In SA, the top 30 total evaluations of all companies that were in the top 30 most valuable brands are relatively low in comparison to our emerging market peers, published in The Financial Mail.
Most of our brands are still communicating to their market about features, pricing and functionality of their products, rather than talking to people. This has put them on a back foot in comparison to foreign brands and until our brands begin to understand what it means to be a brand, international brands of a similar nature to them will continue to dominate a market which in actual fact should be theirs.
Marius: 00:00 Good afternoon Kyle.
Kyle: 00:02 Afternoon Marius.
Marius: 00:03 It’s always a pleasure talking to you. It’s so wonderful having you on the show again. Now, Idea Power and Kyle Rolfe, for me, it's synonymous. The one doesn't go without the other. Today, we are talking about the state of brands in South Africa. Do we compare now? Is there a problem that you know of that we should know?
Kyle: 00:48 Yeah, the thing with, i think the thing with today’s discussion and why we came up with talking about was out of a recent article that was published in The Financial Mail which discussed or gave the results of a survey. They call it "The Brandz" that's brands with a "z" at the end. It is a ranking system the for the Top 30 most valuable brands. They have a way of evaluating brands and they come up with their Top 30 every year so, they gave some insight on that. Just in terms of a sense of context, that article got me thinking about those things and some of the points that were discussed are actually a little bit for me disconcerting. To be clear this is not ranking brands that are in South Africa but brands that are South African. So in other words, fundamentally owned by South African companies. So Nike wouldn't come into this. Apple wouldn't come into this. Even the big SAB brands wouldn't be a part of it because they’re fundamentally owned by foreign companies now fundamentally own them. Interesting enough, the top brand in the country is Standard Bank. I consider this quite a problem, it is an indication of our state of our local brands. And funny enough, the top 3 brands in the country are all banks by the looks of things so, it’s not great, to be honest with you for a number of reasons.
Marius: 02:17 And you know what, in time to come I would like to learn a bit more behind that idea because you say you’re finding it awkward that it’s banks. So I'd like to learn a bit more about that. The brands that we do know of that are completely South African are Koo for example or Nandos.
Kyle: 02:38 Yeah, I would say they are some of the diamonds among the rough. So those are the brands that people are actually engaging with. To clarify to people that are listening to this, what do they mean by brand value? What they mean by brand value is the ability of the company to convince you to purchase from them more often and their ability to charge a premium for what they do. That's how they come to a monetary value for their brand. So it's not the actual physical valuation of the company in terms of its assets or sales or it's turnover. They look at how much sales they make, then they make a calculation based on this brand's effectiveness in terms of how much they charge verses everyone else and how many people purchase from them, then come up with an evaluation. It's very important that when we look at a company when evaluating their brand as a standalone thing because people will say well that company doesn't really have a strong brand but it's making a lot of profit. That might be for various reasons that might be very short term. Buying and trading in something where the demand for that thing seems to be exceedingly high then you are going to benefit from it. Typically brands look at the long-term value that's going to be created by a brand over time. So that's the thing. Convincing people to purchase from them over time. I’m just going to look at the total number.
It was in the mid $30 billion that they gave our top 30 total evaluations of all the companies that were in the top 30. They say it is actually relatively low in comparison to even our emerging market peers. Why is that the case? I think the fundamental case comes out of another thing where they say that fundamentally most of our brands in our country are still communicating to us about features, pricing and functionality of their products, rather than talking to people. They do this instead of just talking to people unlike the big brands of the world such as the Nike(s), the Apple(s) etc. Their main line of communication or their communication that goes out across markets and across national campaigns is normally talking to you - the user and making a connection with you as a user of their products. So that's why Nike spent so much time investing in getting the right sport stars to be at the tips of their brand etc. And the evidence is out there that our local owned companies are not doing the same. They're focusing on utility, price and functionality and they're not trying to connect with us on an emotional level. Which means that the value of their brand will be very low. In other words, I am with you because you're convenient. I am with you because the price is fine or I am with you i think, in terms of banks for example, just because it's too much darn hassle to change this. That to me is a very, I wouldn’t say it’s a dire situation but, it’s not a good state to be in. For the brands that are out there shining lights for us are the likes of Koo and Nandos. Koo, for example got a sideline award of the most loved brand in the country. You want to buy something from someone because you want that product , because there’s a sense of value in it. Not just because you have to or at the time, it is the lowest price for what’s on demand. I think that for me why that is concerning is because if we truly want to grow our economy we have to If you look at a growing an economy like Australia's, it quite strong economy because Australia is an export focused economy and we know that we have to start exporting more stuff.
Now, if we don't want to go the route of China where we just make things and people put their own labels on it, they make the real money out of that stuff. We want to make stuff that is here and is sold as a brand from South Africa overseas. In order to do that, we need to compete with these foreign brands very strongly and for me it’s saying that overall obviously there are going to be very similar brands but overall our brands are not really hitting it. They are not out there. They’re not understanding what it means to be a brand because they are still fundamentally trying to sell us on features and pricing.
Marius: 02:38 That sums it up quite nicely. Thank you so much for your time this morning and next week we will continue with the next segment on brand mentoring.
Kyle: 02:38 Thank you Marius. It has been a pleasure sharing with you guys.