouldn’t be too difficult to find. The Internet is a wonderful marketing tool. Trade associations and associated suppliers such as clearing agents might also help identify prospects.
Even a prospect that turns you down can offer important information about other players in the market. The aim is to really understand who’s who, what type of business they concentrate on and how they compete. Without this information you are blundering around in the dark.
Selling is marketing too
Get out and sell. Nothing beats a face-to-face meeting (if possible) or as second best a telephone call. But be prepared; know exactly to whom you need to speak, what their title and responsibilities are and what business problem you are in a position to offer solutions to.
Selling is so effective that unfortunately everyone is doing it. You need to be able to offer possible business solutions early in the conversation to retain interest and build rapport.
There is in my view, little value in conventional advertising under these circumstances. You should however, spend significant effort creating a well thought-through web site (which these days effectively replaces the “sales brochure” of old).
You can create a remarkably professional website yourself for very little cost at WordPress . If budgets allow you could also consider a limited amount of Google search pay-per-click advertising to attract prospects to your site. As you only pay for those who click through to your site, this can be very cost effective.
Until you get paid, it’s not a sale
The most important business lesson in my career has been the importance of deciding with whom you are not going to do business. This is particularly pertinent in a business’ growth phase. Easily available business might be indicative of unattractive business.
Beware of unscrupulous (prospective) clients who change suppliers when unpaid suppliers finally refuse to continue the relationship. Remember that a ‘sale’ until paid for is better described as a ‘donation’.
First published by EntrepreneurMag.co.za
If you haven’t ever watched it, the TV show ‘Suits’ depicts New York’s best lawyer Harvey Specter, and brilliant college-dropout Mike Ross going about their high-powered lawyering while all the time dressed up in (obviously) their sharp power-suits. They look the part.
We are always told that one shouldn’t judge a book by its cover, but that is rubbish – it’s the only possible way to judge a book. Actually, publishers will tell you just how critical cover design is to sales. What has this to do with marketing? It’s all about positioning.
Most organisations, especially those during the start-up phase, are explicitly tied to the founder. As time goes on the senior team too represents the company. Eventually as the number of customers / clients grow, account managers or representatives are likely to be appointed. How these folk look and act impacts on the public perception of the company.
Getting your context
Think Bill Gates. Only the occasional suit here (annual financial results?). More open collar shirt, preppie pullover, and the side parting and glasses of an ‘I’ve-got-nothing-to-prove’ uber nerd. Perfect in the context!
So unless you are David Beckham who even manages to look cool playing the occasional game of soccer in his suit, you may rather want to consider what the most appropriate ‘look’ is, unlike my creative director at an ad agency early on in my career.
Now he rather liked a dark pinstripe power suit. Except clients expect the creative director to wear baggie pants and a hat – a significant disconnect which always affected the karma of creative pitches.
Finding your style
Some companies have an explicit dress code for their staff, but most don’t. So what is your company’s ‘style’? Is it short sleeve shirts and ties so liked by Dilbert – which says “techie (and proud of it) who wears this tie to tell you I appreciate your business.” Or kakis and work boots with the intention of looking like someone prepared to walk the factory floor.
Those corporate branded golf shirts you have your sales reps wear- do they really send the right message? Certainly they are uniform, but clients want to think they are meeting someone of stature rather than a drone. Could this be hampering business?
Perhaps the money might be better spent on a clothing allowance for public facing staff? A power suit on the other hand certainly says ‘senior executive’ and ‘confident’ as well as ‘others have paid me good money for my services, so I must be good’ but it also hints at ‘expensive’.
To an extent the vehicle you and your client facing staff drive (if your customers see them) is also part of their ‘business attire’ and influences perceptions. Swooping up to your client in your new Merc SL 65 AMG makes as big a statement as does an 87 Toyota Tazz.
It’s about being congruent with your intended positioning. Flashy cars aren’t appropriate for a non-profit or charitable organisation any more than a clapped out skadonk is for an investment advisor.
It’s all about positioning
Positioning of the organisation’s senior executives goes beyond just their sartorial elegance. Their stature in the industry contributes via a halo effect to the organisation itself. Having your chief executive as the chairman of the industry’s professional body or serving on a prestigious judging panel all rubs off positively on the company.
Positioning your board and exco as thought leaders can only result in additional business. For little effort, inclusion in discussion panels or the occasional opinion editorial piece in a prestigious industry or business magazine creates a lasting effect.
Relying on senior business leaders to help position your business is not without risks, particularly in the rough and tumble of the South African business environment. It is critical to monitor all your organisation’s key players’ digital and press exposure.
Ensure you maintain Google alerts on anyone who has an influence on the company’s public perception, and consider a news clipping service for the ‘real world’ press. Fore warned is forearmed, in reputational management!
This article was first published on http://www.entrepreneurmag.co.za
Growth. It’s the natural order of things. Those of us who own businesses are naturally ambitious for our “baby”. You may have participated in the business’ birth as a start up and gone through the awkward teenage years together. It is only natural for us to drive our businesses to grow.
How big to grow?
Once grown beyond the survival start up phase, it is time to decide: how big do you want your company to become? It seems self evident that most companies try to grow as big as possible. But larger doesn’t necessarily mean better or more profitable. It may be better to be a medium fish in a small (niche) pond than a large fish in the ocean. You may not know that the acknowledged market leader in Olympic class racing rowing boats is Empacher Bootswerft (boat works) a German family business founded in the 1950’s. They manufactured 10 of the 11 Olympic heavyweight-rowing gold-medal-winning boats at the recent London Olympics. In fact they produced 50 of the 84 boats in the finals – a 60% Olympic market share. Apart from also producing oars for racing rowing boats and catamaran’s for well, rowing coaches, they have focused single-mindedly on this particular boat niche. Given this focus and consequential success at Olympic level, you can imagine which boat Germiston High rowing club would really like to own. Success becomes self-fulfilling. Clearly it limits expansion, but market dominance can reduce risk, and not encroaching on say the luxury yacht market means that retaliation by significantly larger competitors is less likely. Customers like to know that their suppliers are world-leading experts rather than generalists. Sticking to ones knitting does make for exceptional jerseys. But the risk remains that said jerseys might go out of fashion. Empacher boat works has for instance lost its dominance in lightweight rowing class boats. South Africa’s stunning Olympic gold in the lightweight four was in a Filippi boat – an Italian competitor. Is this the end of over half a century of Olympic dominance? The point is that as your company grows, you need a specific intent with regards to: do you want to grow? / how much you want to grow, and if aggressive growth is appropriate how best to achieve this.
How to grow.
Professor Igor Ansoff left us a very succinct (and by now well known) road map for growth, known unsurprisingly as the ‘Ansoff Matrix’. Combinations of new or existing products and new and existing markets give four basic growth strategies:
Market penetration (more of the same – same products into the same market)
Unless you already enjoy a very high market share, the most obvious growth strategy is to simply take market share from your competitors. Your competitors of course will be less enthusiastic about this strategy and may well retaliate by attacking your core customers. This could well drive down market prices and consequently profitability, and as most companies are driven by profitability rather than turnover, consider this impact carefully before attacking a bigger aggressive competitor.
Product Development (New products into your existing market
A relatively low risk strategy, most organisations drive the development of new products as a matter of course. The primary attraction being that adding products to your existing portfolio increases sales with very little additional sales or administrative cost. It also helps lock in customers by adding to your basket of products – less opportunity for competitors to make inroads on your customer relationships because you don’t stock an item. In many industries the real competitive advantage is the relationship with the customer and cost effective distribution, rather than exclusive access to products. Use these strengths if you have them, to your advantage.
Market Development (New markets for your existing products)
Do you know all the current and possible usages for your product? Seems a simple question, but often products have unintended markets. Baking soda intended to make cakes and baked goods rise during baking is also used to reduce odours in fridges and to clean plastic piano keys, I understand. Could your products be repurposed into dramatically different markets? What about geographically new markets? Is there an export market for your products, or is there significant business in cities other than your current location?
Diversification (new products into new markets)
It is easy to believe that the strong brand you have developed can be leveraged into completely new products in new markets. This is a strategy utilised with significant success by Sir Richard Branson and his Virgin Group. With businesses ranging from travel (soon to include space travel), mobile phones, financial services and entertainment, the only common denominator is the brand and the founder’s personality. Of course many forget that there were numerous failures along the way including (bizarrely) Virgin Brides a wedding dress business launched in England 1996. Richard Branson predictably dressed up in a wedding dress for the occasion but it closed its doors about a year later. Cosmetics, lingerie and most famously Virgin Cola came and went. With reference to the latter Sir Richard admitted: ”That business taught me not to underestimate the power of the world’s leading soft drink makers. I’ll never again make the mistake of thinking that all large, dominant companies are sleepy”.
Even McDonalds. a recognised marketing heavyweight with a hugely powerful brand has suffered when it tried ill-advised diversification. Based on the thought that “Our restaurants serve 74 million customers in a country with a population of 7 million, if only one in 1,000 of those guests choose the Golden Arch Hotel, the project will be a success” McDonalds Switzerland went into the hotel business. However, apparently the 74 million customers couldn’t see the connection between the Mickey D brand and luxury 4 star hotels, with complaints that rooms were “too plastic”. This combined with unfortunate market timing resulted in the hotels being sold off after just a couple of years.
So, where the market sees a valid connection to the mother brand and believe the relationship can add real value, this can be a compelling growth strategy. Leveraging an existing brand for no additional cost to kick-start a new business is compelling. But it is high risk, with many failures even under the guidance of world-class marketers. So think long, hard and more importantly objectively, before attempting to deploy this game plan.
Blue Ocean Strategies
What about going one-step further than mere diversification? How about creating completely new demand consumers haven’t even realised they have yet, in completely new business categories? This is ‘Blue Ocean strategy’ devised by W. Chan Kim and Renée Mauborgne from the Blue Ocean Strategy Institute at INSEAD business school. The iPod is an often-used example – where the market wasn’t even aware of the possibility of managing their own personal music library through buying music tracks individually and digitally downloading them onto a personal listening device. Many recent social media and digital businesses fall into this category. Who could have predicted that half a billion people were itching to communicate in 140 characters or less, the foundation of Twitter? The payoff with such a growth strategy can be dramatic, primarily because by definition, there are no competitors to take a share of the market.
Growing a business is not unlike parenting. It is a roller coaster ride as you try and guide your progeny in the right direction, protect it from adversaries and help build a viable exciting future. Just like bring up children, it is also exciting, rewarding and well worth the investment.
This article was first published in Your Business magazine.
Given the progressively complex and rapidly changing business environment, few would argue the importance of the marketing role in commercial organisations. Companies’ market value and business flows (particularly given the apparently inextricable move towards digital business models) are firmly anchored to market decisions, degree of market orientation, and the strength of their brands and reputation. Even during these economically tough times, international brand values continue to climb to stratospheric heights. Coca Cola, affirmed by Interbrand (a respected branding agency), as the world’s most valuable brand, tops the list at over $77 Billion. “The company excels at keeping the brand fresh while maintaining a powerful sense of nostalgia that unites generations of Coke lovers and reinforces consumers’ deep connections to the brand.” Apple, rushing up the brand value charts to a close second (129% increase in brand value to $76 billion in 2012), has transformed how the world sees technology and its brand personality defines the very character of its consumers.
The explosion of social media has irrevocably changed company / consumer relationships, effectively reversing the balance of power. Take Dave Carroll, small time musician, peeved that United Airlines had damaged his guitar and refused to compensate him. Their parsimony no doubt saved their insurers a couple of thousand dollars. It also earned their reputation a YouTube video entitled “United breaks Guitars” which has amassed twelve and half million views to date. And a book (unsurprisingly named “United Breaks Guitars – the power of one voice in the age of social media”. Dave fills his days doing corporate talks on, well, how United breaks guitars. The Daily Mail quantified the resultant losses at $180 million. Contrast this with KING III requirements to carefully manage stakeholder relationships. Of course, Greg Smith’s New York Times op-ed piece on why he resigned from Goldman Sachs knocked $2.2 billion off their market capitalisation – certainly a material consideration for the board.
In spite of this context some companies remain without a marketer in the boardroom. While it is the norm to have board finance committees, remuneration committees, ethics committees and audit committees, it is very rare to have a customer, brand or reputation committee. However given the requirements of King III and the increasingly legislative environment in which South African business is required to operate, the marketing directors role is increasingly critical.
At a leadership level, the scope of the marketing role is dependent on the marketing-orientation Vs product / production orientation of the organisation as a whole. Organisations vary dramatically in their marketing orientation due to their market conditions, industry structure, strategic intent and maturity as an organisation. Brand driven organisations are inclined to place greater emphasis on marketing with greater scope under the direction of the marketing director. In sales led organisations a separate sales director may work in conjunction with, at the same level as the marketing director. In business-to-business roles or indeed those organisations that are price takers (such as miners of commodity products) may require only a very limited marketing role.
Senior marketing professionals at board level must balance the analytical and creative. While it is true that the marketing discipline may perhaps require a greater creative component than say, financial management, it should not be confused with “Mad Men” the American TV show depicting an ad agency in the ‘60’s. While the creative output is perhaps the most physicall y evident, and is a differentiating aspect of marketers role, it in not, a senior level, the exclusive defining aspect. Marketing remains after all a management science. The Marketing Director needs to be able to hold a long-term focus on developing the brand and business positioning into the future while simultaneously retaining a short-term action orientation.
The high level functions of a Marketing Director include:
- Input into the organisations overall strategic direction.
- Translating the strategic direction into a specific marketing strategy and campaign.
- Create a corporate / stakeholder communication strategy and plan
- Developing and protect the organisations corporate and other brand/s
- Developing and protecting the organisation’s reputation, including risk management and mitigation structures and procedures.
- Overseeing new business development and sales strategies.
- Ensuring appropriate pricing and distribution structures are in place.
- Managing the organisation’s marketing resources. Budgeting for such.
- Identifying, appointing and managing appropriate, cost effective marketing service providers
- Development and maintenance of market and competitor intelligence, and the maintenance of the organisational customer records and CRM systems.
- Develop a suitable structure for the marketing department and if appropriate a matrix structure for marketers embedded within functional business units.
- Leading the marketing professionals across the organisation.
- Ensure legal compliance of all marketing activities.
Appointments at this level would clearly hold significant experience, ideally in the type of marketing environment the organisation operates within. Recognising that marketing is very broad by definition, experience in the FMCG field may not easily, for instance, translate to business-to-business marketing. Likewise senior marketers from within a marketing specialisation such as advertising or research may be stretched to undertake a full spectrum marketing-generalist, leadership role. A senior marketer should additionally be reasonably knowledgeable in a wide variety of allied disciplines, such as production, information technology, legal and finance given that the marketing function is expected to interface across such disciplines.
While there are a number of notable senior marketers with no formal qualification in the subject, it would be the norm to expect a Marketing Director to have a minimum of a degree specifically in marketing, communication, or an associated specialisation. As with other board level appointments a general management qualification such as an MBA adds stature, improves linkages into the business and ensures an organisation-wide outlook. A professional designation Chartered Marketer conferred by the Marketing Association and ratified by the Directorate Registration and Recognition (DRR) of the South African Qualification Authority is available to senior marketers.
“It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you will do things differently.”
The Marketing Director is the primary custodian of an organisation’s brand and reputation. While most of his efforts are focused on building a positive reputation, the marketing director needs to ensure reputation monitoring and risk mitigation strategies and structures are in place in anticipation of future crisis.
King III points out that the economic value of a company can no longer be based solely on the balance sheet:
Principle 8.1: The board should appreciate that stakeholders’ perceptions affect a company’s reputation.
Principle 8.2: The board should delegate to management to proactively deal with stakeholders relationships.
Principle 8.5: Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.
Principle 8.6: The brand should ensure disputes are resolved as effectively, efficiently and expeditiously as possible.
Large listed companies may retain the services of a specialist stakeholder relations firm to maintain communication with shareholders, although responsibility for such may be devolved to the Company Secretarial or Corporate Affairs teams.
Some larger brands have their brands explicitly valued by external brand agencies to ensure long-term protection and growth of this asset. While the marketing profession can’t claim unanimity with regards to brand value methodology there are recognised methods, such as ISO 10668 Monetary Brand Valuation.
Creativity and the role of ad agencies.
Creativity is used as a lever to multiply the impact of a well thought through communication campaign. You will recognise from your own experience that highly creative adverts break-through the clutter more effective than bland ones do. However, clearly a more risqué advert or communication is more likely to offend at least a portion of the target market. Thus while a creative campaign can offer significant strategic advantage, it may come with an increased risk to the organisation’s reputation. The degree of market tolerance for such communication depends on the history of the organisation with regard to past advertising (i.e. has it always tweaked the nose of convention) and the category of product and service. A fast service chicken restaurant with a long history of satirical and irreverent advertising is more likely to be forgiven than a funeral home or multinational pharmaceutical company. Critically brands should remain consistent to reduce market push back.
Marketers outsource the creative component of advertising to external agencies because it is difficult to justify the cost of retaining ‘creatives’ in house, especially given the ad hoc nature of their output; creatives prefer and work best in the fertile environment agencies offer; and because the sort of creative staff who work at ad agencies generally don’t want to work in client-type organisations.
A primer on media
Media has proliferated, fragmented, and faces significant change as consumers move from traditional media such as newspapers and magazines to more contemporary channels such social media. Some form of media is a requirement to communicate to an organsation’s target market, and is likely to be their single largest marketing expenditure. The broad categories of media are: those channels the company owns: web sites, brochures, in house publications and the like; media it buys such as advertising and sponsorships and that media exposure it “earns” – traditionally thought of as “public relations” but increasingly “content marketing” and most social media. It is the marketing directors responsibility to arbitrage between the costs and advantages of the media types available. This is done with the assistance of a media house, which offers both media strategy, as well as media buying on behalf of a large number of organisations. Earned media is likely to be facilitated through a media relations or reputation management service provider (previously known as the “PR agency”).
The South African business environment and in particular the marketing environment has become and continues to become increasingly legislated. The days of simple self, or industry regulation are largely coming to a close. With sanction of fines up to R10 million or jail terms up to 10 years, the risk of legal non compliance are material at board level. Clearly the prospective reputational damage of a legal case via the Consumer Commissioner, the Competition Tribunal or other bodies are also significant. While the Marketing Director may not be in a position to determine the specific legal risks of a particular market structure, marketing strategy or tactical undertaking he should certainly have sufficient knowledge and experience to know when to confer with legal council.
Relevant legislation specific to marketing issues includes:
- Competition Act no 89 of 1998 as amended
- Consumer Protection Act no.68 of 2008
- Electronic Communications and Transactions Act, 2002
- Protection of Personal Information Bill soon to be promulgated
- Sector specific legislation such as FIAS Act no. 37 of 2002
Self-regulation clings on in the form of the Advertising Standards Authority (ASA), an independent body funded through industry contributions based on advertising spend. All members are required to abide by the rulings of the ASA. Additionally, in terms of the Electronics and Communications Act (Act No 36 OF 2005) all electronic broadcasters must adhere to the code administered by the ASA. This offers a low cost alternative to legal action to settle complaints regarding advertising in South Africa. Unfortunately for marketers it also means that advertisers are required to respond to complaints even if such a complaint is from a single individual. The ASA can sanction advertisers by prohibiting further dissemination of the communication.
This article was first published in Directorship the official journal of the Institute of Directors South Africa.
- Introduction: Madness in the Market(ing) Place (themarketingmadness.wordpress.com)