As a generally happy-go-lucky sort of person I like to stay away from reading matters around politics, economics and religion. Politics and religion are always a bone of contention, so let’s leave them alone. But because I deal with finding business solutions, I have to be sussed on issues concerning the economy, writes Jedd Cokayne.
When it comes to economics, you’re dealing with one of those areas that if you’ve read up just a bit, you can have a discussion with a colleague and sound reasonably intelligent. As a result everyone is an expert. And the outcome is that when you read some of these ‘expert’ economic reports and opinions you have a sudden urge to run to Builders Warehouse and Makro to immediately order supplies to build a bomb shelter under the house and stock up with enough supplies to last a year or two.
Hell, economic opinion on South Africa finally drove me to start watching programmes on DStv like Doomsday Preppers. Plus, there are others like the Walking Dead that also don’t help with the anxiety. But thankfully this feeling only lasts for about 30 minutes and then it’s back to life as usual…
The last economic report I happened to read started off with “Outlook for 2015 Dismal”. Items discussed ranged from the high unemployment rate, the effect load-shedding is having locally and around investment in South Africa and what factors are influencing the various industrial actions we are having or soon will be having.
In the first quarter of the year we had a negative 0.6% growth followed by a positive 0.5% growth seen in the second quarter. The third quarter will hopefully see a 1.4% growth mainly driven by increased activity in finance, real estate, business services, wholesale and the motor trade. Chris Hart, chief strategist at Investment Solutions, believes the growth in the last quarter will be curtailed for a number of reasons and is notably lower than any of the other emerging markets.
The outlook for 2016 is reasonably grim as well (I believe they are running a special on concrete at Builders Warehouse for the next week). I think it is clear why one would maybe try and avoid all these good news stories! But my job dictates that I absorb, and when necessary, react…
Marketers on the other hand, thankfully seem a bit more upbeat. Either they are in denial or they can see the potential in this country so many of us dream of. International marketers are also sitting up and taking notice of the land down south and starting to invest with us.
As I work on the fast food market, I have seen the arrival of three new international brands to our shores, namely Burger King, Pizza Hut and Dominos who are all aggressively approaching the segment.
Many of their international reports dedicate a lot of space to their expansion plans into South Africa, which bodes well for the future. And it’s not limited to the big names – we’re seeing other newcomers such as Rocomamas and The Gourmet Burger Company also looking for a share of the South African consumer wallet. They have picked up on the trend that consumers are looking for a more bespoke experience and that variety is key to their purchasing decision.
The result is that marketers have to look for different expansion programmes to continue growing their bottom-line. After all, their job is to meet targets, and satisfy shareholders.
There are a number of choices available to them, but the general trend leads to four possible directions:
1) New product ranges
2) Geographic expansion
3) Premium offers
4) Alternative distribution channels
Key to many strategies is keeping an existing customer base happy, while simultaneously attracting new users to brands, and new products that will appeal to new segments. This is most notable in South Africa in the deep rural areas. Often ignored historically, today it is proving to be a potentially very lucrative market based purely on the number of people it represents. This has given rise to many new media opportunities that marketers can use to reach them and an opportunity to dust off and re-energise existing ones ignored in the past.
Aspirations are a great motivator to the emerging middle class and we have seen the opportunity for an increase in premium products offered, which allows for a broader based appeal. Marketers are also looking at expanding their channels of distribution, and incorporating some seldom used, in the hope of appealing to a broader market. I experienced this the other week when I bought a new Rudy Project Cycling Helmet at Dis-Chem. Cycling stuff at Dis-Chem? Yep, it was displayed in the health section and at a really good price too. It worked. I had gone to buy supplements for an upcoming race, and ended up buying a helmet … and the supplements.
Conclusion? From an economic point of view, who knows what the future holds? But I know that marketers need to start thinking differently and I look forward to seeing how they’ll take on the challenge in an ever-changing South African market.
Jedd Cokayne is business unit manager at The MediaShop.