A weakening rand, lack of confidence from international investors and a general identity crisis for the South African people leads us to wonder if we should still be aspiring to buy brands from around the world
Firstly, we need to understand what makes a brand. Brands are made up on tangible elements and the intangible, brand equity if you must. Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands for the firm. Think of it this way, brand equity creates value.
Simply put, what that means is that a company like Nike sells shoes, but the brand is made up of the good feelings that the customers display towards the swoosh. The kicker comes in that we are forking out our rands for brands with brand equity that is set in USD. Should we not be ditching international brands in favour of South African alternatives.
The best example that I can make towards my arguement is through hockey. When a South African hockey player buys a hockey stick, they don’t realise how they get their hands on the product. Majority of hockey sticks are made in a small region in Pakistan before being branded and shipped to the country where the brand is situated, places like Holland and Australia. We then import it into South Africa and, in so doing, have to pay both delivery and import taxes. If you are buying a hockey bag, you don’t realise that the tax percentage is greater because the South African government knows that bags can actually be produced locally. The distributor then marks up the price, sends it to the retailer who marks up the price again.
I’d like to point out that import tax and markups are based on percentages so an increased value due to the depreciation of the rand has a triple negative effect.
Why can’t we try cut out the middle men, even if just one of them? We can start our own brands and either produce equipment here or import directly from Pakistan or China and not through a recognised brand. You might ask yourself about the quality, but if you are going through the right suppliers you will get the exact product as the other brands.
A potential stumbling block is the perceived value associated with the products of the brand. Perceived value is how good the customer assumes the product performs and is an category of Aaker’s brand equity model. Customers might think that the brand is not as good, because it is cheaper.
Obviously it’s not as simple as that, but there is some merit in this thinking. Nedstar got it right in the early 2000’s until Ned moved to Ireland to further his career and took the brand with him… So rude. Maybe we take a page from his book and support local brands and try steer clear of international brands. Just an idea.