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Tue, 16 Jul 2019
South Africa’s 10 strongest and most valuable brands

Brand valuation and research group Brand Finance has published its latest annual review of the strongest and most valuable brands in South Africa – with mobile operators again emerging as the top dogs.

As defined by the report, brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’ revenue is contributed by the brand.

In calculating this value, Brand Finance uses the royalty relief approach, which it says “involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.”

Using these metrics, Brand Finance determined that mobile group MTN retained its position as the most valuable brand in the country, with a brand value of R50.28 billion – up 13.7% from 2018 (R44.2 billion).

The telco is followed by competitor Vodacom, whose brand value was calculated at R33.28 billion, up 21.1% from R27.49 billion in 2018.

“The MTN-Vodacom duopoly is continuously grappling for greater market share across the country, resulting in data price wars, and thus leaving smaller brands struggling to compete, including, Telkom (up 15% to R5.9 billion) and Cell C (up 5% to R3.9 billion),” Brand Finance said.

The remaining top 10 most valuable brands in the country are largely unchanged from 2018, with FNB ranked third, Absa fourth, Standard bank fifth, and Sasol, sixth.

Changes have happened in the last four positions of the top 10, with Multichoice climbing to seventh position (from 10th last year), and retailer Woolworths dropping to eighth. Castle climbed to ninth position, with Nedbank rounding out the top 10 (down from ninth in 2018).

# Brand 2018 value 2019 value Change 1 MTN R44.2 billion R50.3 billion +13.7% 2 Vodacom R27.5 billion R33.3 billion +21.1% 3 First National Bank R19.4 billion R25.5 billion +31.6% 4 Absa R18.9 billion R23.5 billion +24.5% 5 Standard Bank R18.5 billion R22.5 billion +21.7% 6 Sasol R15.7 billion R21.0 billion +33.6% 7 Multichoice R14.3 billion R18.8 billion +31.1% 8 Woolworths R15.5 billion R16.7 billion +8.2% 9 Castle R13.9 billion R16.6 billion +19.3% 10 Nedbank R14.8 billion R15.8 billion +6.7%

Strongest brands

According to Brand Finance, brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors.

To determine the strength of a brand, the report looks at marketing investment, stakeholder equity, and the impact of those on business performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Using this metric, the top brands in the country shifts quite significantly.

Capitec Bank retains its spot as the strongest brand in the country, with Telkom retaining its place at ninth position. All other brands have shifted around.

“Since the bank’s inception nearly two decades ago, Capitec has disrupted the country’s financial services sector and traditional banks, through removing barriers to entry for everyday customers,” Brand Finance said.

“This approach has led to the brand boasting a vast customer base, with 44% of South Africans banking with them. This number is growing exponentially as more [...]

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Mon, 15 Jul 2019
#BrandFocus: Ackermans on owning the value-retail space, body positivity...

Ackermans has been in the value-retail space since its inception in 1916 and it’s this focus on delivering value to its customers that Mamabolo believes has been the cornerstone of the brand’s success and growth. “Being a value retailer in South Africa, especially in the early days, was not seen as anything great. In the olden days, fashion was [the] key driver but there was that niche that we found as a brand on the value side and we have really managed to cover ourselves as the best value retailer in the industry,” he says.

There are nearly 800 stores in six southern African countries and, for the past few years, Ackermans has come out tops in the Ask Afrika Kasi Star Brands Awards, as well as being voted no. 1 for children’s clothing in the 2018 Ask Afrika survey for the fourth year running.

Value goes beyond price

Mamabolo is quick to point out that value goes beyond the immediate thought of only being associated with price. The brand understands that value is relative, meaning different things to different customers —a combination of quality, relevance, price, variety, and accessibility. “There is a massive move to the rise of value-driven consumers. People who have never given value an eye before now are deciding there’s no need to always buy high-ticket items all the time. In SA, sitting on about 29% unemployment, the value-retail space will be where people will be going to,” he says.

As leaders in the children’s wear value category, Ackermans focuses on ensuring it delivers the quality every parent is expecting at a price that’s affordable, with an experience unique to the brand. “Our target market is every woman with a child in their lives,” says Mamabolo, explaining that this includes aunties, grannies, and friends.

While children’s wear is important to Ackermans, its primary aim is to be the brand that every woman thinks of when purchasing not only children’s but also women’s wear; it works hard on making every woman feel comfortable walking through its doors while knowing that she will get good service and high-quality affordable merchandise in her style and her size. As part of this, women’s-wear-only stores are busy being rolled out that include the same product range but with a layout and experience focusing on the quiet time every woman enjoys when shopping alone or with friends — but without kids.

Strict brand CI

Ackermans follows a strict brand CI to ensure that all its communications should be immediately recognisable. Mamabole believes that a brand needs to be “smashable” and that, if you break it up into many pieces, it should still be recognisable by everyone. The retailer works with creative agency, 99c; media agency, PHD SA; and content company, New Media.

In February this year, 99c created #IAmMe, the 2019 Valentine’s lingerie campaign using influential public figures Minki van der Westhuizen, Rami Chuene, Kim Jayde, Pearl Modiadie, and Busiswa Gqulu to push the brand’s focus on body positivity and its belief that all women are beautiful, flaws and all. According to Mamabolo, this was an important [...]

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Thu, 11 Jul 2019
What to consider before venturing into franchising

Many entrepreneurs consider going into franchising as a guaranteed route to attaining business success.

“Despite the sector having a higher success rate compared to its counterparts, franchising has its pros and cons and will not necessarily be suitable for every entrepreneur. Entrepreneurs who are considering or have decided pursuing franchising as a business opportunity should perform due diligence to avoid making costly mistakes,” says Morne Cronje, Head of Franchising at FNB Business.

He shares key factors that entrepreneurs should consider to determine if franchising suits their needs and business endeavours.

Is franchising right for me?

Acquiring a tried and tested system and business model is not for everyone. You should be comfortable to operate in line with the business licence, rules, procedures, requirements and standards set out by the franchisor.

Which industry and brand would be ideal?

Almost every industry can be franchised, which can be an advantage should the entrepreneur have a certain preference. However, the challenge is finding a brand that is aligned to your core values as an entrepreneur.

Am I financially ready?

One of the biggest barriers to entry for franchisees is costs, especially if the brand is prominent. As part of the application for funding, franchisors require the entrepreneur to raise a significant portion of the franchise costs upfront.

Are existing franchisees satisfied?

Interview and determine if franchisees are satisfied and whether they are experiencing any challenges. This will give you a good indication if you are the right fit.

Does the franchisor approve?

The next step would be to approach the franchisor and inform them of your intension to join their network. You will be required to go through a vigorous vetting process to ensure that you are a suitable candidate. Every franchisor has their own requirements.

This is also an opportunity for you to find out more about the business and the type of support you are likely to get from the franchisor.

Contractual agreement

Should your application be successful you will be offered a contractual agreement. It is advisable that you thoroughly go through the agreement to ensure you fully understand what you are agreeing to. If unsure, seek advice from an expert.

How to get funding

As the final step, you would have to approach the bank and apply for funding.

Banks will consider several factors before the loan can be granted:

• Detailed franchise description and system. • Business plan. • FICA and personal balance sheet of all prospective shareholders and sureties. • Contract and franchisor approval letter. • Detailed description of all set-up costs and estimated cash flow forecast. • Own contribution to purchase the franchise and collateral if required.

Funding requirements may differ depending on the type of franchise and whether it is a new setup, existing business being purchased or taken over from another bank

“Taking the above factors into account while doing additional research based on the franchise opportunity you want to pursue will go a long way to ensuring that you make a sound business decision,” concludes Cronje.


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