Like the independent corner store that offered personalised service, informal credit and home delivery, the local pharmacy is on the way out in South Africa and being replaced by hard-nosed retail businesses. Indeed, the entire sector is undergoing a sea change, reports the ‘IMM Journal of Strategic Marketing’ in its October 2016-January 2017 issue. Deregulation in 2003 has progressively seen the growth of corporate-owned pharmacies and the once-traditional ‘corner chemist’ is now struggling to survive. Clicks was the first to see the new opportunity and by the end of February this year had 384 in-store pharmacies. It represented an increase of 23 pharmacies over 12 months, and 60 new outlets over 36 months. “We have a leading 19% share of the retail pharmacy market by sales,” says Vikesh Ramsunder, Chief Operating Officer of the Clicks stores division. It is a market share edging up steadily, having grown from 18,5% in 2015 and 16,5% in 2013. Overall, says Ramsunder, corporate pharmacies tied to the major retail and supermarket chains now account for about 46% of total sector sales. Other corporate players include Shoprite with145 in-store Medi-Rite pharmacies, Dis-Chem with 100 big-format drug store-type outlets, and Pick n Pay with 26 in-store and three stand-alone pharmacies. Spar Group has also joined in the fray. But, in keeping with the Spar model, pharmacies remain stand-alone businesses in the hands of their owners. The attraction of the pharmacy ‘superstore’ model is not that dispensing prescriptions makes money, it’s that pharmacies attract customers who will then shop for more general merchandise elsewhere in the store. Clicks, for example, generates about 25% of sales in the pharmacy and 75% in the so-called ‘front shop’.
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In the fiercely competitive world of South African retail, an effective supply chain is imperative. More effective global sourcing, better speed to market, increased onshore manufacturing and improved warehousing efficiency are strategies being used by the big retail groups, reports the ‘IMM Journal of Strategic Marketing’ in its October 2016-January 2017 issue. The Foschini Group (TFG), for example, has worked hard to enhance the efficiency of its procurement processes in China, where much of its clothing is manufactured. One of the first moves was to reduce the number of Chinese ports through which products are shipped – from 20 down to five. Up to 20 containers a day are shipped to TFG from these five harbours. Much work has also been done to optimise container loads, which now often comprise mixed consignments. The result is that TFG has halved shipping costs. But a slick procurement capability in China is not enough. At the fashion end of the apparel market, what counts most is speed to market and flexibility. Spanish retail chain Zara is a leader in this respect and tries to manufacture garments close to its major markets, often at its own factories. TFG is emulating this and, in 2012, acquired Prestige Clothing and its garment factories in Cape Town and Caledon. Both have since been revamped into state-of-the-art production facilities that can take garments from concept to production in 2-4 weeks. Other fashion retailers including Woolworths, Truworths and Mr Price have also upped their local procurement markedly. “Higher up the value chain, where-speed-to-market counts, upwards of 80% of clothing is today locally produced,” says Johann Baard of Apparel Manufacturers of SA, which represents garment sector employers. Published by the Institute of Marketing Management, the ‘IMM Journal of Strategic Marketing’ is read by professional marketers and those working in related fields, as well as business executives and IMM students. The print edition sold in selected CNA and Exclusive Books outlets, or is available via subscription. Copies are also distributed through a targeted mailing list and through selected airline lounges and IMM Graduate School student support centres.
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What does a logo say about your business and how customers will perceive it? In many instances, the shape will determine whether people see the company or product as warm and responsive, or tough and business-like. According to research conducted by academics at the French-based Insead Business School and published in the June-July 2016 issue of the ‘IMM Journal of Strategic Marketing’, circular or angular logos activate associations of ‘softness’ and ‘hardness’ respectively. “For example, if a person is reading an advertisement for a services company, the notion of softness may give the consumer an image of the company that’s more sensitive to its customers,” explains Professor Amitava Chattopadhyay. The researchers then took this a step further by presenting an ad for a specific product – in this case a sports shoe – to see whether the effect of the logo’s shape influenced people’s perception of a specific product. They found that the circular logo led to perceptions of comfortableness, whereas the angular logo led to feelings of durability. The team then investigated whether these findings could be taken beyond physical product perceptions and into the realm of general brand characteristics. To test this, participants were shown a passenger carrying overweight baggage and trying to board a plane operated by an airline with either a circular or angular logo. As expected, participants believed the airline would be more likely to allow the passenger to bring their bag on board without penalty if it had a circular logo. They also thought the airline would be more willing to respond to customer needs and cared more about its customers if it had a circular logo. Published by the Institute of Marketing Management, the ‘IMM Journal of Strategic Marketing’ is available in print and digital formats and is read by professional marketers and those working in related fields, business executives, IMM alumni and IMM Graduate School students.
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In its 2013 Global Contact Centre Benchmarking Report, UK-based contact centre outsourcing specialist, Merchants, arguably said it all: “South Africa has the most inconsistent customer experience of all countries tested. In extreme cases customer experience ranks as either on par with the best, or amongst the worst, in the world.” But, reports the ‘IMM Journal of Strategic Marketing’ in its latest February-March 2016 issue, the findings seem to have had little impact. “Nothing has changed since 2013,” says Lisa Roos, Business Development GM of Merchants South Africa, one of the local call centre/contact centre industry’s biggest players. Inconsistency in the domestic market stands in sharp contrast to the notable success SA is enjoying in the offshore market. The country has a huge number of facilities and staff that are dedicated solely to serving offshore customers on behalf of major international companies. The latter employed almost 27 000 local agents in mid-2015, 15 000 more than just three years ago. Call centre/contact centre agents serving the domestic SA market number an estimated 200 000-plus. The reason for the vast gulf in quality between most domestic offerings and their international counterparts is simple. “The international market demands a high standard of service and gets it,” states Roos. By global standards, SA contact centre agents are ranked highly on their ability to communicate with empathy, says Lynnette Morris, founder of the Johannesburg-based Contact Centre Coach and Academy, which works across Africa as well as in Europe and the Middle East. This begs the question: Why, then, is service in the domestic contact centre sector so inconsistent? “The inconsistency problem in the domestic market lies in the captive contact centre sector,” says consultant Rod Jones, a veteran of four decades in the industry. ‘Captive contact centres’ are owned by the company that requires the service and are not contracted out to third-party specialist companies. Jones points to the cause of the problem: “It is at the top; in boardrooms. They lack understanding of the importance of service in customer retention and view contact centres as a reluctantly funded cost.” The ‘IMM Journal of Strategic Marketing’ explores this and other marketing-related topics in the latest February-March 2016 issue. The magazine is published five times a year by the Institute of Marketing Management (IMM). Available in print and digital format, it is read and referred to by professional marketers and those working in related fields, business executives, IMM alumni and IMM Graduate School students. The print edition is on sale at selected CNA and Exclusive Books outlets countrywide, or available via subscription. Copies are also distributed via a targeted professional mailing list and through selected airline lounges and the IMM Graduate School’s student centres.
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Thursday, 22 October 2015 09:22

Starbucks to stir up a coffee brand battle

South Africa has proved a lucrative hunting ground for coffee shop and quick-service restaurant brands in recent years – a notable exception being Starbucks. Now the global coffee giant has teamed up with local group Taste Holdings and consumers can look forward to an all-out coffee war involving the likes of Starbucks, Seattle Coffee Company, Mugg & Bean and McDonald’s. As the ‘IMM Journal of Strategic Marketing’ reports in its latest October-November 2015 issue, Starbucks will shake up the industry as big global brands usually end up dominating markets. But the opposition won’t surrender this brand battle just yet. Seattle Coffee, for example, is opening more outlets and tying up with Food Lover’s Market to meet the onslaught, while McDonald’s is likely to increase its specialty McCafé offering. Also under the spotlight in the latest issue is the potentially expanding career path for marketers. The merit of marketers serving at board level has been a hot topic for years, with marketing professionals feeling that they’ve earned their stripes and are deserving of a place at the top table of business. Others, however, have tended to view marketing as a ‘soft’ discipline lacking the necessary all-round business focus. But now a changing world may be making marketers more suited to the top CEO job. Social media, digital communications, big data, analytics, marketing-driven supply chain management and the quest for true customer insight have all shaken up the business world – and it’s top marketers who have these skills! Other features in the October-November 2015 ‘Strategic Marketing’ include the marketing challenges and opportunities facing the South African wine industry, as well as an analysis of Generation Z and what businesses need to know about them. There’s also an examination of the concept of nation branding and whether Brand SA can regain its mojo. The ‘IMM Journal of Strategic Marketing’ is published five times a year by South Africa’s premier academic marketing organisation, the Institute of Marketing Management (IMM). Available in print and digital format, it is read and referred to by professional marketers and those working in related fields, business executives, IMM alumni and IMM Graduate School students. The print edition is on sale at selected CNA and Exclusive Books outlets countrywide, or available via subscription. Copies are also distributed via a targeted mailing list and through selected airline lounges and the IMM Graduate School student support centres.
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