marketing mix magazine sept oct 07

CONTENTS

Vol 25 No. 11/12 I 2007 I MarketingMix 1

MarketingMix

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I 3 1 I Expert Opinion:Lizelle SmitLizelle offers some expert tips foradvertising on radio ahead of theholiday season

I 3 2 I Expert Opinion:Helen McInteeHelen unpacks packaging and its rolein the marketing mix

I 3 3 I Indian mediaMarketing Mix gets a little closer tothe local Indian market, anddiscovers a gem

I 3 8 I Business MediaNew entrants into the businessmedia sector offer more niche targetmarkets and have forced everyone toup their game

I 46 I Ethical marketingAlison Tucker ponders what it meansto be an ethical marketer amidst theGreen revolution

I 4 9 I Expert Opinion:Richard MullinsRichard tells you how to maximiseyour e-mail marketing returns

I 50 I Content ChampionsWe pick this year’s best contentproviders

I 54 I Sales PromotionsCritiqueMarketing Mix looks at some of thebest sales promos

I 5 5 I Expert Opinion:Nici StathacopoulosNici prompts direct marketers to JustDo It

I 56 I Law MixEugene Honey unpacks the risks andissues around licensing intellectualproperty

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I 0 2 I Book ReviewMarketing Mix reviews Quirkology(authored by Richard Wiseman), andfinds out about curious aspects oflife: how much of a role does one’shoroscope actually play? Or how canI tell if someone is lying to me?

I 0 4 I Ed’s note

I 0 6 I DMAFind out about the Assegai awardscriteria and categories, and the newfounder members for the DMA

I 0 8 I NewsAll the latest gossip in the wonderfulworld of the marketing mix

I 1 6 I 7 Day [B]itchDiscovery Magazine editor, andfreelance writer, Gus Silber tells uswhy he doesn’t like films aboutpirates

I 1 7 I Expert Opinion:Richard DuncanRichard examines the nature andimpact of change

I 1 8 I Brand AnatomyMarketing Mix gets to know Hummer

I 2 0 I TownshipmarketingMarketing Mix investigates what’shot and happening in the townships,and tells you how to get into thetownship markets

I 2 8 I Footskating 101Footskating 101 producer, RonnieApteker, chats about the trials andtribulations of marketing a local film

I 3 0 I Expert Opinion:Michele Venter-DaviesMichele explores the school car parkdynamics, and the hullabaloo aroundmarketing to kids

MarketingMix I Vol 25 No. 9/10 I 20072

by michelle sturman BOOK REVIEW

Quirkology is about the quirky natureof humans. The author, Richard Wiseman, is

a well-known psychologist whose studies

and experiments have been featured on TV

documentaries across the world. Quirkology

not only details Wiseman’s foray into the

weird and wonderful, but also some of the

other quirky studies undertaken in the name

of trying to figure out what makes us tick.

According to Wiseman: ‘quirkology uses

scientific methods to study the more curious

aspects of everyday life… but has never been

formally recognised within the social sciences.’

One of the first stories that Wiseman tells

is of an experiment playing the stock mar-

ket. Can astrology really predict what’s

going to happen? Wiseman found a city

analyst, a financial astrologer and a four-

year-old girl to invest in the stock market.

After a year, the results were analysed. The

four year old made the only profit! Wiseman

was prompted to engage in this first experi-

ment to find out why people believe in

astrology – a few more examples of

astrological experiments are detailed in the

book. What’s important from reading the

astrology experiments is the notion that

many people who believe in astrology know

what star sign characteristics are meant to

be, and therefore tend to say they possess

those characteristics.

Finding out detailed characteristics of

consumers could be a way to fine-tune

campaigns. Do your consumers believe they

are lucky or unlucky, for example? Results from

various experiments reveal that people make

their own luck: ‘the lucky people were

optimistic, energetic, and open to new oppor-

tunities and experiences. In contrast, the

unlucky people were more withdrawn, clumsy,

anxious about life and unwilling to make the

most of the opportunities that came their way.’

A fascinating chapter, entitled

Chronopsychology and the grim reaper,

details an experiment by sociologist David

Philips at the University of California. His

specific interest is whether people are able

to postpone their death until after the

moment of important emotional significance.

While controversial, one of his largest

studies looked at whether people’s date of

birth influences their date of death. It was

found that women were more likely to die

in the week following their birthday, while

men were likely to die in the week before

their birthday.

Another study conducted on 2 000 Finnish

men tried to establish a link between healthy

thinking and longevity. The group was divided

into pessimistic, optimistic and neutral groups

and studied for six years. ‘It was found that

the men in the “pessimistic”group were far

more likely to die from cancer, cardiovascular

disease and accidents than those in the

“neutral” group. In contrast, the “optimistic”

group exhibited a far lower mortality rate

than the other two groups.’

Those engaged in research, will be inter-

ested in the section on lying. Research con-

ducted by Professor Charles Bond, involved

surveying thousands of people from over 60

countries. What’s intriguing is that the tradi-

tional indicators we associate with lying –

averting a gaze, fidgeting etc – just don’t

hold up, which could explain why people

are so bad at detecting liars. Apparently, the

way to tell a lie is to study the words used

and the way in which they are used. A few

indicators include fewer references to them-

selves and feelings within the story or lie

they are telling. Following on from this sec-

tion is one on the human smile – can you

tell if a smile is real or fake?

In the chapter, Trust everyone, but always

cut the cards, an experiment to get people

to part with their cash through the power of

suggestion is demonstrated. In the experiment,

two objects were bought from a hardware

store. People in the first group of passersby

were asked if they felt anything unusual – as

expected, they didn’t. The second group

was told that the objects were designed to

feel unusual – some people reported different

sensations and said they would pay far more

than the items were actually worth. The

third group had visual elements introduced

such as Wiseman dressed in a lab coat. This

group reported more extreme sensations

and reported they would pay more than

three times the amount for the objects than

the second group. According to Wiseman:

‘It was a dramatic demonstration of how

easily suggestion can be used to part the

gullible from their cash.’

Other interesting experiments include: how

people choose to save money for items on

sale relates to the overall percentage of the

amount of money they are spending; how

subliminal advertising doesn’t really work;

how first names affect personality, life and

career choices; how news affects people’s

outlook; how to write the perfect personal ad;

how female van drivers are the most aggressive;

and measuring the pace of life. �

Quirky

Quirkology The CuriousScience of Everyday Lives

By Richard WisemanMacmillanR143

The Chambers Dictionary 10th EditionFor those looking for the most eccentric, lesser-used words in the English language, this

is the dictionary to have. It’s probably the only way you’ll ever get to know what jober-

nowl, fizgig, snoozle and zoozoo mean – and they’re just some of the examples on the

cover! A must-have for copywriters and anyone who loves words. The dictionary also

contains sections on first names, foreign language quotes, books of the Bible, wine

bottle sizes, international paper sizes and Internet suffixes, among others.

The Chambers Dictionary 10th Edition

Chambers Harrap Publishers LtdR495

by michelle sturman ED’S NOTE

MarketingMix I Vol 25 No. 9/10 I 2007 4

I’m addicted to Ugly Betty, the smash hit US comedy (just

won a couple of Emmys) but what has really piqued my

interest is the Dulux sponsorship. Talk about a match made in

heaven. It’s not as if we haven’t seen the ads before, but

kudos to the genius that decided to match the two.

This got me thinking about other sponsorships of my

favourite programmes. Prison Break, for example, was

sponsored by Peugeot. Not an altogether bad match and it

did tie the ads into the theme of the programme – fast

getaways, etc. Survivor is great local programming (and vastly superior this year without the

D-list celebs on it) but I’m not 100 per cent convinced by Vodacom’s ads. They’re cute and

designed to tie in with the whole ‘surviving without broadband’ idea but I think it’s slightly

misplaced and the cartoon theme doesn’t work for me. The KFC ads that are slotted in are great.

But, neither of them are a patch on Pick ’n Pay’s efforts last year – loved the fact that ads were

tied directly into an event that happened on a particular night’s episode. That’s creative.

Two sponsorships that really don’t work are Leaf Wireless for Grey’s Anatomy and Tata for

Desperate Housewives. Let’s start with Grey’s Anatomy. It’s simply the wrong product for this

environment and the ad is all wrong – aliens and hospitals, cellphones and hospitals! A little trite

and completely obvious, but how about medical aid, gyms, energy drinks, beauty products – the

female cast is always beautifully made up, no matter what the emergency, or tissues – who

doesn’t sniffle during almost every episode?

And now for Desperate Housewives… call me a snob (and the Marketing Mix team) but when

the cast of the show drive very expensive cars (Gabrielle and the Aston Martin, for example), Tata

doesn’t quite make the grade. That’s not to say I think Tata cars are rubbish or ugly, they just

don’t go with the show – a better fit perhaps would have been Audi with the new TT or BMW

showcasing the Mini Cooper S convertible. Coca-Cola’s sponsorship last year was ok, but so

much more could have been done with it. Why didn’t Coca-Cola come up with a mini-series that

offered a new episode with each airing of the show – it would have caused as much watercooler

gossip as Desperate Housewives itself.

If brands are going to spend so much boodle on sponsoring some of the best programmes

around, then at least do them justice. The very least you can do is think about which products

really fit with the show in question, then think long and hard about what type of ad would fit

best, and then think out of the box – a lot more.

TV talk

PROPRIETOR AND PUBLISHER:

Systems Publishers (Pty) Ltd.

Tel: (011) 234 7008

North Block, Bradenham Hall,

Mellis Road, Rivonia

PUBLISHER: Terry Murphy

EDITOR: Michelle Sturman

e-mail: [email protected]

JOURNALIST: Fulvia Becatti


SUB-EDITOR: Jenny Bastomsky


ADVERTISING MANAGER:

Robyn Andrews


PRODUCTION:

Spencer van Graan

e-mail:

[email protected]

SUBSCRIPTION ENQUIRIES:

Daisy Mulenga

Email: [email protected]

Copyright of all material in thispublication and supplements are

reserved by the proprietors, exceptwhere expressly stated. The opinionsin this publication do not necessarilyrepresent the views of the publisher.

Database:List Perfect

Marketing Mix Conference Programme

• Effective Marketing in the Township: 16 October 07

• Word of Mouth Marketing Workshop: 6 November 07

• The Marketing Law Workshop: 13 November 07

Sponsorship and delegate enquiries: Robyn: [email protected] (011) 234 70083 944 Jan-June 2007


DMA

DMA Assegai Awards 2007

Assegai 2007 categories and criteria

The Direct Marketing Association of South Africa has taken back the direct marketing awards and this year sees the relaunch of the Assegai

Awards. The purpose of the awards is to recognise and reward excellence in multi-channel direct response marketing. “We are aiming to

attract over 200 entries this year and in negotiations to secure international judges from the UK and US. We are looking for campaigns that

have pushed the envelope, have excelled and delivered real, measurable results,” says Brian Mdluli, CEO, DMASA.

This year, the South Africa Post Office (SAPO) has stepped onboard as the main sponsor of the awards. “We are committed to raising the

profile of direct marketing in our country and from a SAPO perspective, even influence the growth of direct mail as one of the effective

advertising media,” says Janras Kotsi of SAPO.

For more information contact Teresa Settas (011) 894 2767,

e-mail [email protected] or visit www.dmasa.org.

Closing date: 12 October 2007. The awards will take place on 5 Nov 2007

There are seven sections covering 21 categories. Campaigns may be

entered into multiple categories and across different sections.

Assegai statuettes will be awarded to those campaigns that meet

the judge’s criteria in each category. The Inkosi Award will be given

to the entry that exceeds all others in the area of creativity, strategy

and results.

Section 1: MediaCategories� 3D/Direct mail

� Alternative media

� Mass media (TV/infomercials/outdoor/radio/print).

� Catalogue/mail order

� Direct distribution/inserts

� Multiple media/integrated campaigns

� Telephone marketing

Section 2: New MediaCategories� Mobile marketing

� E-marketing

Section 3: Strategic and Integrated MarketingCategories� Customer relationship marketing/loyalty

� Enterprise relationship management programmes

Section 4: Technology SolutionsCategories� Database

� Electronic commerce innovation

Section 5: Individual and CompanyCategories� DM marketer of the year

� DMA Hall of Fame

� Organisation of the year

Section 6: CreativityCategories� Copy

� Art direction

� Creative solutions

Section 7: Student AwardsCategories� Young direct marketer of the year (under age 30)

� Student marketing team/campaign of the year

Judging CriteriaIn each area of assessment, the judges will have the following

criteria top of mind:

� Strategy: counts for 30 per cent of the judging criteria and will

be evaluated on whether the campaign demonstrates a thorough

understanding of the business environment and market, while

displaying a focused strategic insight in response to the challenges

posed by the brief.

� Creative: counts for 30 per cent of the judging criteria.

Only work displaying true originality, effectiveness and

craftsmanship in execution will reach the finals. The use of

typography, photography and design in relation to the copy and art

direction will be judged. Simple low cost, once-off campaigns that

demonstrate creative excellence stand as much chance of winning

as any other.

� Results/ROI: counts for 40 per cent of the judging criteria.

Relevant measurements such as cost per response, conversion rates

and sales turnover must be provided for an entry to be considered.

The results must also be in line with the predetermined objectives,

whether those were sales, lead generation, retail traffic etc. Figures

can be represented in percentage or indexed terms. All judges are

bound to secrecy and confidentiality.

Campaigns that have received exposure from May 2006 to

August 2007 are eligible to enter.

� Creative Awards: counts 20 per cent strategy and 80 per

cent creativity.

DMA

Vol 25 No. 9/10 I 2007 I MarketingMix 7

Founder Members are offered the following:� One year free DMA corporate membership

� A free (full day) customised educational seminar about direct marketing, presented by industry specialists

� Representation on the DMA website

� Logo on all pro bono DMA ad placements

� Six free tables over the course of 12 months at various DMA events

� Showcasing at various relevant exhibitions and conferences

� An official Founder Member certificate

� An opportunity to join the planned mentoring programme

Special consideration will also be given to Founder Members through Marketing Mix, with respect to: � Nominating topics and being invited to provide expert opinions, leading sponsorship rights and occupying premium advertising

positions within Marketing Mix

� Nominating topics for executive roundtables that are hosted by Marketing Mix

� A customised communication programme that can be implemented with the DMA and Marketing Mix

More founder members for DMAThere are only two founder member places left for the DMA Founder

Member programme, according to Colin Hudson, founder member

negotiator, DMASA. So far, FNB, SA Post Office, MTN, Absa, Computer

Facilities, Avis and HomeChoice have provided financial support as

founder member companies. “The need for a body representing the

industry as a principal lobbyist on legislation affecting direct marketing

has been graphically illustrated through the contributions made by the

DMA to the National Credit Act and, in particular, to the Protection of

Personal Information Bill and the Consumer Protection Bill, all at a high

level. This positive contribution on behalf of the industry fully justifies

the wisdom of the founders’ investments,” says Hudson.

Says Jacques Hattingh, senior manager, Customer Satisfaction (CRM,

Loyalty & Rewards), MTN Consumer Marketing: “MTN became a

founder member to show its commitment to the direct marketing

industry. We work with a broad base of customers and BTL

communications is used extensively in our own marketing as it’s

cost-effective and more personal. Being in the cellular industry our core

product is a direct marketing tool for many and with mobile broadband

on its way and the next big thing, being a founder member is the right

thing to do.”

Absa’s direct manager, Renny Letswalo, states that the bank’s

involvement with the Founder Member programme will help direct

marketing take its rightful place in the marketing mix. “Direct Marketing

is a critical element of the marketing mix, it allows you one-on-one

contact with your customers. It is a platform to communicate your

products and services as well as build relationships with customers.

Direct marketing in South Africa is not developed to the level that it

should be and it seems marketers do not realise its the full strength.

Given this, Absa Absa believes that supporting a direct marketing

specific body will assist in developing the field, for it to take its rightful

place in the marketing mix and realise the role it plays in effectively

achieving business objectives.”

Companies interested in joining the set of Founder Members

should contact Colin (011) 706 1657/083 628 6406, or e-mail

[email protected].

Join the DMA…

To join, visit www.facilities.coza/dma

DMA fees are paid annually on the anniversarydate of joining the organisation and are basedon the size of your company. Payment can bemade via cheque or EFT. An invoice will be e-mailed as soon as you have completed theonline membership. Before you go to the linkabove in order to register to become a member,you will need to have the following informationavailable:

� Your company details� Your company coordinator’s details ie

the person who will be responsible forkeeping your company details up to dateon a quarterly basis

� Your company decision maker’s details iethe person who will authorise yourmembership of the DMA and the essentialpayment of membership fees

� The details of staff members who youbelieve should receive information updatesfrom the DMA on an ongoing basis. If youdo not have all the details with you, yourcompany coordinator can go back into thesystem at any time to update these details

Contact details:(011) 577 [email protected] www.dmasa.org

NEWS

The introduction of four new Pay TV services – ICASA

has awarded licences to Walking on Water, On Digital

Media, e-sat, Telkom Media and renewed MultiChoice

licence is going to shake up the sector considerably for both

consumers and the advertising industry.

The news is excellent for consumers as fierce competition is

expected to lower pricing and increase the number of channels

and programmes available. The news is also good for advertisers

for the exact same reasons, although media planners are going to

have to examine the prospects carefully as soon as pricing

structures, ad rates, target markets and programming strategies

are announced. Marketing Mix will keep everyone

informed as soon as information is available

although don’t expect any announcements for at least

another few months.

Telkom Media is expected to give incumbent MultiChoice a run

for its money, especially as it is looking at IPTV and video on

demand. We’ll have to see what e-sat and ODM offer and Walk

on Water is a niche channel aimed at SA’s large Christian

community. Expect to see lots of TV sales people knocking on your

door offering movies, sports, news and entertainment channels as

well as much more local content.


The Efficient Consumer Response

(ECR) South Africa conference is

back again with a great line-up.

The conference deals with the

global and local shopper, retail-

ing and supply chain trends, and

case studies.

The conference runs over two

days and includes both local and

international speakers. The

keynote speaker is Grant

Pattison, CEO of Massmart SA.

Other speakers include Mark

Davies from Glendinning

Management Consultants, UK,

Mark Barnard from Unilever, Bob

Connolly from the US (ex Wal-

Mart) and Michael Poynor, chief

retail adviser,

PricewaterhouseCoopers UK.

Topics include: Brand Building

in the 21st Century Retail, Global

Retail Trends and the Effect on

the South African Retail Market,

Supply Chain – the big picture

and Turning Insights into In-store

Shopper Experiences.

What: ECR Conference 2007

Where: Sandton Convention

Centre

When: 30 and 31 October 2007

Website: www.ecr-sa.co.za

Partnering for growth

The media section within the UK’s The

Guardian newspaper has always been a

great read and it recently updated the

sector with the introduction of the

Creative Lounge. Within this sector, you

can view some of the latest ads in TV,

radio, print, outdoor and cinema with the

latest on show on any given day. A simple

layout means easy access to the ads, with

a link through to all of the ads by

category on the site. There’s a brief

description of the ad – once through

to the ads, you can search by

brand or company name or just

have a look at the top ad of the

day. Each ad provides the

company, brand, name,

product, ad type and first

recorded date of the ad, but

strangely no ad agency details.

Having said that, if you’d like to

know what the UK creatives

and brands are up to, then this

is a great resource plus you

have the added advantage of being able to

gain direct access to the entire media section-

which is always worth a look.

To gain access you will have to visit

The Guardian’s main website, click through

to the media section and then to Creative

Lounge.

Website of the month –www.guardian.co.uk

NEWS

Cheque pleaseWant to reach millions of upmarket consumers

each month with your brand message? Then try

the Billads folder, a plush folder used to give

restaurant customers their bill. Developed by

the Nine Mile Group, the Billads folders are

proving popular with consumers as testing

shows that 93 per cent of consumers prefer

Billads to traditional bill folders. Inperspective

Research Consultancy performed an independ-

ent study and determined that 64 per cent of

consumers noticed the advertising in Billads,

78 per cent recalled the brand that advertised

and 43 per cent said the advertising would

encourage them to make a related purchase. For

brands, the advantages include being delivered

directly into the hands of a target audience in a

medium that has high frequency of contact. “Billads is embraced by up

to four million targeted con-

sumers every month,” says Craig Segal,

managing director, Nine Mile Group.

Cost is between R650 and R850 and contracts are

usually for a minimum of three months (although Segal says that this

can be adjusted to suit individual campaigns); branded pens are also

available. Nine Mile has 500 national sites – increasing daily – including

restaurants, coffee shops and hotels. These sites are researched and data

is available, including the ambience, type and foot traffic of the environ-

ment making it possible to target a campaign to a specific region. All

are LSM 7-10 focused sites (which receive an average of 30 folders each)

and only one brand is advertised on a site during a campaign.

The Nine Mile team visits sites regularly to ensure that all the units are

in good condition; restaurants are also fully educated on how to use the

Billads, care for and clean them. “The Billads are the only folders that

they are permitted to use to hand bills to their clients within the site,”

says Segal. This medium also holds great potential for product sampling,

vouchers, etc. “The key is that we are able to target a specific audience

without a gunshot approach and a lot of wastage,” says Segal.

For more information, call 0861 64 63 64 or e-mail [email protected].

NEWS

The future of TVThe announcement of four new Pay TV services and the changing nature of technology and

consumers mean that Oracle Airtime Sales (OATS), the advertising arm of MultiChoice, has its work

cut out for it, especially when reaching out to advertisers. Not only does its portfolio include M-Net,

SuperSport, DStv, and MultiChoice Africa and Global but also offers advertising packages such as

classic airtime, customised shows, interactive TV (iTV), sponsored fillers, sponsorships and product

placement for over 45 channels.

Chris Hitchings, director of sales at OATS spoke to Marketing Mix about the ‘future of TV’,

and says that the traditional tv businesses have “moved from broadcasters to content

distributors.” The power of that statement cannot be underestimated as Hitchings knows only

too well. The future of TV is a myriad of acronyms: PVR,

VOD, IPTV, iTV, DALs and DVB-H. The second digital

revolution is about TV in the PC and mobile arena with

a more complicated value chain, shorter development

cycles and infinite choice for consumers, and major

challenges for advertisers and broadcasters.

Personal video recorder (PVR)Locally, the PVR has been around for a couple of years

and, according to OATS, over 160 000 PVRs have been

sold. “There are conflicting views on PVRs but it has been

found that the audience is engaged with the ads even on

fast forward,” says Hitchings. According to OATS

research,

51 per cent of respondents claim to watch more TV with

a PVR than without – sports programmes recorded the

most benefit and film viewership increased by around 20

per cent. So far, the PVR has penetrated less than two

per cent of SA homes, ensuring future growth. A high-

definition PVR is currently being looked at in preparation

for SA’s digital migration, supposedly starting next year.

Video on Demand (VOD)VOD is an interactive process whereby video content is

delivered to a decoder and accessed by the subscriber.

VOD systems either stream content allowing viewing

while the video is being downloaded, or downloaded

directly to the PVR before viewing starts. “DStv will be

launching VOD by the end of this year and we are work-

ing on the commercial application for it,” says Hitchings.

In its bid to offer consumers content on as many platforms

as possible, DStv is currently testing Internet Protocol TV

(IPTV) through its www.dstvbroadband.co.za service. The

service offers subscribers free access to premium content after a programme is originally broadcast. All

that is required for IPTV is an Internet connection and Internet-enabled device. The challenge locally is,

of course, the low penetration of broadband currently.

Digital video broadcast-handheld (DVB-H)In the mobile space, MultiChoice is still waiting for the licensing process to take place regarding

mobile tv, and notably its DVB-H product. Another area of interest to OATS is user-generated

content and the social networking space, which could be just one more platform in its arsenal,

which it will need in the battle against Telkom Media, e.sat and On Digital Media.

All of this adds up to further fragmentation of future TV audiences, but also increased viewing as

consumers will have access to programming wherever, whenever and however they wish. All of this

choice means that advertisers need to ensure that their ads are entertaining, seductive, involving,

and that they cover all bases and push services and benefits.

MarketingMix I Vol 25 No. 9/10 I 2007 1 0

On the rampageYouth marketing has just been given a

boost with the launch of Marvel

Rampage, a lifestyle magazine aimed at

boys aged between 7 and 12.

According to Sean Press, managing

director: Sales, Results Media Groups,

which has secured the rights, the maga-

zine will carry one or two of the original

Marvel Comics range each month,

including icons such as Spiderman, X-

Men, Hulk, Silver Surfer and the

Fantastic Four, but it is not restricted to

Marvel Comics. Other editorial content

includes news, celeb news, amazing but

true facts, fashion, poster, toys, gadgets

& stuff as well as DVD, games and film

reviews. And we bet dad will love it too!

The magazine is currently exclusive to

240 CNA stores nationwide with a large

point-of-sale presence. According to

Press, Marvel Rampage will run between

36 and 40 pages monthly with ad slots

totalling 12 to 14, with a retail price of

R14.95 and a 20 000 monthly print run.

In the future, it is expected that Marvel

Rampage will be released in a number

of local languages.

NEWS

Vol 25 No. 9/10 I 2007 I MarketingMix 1 1

Lots of hype and gossip abouther music and addictions

Pop– youthful, rebellious andindependent

Amy WinehouseRehab

PinkGet the Party Started

Just completed a South Africantour

Pop – party, fun and social

PavarottiTi Adoro

Mass awareness of Pavarotti’s deathand his relevance in the music business

Classical – serious, proud,romantic and trusting

Elton JohnYour Song

About to create a media frenzy withhis shows in January

Pop – celebration, joy and memories

K-OSSunday Morning

Catchy and optimistic while beingappropriate as he headlined the ArtsAlive festival at the end of September

Hip-hop – vibey, positive and optimistic

Chemical BrothersDo It Again

Powerful electronic music from aclassic band and one of the biggesthits on youth radio

Dance – uplifting, energetic, speedand drive

JamaliAin’t No Mountain High Enough

Major radio smash hit. Also, it’s aninstantly recognised cover of a classicso cheaper to licence than the original

Pop – cheerful, family, motherly, positiveand uplifting

Miriam MakebaPata Pata

Just headlined the Joy Of Jazz festi-val and advertised to mass media asa result so fresh in people’s minds

African – cheerful, fun, friendship,social and full of life

ObitaShaka Zulu

Another cover of an instantly recog-nised classic with powerful vocals

Hip-hop – force, pride, patriotic andpowerful

QueenWe are the Champions

Ending off the hype and patriotismevoked by the Rugby World Cup andCricket 20/20 World Cup

Rock – a strong unifying and unitingclassic

Which music is currently enjoying its 15 minutes of fame or would

make a brilliant soundbed for an ad? The list below includes a

wide range of local and international music styles and, most

importantly, it highlights which songs are hip and happening with-

in different target markets right now.

The following list is courtesy of Roy Harman, who manages

South African artists and works on various

music entertainment productions and events.

For more information on how to match

your brand with an appropriate song

e-mail [email protected] or call

083 407 4928

Just add music

Superbrands UK has released it CoolBrands results and

while SA doesn’t always follow international trends –

we have our own – it’s always worth taking notes of

what’s cool elsewhere in the world. Five of the top 20

are websites, with three car brands and five lifestyle

technology brands. What’s most interesting is that the

top five CoolBrands rarely advertise or market themselves – the power

of style, sex appeal, packaging and the mighty word-of-mouth rule.

The top CoolBrands 2007 are:� Aston Martin – thank you Casino Royale� iPod – to be expected� YouTube – we really are all TV addicts� Bang and Olufsen – top of the range

and super sexy� Google – only fifth place?� PlayStation – no doubt spurred on by the launch of PS3

� Apple – Steve Jobs we love you� Agent Provocateur – when are you going to

land in SA?� Nintendo – wiiiiiiiii� Virgin Atlantic – fly British!� Ferrari – the Italian stallion� Ducati – super fast, super cool� eBay – Fergie’s (Black Eyed Peas) Hummer

anyone?� Rolex – timeless� Tate Modern – greed experiential campaign� Prada – thanks to Ms Beckham perhaps?� Lamborghini – burnt orange or baby blue?� Green & Black’s – orgasmic organic choccies� iTunes – SA is not a fan� Amazon – SA is a fan

The English way

Act and song Why it’s hot Genre and emotion evoked

NEWS


The interviewMarketing Mix spoke to Louise Sams, president of TurnerBroadcasting System International and executive vice presidentand general counsel for Turner Broadcasting System, Inc, aboutthe future of broadcasting and Africa. This is what she had to say:

On Africa: For Africa, nothing is out of the question. Unfortunately, the scale

of our African operations is inhibited by the lack of broadcasting technology

such as cable and satellite. But, we already have programming such as Inside

Africa on CNN and we’ll continue with that great work. We have to take

countries as we find them but the potential with the cellphone for developing

markets is enormous and is definitely an opportunity on the continent that we

had not appreciated until recently. However, looking at the traffic to our mobile

service across EMEA, we are getting viewers from Africa although it seems that

the devices are primarily used for voice at this point. We are still experimenting

with mobile devices and while there is a real opportunity here, we do hope that

in Africa, broadband will become pervasive. Our goal is to be as agnostic as

possible as it relates to distribution – we want to be everywhere. We’ll not only

take advantage of additional platforms but also new platforms such as IPTV.

On programming: There is always the possibility of licensing existing

programmes from TBS and our plans are to move into new genres, in some

cases leveraging the brands in the US and adapting them locally.

On a digital future: We will have to work harder and use some of the new

tools to appeal to the younger generation such as user-generated content, etc. People are looking for excellent content and credible brands to

help them sift through all this information and to fulfil the brand proposition. The audience is still tied to TV but broadband and mobile are

growing. Our core (TV) is still very strong but the engine is definitely digital. TV is not going to go away. I think in 10 years there will be

different players launching linear channels in new markets.

For TBS, the aim is to have as much broad content across

as many different platforms as possible. The viewer

needs to be connected to the brand no matter how they

interact with it. Services will become more interactive and

‘on-demand’ – on-demand will become more and more

important – how, where and when the viewer wants the

info is key.

On growth markets: The largest growth in five years –

Brazil, India and China, although China has regulatory

issues which means foreign channels are allowed only in

certain hotels. Russia is another rapidly growing market. A

major growth area will be multichannel TV and advertising

spend in particular in the Middle East, Central and

Eastern Europe.

On branding: If you want to have a successful offering,

you have to distinguish yourself from the pack with a

recognisable brand, great content and a brand that

delivers on the proposition promised to the customer.

This is what appears to be working in this digital world,

where everything is available. Sometimes companies focus

too much on what the competition is doing rather than

on their own business and brand – brands must be

proactive, not reactive and for any brand it’s important to

be on the ground.

Louise Sams is president of Turner Broadcasting System

International and executive vice president and general counsel for

Turner Broadcasting System, Inc. (TBS, Inc.).

In the former capacity, she is responsible for production, distribu-

tion and ad sales relating

to Cartoon Network,

Turner Classic Movies,

Boomerang and all other

entertainment networks

and media services offered

by Turner outside of North

America; the distribution and commercial operations of CNN’s inter-

national services; all of Turner’s international joint ventures; and

licensing and merchandising activity of Cartoon network outside of

North America. Sams is based in Atlanta and reports to Philip I Kent,

chairman and CEO, TBS, Inc.

In her capacity as exec VP and general counsel for TBS Inc, she

oversees the company’s legal matters worldwide, which include

acquisitions and joint ventures; production and clearance of content

for Turner Broadcasting’s news, entertainment and animation

networks; protection of the company’s intellectual property; and

litigation and employment matters. Sams directs a staff of 80

lawyers located in Atlanta, Los Angeles, London, Hong Kong and Sydney.

brief biography

NEWS

As iPods, online media and new technology

change the way we consume music, radio is

forced to adapt if it is to survive. But more

importantly, radio still has to address a few

long-standing issues. One major issue is that

radio is frequently the ad campaign after-

thought; as a result, the radio brief is often

inadequate. Award winning radio copywriter,

Alison Hingel, chatted to Radmark Sound

Safari delegates about the poor quality of

radio advertising that too often is the result

of clients not giving radio enough attention.

Hingel championed the role of the copywriter

(who has trained to write powerful copy for

a medium that is unique, ie not visual).

Marketers and clients need to realise that the

advertising brief needs the same attention to

radio that is devoted to TV and print ads.

A related issue (and one that got tongues

wagging at the workshop) is the role of the

media agency, which is bypassed or disre-

garded by clients, who then complain when

the advertising fails to hit the mark. Creatives,

likewise, are accused of failing to understand

the role of the agency.

In terms of its future, radio needs to

embrace new media and technology.

Podcasting, for example, will extend radio’s

offering (lets listeners download info and

content that they want, which they can listen

to in their own time). Podcasts are easy to

produce and are easily loaded onto a radio

station’s website. Podcasts can also create

new opportunities for advertisers and

sponsors to get involved in the ‘on-demand’

environment. However, contentions surround

the use of podcast advertising and websites.

It is clear that some clients still believe that

this type of advertising should form the ben-

efit feature of a contract and be free! Others

argue that clients should be experimenting

and investing in these new media types in

preparation for mass markets (when broad-

band becomes affordable and available, who

isn’t going to be online?). Guest speaker

Anice Hassim of Immedia, argues that the

customer is online, researching your brand,

so that’s where you should be too; he urges

brands to develop an online presence that

supports mass media advertising.

On the other hand, there is the issue of

the online and mobile elements of radio and

its impact – will the audiences pull away

from radio. After all, why bother tuning in if

you can download the weather and traffic to

your phone? Or will these simply add value

for listeners and allow for time shifting of

radio content in much the same way that the

PVR has done for TV viewing? Watch this

space for the only real answer.

Debating radio


One club educationThe One Club recently held its 4th Annual One Club Education

Summit in New York City connecting decision-makers at universities,

portfolio schools and advertising programmes with key players in the

industry. Panel speakers were: Richard Ting, executive creative direc-

tor, R/GA; Robert Wong, executive creative director, Arnold; Robert

Rasmussen, creative director, JWT; Fernanda Romano, executive cre-

ative director, Lowe; and Matt Smith, creative director, TribalDDB.

The summit also covered Brand and Innovation with Brian Collins,

former chairman & chief creative officer, B.I.G; the New Creative

Revolution with Kevin Swanepoel, president; The One Club and

Clients – shepherding the Brand into the New Age with Moira

Cullen, design director, Coca-Cola North America; and Brad

Jakeman, executive vice president, Creative Strategy, Macy’s.

The following are extracts from the summit detailing key issues:

Reforming your studentsQ: How do you want educators to change or prepare studentswho come into your industry?RT: Technology is changing very quickly and we are looking for people

who have a genuine interest, who are constantly learning and keeping

up to date with industry changes. The iPhone came out and there is an

amazing Safari browser on it that allows mobile browsing that is differ-

ent from any other browser out there. If you work in interactive but did

not know this, you are not keeping up with the instant changes of

events, so how are you going to pitch new ideas to clients?

Q: Is there anything you would change?FR: There are two things schools need to focus on for creative stu-

dents. The first is media planning. It is a creative person’s responsi-

bility to understand it. They don’t need to be able to sit down and

do the planning, but be able to have a conversation about it.

Second, students need to know the business aspect of advertising.

They need to understand that they are selling a product. It has a

cost and an economic impact. The agency model is shifting and

products are created and becoming part of the campaign.

Q: Are agencies too busy to teach?RR: It depends on the agency. If we want young people to be more

connected to what’s out there then we need to teach them.

FR: Students don’t come ready. If we don’t help the talent to devel-

op then we won’t find the talent.

What Happens Next? Brand and Innovation with Brian CollinsWhen people talk about branding, particularly in advertising, they are

talking about what we hear and what we see. However, there is a whole

territory of the brand experience that has nothing to do with that. When

we talk about branding and advertising, it is not just what we hear and

see; it is really about what we feel. I think it is so important for us to think

about what people touch and smell. It is a huge part of creating brands.

The interesting thing is smell goes right into our memory. It is instant and

we don’t analyse it. Every good brand story speaks internally and exter-

nally. The things that are powerful to us can be interesting. Now, what

we have discovered is when creating business ideas, emotionally charged

stories are powerful. It’s not just the object; it’s about the stories behind

the object. So when people buy products, they are not only buying the

item, they are participating in your story.

The New Creative Revolution with Kevin SwanepoelThis is not about the death of old media but rather about the

birth of new media, an interactive media. It’s about reinventing

and reenergising your students’ career paths. It’s about pop

culture; it’s about the client’s need and the consumer’s desire. It’s

about community and collaboration on a scale never seen

before. It’s about the cosmic compendium of knowledge. The new

web is a very different thing. It’s a tool for bringing together the

small contributions of millions of people and making them matter.

It’s really a revolution. Here are some questions you should ask

yourself and your students. The answer to each should be ‘yes’. Do

you own an Xbox, WII, PSP, PS2, etc? Do you have a MySpace or

Facebook page, or your own website? Do you write or contribute

to a blog? Do you subscribe to RSS Feeds? Do you know what

Twitter is? Have you posted creative work online or have an online

portfolio? Have you created a podcast or posted a video on

YouTube? You need to be engaged and you need to immerse

yourself in the very space clients and consumers live in. If you

and your students do not understand the basics of how these

technologies work or fit together, if you do not play in the same

world as the new generation, how will your students come

up with concepts and ideas to create compelling commercials,

applications, games and websites? What I find interesting is that

some of the better interactive agencies are looking to hire creatives

from the traditional space. They are looking for better art direction,

writing and creative thinking. They are looking for traditional

creatives who understand the new media. Technology can be learned,

creativity cannot.

Clients – Shepherding the Brand into the New Age withMoira Cullen and Brad JakemanQ: Over the past 12 months, there have been dramatic changes inthe media landscape. As Head of Creative Strategy, do you see this asa trend? If so, are you changing your approach to retail advertising?BJ: We are in a rapid cycle of change. Society and consumers are

taking more control over what they see, what they choose to see

and what they like. We are seeing people posting their content on

YouTube. We are seeing greater penetration of broadband. The

sophistication of what we experience online in our own homes is

getting deeper. This is leading people to talk about the death of the

30-second ad. I think it’s the death of the bad 30-second spot. All

of these new technologies are presenting more messages to more

people, but they are also allowing us to edit and filter. Most of the

messages are not breaking through because they are either irrele-

vant or they are not delivered in a way that is causing people to take

notice. It is not about trying to cover up the fact that it’s an ad and

trying to present it as something it’s not. It’s about making it better.

People will respond to advertising if it’s good.

I don’t believe new media is going to replace old media. I think one

of the biggest mistakes that marketers make all the time is they

think of new media as either black or white. I think the implications

are really simple – people who are in marketing positions like me

need to drive bigger ideas and execute them in better ways.

NEWS


NEWS

Q: In the past few years, design has become aggressive in a posi-tive way. How do you work with advertising agencies and designcompanies to ensure the overall design keeps the brand true?MC: I think we are moving from a very networked world to a world

of relationships. Moving from a very rational economy to a much

more emotional economy. Design is difficult to value but on the

operational and even marketing side, its value has certainly increased

because we respond to it. Everyone responds to the ascetic aspect of

life experience, but there is no rational or quantitative value. The

only thing we can calculate is the executed product that can be

quantified down the line in an experimental approach where you

can look at consumers with empathy and observe their behaviours

and understand the kind of need they show. This can then inspire,

lead, help and build the creative ultimate experience. The value of

this is huge.

The challenge is the world has departmentalised design

advertising and established its value to the advertising community.

Design roles are complementary to the advertising role. It’s an

ongoing process and I think designers need to consider their

education in terms of their ability to communicate who they

are and what they are. The importance is, we are truly trying to

create an integrated experience and this is the new way of working.

I think students and young professionals really need to have a deep

sense of what that means.

Q: What makes a good client-agency relationship?BJ: How can most advertising agencies be good and most

advertising be bad? Clients have a very adversarial relationship

versus a complementary relationship with agencies. Clients

don’t see their roles as pulling the agency back from doing

something crazy. What I encourage is to make your work better and

to get work through to the organisation. There are many things

that make a great client-agency relationship. I think you have to

understand and have a mutual trust in each other. You have to

respect each other’s expertise.

Q: What would better prepare students for a career inadvertising?MC: I am a client. I am looking for a partner. We need to ensure

that great work gets presented and done. I want to work with a

designer that is excited about the business we are in. I think to

really appreciate the complexities of the world that we live in is

unbelievable. I think the ability to appreciate the creative is only as

good as the emotion around it.


7 DAY [B]ITCH

27/08/07Curses. I have to be up at 4am to be ready at 5am to be at the airport at

6am to be on the plane at 7am. The workshop I’m attending is

sometime this afternoon so, in theory, I could have taken a mid-morning

flight. But I would still have had to be on the road before sunrise to beat

the peak-hour traffic and get to OR Tambo in time to find parking. This is

known as the Johannesburg-to-Cape Town Paradox.

I’ve taken a bunch of mags and printouts to go through on the plane.

Those two hours of cellular-free confinement can be among the most

productive of the day. We take off at 7.09am. By 7.11am, I’m lolling

against the headrest with my eyes shut tight and my jaw hanging open.

It’s a nice sunny day in Cape Town, with just a wispy milk moustache of

cloud on top of the rock. We have a good workshop, focusing on the

challenges of producing custom titles for corporations in a fiercely

competitive media environment. I like being part of the Special Projects

Division of Touchline Media.

28/08/07Coffee with Janna Joseph, managing editor of Discovery Magazine, at

vida e caffè, to go through the line-up for the next mag. We could just

as easily do this in the office on the 5th floor (or is the 4th? I work from

home, so I am always disoriented in a vertical working environment) but

there is something about Cape Town that induces in me a Pavlovian

response for a short cappuccino.

As soon as I break through the foam, I start feeling enthused, alert

and inspired. Three sips later, and I’m hallucinating, which is the best

way to deal with the growing realisation that we are presenting the mag

in – gulp – two-and-a-half weeks. We’re never going to make it. We’re

never going to make it. We’re never going to make it.

Janna smiles brightly and tells me we’re going to make it, we’re going

to make it, we’re going to make it. I flip open my new black MacBook to

look at the production schedule or at least to let everyone in the vicinity

see that I have a new black MacBook.

Several cappuccinos and a sushi lunch later, I head for the airport, in

good time to avoid the bottleneck on Hospital Bend. But thanks to all

the Jo’burgers hurrying to avoid the bottleneck on Hospital Bend, there is

a bottleneck on Hospital Bend.

29/08/07Back at home, staring at my PC, in full, flat-out Triage Mode. People are

leaving anxious messages on my landline, to let me know that they have

left anxious messages on my cellphone. In situations like this, I am forced

to maintain radio silence, so that I can channel all my energies into tackling

the task. Just as soon as I’ve brewed myself a fresh cup of Twinings

Green Tea and cleaned these keyboard marks off my forehead.

30/08/07Coffee with a freelance journalist at the mall, to go through the first

draft of a story that is going to need a lot more drafting and a lot more

coffee. The problem with the story is that there is not enough story in it,

which is a growing syndrome of the age of journalism-by-Wikipedia. If

you are going to use Wikipedia, I tell the journalist, at least use it for its

intended purpose, which is to insert random mis-statements and inaccuracies

into the articles, and see how long it takes for someone to notice. I

spend the rest of the morning mooching around the mall and playing

cellphone roulette, which consists of looking at a ‘Private Number’ on

your caller ID and trying to decide whether it is someone nagging about

work, or merely someone inviting you to a presentation about timeshare.

31/08/07My wife, Mandy, rushes into my study from her scrapbooking class,

warning me once again to keep the security gate closed because the little

old lady across the road was almost hijacked by two guys pretending to

be cops. They were driving a big black Mercedes, which was the first clue

that they weren’t cops. Also, they were carrying AK-47s.

01/09/07Saturday is the freelancer’s day of rest, in theory at least, because not too

many people need copy on a Sunday. But a nice lady from a below-the-

line agency has come to see me about an urgent script for the launch of

a feminine hygiene product. She has brought along a sample for me to

look at. I’m not sure whether I should open it, or just run my fingers

along the packaging. I ask whether the script needs to mention the

product. Oh no, she says, and I sigh with relief. I set aside a few hours to

fashion a light script about fashion through the ages. What the heck. I’ll

rest tomorrow.

02/09/07A friend comes around to discuss a project we’re supposed to be

working on. It’s a seminar on creativity for the corporate market. To get

me in the mood to spend my Sunday working, he’s brought along a

plastic bag full of pirate DVDs. I take a look. No thanks. I’m not interested

in movies about pirates. �

Gus Silber, editor of Discovery Magazine and

freelance writer


The rate of change is unrelenting andunforgiving, and for those brands that fail to

keep pace with the ever-evolving demands

and expectations of their customers, it can

prove fatal.

Change can be driven by societal pressures

like consumers’ enhanced environmental –

awareness and demands which directly impact

on manufacturers. It can be driven by heightened

service expectations as found in the retail

sector, which challenge the conventional

staff-to-customer ratio. Often, it can be as a

direct result of technological advancement, as

witnessed by the rapid evolution of the cell-

phone as a handheld television, Internet services

and general all-round communication tools.

Companies today face daily demands for

change that force them to continually review

and redress their product ranges, scope and

offerings. The speed and frequency of this

re-evaluation would make yesteryear’s chief

executives’ heads spin. This has resulted in

changes to the dynamics of many traditional

markets and their ways of doing business.

This is further supported by the trend of

‘masstige’, the demand for prestige products

by the mass and often-price sensitive market.

One example of this phenomenon is the

relative accessibility of brands like Sony whose

products are now much more widely affordable

to all income levels. Coming from the opposite

direction is the ALDI brand. While ALDI may be

unfamiliar to most South Africans, it remains

one of the biggest and most established

grocery brands in the world with around

7 000 stores. Founded in Essen in 1948 after

WWII, the ALDI brand was formed to offer

disenfranchised Germans in post-War Germany

a quality offering at an affordable price by

focusing on a select range of quality merchandise.

While it began its life as a traditional grocery

retailer and has largely stayed true to its

original formula, its unique format of pallet

box displays and weekly specials, supported

principally through its weekly catalogue, has

propelled it to the forefront of the European

retail landscape and threatens to spread across

the southern hemisphere.

In Australia, the brand has a modest network

of 140 stores, which currently accounts for less

than 10 per cent of the total market. From

humble beginnings in 2001 and while still a

minor thorn in the side on the local market

leaders Coles and Woolworths (same name but

very different brand to its South African

counterpart), the ALDI brand threatens

exponential growth in the years ahead.

With a public target of 200 stores by the

end of 2008, its MD Michael Kloeters

recently projected its potential growth on the

eastern seaboard of the country as 500 outlets,

which sent shockwaves through the Australian

grocery landscape.

Privately owned, the ALDI brand is under no

real pressure to grow and so quietly goes

about its business, largely under the radar of

its local competitors. And yet, even this

juggernaut brand is slowly evolving with the

times and is arguably causing a change in

shopping behaviour and attitudes. It offers

savvy shoppers a clever way to save money on

the basics and the opportunity to afford

certain luxuries. At present the brand’s image

is more commonly associated with discount

retailing and low-cost bulk shopping, even this

is set to change as the brand taps into the new

trend of smart shopping.

In Australia, Woolworths and Coles realise

that their future threat is ALDI. Despite this

realisation they are hard pressed to be able to

compete with its well-established formula of

high volumes at low prices. Consider this;

Wal-Mart in the US sells 100 000 SKUs with a

turnover of US$300 billion, which translates

into $3 million per item. ALDI, on the other

hand, only sells 700 SKUs with a turnover in

the US of $44 billion. This surprisingly

translates into a turnover of $63 million per

item. With this sort of buying power it is no

small wonder that it can undercut its competitors

and offer its customers the same quality product

for substantially less.

The thought that comes to my mind is the

potential threat a brand like ALDI and its sister

IKEA could pose to the current retail status quo

in South Africa. Just how disruptive could they

be if they decided to turn their attention

southwards? Their arrival would certainly

change the dynamics of the South African

retail landscape forever and force changes on

the current market leaders. Perhaps this

wouldn’t be such a bad thing. �

Richard Duncan

Sydney, Australia+61 41 154 [email protected]

EXPERT OPINION by richard duncan

Companies todayface daily demands forchange that force themto continually reviewand redress theirproduct ranges, scopeand offerings.

“

”

A time for change

by fulvia becatti BRAND ANATOMY

The star of action films, rap music videosand the Gulf War, the Hummer has become the

ultimate SUV, sought after for its capabilities, its

style and its status. In 2005, General Motors

(GM) made the decision to take the Hummer

H3 to an the international market, and would

later invest a reported R650 million into the GM

production plant in Port Elizabeth, with the aim

of producing vehicles for launch to a global

market that would include South

Africa.

Big questions were raised around local

brand awareness, and the mass market

desirability of a vehicle that has

become synonymous with millionaires. Brand

manager Bob Smith decided to test the waters

ahead of the launch of the H3 locally with

strategic market research. He brought together

motoring experts, car dealers, celebs and the

media from across the country, for a mysterious

weekend ‘car clinic’. The first step was to estab-

lish the price/volume relationship, the vehicle’s

positioning, and the specifications and features

that would be required by the various local

markets locally (ie the 4X4 enthusiasts versus the

soccer moms); this involved a static display with

competitors. “When we asked them how much

they would expect to pay for a Hummer, the

response was ‘a million’. The mindset around

this vehicle is that it is expensive,” says Smith.

This was good news for Hummer: “This existing

mindset would allow us to premium price the

Hummer at a premium price,” says Smith.

The next step was to gain insight into the

brand itself; the recognition factor and brand

associations. What became clear is that

Hummer enjoys a high brand recall. “The

Hummer shape and iconic design cues [the

grille, for example] were the most recognisable

factors with 85 per cent recognition on of the

Hummer shape, from nine years of age

upwards,” says Smith.

Based on this initial market research, it was

decided that the mystery about the car’s entry

into the South African market would be

The History history of Hummer:1979: the US Military needs a multi-purpose war vehicle, and awards American MotorsGeneral (AM General) a contract for the production of the High Mobility MultipurposeWheeled Vehicle (or Humvee, as it was dubbed)1990: Gulf War (and Operation Desert Storm in particular) generates positive mediaexposure for the Humvee. During this time, Arnold Schwarzenegger takes an interest in theHumvee and he requests a modified (ie civilian-friendly) Humvee to be used in the filming ofKindergarten Cop. 1992: the The Humvee goes on sale to the US public, under the name Hummer.1998: AM General sells the brand name and technology to General Motors, retaining onlythe manufacturing rights.2000: The Hummer is renamed the Hummer H1.2002: Hummer H2 Sports sports Utility utility Vehicle vehicle (SUV) is launched.2003: Hummer H2 Sports sport Utility utility Truck truck (SUT) is launched.2005: Hummer H3 is launched. In April, GM announces its export contract programme. 2006: In February, Bob Lutz (GM Chairman, North America) visits South Africa. In August,GM expands its facilities and production lines at its Port Elizabeth plant (which produces andexports left left-hand drive Hummers to countries globally, including to Japan, Australia, theMiddle East, and Europe). In October, the first left left-hand drive H3 is produced at this plant.The H1 model is discontinued, due to the fact that the vehicle does not comply with newdiesel emission laws. 2007: The pricing for the Hummer is announced, and the H3 is launched in South Africa.


Hummer has arrived

BRAND ANATOMY

maintained for as long as possible. To achieve

this, Hummer held off on mass media cam-

paigns for a while, and opted for clever and

regular PR messages delivered to the right

media, as well as exciting test drives on the

dunes of Mozambique. Smith believes that the

media coverage that this generated is worth in

excess of R10 million when assessed relative to

the cost of purchasing traditional ad- space.

“Values are difficult to calculate but when one

thinks that an A4 glossy ad can be cost as

much as R60 000, then third third-party

endorsement is priceless and is more credible

than traditional ad spend,” he says.

It worked – orders for the vehicles started

rolling in, despite the fact that pricing would not

be set until later that year. “People were putting

down R20 000 deposits without even knowing

how much the cars were actually selling for. In

fact, we didn’t spend a cent on advertising, until

two months before the launch,” explains Smith.

GM simply kept the brand messages and PR

going on a regular basis.

The provocative billboard, print and television

ad campaigns were launched in May 2007,

following Smith’s media announcement in April

that the entry-level H3 was to retail for a com-

petitive R3754 000, (the orders doubled). “Our

planning was perfect. As a result, we knew

exactly which dealers to set up and where,

because we already had an idea of where the

footprint was,” says Smith. Dealerships opened

in KZN, Menlyn and Fourways in Gauteng, the

Western Cape, Bloemfontein, and in Nelspruit,

Mpumalanga. New dealerships are due to open

in Port Elizabeth, Bruma in Gauteng, and

Klerksdorp before the end of the year.

Since July 2007, when the H3 was launched

to the market, sales have exceeded expecta-

tions, with 234 Hummers sold through five

dealers within the first month. In its second

month on the market, another 230 cars were

sold, and a sixth dealer was opened.

“Everyone we sell to at this stage is a conquest

sale,” says Smith, “the repeat purchases will be

proof of our success.” Effectively, sales

averaged at two cars per dealer per day – an

average Hummer wants to maintain for now,

through careful control of the supply and

demand of the vehicles (ahead of the launch,

GM ensured that dealers had sufficient stock,

but they have carried forward the mystique of

the car post-launch by focusing on a drip-feed

of vehicles to the dealerships, and almost

encouraging a one one-month waiting list on

for the cars). They also invite new owners to

pick up their Hummers on a Saturday (when

buyers are more likely to bring their families

and friends along to check out their new toy).

“We place a great emphasis on the idea

that it should be a joy to buy a car,” says

Smith. To this end, effective motor finance

plans and customer service departments were

in place well ahead of the launch, ensuring

that customers would enjoy ease of service.

And indeed, a part of the joy of buying a

Hummer is the fact that it is customisable.

“This vehicle lends itself to being unique,”

says Smith; and this is powerful in an age of

mass customisation.

The success of this brand will depend on its

ability to maintain singular global presence.

“What we do as brand Hummer internationally

must be replicated in South Africa,” says

Smith. Parent company GM (including global

brand managers, etc) are is highly involved;

country brand managers hold fortnightly

conference calls to discuss the brand’s image,

as well as the marketing activities. Co-promotions

must be approved and discussed, and deemed

to be beneficial for the brand as a whole

before they will get the nod. “Every brand

wants the Hummer association in order to

uplift their brand. As assessment policy is in

place to determine the ‘must must-haves’,”,

says Smith. Unfortunately, this does not prevent

other brands from using Hummer as leverage

without its sanction (for example, by purchas-

ing a Hummer and then covering it in brand-

ing, or offering it as a competition prize).

Luckily for the Hummer brand, its image and

appeal has landed it in more than a few films, TV

series and product placements (many of which

have been unpaid). And there is the powerful

celeb endorsement by actor turned Californian

governor, Arnold Schwarzenegger (who became

a spokesperson for the H1 and H2 models). All

of which went a long way to building the

Hummer brand (at no cost to Hummer).

“GM has realised that these are big

opportunities because it gets the message

across positively for the brand,” says Smith.

Look out for the Hummers in a new Ricoffee

TV campaign (to be aired soon), and in the

Peter Pan pantomime at the Civic Theatre.

There is also a campaign planned with one of

the cell phone companies.

The big question on everyone’s lips is how

will Hummer survive the Green green

revolution? The car is a renowned gas guzzler,

and, as a result, is often targeted by

environmentalists. The Green Hummer Project

in the US, for example, built a mock Hummer,

powered by two bicycles that are incorporated

into the frame of the vehicle, to protest

against the vehicles. But Hummer seems to be

addressing the issue. In 2006, the H1 model

was discontinued, precisely because its fuel

consumption did not comply with fuel

emission laws (and also because it was being

ousted by the smaller H2 and H3 models,

which were more suited to suburban driving).

“Hummer is no worse than any of its

competitors,” says Smith, adding that

Hummer has set itself “’green goals”’: by

2010, the Hummer range will include cars that

have biofuel capabilities. SAAB (which is GM’s

biofuel pioneer) is already taking biofuel-

enabled cars into the market place. “We’re on

our way to producing these for all Hummer

models,” says Smith. Plus, GM is making

inroads into electric cars (such as the Chevrolet

Volt). Product research and development

efforts are underway, and we can expect to

see new engines and special editions by

2010. And in the meantime, Hummer will be

developing its CSI initiatives. �


Who is buying a Hummer?Interestingly, only 20 per cent of buyers are firm off-road enthusiasts. A hefty 40 per centof the brand’s early adoptersbuyers are ‘black diamonds’ and the brand’s early adopters.And 40 per cent of buyers are females (many of whom see the Hummer as a safe vehicleto travel our roads in). The core market is defined as LSM 10+, in their mid mid-thirtiesand older, mostly married; they have a degree and/or are self-employed. This is a savvyshopper that enjoys more subtle forms of status, but is still brand conscious. They arelooked up to their peers (trend setters), and have an adventurous spirit. The majority ofHummers sold to date are either black or yellow.

Extending the brandBrand extensions in the form of Hummerclothing lines, sunglasses and accessoriesare in the pipelines. “The brand is biggerthan the vehicle,” says Smith.

Hummer in Hollywoodimcdb.org has compiled a list of all the films and TV series in which theHummer has featured. Check out www.http://www.imcdb.org/vehicles_make-Hummer.html

by fulvia becatti TOWNSHIP MARKETING


Tapping in

TOWNSHIP MARKETING

Historically, townships were the underde-

veloped eyesores of SA’s landscape and cities;

considered poor (possessing little, if any, dis-

posable income), undiscerning and illiterate.

Few brands ventured into these no-man’s

lands as a result. But there is tremendous

change afoot, and today, the townships are

veritable goldmines. Yet still, too little is

known about this market by too many, with

assumptions that townships are all one and

the same; or worse, assuming that townships

hold no appeal for brands.

A changing consumerThe township population is increasingly

educated, employable (employed) and

possesses ever greater disposable incomes

and buying power. “People are beginning to

live good lives,” says Marcus Banga, marketing

director, PEP. As Pieter Groenewald, managing

director, Comutanet, says, while many town-

ship residents do not have large disposable

incomes, their combined purchasing power

and loyalty to specific brands are huge drivers

of the South African economy.

This growing percentile of the township

population works in the metropoles and

major cities, commuting to and from work by

bus, taxi and train. Jacques du Preez, manag-

ing director, Provantage Media estimates this

number of commuters to be around 18.2

million. “It takes an average of 84 minutes

for someone living in Soweto to get to work

in Rosebank. This means that they are a cap-

tive audience for that time,” he says. And yet,

as he points out, less than one per cent of

ATL advertising is allocated to taxi and transit

advertising. “When the average township

dweller starts their day, they are out of range

of conventional advertising media,” says

Groenewald. He insists that alternative media

(transit media, taxi radio and TV etc) is

the way to go, in order to reach these

consumers. Du Preez adds that most info into

and out of a township is through a taxi.

Mass media is just as prevalent in the

townships as anywhere else. “They own tele-

visions, radios, consume popular newspapers

(such as the Daily Sun and the Sowetan) and

definitely aspire to premium brands when

they are affordable,” says Groenewald.

Word of mouth is also extremely important

within this environment, says Melanie

Walter, media director, Starcom Media, as

they have more of a community information

network, than someone say, living in

Jo’burg’s northern suburbs.

Townships are the new coolProperty is booming in the townships, busi-

nesses are moving in and malls are springing

up. “When companies such as Pam Golding

move in, it shows that these areas are no

longer the ‘poor cousins’,” says Walter.

According to Casper Oelofsen (Shareholder

and Principal of entity that owns Pam

Golding Franchise rights of Khayelitsha,

Mitchells Plain, Kuilsriver and other empower-

ment areas) the boom has been triggered by

more land becoming available from the

supply side and current land owners starting

to see value in developments.

Oelofsen continues to say that not all

township residents want to or can afford to

move to the suburbs, but they are gaining

from economic growth and want to buy and

own a house in the area they live. He points

to areas such as Khayelitsha, where secure vil-

lages are in serious demand; prices in the for-

mal market range from R130 000 to R750

000. Businesses and government depart-

ments are also purchasing land and property.

As Caroline Rait, insight project director,

Added Value says, many people are choosing

to stay in the place where they grew up cre-

ating a market that is as rich and diverse as

any other. “They are looking for everything

that suburban dwellers are looking for and

they have access to all media platforms,” says

Walter. The burgeoning cafe culture is a

prime example of the ‘suburban’ trend that

has emerged in the townships. “Indeed, con-

sumers in the rural and township areas are

demanding it. They want to have a coffee

shop locally rather than having to travel

50km to experience it,” says Dave McKenzie,

g into iKasi


managing director, Boo! Media, pointing to

the increase in the number of coffee franchis-

es across the townships.

Even those who move out of the town-

ships return on weekends and holidays.

“Much of this market is living in the suburbs,

but spending money in the townships,” says

Walter. Du Preez has found that township

schoolchildren attending model C schools in

the suburbs are being consulted on house-

hold purchasing decisions as they are deemed

to be informed, brand savvy and are bringing

this information home with them.

Government is also pumping money into

the townships, especially Soweto – ready for

the 2010 FIFA World Cup – with greenifica-

tion projects and the upgrading of taxi ranks,

malls, parks and services; the townships are

becoming fully functional and well equipped.

“The government is spending money improv-

ing these environments, and this changes

what you can do in terms of advertising,”

says du Preez; outdoor ads, such as posters

and billboards become a viable option in

these environments, now that they are for-

malised and attractive.

Marketers need to make the effort to

explore the many possibilities that are becom-

ing available to them. Refiloe Mataboge, CEO,

Infusion (a local market research company,

formerly Culture Cruizing) says that townships,

such as Soweto, have proved to be attractive

and unexplored markets for marketers seeking

to increase their sales by reaching new audi-

ences. Conversely, townships need to brand

themselves to attract more investment.

Infusion’s study found that Soweto has

attracted the most investment – retail, com-

mercial and community development – and

tourism plays its part as Soweto is a brand

known worldwide. Mamelodi, likewise, is gar-

nering investment, having positioned itself as

a ‘Jazz Capital’. Mataboge points to Tembisa

as a township that offers a lucrative market (ie

one with a disposable income and a brand

awareness) but is overlooked.

No one-for-all approachInvestigating each township is imperative as

they are not alike – each one is unique and

diverse, some being home to several sub-

groups (each with its own purchasing behav-

iour and brand preferences). “If one studies

Soweto as a prime example of a township,

one must realise that Soweto is a city in its


Primedia@Home recently launched the Store Carnival offering (a concept for storeopenings among the LSM 1-6 markets). According to Melvin Chagonda, managingdirector, Primedia@Home, there are three different Store Carnival products. The firstinvolves bottom-end distributors giving out leaflets at the malls/centres. The Deluxeoption involves more presentable distributors, dressed in branded gear, handing outbranded freebies; a popular radio DJ and music are included. The Extravaganza optionis a live event, with branded promoters, a well-known DJ, music and speakers, etc. Thisoption includes the use of an in-house trailer (equipped with its own generator), whichcan be taken anywhere.

The Store Carnival offerings are adaptable to events, stadium environments andmore, making them flexible; plus, the concept can be adapted to the language profileof the target market. And the cost is relatively low (with marketers paying between R4500 and R12 500 for a Store Carnival). Chagonda believes that, given what the storecarnivals can do, the cost is negligible. “This is precision marketing, taking the rightproduct to the right person, at the right time and in the right place,” says Chagonda,“we’re also able to speak the language of the people in that area. And the response isinstantaneous.”

TOWNSHIP MARKETING

Community serviceAccording to the ROOTS study, the Caxton newspapers reach penetration in the 60-85 per cent zone and are primarily focused in Soweto, with newspapers also inTembisa, Alexandra, Mamelodi, and those townships of the Vaal Triangle (Sebokeng,Boipotong and Sharpeville). “We cover about 320 000 households in Soweto, with10 local newspapers. All in all, the group’s township print orders are roughly 500 000,”says John Bowles, joint managing director, NAB. While the newspapers have had agreat response from national advertisers, it appears that the small businesses in thetownships lack an understanding of the role of advertising. “We don’t see the samesupport for local advertising as we do in the more established areas but we doanticipate that will change as the market becomes more formal,” says Bowles.

Soweto TVOn 1 July 2007, Soweto TVswitched on again, this timewith a first of its kind in SA, a12-month TV licence. This free-to-air channel generates rev-enues from advertising, spon-sored programming and CSIfunding. Target Group Index(TGI) is compiling research on viewership andaudiences (due for release in early in 2008), but according to head of marketing andsponsored programming, Deon Botha, the longer 12-month contract has allowed thestation to become more proactive in the activation of viewers through community ini-tiatives. The station’s Switch On campaign includes ads in the Sowetan and communi-ty papers as well as distribution of pamphlets and promotions on taxi TVs. Showsinclude Dlala Ngeringas (youth programming), Mbokodo (for women), Soweto Today(current issues and events) and Ziyamporoma (the hip and happening in Soweto),among others. Advertisers can expect to pay between R2 330 and R4 660 for a 30-sec-ond ad spot; sponsorship opportunities are also available, especially with a focus onedutainment. “This is a target market that contributes in excess of R10 billion in retailsales per annum, and is highly motivated to improve its living standards,” says Botha.

Soweto TV is expected to increase its footprint to extend outside of the townshipin the future as well as expand the number of platforms it can be viewed on.

13 November 2007Sandton Sun, Johannesburg

Consumer Protection Bill, Protection of PrivateInformation Bill, National Credit Act,

Electronic Communications and Transactions Act

Your questions answeredThese Acts and Bills are and will profoundly influence marketing practices. We are in constant dialoguewith the Regulators and the government departments about interpretations and the purpose of the workshopis to brief you on the latest discussions and interpretations, as they will impact on marketing practices.Present at the workshop will be representatives from the appropriate government bodies, legal advisorsand senior representatives from the marketing bodies who have been actively influencing government.

Keynote AddressAndy Quinan, chairman of the legislative sub-committee of the DMA, explains the consultative frame-work with government, advising on the current status of the various discussions and highlighting threekey issues per Act/Bill which impact upon marketers.

Consumer Protection BillThe Project Manager from the DTI will address key issues and our legal advisor will comment on the legalinterpretations and respond to your questions.

Protection of Private Information BillChristiane Duval, a director of the DMA and a member of the South African Law Commission provides abriefing on the latest draft and the implications for marketers. The issues to be highlighted will be basedon the current draft Bill, and Christiane will suggest how companies can adopt best practices to supportthe basic nine principles, including electronic marketing and purpose and consent marketing.

National Credit ActThe DMA have conducted a number of discussions recently with the Regulator concerning variousinterpretations and the resulting clarifications are helpful. Andy Quinan explains the key developmentsand a senior representative from the Regulator’s office will be present to answer questions.

Electronic Communications and Transactions ActCritical issues include the extent to which SMS and email messages can only be issued with priorconsent, opt-in versus opt-out and conflicts with the wording of the Protection of Private InformationBill. The policing of spamming and its effectiveness will be reviewed. A senior representative of ISPA(Internet Service Provider Association) will comment and answer questions.

Legal SummaryAdv. Randolph Samuel, a director of LUCID Legal Business Services, a consulting firm specialising in theseareas, looks at the key issues from a legal and business impact perspective

Delegate fee: R1 950 plus VAT. Three or more delegates: R1 750 plus VAT per delegate.Enquiries: Robyn Andrews (011) 234 7008 or e-mail [email protected]

The Marketing Law Workshop

own right and city dwellers are diverse in

their beliefs, traditions, habits and behav-

iours. This is inadequately recognised by

those seeking to penetrate ‘this market’,”

says Groenewald. Mataboge agrees: “the var-

ious townships are at different stages of

development. On average, Soweto is more

advanced than the likes of Kwa Mashu and

Khayelitsha,” she says.

Marketers often complain that they are not

recognised by this market, and one of the

major reasons is that once-off marketing that

assumes people are alike is futile and ineffec-

tive. “This market is not homogeneous,”

insists Banga. Consider, for example, that

PEP’s market (primarily LSM 2-6, township

dwellers) is categorised into five groupings,

depending on the driver of purchase deci-

sions (value for money, lowest price, best

quality, fashion and style at any cost, and a

combination of best quality for best price).

“Irrespective of where they live, shoppers, as

individuals, make decisions based on these

factors,” says Banga. Groenewald points out

that contrary to the perceived stereotype,

there are more than 10 languages and

dialects spoken in the townships, people with

university educations and others with no edu-

cation at all.

Retail While language can be a barrier, the main

obstacle, a lack of national retailers, is rapidly

being removed. Informal trade and small

independent retailers are the norm, but the

introduction of shopping malls makes it easi-

er for brands and retail marketing to begin

the quest for brand loyalty and sales.

“Marketers are not necessarily ignoring town-

ships, but look at them from the point of

view of a major player, such as Procter and

Gamble. They distribute through retailers like

Shoprite, and if these retailers are not in

those environments, it makes it difficult for

marketers to move into those areas,” says

Walter. McKenzie points out that while

traditional billboards are available and have

been for some time, the innovative use of

branding communication inside the mall or at

entrances as examples was not available pre-

viously. “Traditionally, the marketplace was

the town or village square, where one could

eat, shop, meet friends and be entertained.

The malls have become the modern market-

place,” says du Preez.


Infusion Lifestyle Research� The townships which have the highest incidence of residents who feel that they can

get by on their salaries are Tembisa and Soweto. Those who cannot meet their basicneeds are in Khayelitsha, KwaMashu and Soshanguve.

� Khayelitsha is described as being in a general state of despair (average householdincome is R2 500 or less). However, Soshanguve has the lowest household earning atR1 400 a month (yet they do not report feeling despair).

The taxi industry � 120 000 taxis in SA� 11 per cent of taxi drivers own their

own taxis� 11 average number of trips that each

taxi makes per day� 1 050 number of local taxi associations� 55 number of major taxi ranks or transit

nodes in SA� 14.5 million number of passengers

transported by the taxi industry each day� 87 million the number of passengers

transported by taxi each week

Taxi commuters per provinceEastern Cape: 2 100 000Free State: 1 100 000Gauteng: 3 200 000KwaZulu-Natal: 3 300 000Mpumalanga: 926 000Northern Cape: 266 000Limpopo: 1 500 000North West: 1 200 000Western Cape: 994 000Total: 14 586

Source: Provantage Media

Property BoomPam Golding Property Group’s empowerment division has launched a black-owneddevelopment franchise that will focus on the marketing and sales of new developmentsin Mitchells Plain, Khayelitsha and the Eersterivier areas of the Western Cape. “Rightshave been approved and split to accommodate existing residential (secondary market)and developments (greenfield or primary opportunities),” says John Herbst, managingdirector, Pam Golding Properties: Empowerment. This hopes to address the demand fornew housing to consumers (especially sectional title ownership, which is a new conceptto these markets) and to educate and inform consumers about property ownership.Furthermore, the split in franchise rights will allow stakeholders to act as project advisersor facilitators to developers seeking to develop in new markets. Market intelligence andproject viability can therefore be adjudicated with the assistance of a dedicated PGPdevelopments office that has an intimate knowledge of the market.

“New development franchises have been secured for Khayelitsha, Mitchells Plain andEersterivier, with development capacity in Soweto, Johannesburg South, Roodepoort,Roodepoort North, Pretoria West Moot and Kuilsrivier. Strategic partners also includedevelopers of affordable housing,” says Herbst. The Franchised offices have secured forthan R400 million in sell out value in new projects in the Western Cape; R300 million insell out value in KwaZulu-Natal and potential engagements on greenfield opportunitiesin Gauteng (all of which are at an advanced stage of negotiation in excess of R1 billion).“Townships will keep on attracting consumers based on affordability and socio-culturaldynamics. The spend is unquestionably present, with an objective to contain economicupliftment within these markets,” says Herbst.

Meanwhile, Old Mutual Property Group Investments (OMIGPI) is also involved in devel-opments in previously under-developed areas. One such development is the R350 millionThembokwezi Lifestyle Estate, which is under construction in Khayelitsha. Another is theR2 billion development and office-to-apartment conversions in the inner cities ofJohannesburg and Pretoria. “OMIGPI is also exploring property development opportuni-ties for Umgeni, Tsantabane, Mafikeng, JS Moroka, Buffalo City, Nelson Mandela Metroand Kokstad. These range from residential townships and mixed-use developments toparkades and taxi ranks,” says Ben Kodisang, managing director of Old MutualInvestment Group Property Investments.

TOWNSHIP MARKETING

TOWNSHIP MARKETING

These developments are impacting on con-

sumer behaviour, shoppers’ decision-making

and the response to advertising messages.

McKenzie says that the township consumer is

an emerging consumer; “they are demanding

a greater choice of product in their shopping

centres,” he says. Many of the landlords that

Boo! Media have signed contracts with are

developing additional malls in the untapped

rural and township areas, so there is a great

deal of development in the pipeline. “The

sizes vary from 15 000m2 gross lettable area,

which excludes the parking and taxi rank

area, through to 85 000m2. Foot traffic also

varies from 400 00 shoppers to two million

shoppers per month,” he says. The good

news for retailers is that the township malls

are seeing greater demand for the retailers

that are available in the upper LSM malls.

Woolworths, for example, has moved into

the townships with great success; according

to McKenzie, the Jabulani mall store generated

double the expected revenue in its first

month of trading. “If one works on a formula

of dividing the amount of monthly foot traffic

by the square meterage of the centre, the

township malls are receiving higher volumes

of traffic per square metre than the upper

LSM malls,” says McKenzie.

The good news is that the mall owners

and developers are backing mall advertising.

Mall owners and developers are more edu-

cated now than ever about the marketing

and advertising within their centres. “They

understand the opportunity that we are

creating, and are very much behind us.

Property owners want to see that the

shopper’s experience is enhanced,” says

McKenzie. For this reason, the property

owners will outsource professionals that will

help them to realise their ambitions. But care

must be taken to ensure that the ad

campaigns fit with the marketing profile of

the mall and its market positioning.

Questions have been raised over the

impact that these malls and centres will have

on the smaller retailers and informal traders.

“The rural and township markets are

experiencing unprecedented income growth.

The malls are purely satisfying the demand

from this growing economically active mar-

ket,” says McKenzie. Mataboge maintains

that the impact of the malls on informal

traders is largely dependent on which ‘industry’

they operate in. “Interestingly, there is a big

market for township junk food, such as kota

s’phathlo (township bunny chow) and chisa

nyama.” There has been a visible increase in

the number of local car mechanics (relative to

the increase in car purchases), and in the

number of people who make security/

burglar bars.

Professor Andre Ligthelm of the University

of South Africa’s Bureau of Market Research

compiled a study into the impact of shopping

mall developments in township areas on

small township retailers. In the study, it was

found that in 2004 only 25 per cent Soweto

households’ retail expenditure was at outlets

in Soweto. This has changed today. It was

also found that those small retailers that are

based within 1km of mall lost the greatest

revenues and saw the greatest declines in

profit. Consider Southgate Mall; this mall is

very much an entrenched part of Soweto,

and while the new malls in the area are

pulling some customers away, the mall is

retaining its higher income shoppers. “The

one risk for malls in rural and township areas

is if they do not upgrade their malls; a com-

petitor will come in with a bigger and better

mall,” says McKenzie. Expect to see new

malls in Tsakane township in Springs,

Mamelodi, Everton, Mafikeng, Burgersfort,

Mdantsane and East London, among others.

Marketing savvy?Studies, such as TNS Research Survey’s Black

Diamond, have shed a lot of light on the

township market, although it also has its critics,

and perceptions of this market have

progressed substantially. But there is still a

great need for marketer education, and du

Preez believes that some of the responsibility


Township slang� Chisa nyama: a butchery with a car wash and a braai area, where suburban locals will

hang out and show off their fancy cars (in particular, on Sundays)� Ekasi: the township (derived from the word location/lokasie)� B.E.E: any BMW driver in their forties (new money, flashy); likes to pick up young women; a

‘sugar daddy’� Ziyawa/ziyabhixha: it’s happening� Maraud: to paint the town red; party hopping� Mpintji: a buddy or friend� Mpintji Gazi: very close friend (almost like a blood relative)� Hectic: crazy (used as an adjective); describes a tragedy; describes how busy one is� Hundreds: used in reference to the first person, indicates that he/she is OK� Heita/holla/hoezit: hello, how are you?� Bra: used as term ‘guy’, applies both to males and females� Jeses bra: exclamation, when something is ‘hectic’ or shocking.

Source: Added Value

lies with media owners and agencies. “A lot

of people who are responsible for media

planning don’t go into the townships,” he says.

Mataboge says that some marketers

believe that people in the townships will

simply ‘catch on’; these marketers seem to

lack the instinctive feel that they have with

people residing in the suburbs. And the

biggest mistakes are made post-product

launch. “Prior to launch, most retailers conduct

extensive research in order to understand the

potential market, ascertain viability of the

offering and so forth. Once the launch is

done, there doesn’t seem to be the same

enthusiasm to ascertain satisfaction with

products and services on a continuous basis.”

What works?Integration is the key word here – traditional

mass media with alternative media such as

taxi advertising, mall advertising, etc).

McKenzie advocates the use of campaigns

integrated with experiential activations. “It’s

how you integrate your campaigns that is

important,” says du Preez. PEP, for example,

uses a combination of media: knock-and-

drop leaflets are popular, as is radio, and

branded TV entertainment (the brand fea-

tures in the SABC 1 soapie, Generations). In

terms of newspaper advertising it’s the Daily

Sun. Groenewald adds that the township

market is not an easily trusting one, so

tangible experience with a brand is important.

A condescending or patronising attitude

towards the township consumer is not

tolerated. Past oppression has made them

very aware of status.

Research data on the language preferences

of the township consumer is limited, but

marketers and media owners know that

communicating to this market in a home

language is important. Dubbing over an

English ad is not going to work; “it needs the

cultural nuances that go with it,” says Walter.

She adds that the younger, more educated

market doesn’t mind being marketed to in

English. Du Preez, meanwhile, has found that

88 per cent of taxi commuters read English,

and prefer to get info and news in English.

“It is an aspirational language – just look at

the success of the Daily Sun.”

Deeper insightsGroenewald says that serious analysis is needed

to better understand the township environ-


TOWNSHIP MARKETING

ROOTS 2007: SowetoLSM 7-10: Dobsonville, Protea, DiepkloofAverage HH income: Dobsonville – R6 600

Diepkloof – R6 200Protea – R8 400

Most dominant home language:Isizulu, Sesotho, Sepedi.The averages: the percentage of Soweto households that have:Fridge/Freezer: 91 Washing machine: 35 Microwave oven: 53Have children under age of six: 19Have school-going children: 38Have children beyond school age living at home: 33Without children: 2090 per cent of Sowetans own their homes. Less then 10 per cent rent 17 per cent of Sowetans have one car in their household; Four per cent have two, andjust 1 per cent have three65 per cent of Sowetans have bought take away food once a month (or more often); 39per cent eat in a restaurant once a month or more often30 per cent entertain at home once a month or more oftenDurables purchased:Small electrical appliances; large electrical appliances; furniture; soft furnishings (cur-tains, cushions, etc); home accessories; and toys.Contribution to savings and insurance (medical aid, short-term insurance) on amonthly basis is below average in Soweto (though residents in Diepkloof and Protearanked highest).Shopping, cellphone and techno gadgetsThis market does not buy nutritional supplements; it purchases over-the-counter medi-cines, and will try to improve its health by taking supplements. This market does notexercise at the gym. Only 12 per cent of Soweto and Alex households have four or more‘techno’ items in the home; however, 47 per cent of these markets have looked for orbought audio visual products in the past 12 months.Forty eight per cent of Soweto and Alex cellphone users are MTN subscribers; 47 percent are Vodacom; and six per cent Cell C. The majority are prepaid customers.In the past month, the majority of Sowetans have shopped at Shoprite and Pick ‘n Pay.Spar is also popular in Dobsonville and Meadowlands. These shoppers do bulk shoppingonce a month. A small percentage will shop twice a month. For clothes and toiletries,this market will shop at Edgars and Jet stores.

ment and insists that an intimate knowledge

of the demographics of the target market is

essential. But researching this market presents

challenges. Infusion encountered the following

challenges over the course of its township

research. “The most significant problem

behind research is the fragmentation due to

research projects focusing on a couple of

problems that are never seen in the context of

larger society,” says Melani Prinsloo, founder,

Infusion. Traditional fieldwork doesn’t work –

arriving at 7am to interview people that leave

for work at 5am, for example. Prinsloo also

points to the distrust of respondents because

of non-sustainable investments in the town-

ships. “What works best for us is referred to as

community-based participatory research,

where information is gathered for us through

community members, while this info is provid-

ed free of charge back to the communities for

development purposes.“

Mataboge adds that we need to start asking

different questions if we are to gain true

knowledge about life in the townships. And

respect for the community needs to be main-

tained; “we need to more humane when visit-

ing places that people call home. The same

sentiment applies to brands,” says Mataboge.

Traditional research methods do not apply

within the township environment; face-to-face

interviews set in the townships are the way to

go. Recruiting a local community member to

smooth the research process is key, as is inter-

viewing outside of working hours. “Taking

clients with us into the townships can be really

powerful, especially for those who’ve never

ventured there,” says Rait.

ExpectationsCraig Irving, founding director, Consumer

Insight Agency (CIA), says that some suburbs

of Soweto already resemble Sandton. The CIA’s

NOW project reveals 12 archetypes that make

sense of the South African landscape, and the

‘loxion’ dwellers. “Township is not an amor-

phous catch all for some notion of black-

ness…we believe that marketers need to

spend time understanding this – drawing

inspiration from the reality of the streets.

McKenzie points to the growing aspiration of

these markets. “For the first time, dishwashers

are being sold in township malls beyond

Soweto. The biggest mistake marketers can

make is to under-estimate or ignore this

market,” he says. �


TOWNSHIP MARKETING

Bite-sized brandingThere has been an increase in the number ofbrands exploring bite-sized servings. Cloretschewing gum recently launched a two-piecepack; Cadbury’s bite-sized chocolatescampaign is doing well too. Kirstin Stapelberg,senior brand manager: chewing gum, Cadburyexplains the launch of the Clorets two-piece pack. At the time of launch, SA wasconsuming less chewing gum than other developing markets (in spite of thehuge growth in confectionary categories worldwide). “The so-called emergingmarket consumes more bubblegum and sweets than it does chewing gum, dueto a lack of availability and an inability to afford chewing gum,” says Stapelberg. For Cadbury, this represented the ideal opportunity to grow the chewing gummarket in a new direction. Clorets was identified as the ideal brand for thisextension because it is a well-established within this market; consumers trustthe brand. The smaller two-piece pack overcomes the issue of affordability (atjust 50 cents per unit). A sampling campaign formed an integral part of the launch (especially since themajority of South Africans had not been exposed to big-brand chewing gum inthe past); support in key wholesalers took the form of giveaways, win-and-spincompetitions and point-of-sale material. Other campaign platforms include taxibranding, billboards, in-store activity and trade education. All communicationcarries the payoff line ‘nge5bob nigmnandi’ (for just 50 cents you can becool/fresh). Cadbury had researched the market extensively and tested a variety of conceptsat different price points. “Crucially, we confirmed that consumers in the low-income market have the same needs and aspirations as those of their middleand upper income counterparts, and that they desire similar quality products.The difference lies in purchasing behaviour,” says Stapelberg. She also foundthat it is a question of affordability and availability. The Clorets two-piece offer has added growth to the brand (through awareness,which had grown to 54 per cent four weeks after the launch). “One-third of theconsumers purchased two boxes at a time. Many consumers heard about theproduct through word of mouth, which indicates that people are talking aboutthe product,” says Stapelberg.

The Imagination Lab in SowetoThe Imagination Lab takes matriculants from disadvantaged backgrounds andgives them the opportunity to explore the creative world (and consider careers inadvertising, design and digital media, etc). After a year of study through theImagination Lab, students are offered internships at ad agencies and marketingcompanies (such as TBWA Hunt Lascaris, Network BBDO, The Jupiter DrawingRoom, Old Shanghai and FCB). These agencies play a role in guest lecturing atthe Imagination Labs.

The Imagination Lab course is a Vega School and Communications andAdvertising Forum for Empowerment (CAFÉ ) initiative, and was launched in2003. It was established with the purpose of fast-tracking transformation withinthe industry. Recently, the fifth Imagination Lab was launched in Soweto (withothers in Alexandra, Kwa Mashu, Westville and Sandton). “We are very proud ofthis initiative as it is playing a big role in transforming the industry and in help-ing people develop their talents. Since inception, Imagination Lab has main-tained a pass rate of 85 per cent, while many of the students went on to starttheir own small businesses after obtaining the certificate,” says Gordon Cook,founder and school navigator.

by ronnie apteker EAST MEETS WEST

Two years ago South Africa’s imaginationwas captured by Crazy Monkey’s Straight Outta

Benoni – a full-length local feature film that

created a lot of hype and set a massive

expectation. Well, the chips are down and the

numbers are in. That youth comedy sold just

over 200 000 cinema tickets. Not a bad first

attempt but not nearly enough to cover the

film’s budget. The result was a financial loss.

Many hard lessons were learned, resulting in a

lot of soul-searching.

Winston Churchill once said that success is

the ability to go from one failure to another

with no loss of enthusiasm. So, we are back,

with a different team of people, a radical new

approach and a clearer vision coupled with an

abundance of enthusiasm. The new colourful

youth comedy is called Footskating 101 and we

are very happy with the film. The budget came

down, drastically, and the marketing campaign

this time round will be more targeted with a

clearer message.

We made the new film on high-definition

digital, a huge cost saving over Kodak film.

Benoni had over 100 crew members. The new

film, which was shot on the West Rand, was

made with a handful of people and crew. I was

one of the crew. We laid down a set of house

rules. It was a simple, no nonsense approach.

There was no catering, no portable toilets, no

trailers, no frills and no attitude. What there

was, was a stronger sense of purpose, an

overwhelming humility, increased passion, and

a bunch of artists that were very hungry. The

film is complete and we have done some

extensive audience testing. The sense I am

getting is that we have moved up to a six or

maybe even a seven out of 10. That makes me

very happy. Finally, some growth.

Yes, it is a crazy, silly movie. The name says it

all, ‘Footskating’. But it has far greater heart

than Benoni. It is a more honest piece of work

and we hope that this time, the expectations

we create with our marketing campaign will be

more precise.

The Benoni film’s marketing drive started at

the beginning of 2005. It went on for nine

months and the Monkey was everywhere. It

certainly was a relentless and pervasive

campaign and it had a lot of imagination

behind it. The Footskating marketing blitz, on

the other hand, is a lot more focused. It

officially kicked off in August and runs for two

months. The new campaign is simpler, but

bigger. By simpler I mean more direct, more

straightforward and clearer. By bigger, I mean

more creative and far more innovative.

5FM have come on board again as our main

marketing partner. The movie is branded as a

5FM project. For all intents and purpose, it

looks as if 5FM made the movie. In the new

film we have a lot of 5FM product placement

as well as some very clever cameos by some of

the DJs. 5FM will get kudos for the film and we

are hoping to forge an even stronger relation-

ship with the station from our efforts. And

the film gets a national broadcaster to help

promote it.

We learnt many valuable lessons on the

Benoni marketing roadshow. Poster signing, for

example, is highly cost-effective and we are

printing 20 000 posters that will be used on

campus tours, mall visits, cinema campaigns,

music store displays, etc. The new poster is

really brilliant, it hits all the right notes and we

are confident that every youngster will want an

autographed poster. Every teenager, for

example, that puts up a poster in their

bedroom or classroom becomes a billboard for

the movie. Even more important is reaching

our target audience through MXit, which is

being organised by the film’s distributor, UIP.

During the roadshow, we will be handing out

flyers, which will have an SMS line and an entry

form for a competition.

Handing out T-shirts is always cool. Everyone

loves getting a funky new hip T-shirt. But a

good quality T-shirt costs around R50 to make.

A poster costs less than R2. So, we are doing

more with posters and less with T-shirts. There

will be a range of stunning Footskating T-shirts

from Puma, but it will be focused, and more

strategic and tactical in its usage. This time

around, we are using the T-shirts for competitions

as opposed to just handing them out. We are

trying to be more tactical by getting people to

enter a Footskating competition by filling in a

form whereby we capture their cell numbers

and e-mail addresses to keep growing our

database.

We are creating a stack of big vinyl banners

to hang up in the cinemas across the country.

The cost of making a vinyl banner is around

R600. To make, say, 40 banners is not that pro-

hibitive from a rands and cents point of view.

The exposure these banners provide to the key

cinema-going population is focused and effec-

tive. There is no monthly real estate cost for

putting up banners in a cinema. Yes, it is excit-

ing to see a big billboard up on the side of the

road advertising your labour of love, but it is

expensive, and it is not that targeted. Having

said that, we have a bunch of roadside bill-


Footskating 101

EAST MEETS WEST

boards going live for the month of September.

For the Benoni film we had billboards up for

seven months. This time it is for one month;

the month of release. It is a smaller footprint

and more precise – there are about a dozen

boards going up in Johannesburg... mainly in

the north.

Probably the most innovative aspect of the

new campaign is the tie up with Fanta.

Collaboration is in the form of branding on

Fanta tins and the campaign will last about

10 weeks. This is an extraordinary win/win

proposition. The thing I want to point out

about this particular aspect is that it did not

happen over night. Nothing about the making

of this movie or its marketing happened quickly.

A lot of time and effort has been invested in

this journey and everything we have done on

the marketing side has been proactive. We

have not waited for the phone to ring. We

have been building bridges since the first word

was put on paper when we started writing the

story over two years ago. The secret to our

marketing campaign, and to life in general, is

to be as proactive as humanly possible.

We’ve been building our audience through

a website – www.footskating.com – TV and

radio spots, trailers, the Footskating Game

competition as well as music videos. The music

in the new movie is really solid this time

round, it is all South African. We had a ball

working with EMI on the CD which hit the

stores mid August. We are expecting it to sell

well and create more heat for the film. A key

consideration here is that we are not calling

it a soundtrack, but rather, “The Footskater’s

Rock Compilation”. Generally, compilations

get far more exposure than soundtracks.

Look & Listen and 5FM are punting the CD

and at the time of writing, two of the songs

are in the Top 40 charts and climbing. We

are all hoping one of these tracks get to the

number one position. Bands include:

Fuzigish, Driverlane, Farryl Purkiss, Scarlet

Box, Fokofpolisiekar and Taxi Violence,

among others.

Einstein once said that insanity is doing the

same over and over and expecting a different

result. I have been involved in eight film

productions over the past seven years and this

last one, the Footskating adventure, has been

the best. We did things differently, radically

differently, and the result is already a success

from my perspective. We came in on budget,

on time, and with greater alignment in the

small team. This, to me, is fundamental.

Everything in life is about people. People are

what make the difference. You only ever invest

in people; not in business plans or movie

scripts. From my perspective this was the best

film investment I have made to date. �


by michele venter-davies EXPERT OPINION


We’ve all recently read several articles inwomen’s publications and witnessed

distraught parents on TV magazine

programmes slating advertisers for the harm

they are doing to their children.

‘The pressure’ has become a buzz phrase

flaunted in the car parks and on the cricket

fields of many prestigious schools. Moms

complaining about the stresses caused by

irresponsible advertisers who have brain-

washed their (above average) offspring to

believe that brands dictate social acceptance –

which is directly proportional to the price tag.

Dads bragging about the thousands paid for

a cricket bat for six-year-olds who must ‘get

off to a good start’. Sure, we all want to give

our kids the best. Heaven forbid they should

suffer psychological problems such as ‘material

deprivation syndrome’ and humiliation at the

next school function.

The school car park must be one of the

most powerful marketing arenas of our time.

A captive audience of women determined to

ensure that their children ‘make a success of

life’ – founded on brands. Word of mouth is

nowhere near as powerful as ‘Word of Mom’.

Well done to the marketing profession. It

has, it seems, successfully managed to remove

the word ‘no’ from the vocabularies of

thousands of well-heeled opinion leaders,

seekers and followers, hell-bent on their kids

outwearing, outperforming and out-marrying

their nearest and dearest cohorts.

An energy drink brand which, I guess, is

aimed at teens and twenty-somethings that

party all night, is poured down the throats of

gagging primary school athletes intent on

winning that gold (plastic medal) for mom.

As long as Johnny has one medal more than

Sipho we’ll risk the side effects of adult doses

of caffeine. A lingerie shop designed to fulfil

the dreams of any blushing bride-to-be is

patronised by 13-year-olds wanting to ‘look

sexy’. For whom we wonder? Maybe the

15-year-old who invited her to spend the

holidays at ‘our place in Plett’ sipping Mexican

beverages and smoking agricultural produce

from KZN, while his parents are overseas

making sure they keep ahead of the Jones’

and Gamedzes’. Good example of cross-

segmentation and targeting.

It was interesting to hear a mother

reprimanding a young boy who was

tormenting the ‘dear little creatures’ at the

Johannesburg Zoo… “Stop it Daniel! I will

take away BOTH your bicycles!” Great marketing

campaign that convinced mom that Daniel

could ride two bicycles at same time.

And what happened to good old sarmies

for lunch? It is now essential to buy hamburgers

and pizzas from highly successful franchises

during break time. Again, ‘the pressure’. This

time it’s the pressure of having to shop for

shoes AND play tennis before noon. No time

to make a sandwich. But the real reason, of

course, is that the chubby teen will be

ostracised by ‘the others’ if they bring

homemade goodies. Not serious – chubby

can be liposuctioned as a Sweet-Sixteen gift

… they are all doing it.

Plastic surgeons are being hounded by

teens seeking boob jobs, nose jobs, lipo and

even eye jobs. Gone is the matric holiday …

we went to Disneyland by the time we were

10… Margate sucks. But lipo sucks better and

that’s what we are doing for the December

holidays. (And, after all, we had the sex-toy

party for our 16th so even that doesn’t

titillate anymore.)

And who is driving this consumption

phenomenon? It is accepted that there are

various role players in the consumer decision-

making process. Kids are strong influencers.

But, ultimately, the decider and buyer roles

are acted out by those who control the

spend. I assume that in most higher LSM

families these are adult parents with a reasonable

level of intelligence and education. And yet

they claim to be the helpless victims of armed

marketers who threaten horrid things if they

don’t join the ‘get branded’ inner circle.

Marketers lurk in car parks and on soccer

fields exploiting spineless creatures who’ve

lost their basic values. Those who merrily

spend R800 on a T-shirt, but turn away from

the child at the traffic lights for whom it

represents school fees for five years or more.

The same traffic lights where dad leans out of

his luxury German sedan to buy a DVD from

the informal sector. Very confusing as mom

insists ‘We NEVER buy fakes’ during car park

competitive dialogue sessions.

Marketers play a role, of course. They put

their brands out there for consumption. They

position themselves according to consumer

values. The consumer tells the marketer what

their values are and the marketer designs a

product offering to match. Maybe marketers

are to blame for delivering on what the

consumer wants? But, ultimately, the

consumer has a choice. While South Africa

has some truly innovative criminal tactics,

forcing soccer moms to patronise trendy

boutiques is not one of them.

The most interesting thing for me, however,

is how these consumers cannot seem to identify

at all with other like-minded souls. They all

lament the fact that they are ‘not like the

others’. It is ‘the others’ who place pressure on

them to conform to shopping behaviours

beyond sensible practice. ‘We have no choice’

is their car park war cry. I wonder which

marketing genius started the conspiracy? �

While South Africahas some truly innovativecriminal tactics, forcingsoccer moms to patronisetrendy boutiques is notone of them.

“

”

Word of mom

Michele Venter-Davies

faculty head: Marketing and AdvertisingAAA School, (011) 781 [email protected]


Lizelle Smitcreative head, RadioHeads(011) 624 1319 [email protected]

EXPERT OPINION by lizelle smit

Surviving the silly season– a radio guideWhere are all the Christmas trees? It’sOctober and not a Christmas light in sight!

Don’t worry; they’re being unpacked as we

speak. In a month’s time you’ll be wondering

what happened to the year and to your new

year’s resolutions. Every year retail high season

starts earlier. Retail mediums become more

cluttered. Retailers become more competitive,

and consumers become more discerning.

While advertising mediums look more and

more like gaudy, overdressed, cheap and nasty

Christmas trees.

The question on radio, as in any other medi-

um, is how to STAND OUT. You might not

have the benefit of CAPS on radio, but a few

other pointers will help.

Creatively: try staying away from Christmas

tunes. I know it’s the only time of the year you

can jingle your bells under the voice over, but

it’s really not worth it. For the simple reason

that everyone will be doing it.

Slow down. The silly season brings out

something funny in advertisers. Everyone wants

to squash 45 seconds of price-product offers

into 30 seconds. Understandably so, since

there are so many fantastic offers and dis-

counts around. But a second of sanity on radio

often speaks louder than five words per sec-

ond.

On slowing down: allow enough time to

develop the creative. Clients, even agencies,

rarely allow their creatives enough time for

crafting. Every word counts, especially consid-

ering you have 60 to 80 words to get your

message across. Demand something fresh

from your creatives; even if it means rebriefing

them 10 times. Using a writer that actually

likes writing radio commercials helps.

Then an obvious one: avoid clichés and bad

Christmas puns. Rather, avoid all puns, not just

the bad Christmas ones. So no ‘miss it and

you’ll miss out’. No ‘get into the festive spirit

with…’ and definitely no ‘Tis the season to be

(insert brand name here)’. Please. They make

your brand sound contrived and unbelievable.

Likewise, many brands will be claiming ‘profes-

sional’, ‘friendly service’, ‘knowledgeable staff’

etc as they do throughout the year. These

phrases become more irritating in high season

because of how often you hear them being

thrown around.

But even before you start thinking creative,

think strategy. Retailers often flood the market

with frequency over the retail season.

Remember that different radio stations attract

vastly different listeners. Don’t un-sell your

brand by talking to customers in a way they

don’t appreciate or understand. Target the per-

son you want to attract in a way he or she will

notice. Related to this is understanding who

really makes the buying decisions – not who

pays for the item, but who nags for it. It might

change the way you advertise completely.

If at all possible, talk to people when they

are performing a related activity. For example,

if you sell a slimming product, talk to women

on their way to the gym. Or on a Monday

morning when a whole week’s worth of

starving was trumped by the Sunday braai.

Radio makes an even bigger impact if the

message is heard close to the moment of

purchase. For example, radio reaches people

on their way to the shops. Radio reaches them

in their homes as they get ready, in their cars,

in shopping centres (there’s a reason large

clothing retailers now have their own in-store

radio stations).

So think about the lifestyle of the person

you want to talk to and place your ad as close

as possible to the time he or she would want

to buy your product. And even if it can’t be at

the time of purchase, make sure you’re top of

mind when the purchase is made.

Then the fuzzy-feeling factor. Over the peak

retail season, say, from November to January,

people are feeling different from the way they

feel the rest of the year. They are looking for-

ward to their annual holiday, family gatherings

and spending time with loved ones. They are

realising how lucky they are, and getting into

caring and sharing mode. So join them, and

get on board a radio station Christmas charity

drive. It’s usually free, apart from your pledge.

And it’s fantastic PR, even though ‘you’re not

doing it for the airtime’. So give something to

the people around you, and be sincere about

it. More importantly, do it on radio – the most

personal and believable medium.

On being personal on radio: radio has this

strange and wonderful way of making the big

boys seem more personal and more caring

over this period. It also allows the little guys to

create a bigger ‘we’ve arrived’ vibe. Use this to

your advantage.

Then lastly, since the period is all about

selling: Remember that nothing beats a fantastic

offer. So make yours irresistible, and keep it to

one message per ad. One price per ad. One

beautiful shiny star for the top of the

Christmas tree.

Merry retailing. �

Remember that nothingbeats a fantastic offer. Somake yours irresistible, andkeep it to one messageper ad.

“”


by helen mcintee EXPERT OPINION

Fifteen years ago I conducted someresearch into packaging as the fifth ‘P’ of the

marketing mix, limiting my study to the cosmetics

industry. The results were interesting in that I

successfully managed to prove that packaging is

so closely linked to the cosmetic brand, that it

could not be regarded as a separate ‘P’. Okay, I

hear you sigh, so what’s your point?

My point is that after 15 years, marketers

have apparently still not hit on the fact that

‘packaging’ is a critical part of the product. It is

well recognised (my research revealed) that

many authors on the subject of marketing

indicate that packaging is really the only piece

of product information that every consumer

sees. ACNielsen’s Shopper Trends 2005 report-

ed that 60 per cent of shoppers are ‘extremely

susceptible’ to impulse purchases and the

average shopper makes 19 store visits in a

month, with supermarkets visited twice a

week, often two or three different supermarkets

a month. And while containment obviously

remains the most fundamental function of

packaging, over the years it has come to

perform many other functions.

Consider the following functions:� Protection from physical or environmental

damage � A source of information about manufacturer,

dosage, contents, usage instructions etc. � Identification – the packaging enables quick

and easy identification of the product at

point of sale � Security – for example, tamper or childproof

seals, authentication seals (to indicate that

contents are not counterfeit), and anti-theft

and pilferage devices � Facilitation – the very nature of packaging is to

facilitate the usage of the product within, for

example, aerosol cans, easy pour spouts etc� Storage of the product in warehouses, on

shelves and so on � Convenience, such as the six-pack carry pack � Marketing – packaging should be carefully

thought out as a very effective way of advertising

to and communicating with the consumer.

Unfortunately, it seems that little space is

given by marketing textbooks or syllabi, either

examining or discussing this crucial part of the

mix and, in real life, by active marketing

departments. I feel fairly sure that proportionally

the amount of time spent on the packaging

of a product is probably fairly small when

compared to logo design, brand awareness

and advertising.

I decided to try and prove myself wrong and

so opened up Philip Kotler’s latest textbook

and yes, there it is in the index:

‘Packaging pages 393-394’

A page and a half does not, in my mind,

constitute nearly enough focus on the topic.

As marketers in one form or other,

we are all aware that Product is arguably

the most important ‘P’ as without it no

marketing would be necessary. However,

with the dramatic increase in products and

services available to the consumer, the

subsequent rise in intense competition

between brands and, most importantly, the

propensity for self-service shopping

environments, then it is the appearance of

the product that has now become a critical

influencer in the purchase decision.

In the marketing of services, we constantly

emphasise the need to ‘tangibilise’ the

intangible. This means trying to display physical

evidence of the service so that consumers can

more easily evaluate a product they are unable

to touch or see – this is, in effect, the

‘packaging’ of that service and is equally

important in the marketing mix.

Marketing as a discipline is fairly new to the

world, but I believe it is old enough to

necessitate a review of past theory and

practice. The world of the ‘50s and ‘60s is no

longer our current reality – so let’s now add

packaging to the marketing mix. �

Helen McInteedirector, IMM graduate School ofMarketing(011) 628 2038 [email protected]

Packing – the other ‘P’

Marketing as adiscipline is fairly newto the world, but Ibelieve it is old enoughto necessitate a reviewof past theory andpractice. The world ofthe ‘50s and ‘60s is nolonger our currentreality – so let’s nowadd packaging to themarketing mix.

“

”

INDIAN MEDIA by fulvia becatti


The local Indian market makes up arelatively small percentage of the total popu-

lation, with the 2001 census figures placing it

at 1 120 494 adults (Labour Force 2006

survey places the Indian population at 1.16

million). The majority of this market is settled

in KwaZulu Natal (where it accounts for

49 per cent of the total population). “KZN

has the largest population of Indian people

outside of India,” says Naveen Singh, pro-

gramming manager, East Coast Radio.

According to census figures, two thirds of

South Africa’s Indians are Hindu. “Even

though there is a small Indian population in

SA, it is still representative of most of the dif-

ferent religions, castes, sects and languages,”

says Shyam Pitamber, CEO, Indfinity.com (a

local Indian website).

The NAB ROOTS 2007 study found that

Indian purchasing decision-makers (PDMs)

are settled primarily around Durban (in

Phoenix, Chatsworth, Merebank, Overport,

Queensburgh and Umhlanga), with smaller

concentrations across Johannesburg and

Pretoria, and the country metros of

Pietermaritzburg, Ladysmith, Newcastle,

Empangeni and Brits.

In Phoenix, more than 94 per cent of

PDMs are Indian. In Chatsworth, the figure is

89.8 per cent and in Merebank 65.2 per

cent. They are wealthy households. “It is true

that Indians are of the upper LSM, however, I

believe that there is a significant portion that

is up and coming; people who aspire to

becoming upper LSM individuals,” says

Pitamber. In Chatsworth, for example, where

there are 47 158 Indian households, their

average monthly income stands at R8 620.

This results in a total wealth of R407 million

for the region. Overport’s 30 491 Indian

households have an average monthly income

of R11 785, which puts the total wealth of

the region at R359 million. Phoenix’s total

wealth stands at R306 million with 38 252

Indian households generating an average

monthly income of R8 010. The total wealth

of urban KZN households is approximately

R4.8 billion; the Indian population in KZN

accounts for around R2 billion of this total

wealth (ROOTS 2007).

“This is a rich capital market,” says Rajesh

Devjee, CEO, SA India magazine. He warns

advertisers that if they neglect to engage this

market, they will alienate the country’s

wealthiest group. “Indians won’t buy a

brand-new Toyota. They would rather buy a

second-hand BMW. It’s about the status,”

he says.

Of the Indians who have flown in the past

12 months, 60 per cent have flown SAA, 27

per cent Kulula and 12 per cent British

Airways. This market shops for clothing and

shoes at the following stores: Edgars (43 per

cent), Woolworths (29 per cent), Jet stores

(25 per cent), Mr Price (22 per cent) and

Truworths (14 per cent). KFC and Nando’s are

the most frequented takeaway/restaurant

outlets, with 64 per cent and 58 per cent

of Indian PDMs visiting them respectively

over the past month. Spur, Debonairs,

Something Fishy, Steers and Ocean Basket

follow (ROOTS 2007).

Mass media consumption among the

Indian market consists of newspapers

(national, regional and community papers),

radio and TV (with DStv offering North Indian

and South Indian bouquets), while SABC

programmes such as Eastern Mosaic meet

the need for locally produced content.

AMPS 2006 figures found that of the 2.4

million DStv viewers, 137 000 were Indian.

Approximately 33 000 of these are sub-

Hot and sp cy...

Race Profile: KZN (ROOTS 2007)

Region Percentage of total populationBlack Coloured Indian White

KZN TOTAL 21 6 49 25Durban total 8 5 71 9Phoenix 5 1 94 0Chatsworth 6 0 90 4Merebank 4 26 65 4Overport 25 14 58 2Queensburgh 17 1 30 52Lower South Coast 26 2 19 53Umhlanga 26 1 19 54Berea 31 1 16 51Highway 27 3 14 56Empangeni 33 2 14 51Bluff 29 5 12 54Upper South Coast 12 1 5 82


scribed to the North Indian bouquet and

approximately 16 000 to the South Indian

bouquet. The North Indian bouquet includes

B4U, ZEE TV, Sony Channel and NDTV. The

South Indian bouquet includes KTV, NDTV

and Sun TV. “Our subscriber market reflects a

strong sense of cultural identity and the need

for Indian cultural content which we provide.

They are also looking for an alternative point

of view, referring primarily to news and infor-

mation,” says Cheryl Uys-Allie, specialist bou-

quet manager, DStv. She adds that the pri-

mary content drivers are Bollywood films,

song-and-dance entertainment, celebrity

news and entertainment formats. Family

viewing rates high in comparison to sport or

documentaries.

In general, local community newspapers

enjoy a high average issue readership, but

publishers are starting to realise that this

market is under-served. The Express stable of

community papers (a new venture formed of

the partnership between the Express titles

and The Witness Printing and Publishing

Company) includes the Eastern Express,

which was launched because of changes that

have taken place in the Indian community,

which feels that it is not being reflected fairly

(if it is reflected at all) in mainstream newspa-

pers. The paper will avoid sensationalism, and

will focus on professional, upwardly mobile

LSM 6 – 10 Indians, between the ages of 24

and 55 years; they have an average monthly

income of R7 500 plus. Half of this reader-

ship is female. The newspaper will cover a

mix of national and international news, with

a strong emphasis on lifestyle, food, fashion

and decor, as well as Bollywood, sports, cars,

travel, health, business and property. The

paper is distributed on Wednesdays (97 000

copies), door-to-door, as well as via bulk

drops at major shopping centres.

The Express stable community papers will

launch into the Durban metropole to address

the gap in the market, says Piet Le Roux, CEO.

The Sunday Tribune and the Daily News

also rank high (ROOTS 2007). The Post reach-

es 327 000 readers, of which 90 per cent are

Indian (AMPS 2006). “Adverts or news for

that matter, on radio and television are just

fleeting moments, not often remembered. In

print there’s sustainability. The shelf life of

this title, for example, is from a Wednesday

to Sunday, and if readers or advertisers want

to refer to past copies, it’s always readily

available,” says Post’s editor, Brijlall Ramguthee.

Indfinity.com will launch a new Indian

lifestyle newspaper, the Indluminator, early

next year. According to Pitamber, the paper

will focus on the Indian lifestyle in the mod-

ern age, and will cover such topics as health

and spirituality, recipes, religious events, fash-

ion and technology, Bollywood, Tollywood

(Tamil and Bengali language film industries),

travel, community news, financial advice and

classifieds. Games and competitions will

make the paper reader interactive. “We have

acquired the services of experts on these vari-

ous topics to provide content. These experts

are located in SA, and some in India,” says

Pitamber. Meanwhile, research is being car-

ried out to gain a better understanding of

the Indian market; the results and data need

to be processed as yet.

INDIAN MEDIA

Average household monthly income and regional wealth(ROOTS 2007)Region Ave HH monthly

incomeNumber ofHH

Total wealth (in millions)

Spur advertising hits a nerveSpur Steak Ranches was forced to ditch its TV ad campaign (featuring a young Indiancouple performing Bollywood dance sequences) after the Advertising StandardsAuthority of South Africa (ASASA) confirmed that it had received several complaints frommembers of the Hindu community. The complainants claimed that the advertising wasoffensive and made a mockery of Indian culture. This has brought to light issues aroundthe manner in which advertisers target the Indian market (especially when this involvesmaking light of Indian cultures and religions). As Pitamber says, one of the biggest mis-conceptions held about the Indian market is that it is a homogeneous group. He pointsto the failed Spur ad as an example of marketing that is not sensitive to the uniqueneeds of the Indian population.

Indians value culture andheritageMarkinor’s World Value Study found that99 per cent of Indian South Africansbelieve that their culture and heritage arevery important to them. 94 per cent ofIndians say that their heritage and historyis important to them.

The World Values Study was carriedout by Markinor in conjunction with theCentre for International and ComparativePolitics at the University of Stellenbosch.

Berea 17 231 3 560 61Umhlanga 18 919 2 997 57Queensburgh 13 863 4 801 67Highway 14 291 5 106 73Bluff 17 198 1 944 33Chatsworth 8 620 47 158 407Phoenix 8 010 38 252 306Overport 11 785 30 491 359Merebank 10 028 12 294 123Amanzimtoti 18 114 515 9Port Shepstone 13 000 3 019 39Ladysmith 10 522 1 931 20Newscastle 13 986 3 620 51Pietermaritzburg 11 688 25 813 302Empangeni 15 125 951 14

INDIAN MEDIA

In terms of magazines, community maga-

zines and mass market consumer titles are

viable media options. SA India magazine is

one title that is specifically designed for and

targeted at the Indian market. However, as

CEO, Rajesh Devjee points out, media plan-

ners don’t know about the magazine, and

don’t understand the Indian market. The mag

was a member of the Audit Bureau of

Circulations previously, but Devjee cancelled

the membership: he believes that these circu-

lation figures do not accurately represent

readership. “We sell 10 000 copies every

month. And we know that the average

Indian family has six members, all of whom

read the magazine,” he says. The magazine

has a 65 per cent female readership, and

focuses on Indian lifestyle (recipes, fashion

etc) as well as all the latest gossip from India.

According to Devjee, the magazine

researched its readers’ preferences and found

that there is great interest in Bollywood gos-

sip. “No media that hopes to target the

Indian market can survive without Bollywood.

Every Indian perceives himself as a living

reflection of a Bollywood actor,” says Devjee.

On the radio front, community stations

Millward Brown explores IndiaMillward Brown research has found that English and Hindi account for the majority ofad-space revenues. News is the most popular genre, followed by music, Hindi moviesand kids. Soap operas are also hugely popular.

It is expected that outdoor advertising will come to control a significant share of themarket in the coming years, since this medium will continue to enjoy new innovationsand advances. Seven per cent of advertising spend is allocated to outdoor media.

Radio is growing, and is seeing an increase in competition; it is expected that thistrend will be ongoing as content standards continue to improve. Plus, the Indian govern-ment is waiving licence fees and opening the second phase of licence bidding. Radio cur-rently accounts for two per cent of total ad spend.

India’s Internet user base is the fourth largest (49 per cent of this base comes fromoutside of the country’s big eight cities). Real estate, travel and jobs will extend thegrowth of the Internet. Currently, tourism is the primary e-commerce and online advertis-ing driver. Internet adspend remains small at 0.5 per cent.

Cinema is expected to grow, aided by the development of multiplex cinemas and digi-tal distribution. Cinema adspend is at 0.5 per cent. Press adspend is the greatest, at 48per cent, while that on TV is at 42 per cent.

India is considered the least developed market in Asia, with low income and educationlevels. But this is a competitive and assertive market, and consumerism is on the increase.This is the world’s fourth largest economy (in terms of purchasing power parity), and ithas a population of 1.12 billion. It is the largest English-speaking country in the world(although English is only one of 18 official languages). Nearly two thirds of all middle-income households are rural, but they represent half of the country’s buying potential.This is a market that is highly dependent on single serving packages (lower-income class-es receive their wages daily). Non-traditional forms of communication (such as villagetheatre, etc) are viable means of reaching the vast rural areas.


seem to have great reach among Indian

markets, given that they can focus on

issues around religion and culture. Hindvani

radio (based in KZN) reached 36 000

listeners in the past seven days, compared

with Radio Islam MW 1548, which reached

25 000. Eastwave Radio 90 92.2 FM had

8 000 listeners in the past seven days (RAMS

August 2007).

Of the commercial and regional stations,

East Coast Radio and Lotus FM deliver audi-

ences. East Coast Radio has a total past seven

day listenership of 1.786 million (RAMS Aug

2007). AMPS 2007 figures show that the

station captured six per cent of total radio

audiences in the past seven days (a drop

from 6.3 per cent in 2006). Four hundred

and forty thousand of the station’s listeners

are Indians between the ages of 25 and 49

years; they spend an average of 19 hours lis-

tening to the station each week. “It can be

said that there is a lot of disposable income

that is used to create a better lifestyle among

this market,” says Singh.

Lotus FM launched its new corporate

identity recently. “The challenge was to create

a brand that fuses the richness of Indian cul-

ture with the diverse lifestyles of modern

South Africa,” says station manager, Shanil

Singh. Lotus FM had 380 000 listeners

(RAMS August 2007) in the past seven days.

Meanwhile, AMPS 2007 finds that the station

reached 1.3 per cent of the total adult audi-

ence in the past seven days (this figure has

dropped from 1.4 per cent in 2006). The

station’s core audience is between the ages

of 24 and 49, in LSM 8-10.

Bollywood films draw huge audiences

locally. Ster-Kinekor recently formalised a

broader strategy with regard to the acquisi-

tion, marketing and distribution of Indian

film content, including Tamil- and Telegu-lan-

guage films (previously, the acquisition of this

content was not financially viable). “Our

belief is that this content has strong potential

to also cross over to non-core audiences,

such as the Cinema Nouveau and the black

emerging market,” says Isabel Rao, CEO, Ster-

Kinekor Distribution. Recently, Ster-Kinekor

Distribution saw Tamil film Sivaji, which

opened in the Box Office Top 10, become

one of the biggest releases in the country.

According to Rao, Hollywood studios are tak-

ing a more active role in Bollywood produc-

tions, co-producing Indian films.

The Indian market is connected to the

Internet, and as broadband becomes more

popular and more affordable, one can expect

to see more Indians online. As Pitamber puts

it: “Indians are definitely not techno peasants

– they use it every day and embrace the

changes it brings to ordinary tasks.” Devjee

believes that as much as 95 per cent of

Indian households have a PC or laptop and

Internet access. Blogging, watching videos on

YouTube, chat rooms and social networking

are as popular among this market as any

other. “The Indian market has taken to these

sites to such a huge extent that we have

received thousands of requests to offer similar

features on Indfinity.com,” says Pitamber.

Mobile media and technology is ubiqui-

tous in this market. “While many Indians no

longer limit their cellphones to making and

receiving calls or text messages, many are

using them to interact in chat rooms (and

services like MXit), multimedia messages and

mobile social networking,” says Pitamber. He

believes that in the near future, Indians will

be consuming their news and information

through the most convenient means possible

– mobile media.

Research into the Indian market is some-

what limited, and Devjee speculates that this

is because of the relatively small size of the

population. However, as he points out,

researchers and media planners must keep in

mind that this is a proactive and entrepre-

neurial group. TNS Research Surveys’ Wildfire

study found that 39 per cent of total igniters

in 2005 were Indian/Asian, making this racial

grouping the most ‘ignited’ group.

Marketing and advertising that targets this

market in the right way is guaranteed to hit

the spot. “Big brands must remember this

silent market,” says Devjee. �

INDIAN MEDIA

Fact a Day: did you know? (Eighty 20)� Cricket is the most popular sport among the South African Indian population (40 per

cent of Indian adults are interested in the sport, the highest proportion of all the pop-ulation groups). (AMPS 2006 RA).

� Seven per cent of Indian males say they have been a victim of violent crime (the high-est proportion of males from all the race groups). (AMPS 2006 RA).

� 0.5 per cent of single Indian women have babies under two years (the lowest propor-tion from all the race groups. For the country as a whole, the ratio is 12 per cent.(AMPS 2006).

� Six per cent of Indian adults understand at least one of their native languages (Hindi,Tamil, Telegu or Gujerati). Of those who do, four per cent are under the age of 25(AMPS 2006 RA).

� The Indian population is at 1.16 million. Seventy per cent of Indians reside in KZN.(Labour Force Survey 2006).

Media Mix: Average HouseholdIncome (AMPS 2007)Lotus FM - R10 162East Coast Radio – R8252SA India – R11 488

Media Mix: Average Age(AMPS 2007)SA India: 35Lotus FM: 42East Coast Radio: 32

Newspapers:

Sunday Tribune 119 495 2.1 5.7 41 R13 115The Post 46 721 - 6.7 39 R11 218Daily News 57 830 1.1 5.9 41 R12 886

Newspaper ABC (Apr-Jun2007)

AIR (%of adults,AMPS 2007)

Readers per copy(AMPS 2007)

Ave Age (AMPS2007)

Ave Household Income(AMPS 2007)


PrintConsumer magazinesThe battle between the

Financial Mail and Finweek con-

tinues in the consumer business

title race – there are less than

500 paid-for copies separating

them, with Finweek taking a

slight lead. In a year, both mag-

azines have managed to

increase circulation, with the

FM keeping itself over the magical 30 000 barrier and Finweek

increasing its circulation more than the FM overall.

According to Marc Hasenfuss, editor-in-chief, Finweek and

Fin24.co.za, the magazine is seeing its biggest editions (100-plus

pages-) since 2002. “Adspend is robust. A strong, churning economy

is evident in the number of financial service ads and strong consumer

spending is driving cellphone, car, watch and luxury property ads – a

relatively new phenomenon in Finweek,” he says.

The FM added lifestyle components to its line-up last year under its

revamp and is pulling in luxury brands. Finweek, however, is maintain-

ing its non-lifestyle editorial policy although Hasenfuss says that it

“might look at a wine column… at least a different kind of wine

column and perhaps a movie review… but that quite possibly a wider

focus on lifestyle would blunt Finweek’s thrust.” Still, it doesn’t seem

to have done the FM any harm.

In the same consumer category, Entrepreneur magazine is next in

succession after Finweek and the FM. Andrew Honey, publisher of

Entrepreneur, says that the entry of the publication into the market

may have helped the sector to throw off its staid image. He also says

that the magazine has created a new niche market within the print

sector – the ‘how-to’ guide. “We are still connecting with the regular

business media audience but we are the only ones in the consumer

business media in this particular category.”

Entrepreneur is the fastest growing title in the business media

sector, and one of the fastest growing magazines overall – the

magazine has also just increased its print order and number of retail

outlets. There are four divisions of the brand: print, digital, events and

business tools. “Entrepreneur is a resource, it’s a start and improvement

magazine for business,” says Honey.

Maverick is another of the big consumer business titles with sold

copies coming in at under 9 000. Still, it does attract the luxury brands,

is a great looking magazine and comes at business news from a

completely different angle to any of the other publications.

Business-to-business magazinesThe management category of the

B2B section makes up one third

of the overall sector total with

227 184 copies (out of 665 502).

Leaders in the sector include

Gauteng Business and Succeed

Magazine – interestingly, both are

aimed at the SME and entrepre-

neurial business sector.

Two-year-old Gauteng Business

takes the lead after impressive

increases in circulation, a recent

publicity campaign to raise aware-

ness among consumers as well as

a campaign aimed squarely at

media planners. It is aimed at the

SME market but specifically tar-

geting the boss that makes all the

decisions for the business – those businesses that do not necessarily

have a formal and professional management structure. The publication

has 3 500 agents with over 80 per cent of the distribution targeted in

Gauteng, but it is also found in Mpumalanga, Limpopo, KZN and the

by michelle sturman BUSINESS MEDIA

Best foot forward

Consumer magazinesABC reportAll figures shown within the Consumer Magazines section are forsubscriptions and single copy sales. The figure in brackets is thetotal circulation figure, including third-party bulk and controlledfree distribution. Some magazines have recently been recategorised by the ABC sofor the purpose of this article, category headers will be used. Category: Business and NewsApril-June 2007Entrepreneur (Mtly) 10 407 (16 604)Financial Mail (Wkly, Fri) 31 127 (33 308)Finweek (Wkly, Wed) 31 559 (35 028)Maverick (Mtly) 8 574 (24 716)AMPS 2007:Finweek HHI: R16 643; ave age 40; 1.7 readers per copy (RPC). Financial Mail HHI: R15 000; 5 RPC

January-June 2007Your Business Magazine (AltM) 12 978

After stagnation in the business media sector, a number of new entries into the market has stirred the pot, upped everyone’s game and

put it firmly back in the spotlight. The TV sector has been shaken with the introduction of CNBC Africa and SABC News International and, to

some extent, Al Jazeera in English. In the print sector, Entrepreneur magazine launched and new newspaper supplements have made their

presence felt. There are also a myriad of online business news and information websites and the introduction of lifestyle elements into

previously staunch business-only editions. All this in the past 18 months or so. What this choice does mean is that it has become easier to

handpick and precisely target niche audiences but spreads advertising budgets more thinly.

BUSINESS MEDIA


Northern Cape.

According to Ryk van Niekerk, editor,

Gauteng Business there are plans in the

pipeline to expand with new editions provid-

ing information pertinent to a particular area.

There are three parts to the editorial content:

daily news, legislation and by-laws in

Gauteng. Secondly, how to expand the busi-

ness, trends, etc, and thirdly, a management

sector dealing with sales and marketing,

labour issues, etc. “Through independent editorial, we tell readers

which are the best products and services, says Van Niekerk. He states

that the fact the magazine is regional is very important as the reader

has news

that directly affects them. Van Niekerk will also be looking closely

at improving the existing website to include more editorial and

interactive features.

Succeed Magazine is also aimed at the SME business sector as well

as corporate management and a huge subscrip-

tion drive over the past year has seen its circula-

tion skyrocket with almost 15 000 paid-for

copies, according to the April-June 2007 ABC

figures. Covering marketing, advertising, brand-

ing, hiring and firing, motivation, etc, the edi-

torial focuses on the growth of formal SMEs.

“We aim for the aspirational market and for

those that want to start their own business; the

objective is to stimulate thinking,” says Wessel

Ebershohn, owner, Succeed Magazine.

Despite the success of Succeed, Ebersohn does, however, feel that

many independent publishers are largely ignored by those in charge of

the media spend. “We would like the agencies to take us seriously;

they tend to ignore the independents in favour of the large media

houses.”

Other magazines within the B2B sector worth taking note of are

CEO Magazine, Leadership and Enterprise Magazine, all of which

have distinct target audiences. Leadership offers high earners, mostly

males, editorial that has a special focus on business leaders and the

economy. CEO Magazine focuses on business management and

Enterprise Magazine focuses on black business leaders and black business

in particular, and is aimed at middle and senior management.

NewspapersOnline is giving newspapers more problems than other mediums, but

newspapers are fighting back as well as embracing online. The

biggest bonus is that on the whole, there is increased interest from

consumers regarding business news. “There is an interest in business

and this is supporting business media. However, business media has

also repositioned itself and now includes a lifestyle flavour that was

never there,” says Paul Stober, editor, Business Times.

The introduction of business-focused supplements is helping to

diversify the sector and introduce new advertising revenues. The Its

My Business supplement, for example, launched into the entrepre-

neurial space and is under the Business Times brand. “It is a clear

indication of the growing business market and although SA scores

low on the entrepreneurial monitor, there is a real sense of people

doing it for themselves,” says Stober.

In the Afrikaans market, Media24’s business publication, Sake, was

relaunched in March under the Sake24 brand, setting off a number of

welcome changes. “The goal is to have a similar product whichever

Afrikaans newspaper is read,” says Charles Naudé, editor, Sake24.

Concentrating on business news and the economy, Sake24 is paving

the way for future generations of business readers by enticing younger

readers. “We are trying to make business news as user-friendly as

possible without lowering the standard as well as focusing on ICT and

new technologies for the youth market. A strong focus is on entrepre-

neurship, which is where it is expected that most young Afrikaans

Business-to-business magazinesCategory: ManagementCape Business News (Mtly) 6 211CEO Magazine (Mtly) 10 560Enterprise Magazine (Mtly) 13 396Gauteng Business (F) 23 244Leadership (Mtly) 5 981Succeed Magazine (11xA) 21 180 – AMPS 2007: HHI: R10 670;ave age 36

NewspapersAll figures shown within the Newspapers section are for subscriptionsand single copy sales. Newspapers carrying business supple-ments/sections are included for the purpose of demonstratingpotential circulation figures for business news. The figure in brackets is the total circulation figure, includingthird-party bulk and PMIE.

Daily newspapersApril-June 2007Beeld 99 266 (105 184) – Sake24Die Burger 83 967 (90 927) – Sake24Business Day 40 778 (41 858)Cape Times 47 252 (51 428) – Business ReportThe Citizen 73 637 (74 037) – Moneyweb BizThe Mercury 36 342 (43 129) – Business ReportPretoria News 22 946 (28 140) – Business ReportThe Star 153 909 (168 977) – Business ReportVolksblad 27 954 (28 987) – Sake24

Weekend newspapersThe Weekender 10 081 (10 204)

AMPS 2007 report:Beeld HHI: R14 308; ave age 44; RPC 4.7Die Burger HHI: R11 331; ave age 42; RPC 4.9Business Day HHI: R20 159; ave age 39; RPC3.1Cape Times HHI: R11 090; ave age 43; RPC 5.4Citizen HHI: R11 740; ave age 42; reader per copy RPC 7.4The Mercury HHI: R14 581; ave age 43; RPC 5Pretoria News HHI: R11 991; ave age 38; RPC 6.1The Star HHI: R11 818; ave age 39; RPC 4.8Sunday Times HHI: R10 469; ave age 37; RPC 7.1Die Volksblad HHI: R12 070; RPC 4.7

BUSINESS MEDIA


readers will be,” says Naudé.

The newspaper industry is still in a strong position in terms of circu-

lation, readership, advertising and quality of reader. “Business Times

readers are educated and moneyed, in top or senior management,

with six in ten male readers and six in ten black readers. BT also has a

phenomenal exclusive readership with 670 000 reading no other busi-

ness publication,” says Lynn Allcock, trade marketing manager,

Johncom Media Division (Newspapers). Sake24 has high LSM readers,

wealthy readers. “We have an exclusive and lucrative readership with

national representation,” says Naudé.

Alec Hogg’s Moneyweb was rebranded as Moneyweb Biz in The

Citizen a year ago, although it has supplied information for the past

four years. “The Citizen is a marketing exercise and we have five daily

pages. We also cover KZN through the Weekend Witness and in the

southern Cape we supply editorial to the George Herald and

Mosselbay Advertiser,” says Hogg.

Business Day and Business Report remain stable, while The

Weekender has doubled its circulation in the past year – we’ll see how

it does in the next few ABC reports.

TVThe TV sector has heated up in the past year. Firstly, we had the intro-

duction of Al Jazeera offering a completely different insight into news.

Next we had the launch of CNBC Africa to huge fanfare and then the

SABC decided to head into the same territory with the launch of SABC

International. On top of this, there is business news offered on Sky

News, SABC 3, eTV, BBC World, CNN, Bloomberg and Euro News,

along with News24 Alert. Finally, there’s the dedicated local channel,

Summit TV. Going forward with the announcement of four more pay

TV licences, there’s bound to be even more business channels and

programmes to choose from, or at the very least be able to wrangle

deals across different stations for the same channels.

Susie White, sales and marketing director, CNBC Africa, sees the

new licences as an opportunity for its mostly live channel. “We are

lucky in that we came into the market with an established brand,

although we still have to prove our audience,” says White. CNBCA is

looking at the SABRE research, and White says that CNBC Europe had

185 000 viewers weekly when it took over. CNBCA has kept some of

the European content, has included information on the Lagos and

Nairobi stock exchanges, and is due to go terrestrial in Kenya from the

end of October with an available audience in the region of 15 to 20

million. Similarly, in Nigeria, terrestrial TV broadcasts several hour

parts, offering regional buying.

White says that wherever a stock exchange and transparent govern-

ment become available across Africa, CNBCA will look at opening

bureaus. With the only video wall on the continent, CNBCA has all the

techno gadgets and gizmos to spruce up its programming. “We have

our own dedicated sales team and half of our business comes from

advertisers that have never been on TV. We can provide advertisers

with an on-air strategy as we do all the production,’ says White. “The

technology that CNBC Africa possesses is first-rate so the graphics are

superb,” says Hogg – Moneyweb has a daily 30-minute slot, Power

Lunch, on CNBC.

Summit TV, on the other hand, is continuing to focus on providing

South African business and financial news and has introduced new

programming and interactive technology for further viewer engage-

ment. “Our new flagship daily markets show with Bruce Whitfield and

Stuart Theobald is a huge hit and our first Afrikaans programme, Op

Die Keper, went down well so we’ve introduced a daily Afrikaans

strand just after 6pm – Sake met Summit,” says Vernon Matzopoulos,

channel head, Summit TV.

Summit TV now offers live viewer call-ins, SMS comment and vote

lines on the shows with content on additional platforms. “You can

watch Summit on Vodacom’s 3G network and MultiChoice’s DVB-H

platform. You can watch Summit from anywhere in the world via IPTV

and M-Net’s kuduclub.com. We also supply news, finance and other

info via SMS, WAP and MMS to cellphones through MTN Loaded,”

says Matzopoulos.

RadioClassic FMShow: The Classic Business Day Show (Mon-Fri 6pm-7pm)Presenter: Lindsay WilliamsRAMS Aug 07: 171 000 P7DAMPS 2007: HHI: R16 973; ave age: 49

Talk Radio 702 Show: World at 6Presenter: Bruce Whitfield (Mon-Fri 6pm-7pm)RAMS Aug 07: 392 000 P7DAMPS 2007: HHI: R14 894; ave age: 49

SAfm Show: Market Update (Mon-Fri 6pm-6.30pm)Presenter: Siki MgabadeliRAMS Aug 07: 544 000 P7DAMPS 2007: HHI: R12 336; ave age: 44

Radio 2000 Show: The Moneyweb Power Hour (Mon-Fri 6pm-7pm) Presenter: Alec HoggRAMS Aug 07: 262 000 P7DAMPS 2007: HHI: R12 528; ave age: 44

RSG Show: RSG Geldsake met Moneyweb (Mon-Fri 5pm-6pm)RAMS Aug 07: 1.8 million P7DAMPS 2007: HHI: R9 658; ave age: 48

Kaya FMShow: part of the Mashashaba Show (Tues 8pm-8.30pm)Presenter: Andrew HoneyRAMS Aug 07: 1.063 million P7DAMPS 2007: HHI: R7 753; ave age: 36

Community radio featuring The Moneyweb Power Hour:All RAMS Aug 07 P7D:Fine Music Radio: 29 000 1485 Radio Today: 10 000 Radio Rippel: 30 000East Rand Stereo: 36 000

BUSINESS MEDIA

Summit TV is also trying to lure younger viewers through initiatives

such as the Young Entrepreneurs series and ‘Learn to Trade Shares’

competition which has attracted 9 000 active online players.

RadioRadio has always been a hotly contested medium for the business

media sector. Hogg’s Moneyweb has done the rounds and is now

comfortably settled at Radio Today, Radio 2000 and RSG which,

according to Hogg, has 500 000 Afrikaans listeners. Moneyweb has

also expanded to include business news on Lotus FM, Ripple Highway,

East Rand Stereo and Fine FM. “We wanted to move into African lan-

guages and as such started on Lesedi FM, but unfortunately it didn’t

work out,” says Hogg.

According to RAMS, Talk Radio 702’s listenership has been growing

steadily over the past year increasing by more than 100 000. Radio

2000 and SAfm have also increased listenership in the past year

although specific business programmes figures are unavailable.

Radio is a great platform for integration, and interests other media

sectors, including magazines. Hasenfuss hasn’t ruled out launching on

the airwaves either, saying that Finweek has the resources to start-up

its own radio show; “perhaps once the relaunched Fin24 is bedded

down, we will revisit our radio options.” Finweek wouldn’t be the first

magazine to move to radio, Entrepreneur is already on-air with Kaya

FM. “On radio, we showcase success stories and information on fran-

chises as news is now content on-demand, so the Internet, TV or daily

radio business programmes serve this purpose,” says Honey.

Talk Radio 702’s World at 6 show with Bruce Whitfield offers 80

000 listeners and 28 000 CapeTalk listeners for the show (March-June

07 RAMS). “The show is carefully constructed not only to provide the

biggest, most important business stories of the day, but also eyewit-

ness news bulletins, up-to-the minute traffic reports and top sport bul-

letins,” says Whitfield. Audience interaction is made quicker and more

interactive with the introduction of SMS on top of the regular calls,

which gives greater insight into stories that the programme may never

have had, says Whitfield.

OnlineOnline is where it’s at. The business person has changed and everyone

wants news now, which is what makes online so exciting. Most maga-

zines have a website, and while some excel, others need to up their

game. Most newspapers have realised the importance of the Internet

and are surpassing most magazines’ efforts and becoming more inter-

active by the day. Radio stations have websites, although the business

programmes rarely get their own dedicated section, so there’s still

work to be done. TV channels offering business news often have inter-

active content or at least good content. There are many local news

sites offering business news, all of which compete with business

media for eyeballs. Then there’s Moneyweb which has built its busi-

ness model on business news online and expanded outwards from

there. “The value of business information is in how fresh it is and all

our brand extensions are designed to push people back online to the

Moneyweb website,” says Hogg. Moneyweb is also currently expand-

ing into other online arenas, namely education, politics, real estate

and is also looking at sport and tax.

As news is now wanted more immediately, print is at the biggest

disadvantage, and as more South Africans move online, it’s only going

to get tougher. Having said that, some newspapers have caught up

and are now putting more immediate news online with deeper analy-

sis in the print editions. “We want to be a business news service so

online we have breaking news with exclusive news held until the

paper has been printed,” says Naudé. Sake24’s website has grown

substantially in the past year, albeit from a relatively low base and,

according to Naudé, a mobile service will be live by the end of the

year, with podcasts eventually added.

Business Times’ Stober is simply not going to compete with online

but acknowledges that success lies in multimedia products, which are

put together properly and can grow together. The launch of Johncom

Media’s The Times, has led to a reworking of its online product, with

the Sunday Times (including Business Times) incorporated into the

daily’s website. Breaking business news is posted on the website along

with multimedia products such as podcasts and blogs. “We have

entirely separate newsrooms, however, we are constructing a 24-hour

news service, so The Times can carry company results and live feeds on

the same day. On Sunday, we can do the in-depth analysis,” says Stober.

Summit TV has focused on a different tactic – to move its branded

content through other media leaving its website for programmes and

information. “We’re now of the view that the business audience is

wired for video – so expect some changes,” says Matzopoulos. Plus,

you can watch Summit TV through IPTV.

On the magazine side, Finweek recently relaunched its website,

fin24.co.za, and more initiatives in the pipeline include a trader’s

forum, new investment tools and new look blogs. According to

Hasenfuss, the podcasts are doing well “The success of the

podcast hinges on the interviewee giving extra insight or dropping a

hint or suggestion that readers may find useful and overall I am

satisfied with the progress.” Mobile content for the website is in the

pipeline. An extra bonus is the deal between Fin24 and McGregor

BFA – Fin24 (Finweek, fin24.co.za) focuses on business and financial

info on consumer-orientated platforms, while McGregor BFA

focuses on the corporate market. Expect some interesting initiatives

from this partnership.

Entrepreneur magazine is rolling out its third-generation website

early next year and there will be an increasing amount of unique web-

only content available as well as editorial from the magazine.

Advertising on the site has just been made available as well. �


The following figures are from the Online Publishers Association and onlytake into account actual business websites (ie not those from news siteswith business info). All results are Q2 2007Sites with local traffic:

Unique browsers (ave) Page impressions (ave)Fin24.co.za: 276 308 2 187 000Business Report 125 031 519 377Moneyweb 76 443 1 389 409 Business Day 70 442 785 206

Sites with local and international traffic:Unique browsers (ave) Page impressions (ave)

Fin24.co.za 394 987 2 617 679Business Report 210 117 724 553Business Day 150 000 1 131 734Moneyweb 136 696 418 053


If you’d asked a consumer a year agowhat a carbon footprint is, they’d probably

have thought it is something to do with not

wiping your feet thoroughly before traipsing

through the house. Not now. There’s been a

massive change in their environmental

perception over the past year and it is

increasingly affecting consumers’ behaviour.

Ethical consumers have arrived and ignoring

them could be detrimental to your brand.

In this article we explore what ethical

consumerism is and how it manifests itself as

four distinct territories that we can relate to.

Eco-consciousness in the media is at an

all-time high; global and ethical issues are

quickly becoming mainstream; and in the UK,

for example, Marks & Spencer’s carbon

neutral five-year plan has stolen a march on

its competitors, grabbing the first-to-market

advantage.

There has never been a more appropriate

time or urgent need to debate how the

marketing community should respond to

emerging behavioural issues that concern not

just the individual consumer, but broader

cultural and environmental issues. Doing

ethical marketing right and staying emotionally

connected with your consumers will create a

springboard for brand and business growth.

The urgency-lies in the need to do it before

consumers are so far ahead of the game that

they leave your brand behind.

To talk ethical, you need to be ethical –

‘greenwashing’ will eventually peel off to

reveal something the consumer finds

unpalatable. There is no overnight fix; this is

a long-term journey.

Already, more than two thirds (68 per

cent)[1] of US and European consumers have

boycotted a food, drink or personal care

product on ethical grounds, and UK companies

lost US$2.7bn of sales through consumer

boycotts in 2003[2]. Now, 70 per cent of

UK consumers say they’ll deliberately avoid

buying goods and services from organisations

and brands they think are unethical[3] and 85

per cent claim to be interested in ethical

issues[4].

So what are ethical issues? They are both

environmental and social concerns. Ethical is

not a consumer word as such, it is a catch-all

for many different everyday choices: from

‘green issues’ such as recycling and fuel

consumption, through to social issues such

as giving to charity. But while it’s about the

‘we’ rather than the ‘me’, this doesn’t mean

making an ethical choice is about sacrificing

or ignoring your own needs as a consumer –

you just won’t drink Fairtrade coffee if it

tastes bad.

Consumers are becoming more affluent,

and making ethical choices can be seen as a

natural progression up Maslow’s hierarchy of

needs toward the pinnacle through self-

esteem to morality. Some people talk of this

as the age of mature capitalism. Importantly,

from a corporate point of view, whereas

many believe that consumers won’t pay more

for ethical products, almost 50 per cent claim

that they would pay at least five per cent

more and almost a quarter would pay 10 per

cent more[5].

People are increasingly turning to what

they can control. One important area is in

their personal consumption choices. But all

consumers do not respond in the same way –

ethical consumers are not homogeneous. So,

as with any brand initiative, it is essential to

have insight into the potential audiences –

the differences and similarities that could

open up several different directions for the

brand. Ethical consumerism varies by sector,

but with our new research the key finding is

that, regardless of what the ethical issue is,

certain people have a tendency to respond in

a certain way.

This is more about people’s natural

responses and reactions. It is based on

their values and it helps us to understand

and predict their potential response to things

like climate change, which is now passing a

tipping point.

Using our semiotics expertise and practical

experience, together with proprietary/bespoke

quantitative research into certain categories,

we have found ethical consumers fall into

four basic typologies – two internalising their

reaction, putting themselves first, and two

externalising it. These four typologies then

by Alison Tucker EXPERT OPINION

Ethical consumers underthe microscope

Marketing to theethical consumer, ethicalmarketing, isn’t aboutcharity, it is about revealingthe unmet latentcommercial potential formore responsible brandsand designing marketingprogrammes to seize thispotential.

“

”

EXPERT OPINION


split across another axis (see Fig 1), as to

which part of the ethical umbrella most

concerns them, environment or social factors.

The four categories themselves are: Healthy

Awakening – often new mothers seeking

healthy alternatives for their family (the

Me/Social quadrant); Empathising – people

making small gestures to show they accept

their social responsibilities (the Others/Social

quadrant); Ethical Badging – often inspired by

celebrity and high profile ethical brands, which

they use to display their awareness of global

issues as visibly as possible (the

Me/Environmental quadrant); and finally,

EWOL – those choosing an ‘Ethical Way of

Living’, where ethical concerns inform all their

choices (the Environmental/Others quadrant).

As we’ve said, the personal values of the ethi-

cal consumer affects their brand decision. So,

it’s important to understand the characteristics

of each typology in more detail.

Healthy awakeningHealthy Awakening is the behaviour of a new

generation of mums and others who may not

have previously had health issues on their radar

– but who, with the plethora of health and

obesity scares, and the strong media focus, be

it Jamie Oliver’s School Dinners or the large-

scale condemnation of marketing to children,

have woken up to the issues. They feel respon-

sible for the health of their whole family and

are now scrutinising labels, increasingly buying

organic (Tesco experienced 30 per cent growth

in organic sales last year[6]) and choosing super

foods to maximise mind and body potential.

Importantly, this new curiosity has bred a

greater awareness of the food chain and the

interrelationship between what we eat and the

state of our planet. They opt for the likes of

Innocent Smoothies or, locally, Woolies’ organ-

ic range, which have environmental impact at

the heart of their brand promise.

EmpathisingEmpathising, formerly polarised between the

behaviour of militants or local community do-

gooders, has become a broader church. Many

consumers have moved beyond a sense of

guilt to identification and solidarity with others

less fortunate than themselves. These

consumers feel empowered by taking positive

action to help people by giving to Oxfam, or

buying Fairtrade or Duchy Originals, or

shopping with their Save the Children credit

card. Local community efforts are also part of

this. Members’ small, but constructive steps

reinforce their sense of personal integrity.

Ethical badgingEthical Badging is about buying ethical

because it makes you feel chic, trendy and

noble. The brands and products ethical badgers

choose are typically of excellent quality;

they are often more expensive, but these

consumers believe they are worth it. Brands

that appeal to them are the likes of Green and

Black’s, organic Fairtrade Maya Gold chocolate

bars, and the Ethletic: a Converse-inspired

shoe made with environmentally certified

materials. They shop with their Red Amex

card, promoted by Bono, which gives a

percentage of each purchase to the Global

Fund to fight Aids. These consumers want to

make a statement and be seen to be making it.

EWOLThe Ethical Way of Life behaviour is perhaps

the most complex touching on many aspects

of consumers’ everyday lifestyles. It begins

with an increased sensitivity to the environ-

mental impact of personal actions and then

transforms into behavioural changes. They

begin by turning off the lights, recycling,

minimising water usage and then take it

further, integrating their carbon footprint into

their mindset, seeking out alternative energies

etc. They like brands such as Worn Again,

which makes footwear from recycled materials

and responsibletravel.com, which offers envi-

ronmental tourism. They’ll get their fruit and

veg from Organic Connections and power

from the likes of Ecotricity or Green Energy UK

– a green reusable

energy supplier with a unique share scheme

where consumers become partners in

green investments.

Having identified these groups, the next key

factor is finding out how brands can commu-

nicate and interact with them. As an example,

let’s look at what strategies a utility company

could use to address the four typologies and

their specific value responses. In reality, brands

will need to concentrate their efforts on a par-

ticular sector, the one that best fits their brand

profile. But assuming that decision hasn’t

been made:

Utility marketing strategiesbased on these four typologies;

Healthy awakeningThis is perhaps the toughest typology for a

utility company. The brand would have to go

down the route of long-term health benefits

for the consumer and their family. Being more

conscious of how they use energy is a benefit

to the environment, this in turn impacts on

such elements as water quality and, ultimately,

the food supply chain, bringing it back round

to their family. Improving the environment

also means a better future for their family. A

positive health message would be key.

EmpathisingThe brand would need to talk about social

injustice, such as how affluent people have

access to many resources while less fortunate

Fig 1


people have none. The message could be

about rebalancing a community’s resources,

talking about reducing usage so that the

haves are able to help the have-nots. Eskom

is currently employing this kind of tactic in

its communications.

Ethical BadgingOne easy option is to get endorsement from

a well-known or outspoken ethical celebrity.

Strong branding would also be very

important for this sector as well as a heavily

marketable message. Ethical Badgers care

about the environment, but it’s secondary to

hijacking the kudos they can gain surrounding

ethical issues.

EWOLThis is perhaps the typology most catered for

at the moment, though mostly inadvertently.

The strategy here would be about turning

things off, half filling a kettle, making sure

they’ve got electricity efficient light bulbs

and buying from a renewable supplier as a

way of life. It’s about doing their bit to help

the environment.

As mentioned, from a brand point of view,

a company needs to focus on one of these

typologies and develop its strategies accord-

ingly. The choice of which typology needs to

be informed by what the consumers in your

particular category are likely to view as the

most logical path for the brand that is the

path that is likely to elicit the best response

and stamp the brand’s ethical authority on

the market.

Your message will need to come across

clearly. So, if your company has 50 ethical

initiatives, we believe it makes sense to

concentrate on communicating just one or

two that have the best fit with the brand,

and will be the most motivating to consumers.

It’s almost a back-to-basics approach

with factors such as first-to-market and

differentiation being extremely important.

Generally, we’ve found that most companies

are looking at EWOL consumer actions, but

very few are putting across a holistic positive

message or tapping into empathy issues. So,

given the wide range of brand sectors and

the four typologies proposed here, there is

plenty of scope for differentiation.

We also believe that brands need to strike

the right balance between what the company

is doing and what it is asking the consumer

to do. It has to be a partnership. The company

has to be seen to be doing something as

well. There is a clear acknowledgement on

the part of consumers that big business has

an important role to play in the ethical arena.

In our study[7], 30 per cent of consumers

rate businesses ahead of the government

as having the most responsibility for

change. This underlines a simple truth that

consumers understand intuitively; if

business is running the world, then it needs

to be held accountable.

What this means is that any change has to

be real, a company must be aligned with its

brand values, from top to toe, from product

to people. This is not about radical overnight

change, however: it is important to be realistic

about the degree of change that is achievable

in the short, medium and longer term. In our

opinion, a good way forward would be to

develop a clear ethical strategy and make sure

you communicate your progress that is be

transparent and honest about weaknesses

that still need to be addressed and objectives

that are yet to be achieved. We believe it will

be a rewarding option to talk openly to

consumers about the challenges you are

facing and how you are trying to address

them. (Though this doesn’t necessarily have

to be in your primary communications – web-

sites can be a good forum for this.) Many

larger companies are now engaging with

their critics and creating stakeholder panels to

help them as they move along this path.

And remember, while we are talking about

fundamental changes here, we are also

fundamentally talking about growing your

business, the key marketing goal. Marketing

to the ethical consumer, ethical marketing,

isn’t about charity, it is about revealing the

unmet latent commercial potential for more

responsible brands and designing marketing

programmes to seize this potential.

Can you make money by being ethical?

Companies which have focused on ethical

marketing, such as American Apparel, Toyota,

Marks & Spencer and many others, have

delivered better, not worse financial returns

as a consequence. So the response to that

question must be a resounding ‘Yes’.

1 Datamonitor 2006

2 The Co-op index

3 Datamonitor 2006

4 Added Value Branding for Good Research



7 Added Value Branding for Good Research �

EXPERT OPINION

Alison Tuckerdirector, Added Value (031) 207 [email protected]


Companies that want to maximise theirreturns from e-mail marketing should in most

cases build up their own e-mail databases

rather than buying lists of addresses from

third-party vendors.

Companies that invest the time and effort in

creating an e-mail database of users that want

to hear from them will generally experience

better results than those that buy a list from a

third party. The obvious risk involved in buying

an e-mail database from a third party is that

most of the users on the list will not be expect-

ing to receive marketing e-mails from your

company. Many will dismiss your e-mails as

spam, which could damage your brand.

In addition, some recipients might report

unsolicited marketing e-mails to their ISPs as

spam. ISPs could, in turn, block the domain

that the e-mails originated from, with the

result that the company will struggle to send

even legitimate e-mails to its customers.

Many companies think that buying an e-

mail database from a third party is a shortcut,

but this isn’t always the case. If you buy a list,

you may still face the arduous task of having

to sort through it to find the users that you

want to reach and ensuring that the e-mail

addresses are all still valid and up to date. By

contrast, a company that builds its own e-mail

database can target the people that it wants to

communicate with and, perhaps even more

importantly, build up a list of recipients who

are interested in its marketing messages. This

translates directly into higher return on invest-

ment from the e-mail marketing programme.

Companies often think that they can lever-

age an existing database that contains current

e-mail addresses from clients, events and sales

leads. However, they should realise that their

clients have not explicitly given them permis-

sion to use this information for marketing pur-

poses. These lists will also need to be checked

against the DMA’s Do Not Contact Me list.

Following a double opt-in process is therefore

recommended – first encouraging customers

and prospects to sign up to receive marketing

e-mails through the corporate website, online

advertising or offline channels, and then send-

ing them an e-mail requesting them to confirm

that they are interested in receiving marketing

e-mails. It is common to see a 30 per cent

drop-off in registrations after the confirmation

e-mail, but those that do confirm are genuinely

interested in what your company has to say

and establishing a relationship with you.

Companies that invest in creating their own

databases are also laying the foundation to use

e-mail as a sophisticated customer relationship

management mechanism. With a database of

customers and prospects it regularly interacts

with, a company can start to communicate

with its audience in a more personalised man-

ner. Companies that create and maintain their

own e-mail lists need to be willing to invest the

time and effort to ensure that their database

remains up to date as most users will not

inform you of a change in personal details or

e-mail address.

A good e-mail system will be able to track

whether a person’s e-mail address is still live

and whether they are opening and interacting

with the e-mail. If used in conjunction with a

preference centre, then the maintenance of

customers’ details is automated. In terms of

frequency, this will depend on the company’s

e-mail strategy and the dependency on the

data in terms of the core business and fre-

quency of interaction. For example, an online

casino has a very different timeline to a vehicle

manufacturer. By using preference centres to

capture information about its customers, a

company is able to deliver relevant, customised

and segmented content that caters to individ-

ual needs. This customisation allows the com-

pany to deliver targeted communications in a

streamlined and automated manner without

needing to personalise e-mails for each cus-

tomer manually.

It is recommended that companies out-

source the technical aspects of maintaining

and managing the database to a specialist so

that they can concentrate on strategy rather

than technology. They should also automate as

many of their e-mail marketing processes as

they can to reduce the possibility of human

error and free up the marketing team’s time.

A good online marketing services firm

should be able to help a company to manage

all technical aspects of e-mail marketing from

database management through to data

transformation, systems integration, report

automation and e-mail distribution.

E-mail marketing should no longer be about

reaching as many people as possible with a

bulk message, but rather about establishing

and growing a relationship with each

customer or prospect. It gives you the

opportunity to increase interactions with

customers and prospects, allowing you to

consolidate relationships. �

Richard Mullinsdirector, Acceleration (011) 706 [email protected]

EXPERT OPINION by richard mullins

E-mail marketingshould no longer beabout reaching as manypeople as possible with abulk message, but ratherabout establishing andgrowing a relationshipwith each customer orprospect.

“

”

Build your own e-mail list


by fulvia becatti CONTENT CHAMPIONS

Best reality content:Survivor SAIt’s almost a case of who doesn’t watch Survivor SA? With huge audiences

tuning into the programme (Survivor SA 2006 drew in an average of 1.254

million viewers, according to Transmit 3 September-26 November 2006 fig-

ures; the first episode of the show was the most watched in the history of

M-Net, with more than 1.3 million viewers). This is reality TV’s toughest

game, with a lucrative prize that demands a lot from contestants. “The phys-

ical toughness plays a part in revealing the complexity of human behaviour

and mental reasoning that is unpredictable and sometimes shocking. The

production is also one of the most demanding as crew and cameras must be

ready to roll at any moment of the day. All these factors make it one of the

most intense reality shows ever to be produced,” says Pierre Cloete, brand

manager, Survivor SA.

A website offers

fans a game of

Fantasy Survivor,

downloadable con-

tent, the latest news

and info, competi-

tions and interactive

offerings. Plus, the

innovative product placements and sponsorships have changed the way that

local brands engage with reality content. “The sponsorship opportunities

were purposefully limited to food, hygiene and drinks other than water.

These elements become important issues for Survivor contestants as they are

deprived of these necessities. This created a great opportunity for the 2007

sponsors,” says Henry Meyer, project manager, Oracle Airtime Sales.

Best sports content:SuperSportSuperSport covers everything from football,

rugby and cricket, to extreme sports (competitive

skateboarding and surfing), to horse riding and

boxing. Many of the sports offered are exclusive

and now include the major coup of the PSL. An Update channel, including

highlights, extra interactive content and more at the push of a button, sup-

ports programming. Major games and matches are broadcast live, drawing

in huge audiences with interviews and expert commen-

tary. The advertising and programming sponsorships

allow advertisers to really target specific consumers

according to the sports that capture their passion (and in

some cases, boost their brand share in the process). The

website lends SuperSport all the benefits of an online

platform (interactivity with sports fans, advertising opportunities, the

means to disseminate information, schedules, interviews and commentary

with ease).

Best sports magazine:KickOffKickOff, now in its 13th year of publishing, offers the best of football (inter-

views, highlights, fan feedback and more), presented in a glossy magazine

aimed at the male football fan. It was voted the sixth best consumer maga-

zine in the Sunday Times Top Brands survey, and has 1.8 million readers every

two weeks. The mag has seen a dip in circulation, but associate publisher,

George Dearnaley believes this is attributable to the increase in competitive

media in their environment. He maintains that readership has remained high.

“With the 2010 FIFA World Cup around the corner, everyone is trying to

find a football angle. With the rise of new media, and free soccer supple-

ments in some of the newspapers, we have lost out on around five per cent

of our total print circulation, although a decline in print circulation is true

across a range of black market maga-

zines,” says Dearnaley. “But the KickOff

‘footprint’ in the black male market

continues to increase. Our latest

website stats show that we had over

90 000 unique users on site for the

month of August!”

According to figures published by

the Online Publisher’s Association,

kickoff.com is the fourth most popular

website among South African men, with 79 per cent of the total online

male audience. In August 2007, the website generated 1 953 823 page

impressions from 93 104 unique users.

Best women/family interest magazine:Move!The magazine’s content is obviously meeting the needs and

interests of the emerging middle-class black woman. Since its

launch in February 2005, Move! has grown its circulation fig-

ures rapidly, and now finds itself at 107 719 (ABC

April-June 2007) as one of the biggest consumer titles in

the country. Content includes fashion and health advice,

recipes and home decor articles, success stories, reader

advice and more.

And the winners are...

TV

Marketing Mix has chosen the Content Champions across various media categories. The champs arethose media which have got their content mix right for their relevant target audience. Where thecompetition was tight, secondary factors, such as audience ratings or circulation figures were lookedat. For circulation figures only, subscriptions and sold copy sales were used.

Magazines


Best men’s magazine:ZOO Weekly ZOO Weekly delivers the right content mix, in the

right way, to its teen and 20-something male read-

ers. Growing circulation testifies to the winning for-

mula sitting third in the category (not including

Popular Mechanics) with 15 655 domestic unique

browsers and 230 949 domestic page impressions

to the website. The content covers everything

from new cars, jokes, gadgets, women, oddities etc.

“Because ZOO’s readers are active, technologically

switched-on members of the information generation, their

level of interaction with zoo.co.za is extensive. ZOO’s read-

ers love to interact, submitting pictures of themselves to

the hugely popular ‘Inbox’ and ‘Eish!’ pages of the maga-

zine, and registering on zoo.co.za and leaving comments or

submitting stories,” says Margot Bertelsmann, ZOO

Weekly/Weekliks editor.

Best general interest magazine:TV PlusTV Plus is so much more than just TV, this mag delivers

everything from crosswords, gossip and interviews with local

soap stars to the ultimate TV guide. It is available in both

Afrikaans and English, and even though circulation figures

have taken a dip, this magazine remains a force to be reck-

oned with. The circulation losses are due to the mag’s switch

from a fortnightly to a weekly publishing schedule; according

to editor, Wicus Pretorius, the decline mirrors that which

resulted when the mag switched from monthly to fortnightly,

and it reflects the industry norm. “As previously, we will rebuild

the circulation. Our readers are in the habit of buying the mag-

azine every two weeks, so it will take time to change this. Plus,

the economic situation at the moment means that people

think twice before buying a magazine every week,” says

Pretorius. He adds that the magazine continues to cater to TV

fanatics, who watch about 25 hours of TV every week. “In

one sense, it’s a mass market magazine. But in another, it’s a

niche magazine,” says Pretorius.

Best Afrikaans magazine:WegWeg is the travel and outdoor magazine for the informed and travel

loving. It highlights the outdoors, while also giving readers informa-

tion about creative (and affordable) travel destinations in and

around SA for campers, hikers, caravanners and walkers, as

well as 4X4 lovers. Photographic portfolios paint the best of

SA’s outdoors, while product reviews inform. Interesting

supplements and special issues add reader (and advertiser)

value, with growing circulation figures to prove it.

Best youth magazine:National Geographic KidsNational Geographic Kids has taken a broad spectrum of top-

ics and made them engaging for the youth (with competi-

tions, special features, short snippets packed with fun facts,

etc). It covers science, animals and nature, current events, cul-

tures from around the world and technology, among others, so

it appeals to just about every kid. NGC educates while it

entertains, and encourages reader interaction. An Afrikaans edition

extends readership even further. Reader events add value, and the

Loerie Award for its illustrated advertising lends credibility. Since

its launch in June 2004, the magazine has grown its circulation

in a very tough category that is not only competing against

each other but against the Internet.

CONTENT CHAMPIONS

Best weekly newspaper:Soccer LadumaSoccer Laduma takes the country’s biggest sport to heart, delivering local, regional and international soccer news on a

weekly basis to a growing number of readers. It includes the latest news from all the local and international clubs, player

and team interviews, schedules and match information. The paper is currently relaunching its website with a promise of

more editorial and interactive content. Its uncompromising editorial stance sees this paper just keep on growing.

Best daily newspaper:Shared between the Daily Sun and Isolezwe. The Daily Sun reaches the blue-collar worker with perfect aim and is the

highest selling daily as a result (the latest ABC figures place it at 488 841

copies). The paper is written in a style that speaks directly to this market,

while the content includes community news, gossip and scandal, sport and

entertainment. There is no other paper that reaches this market with such

authority and understanding.

Meanwhile, Zulu daily Isolezwe is

reaching an ever-widening readership

as it enjoys high brand affinity,

and is giving back to the community

that reads it (newspaper

salespersons are employed by the

paper as area distribution

managers, for example).

Newspapers

CONTENT CHAMPIONS


Best newspapersupplement:Business Day WantedBusiness Day Wanted is a lifestyle maga-

zine supplement that meets the needs and

interests of the paper’s core readership.

Travel, entertainment, dining, cooking and

films, decor and weekend activities are cov-

ered in a neat, stylish package aimed at the

high-end luxury buyer.

Best weekend newspaper:Shared between the Sunday Sunand City Press.Both these newspapers round up weekend news

(including community news, gossip, entertain-

ment and weekend events, sports and business)

effectively, meeting the needs and interests of

the middle-class black newspaper reader. Content includes community-

relevant news and information, sports roundups, entertainment news and

TV guides, as well as general lifestyle-related material.

Best national station:5FM 5FM boasts a hugely popular DJ

line-up, and has targeted its pro-

gramming to its core, urban lis-

tenership. The music mix is hip

and fresh, with a focus on new

releases (especially in the rock,

hip-hop, R&B, rap and pop gen-

res). Competitions and events add

value and buzz for both advertis-

ers and listeners, and allow brands

to really make waves with listeners. The online platform (complete

with downloadable content, blogs etc) is top class, with DJ blogs

and podcasts, chart lists, competitions and interactive content as

well as community media features.

Best website:Sarugby.com Sarugby.com is the official website for the Springboks and offers the ultimate in rugby content. This

includes local, regional and international rugby news and interviews. Downloadable content includes

the national anthem, Youth Weeks Annual and wallpapers. There is online shopping available as well

as useful links for fans.

Best regional station:94.7 Highveld Stereo 94.7 Highveld Stereo is one of Gauteng’s

favourite stations. The music mix is spot on

(although song repetition is a sore point

for many), the station’s interactive and

innovative competitions, such as The

Fugitive, and promos pull in massive audiences. Content is available via its

website, also offering podcasts, streaming and mobile applications. Highveld

also offers a VIP loyalty programme.

“We bring listeners the hottest music line-up, we showcase and support local

talent and we invest in presenters who are enthusiastic and passionate about

music,” says Ravi Naidoo, 94.7 Highveld Stereo station manager. “94.7 prides

itself on developing and maintaining a close relationship with its listeners. We

strive to bring in the ‘human factor’ in everything that we do,” he says.

Best newcomer:The TimesThis new tabloid is delivered free to Sunday Times subscribers and judging from the content it

should help to attract the younger newspaper readers with interactive, multimedia content

across various integrated media platforms. News includes celeb gossip, recipes and horo-

scopes as well as comics, sports and business commentary, and columns penned by local

experts and comedians. The Times now includes the New York Times insert (formerly housed

in the Lifestyle section of the Sunday Times). �

Newspapers

Radio

Online

Best Newcomer

6 NNovember 22007Sandton SSun, JJohannesburg

Motivating customers and prospects to say good things about you– that’s the trick and that’s how to gain real competitive advantage.

The keynote speaker and Master Class leader is Steve Barton, afounding member of the Word of Mouth Institute in the UK.

ProgrammeWord of Mouth MarketingSteve Barton from the WOM UK explains why WOM is more important than ever, highlighting the latest

trends from the UK and the US and focusing on the key issues affecting WOM marketing.

How to Get Youth Talking about Your BrandsJason Stewart of Instant Grass discusses Seeding – Harnessing the Power of Consumer Advocacy to

generate word-of-mouth marketing for your brand.

Blogs and BrandsThe do’s and don’ts of corporate blogging and how they should be treated as a

dynamic evolutionary extension of the Internet and a platform for really powerful dialogue with clients.

Mike Stopforth, CEO, Cerebra (www.cerebra.co.za)

Appraising WOM ModelsNeil Higgs, director of TNS Research Surveys looks at:

Traditional models of word of mouth

New thinking about how people interact and what this means for marketing models

The Wildfire model (including Black Diamonds)

WOM ShowcaseThe best of the WOM campaigns from the US WOMMA and recent SA campaigns.

WOM AnalyticsEnsuring a measurable and accountable campaign from the start; focusing on the real metrics and identifying

the keys to repeatable success.

Hendrik van Vuuren, director, Millward Brown

WOM Master ClassLed by Steve Barton, with the objective of communicating specific techniques and methodologies to

facilitate your WOM planning.

Briefing: If you are expecting a very different outcome (e.g. conversations rather than response) then you

need to account for this when you establish the brief

Targeting: There is no rate card for ‘influencer’. How you target the right influencers to spread the word

Planning creative & media: Designing ideas to get your brand talked about

Measurement: Creating the systems that can capture amplification rates rather than response rates or

brand ratings... and ultimately proving ROI.

A full day workshop: registration: 7.30am, conference starts: 8am and ends at 4pm.Delegate fee: R2 500 plus VAT, 3 or more R2 250 plus VAT per delegate.Enquiries: Daisy Mulenga (011) 234 7008, e-mail [email protected]

Word of Mouth Marketing Workshop


Sales promotions critique

SALES PROMOTIONS

Title: PS Love is in the AirCompetitionClient: Cadbury’s

Promotional tools: An envelope in

magazines and SMS.

Description: A promotional envelope

was inserted in print publications from

Cadbury’s PS chocolate in time for

Valentine’s Day. The envelope had the

words ‘PS From Your Secret Admirer’

on the front. In the background, in

gold, was a love message. Turn it over

and there were details of a competi-

tion: ‘A message for your valentine on a

sky banner’. Recipients were also

encouraged to use the limited edition

envelope to put a PS chocolate bar

inside it. Details of the competition

were on the back with the entry details.

To win the prize, you had to buy the

chocolate bar and SMS the last three

bar code digits to a cellphone number.

Comments: � Nice idea � It could have been better geared to

increase sales to males prior to

Valentine’s Day� The Valentine’s message in the sky

was good. Hope they got good PR

out of it� Great creative with the striking enve-

lope and clear details on the back for

what to do and how to enter.

Title: Prevage EyeClient: Vida e caffé and Elizabeth Arden

Promotional tools: cup tag and SMS

Details: Vida e caffé together

with Elizabeth Arden promoted

the new anti-ageing moisturising

treatment ‘Prevage Eye’ on

coffee cup ‘ear tags’. Customers

received their cappuccinos with

this tag attached to the ear of

their coffee cup. The front of the

tag promoted the treatment

using the same creative as its print ads. On the back of the tag were SMS

competition details to win one of four product hampers.

Comments:� Nice graphics but call to action ‘WIN’ is lost in body copy. � I trust consumers would read the tag if they were bored with their date.� Choosing the right venues increases the hit rate to the target market

making it very cost-effective.

Title: Koo Donation CanClient: Koo

Promotional tools: creative stuck

on Koo tins on-shelf

Details: A sticker mimicking the top

of a donation tin was stuck on top of

tins of Koo fruit. As a shopper took

the can from the shelf, it caught their

eye and they would read the accompanying text, which explained

that Koo was donating a percentage of sales of tinned food to Unite

Against Hunger.

Comments:� Simple, brilliant communication explaining to existing buyers what Koo

is doing to help � Great PoS would have furthered the message to ‘would-be’ buyers� Certainly eye-catching for those doing their grocery shopping.

The campaignsMarketing Mix’s definition of a sales promotion:A sales promotion is designed to motivate a short-term call to action which adds value andpromotes a transaction between a consumer and a brand.

CriteriaAll sales promotions are based on eliciting a response of ‘I wishI’d done that…’ The promotions are viewed from a consumerpoint of view that is without information on the brief, agencyobjective or results. Marketing Mix is also looking for innovativework that has broken new ground.

Title: Thank YouClient: Bokomo Weet-Bix

Promotional tools: On-package

details, PoS, limited edition tins, print

and TV ads.

Description: Bokomo replaced the

Weet-Bix name on its cereal packag-

ing with the words ‘Thank You’ in the

same font and style as the Weet-Bix

logo. For every pack of Bokomo

Weet-Bix sold from April to

September 2007, Bokomo donated

7,5 cents to Childline, up to a

guaranteed R1 million. The Childline

logo and telephone number is

available on every Weet-Bix pack. The

‘Thank You’ campaign also had a

competition element, with consumers

standing a chance of winning one of

three Citroën C4s, Sony PSP Value

Packs, thousands of rands in cash

and Bokomo hampers.

Comments:� Great ‘out-of-the-box’ thinking � If going the empathetic route with

Thank You, donations to charity

etc, on one hand, and appealing

to the consumers’ soft emotional

side, DO NOT get greedy with a

commercial incentive to sell more

products – the ‘Win a Citroen’

competition, under the same ban-

ner. The consumer gets mixed mes-

sages and the brand-building

opportunity is missed. Leave it a

while and charge for a separate

concept.If you think your latest sales promotioncampaign warrants a look by Marketing Mix,please send your campaign details to:Michelle Sturman1st Floor, North Block, Bradenham HallMellis Road, RivoniaOr e-mail: [email protected]


Every month poses interesting CRM scenariosand in my daily experiences with clients, family,

travel and staff, I collect anecdotal information

that helps the business to grow and enables us

to ‘disperse’ relevant and significant strategic

thoughts to everyone.

Let me start with government policy. As we

all know the National Credit Act has had a

direct impact on our ability to spam South

African citizens and, with the Data Privacy Bill

being the topic of the day, we all need to be

very cognisant of buying lists or even using our

own lists to communicate. We sit with clients

and pore over application forms – are they ask-

ing the right questions; what if a consumer

ticks the NO box for communications, and yet

we have a major operational issue they need to

be made aware of?

What if we know nothing about our con-

sumer but we believe our message will

enhance their lifestyle etc? What if they always

open our newsletters, click to relevant articles,

and yet they have never ticked a YES box?

All these questions certainly make us think

about and devise clever strategies for the

future. But the bottom line is quite simple, if I

don’t give you permission to communicate to

me, then don’t! And even more importantly, if

you really need to tell me something, send me

a letter, that way I don’t feel you have invaded

my privacy. After all, post boxes are usually far

removed from my personal space.

Yet the government disregards its own Bill.

Our company recently parted ways with a con-

tractor who went to the CCMA. At 8am one

Saturday, I received an SMS from the CCMA

notifying me of the case’s hearing date. How

dare they? I never gave them my cellphone

number. This is a company issue, so surely they

have no right to text me personally – and on a

Saturday? Surely, these issues should be com-

municated in a letter to my company? So, will

someone please tell the government institu-

tions it should follow its own policies before

intervening with the way businesses communi-

cate with their clients.

My next anecdote spins around loyalty pro-

grammes, or rather, the thought process that a

points programme will fix our woes and gather

data that will unlock the mysterious consumer.

Yes, it will, but over time, with continuous

effort and if you are starting from scratch, with

some serious money. With new clients you

need to begin with a ‘start small, start some-

where’ test and trial, and then roll out to the

masses. You need to start with data – under-

stand your consumers’ needs and wants so

that you can implement a programme that will

enhance your offering in a relevant manner.

Remember that only consumers who are truly

invested in your business and brand will take

up the programme and activate it – usually

your most valuable first – and in that consider-

ation, our office in Singapore recently sent out

an article on moving from monologue to dia-

logue – probably one of the best I have read in

years. You need to engage your consumers in a

manner that is relevant and rewarding to them

on a regular basis, that way they will continue

to purchase your brand, and don’t look

towards you for discounts. This will engender

dialogue, where consumers discuss your

offering, not your price.

Now we’re onto pitches. Remember when

you put your business out to pitch, you need

to be realistic in what you are asking the agencies

to do. Two recent pitches asked us to present a

strategy. But, how can we when we don’t

know the client’s business and this is where we

also make our money – so asking a CRM

agency to give you a strategy in the hope it

will appoint you without having spent a few

weeks immersed in your business is actually

quite unfair business practice.

Finally, I turn to my most recent trip to Paris.

Having visited the city in 2003, I was really

surprised by the turnaround in service attitude

wherever we went. Shop assistants, waiters,

hoteliers etc all smiled, helped, spoke the best

English they could and, generally speaking, you

felt that you were truly in a world-class city.

But so are our beautiful South African cities –

so how hard can it be for our airlines, shop

assistants etc to smile when they meet you and

give you the service you deserve – after all, you

are spending your money with them, even if

they are offering you a ‘low-cost’ solution.

Service is a hygiene factor if you are dealing

with consumers, and to this end, if you get it

right you will get the customers. (By the way –

how difficult is it for a customer to use the

sales assistant’s or steward’s name, if they have

a name badge – that also goes a long way in

launching dialogue). And only then can a loyalty

(points) programme kick in and enhance your

business offering so that your consumer buys

your brand on a regular basis. �

EXPERT OPINION by nici stathacopoulos

Service is a hygienefactor if you are dealingwith consumers, and tothis end, if you get itright you will get thecustomers.

“

”

Just do it!

Nici Stathacopoulos

CEO, proximity#ttp(011) 447 [email protected]

by eugene honey LAW MIX


Royalties are an integral component ofSA’s business sector. As a result, the recent

Supreme Court of Appeal’s decision confirming

that royalties are taxable has brought welcome

relief. Many businesses, which license intellectu-

al property, were at a substantial risk, including

international entities with local independent

operations and the entire franchising sector.

A South African entity entered into a

licence agreement with its foreign principal in

terms of which it was authorised to use cer-

tain licensed trademarks. In terms of the

agreement, the South African entity paid sub-

stantial royalties to its foreign principal, the

proprietor of the brand and trademarks, for

the use of those trademarks.

Prior to the Appeal Court’s ruling, the

lower courts found that the royalty payments

were of a capital nature and therefore tax-

able. The Supreme Court of Appeal subse-

quently found differently and decided that

royalty payments are of a revenue rather than

a capital nature.

The decision reiterated the following previ-

ously established principles:

� ‘Expenditure incurred for purposes of

acquiring a capital asset of the business is

capital expenditure whereas expenditure

which is part of the cost incidental to the

performance of the income producing

operations… is revenue in nature.’

� ‘A distinction is thus drawn between expen-

diture made to acquire an income-produc-

ing concern (in respect of which the outlay

is usually non-recurrent) and money

spent… in working the concern for the

present production of profit.’

� ‘The conclusion to be drawn from all the

cases seems to be that the true nature of

each transaction must be examined in

order to determine whether the expendi-

ture in question is capital or revenue expen-

diture’ and that, ‘in deciding that question

each case must be decided on its own facts

and circumstances.’

� The royalty payment was made… for the

use of the trademarks. Its purpose was to

procure for the licensee, ‘…the use – not

ownership – of the intellectual property of

another from its sole and rightful owner for

the duration of the agreement.’� The ownership of the intellectual property

remained with the proprietor throughout

the term of the agreement and that on ter-

mination thereof the local licensee ‘would

automatically cease to have the right to use

the intellectual property in question.’� The anticipated and recurrent nature of the

royalties was a strong indicating factor that

they are related to revenue rather than cap-

ital. ‘The recurrent cost of procuring the

use of something which belongs to anoth-

er is usually recognised as being of a rev-

enue nature. The most obvious example is

the recurrent rent paid… for the use of

premises…’, which is certainly ‘expenditure

incurred in the production of income and

of a non-capital nature and therefore

deductible… for the purpose of determin-

ing taxable income.’

The Court found that the royalty fees paid

were to all intents and purposes indistinguish-

able from ongoing rental payments for the

use of another’s property and that the royal-

ties neither created nor preserved any capital

asset in the hands of the taxpayer.

The confirmation of many previously exist-

ing principles is comforting. Even so, it is criti-

cal to bear in mind that each case will be

decided on its own facts.

Thus, although the general principles have

been confirmed, there are certain scenarios

where the Court could arrive at a different

decision –for example, in the case of an

indefinite exclusive licence agreement where

a single payment is made. �

Eugene Honey

director, Bowman Gilfillan Inc (011) 669 9000 [email protected]

Taxation o f royalties

Many businesses,which license intellectualproperty, were at asubstantial risk, includinginternational entities withlocal independent operationsand the entire franchisingsector.

”

“

marketing mix magazine sept oct 07

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