The importance of adapting to change when taking brands to the market

Many a good brand has died a sad death due to lack of access to markets and a good understanding of how to get brands to the market.

While marketing and branding today are vastly different from how things were done in the past, characteristics and principles embedded in the tools and messaging have remained. Content, originality and endorsements are still relevant. Billboards, print, radio and TV advertising have had to cope with significant competition from digital and social media.

Current trends in the marketing space

Young people do not spend time reading a newspaper or magazine, and are watching less traditional TV channels except for reality shows and sports compared to the time they spend on social media either creating content or following others on platforms like Facebook, YouTube, Instagram and TikTok. Even within the social media platforms, there has been a shift towards the latter two at the expense of the former in the younger generation, with a whole new group of followers who engender influencers’ endorsements. These influencers earn income promoting products and services by reaching a wider audience than media channels.

A good knowledge of social media users is key to driving advertising as much as the message and slogans being carried. Long messages generally don’t work well, slogans do. They capture attention, they ease and improve recall for when a purchase is in the offing, and reduce cognitive dissonance. In the book Made to Stick, Chip and Dan Heath made that point convincingly.

The graph from the WOW report on the footwear industry in South Africa illustrates that revenue has steadily increased and is above pre-pandemic levels, reflecting the competitiveness and resilience of the industry.

The footwear industry like other sectors, has been gradually embracing digitalisation with online technologies having become essential for companies to stay competitive, streamline operations, and enhance customer experiences.

A good South African footwear story

Bathu, a South African footwear manufacturer, nailed it and did things right, setting an example that successful companies have a place in South Africa. It created identification with its slogan “Walk your journey” and combined it with a strong township South Africa association.

Bathu has a slick online presence and was able to create a niche market for its footwear, against giants like Nike and Adidas, which is not a small feat.

Conclusion

The adoption of digital technologies in the South African footwear industry has reshaped the landscape of marketing, challenging traditional methods while offering unprecedented opportunities. This is evident in how local brands connect with consumers, with Bathu being a good example. The brand navigated the digital race, leveraged social media, has a slick online presence and a resonant slogan.

The industry’s resilience, which is showcased by a steady revenue growth, emphasises the  effectiveness of marketing strategies that include digitalisation. However, the open-ended nature of digital media underscores the importance of responsible usage. As South African brands continue this digital journey, mindful integration remains key for sustained success.

This letter was first published in the Business Day

Linda Ensor’s article states that not all entities governed by the Financial Intelligence Act, which is implemented by the Financial Intelligence Centre (FIC), are complying.

A crucial component of this legislation is the obligation to “know your client”, which includes the disclosure of ultimate beneficial owners (UBO). While the Companies Amendment Bill gazetted last year obliges private companies to provide a UBO register with their annual returns to the Companies & Intellectual Property Commission (CIPC), the law states that this information can only be accessed by the FIC and the state security cluster, and not by the media or the public.

Companies are therefore obliged by law to provide information on their clients that is denied to them by a further piece of legislation, which is an obvious clash of legislation. One of the 22 reasons provided by the Financial Action Task Force for greylisting SA is the lack of legislation to disclose UBO, which was addressed in the amendment bill, but it inexplicably denies access to this data by the media and the public.

The CIPC is an efficient state agency with an effective IT infrastructure that could provide this access, but it is not the custodian of the Companies Act and can only implement the law as gazetted. Public access to UBO registers has long been in place with most of our European trading partners and our African neighbours Ghana and Nigeria, and commitment to this effect has been given by Kenya, Senegal and Zambia.

The principle that the affairs of companies cannot be entirely private is well established in our law. The Constitutional Court ruling in 1996 by Justice Ackermann in Bernstein v Bester NO stated as follows:

“The establishment of a company as a vehicle for conducting business on the basis of limited liability is not a private matter. It draws on a legal framework endorsed by the community and operates through the mobilisation of funds belonging to members of that community. Any person engaging in these activities should expect that the benefits inherent in this creature of statute, will have concomitant responsibilities ….”

A further simple argument is that the reasons for shareholders keeping beneficial ownership secret from the public are probably precisely the same reasons the public requires transparency of ownership. Given the corporate malfeasance of our recent past, it is patently clear that transparency should prevail over secrecy, and the relevant authorities need to explain to the media and public why they are denied access to private company UBO registers.

The battle of wits

Advances in technology are linked to the evolution of cybercrime and crime syndicates, who stay abreast of these advances and change the way they operate in response.

Before the explosion of technology in its daily use by individuals, cheque fraud and manipulation were common. The movie Catch Me if You Can, starring Leonardo DiCaprio as a brilliant forger, whose skill at cheque fraud had netted him millions of dollars in stolen funds, is a good example of crime at the time. Today’s potential loot from victims of fraud on the internet is beyond comparison in size and impact.

In January 2024, Bob Dyachenko, owner of SecurityDiscovery.com, and a team of researchers from Cybernews discovered a data breach on an unsecured web instance of over 26 billion records. Interestingly it was found that Leak-Lookup, a data breach search engine, was the holder of the leaked dataset. “The dataset is extremely dangerous as threat actors could leverage the aggregated data for a wide range of attacks, including identity theft, sophisticated phishing schemes, targeted cyberattacks, and unauthorised access to personal and sensitive accounts,” the researchers said. This demonstrates how complex the issue of cybersecurity has become.

Privacy legislation, such as the POPI Act is meant to prevent unauthorised use of identities and private information, yet private information sits on multiple servers and hard drives that, with enough effort and astute access, can be copied. Municipal accounts, bank accounts, cloud storage of files on laptops or PCs, VISA or Mastercard account information, retail loyalty programmes with Pick n Pay or Shoprite, patient information stored by medical aids and home affairs ID information are all a target of professional hackers who are continually attempting to steal it.

The impact of cybercrime on the economy

According to Billy Petzer, research group leader: cyber security systems, at the Council for Scientific and Industrial Research (CSIR), the impact of cybercrime on the economy is estimated at R2.2bn per annum.

At corporate level, successful hacks can become very expensive, paralysing a company’s networks and data access. A WOW report on the information technology industry indicates that increased spending on cybersecurity solutions represents a growing opportunity for providers of IT services. The report referred to a February 2023 survey of 163 IT and security professionals by cybersecurity consultant Artic Wolf undertaken for ITWeb, which revealed that 74% of respondents said that their cybersecurity budget for 2023 would increase. Altron reported in the year to end-February 2023 that small to medium size companies that are listed as a vendor for a major enterprise supply chain may need to meet the cybersecurity standards of the enterprise to comply with vendor security requirements.

What can be done to counter the sophisticated growing industry?

Today, half of all the personal information of individuals, including bank account numbers South African Social Security Agency (SASSA) pay-out information and passwords, are stored on their mobile phone, an item that is purposefully targeted by thieves.

Some data or information is unavoidably necessary to function in society, and cell phones have become instrumental in transaction security checks. Everybody has a debit or credit card linked to a bank account and other accounts, home loans, car loans, investments etc. How do we shop without a card? To store all one’s data on a hard drive or keep it in a safe and only do cash transactions has become impossible. Woolworths will no longer accept cash for a coffee as cards and digital tools become the norm.

Online payments request all your card detail information without signature or other physical intervention. Payment systems get hacked, and recipient cell numbers get altered with painful consequences.

Relentless crime warriors are helping with cybersecurity

Cybersecurity has become a battleground of cybercrime syndicates and advancing technologies by software developers.

It has become an elaborate and intricate web of controls and checks to keep predators at bay. The relentless software updates even by the likes of Microsoft, Apple and Samsung to plug “vulnerabilities” demonstrate that the sophistication of cybersecurity defences is ever evolving.

To find out more about this growing industry and sector, purchase WOW’s full report on the IT industry in South Africa.

Why cigarettes are highly regulated

Cigarettes are highly regulated in South Africa and fall under the umbrella of items subject to sin taxes. This is due to their addictive nature and the complexity of safeguarding public health, aided by health warnings that smoking is bad and dangerous for your health.

Tackling the issue of illicit cigarettes in South Africa requires a comprehensive approach by various stakeholders including government agencies, lawmakers, and industry stakeholders by sharing resources and information to effectively combat the scourge.

The price difference between legal and illicit cigarettes will always be tempting for shady operators who rob the government of a significant amount of tax. Tax makes legal cigarettes expensive, and fighting the lucrative illicit trade adds to costs of legal cigarettes.

The rise of illicit cigarette trading

The five-month long ban on selling cigarettes in South Africa during the pandemic triggered unintended consequences of serious proportions. In the absence of cigarettes from tobacconists and retailers, some smokers desperately searching for cigarettes managed to find them on the black market.

This became an incredible boon to illicit cigarette peddlers who built a vast under the table distribution network, sustained beyond the lifting of the ban as smokers discovered how easy and a lot less expensive it is to buy cigarettes at a much lower cost.

The WOW report on the Tobacco industry in South Africa indicates that illicit trade took off from 2010, about the same time that new South African manufacturers sought to take advantage of the high prices for cigarettes charged by British American Tobacco South Africa (BAT SA), Japan tobacco International (JTI) and Philip Morris. In 2010, the illicit economy was for the first time estimated to be as high as 10% of the total market. By 2018, studies on the illicit market by Ipsos found it accounted more than 33% and was dominated by Gold Leaf Tobacco’s Remington Gold brand. The market share of illicitly sold cigarettes increased during the five months ban in 2020, and it was estimated that the share of illicit cigarettes had grown to between 54% and 60% of the market by 2022. BATSA’s loss of market share saw it reduce tobacco orders by 12.5% in 2021. BATSA has also on previous occasions said it considered closing its South African factory and considered sourcing processed tobacco from overseas rather than locally from Limpopo Tobacco Processors.

How the cost of living is driving the illicit trading of cigarettes

The government cannot rely on a moral barrier to stop buying cheap illicit cigarettes over expensive legal cigarettes. The price difference amounts to taxes, but the cognitive dissonance of buying illicit cigarettes is low to non-existent. Consumers are battling to make ends meet and find the solace of cheaper cigarettes acceptable even if borderline illegal.

Once the can of worms has been opened, it has become nigh impossible to re-can those worms, and the biggest loser is the government.

The impact of illicit trading of cigarettes on multinationals

Understandably, BAT joined forces with government to push back against the illicit cigarette trade, and is frustrated by the lack of progress, as this comes on top of continued and increasing measures to make legal cigarette trade and consumption more difficult. Not surprisingly, BAT’s workforce is down by a third, as if you sell less, you produce less and therefore require less manpower. Some of that workforce shifted to the illicit cigarette manufacturers, which pay much less taxes, if at all. The loss to the economy and employment is not in the main caused by the identity of the manufacturer but by the restrictions on and lower consumption of cigarettes.

It has become a real catch-22 situation for the government which probably will cut its nose to spite its face and continue to increase sin taxes on cigarettes in the Budget, which will inevitably drive more people towards the illicit cigarette trade.

While there seems to be progress to stub out the illicit trading of cigarettes, the resilience of this trade presents complex dynamics of taxation, public health, and economic repercussions. The resilience of the illicit market poses a formidable threat, demanding urgent and collaborative intervention by all stakeholders concerned.