Brands: Africa versus the World

The American Marketing Association defines a brand as any feature that identifies a company’s products and services as distinct from those of its competitors.

It goes on to state that the concept of a brand has evolved to encompass indentity insofar as it affects the personality of a product, company, or service. Companies spend millions, if not billions, of rands investing in their brand to ensure it aligns with their stated business objectives.
And with anything marketing-related, these brand campaigns are designed to elicit those elusive warm and fuzzy feelings amongst end-users to ensure that they continue to buy the products and services related to that specific brand.

It is for this reason that the Brand Africa 100 will get the tongues wagging: it is based not on the companies with the biggest marketing budgets but rather on what consumers think. The research uses a methodology that encompasses qualitative, quantitative and secondary research developed by the Brand Leadership Academy in partnership with TNS, an international consumer knowledge and information company, and Brand Finance, an independent valuation consultancy.

Brand Africa 100 is the first survey across the continent to explore the pan African brands. “What makes this inaugural study unique is that it’s not just consumer based or values based as most studies,” says Thebe Ikalafeng, founder and chair- man of the Brand African initiative. “It truly looks at brands that are valued by consumers and investors—taking into account their affinity with brands and how that translates into value for investors.”

The study recognises the most admired international and African brands on the continent and is rated by consumers across Botswana, the DRC, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda, and Zambia.

For the research buffs
“We looked at the most developed markets in Africa and focused on the urban environments in those countries. Respondents were asked to name the five local and global brands they admired in order. Because we did not provide them with brand lists, the responses were completely spontaneous,” says Neil Higgs, senior adviser and head of innovation at TNS. In terms of the methodology, TNS calculated a score for each brand based on rank sums ( simply the sum of all the mentioned ranks for each brand). This was obtained by multiplying the rank by the number of people for each rank. In turn, the index was created by taking into account the sample and population size of each country. A weight was then created for each country. “People were very clear on the top 20 brands in the Brand Africa 100, but thereafter the differences between brands decreased,” continues Higgs.

Curiouser and curiouser
One of the things that quickly grabs attention is the fact that Nokia was rated as the most admired brand in Africa. “This is a totally different shift from what we are seeing happening globally with the brand. Nokia has been taking a hammering inter- nationally and is seen to be playing catch-up to Apple. Yet in the Brand Africa 100, Apple does not even feature,” says Oliver Schmitz, MD for South Africa at Brand Finance. But he quickly points out that this is hardly surprising, given the high- end target market for Apple devices. “In Africa, the more basic Nokia handsets appeal to a wider segment, as people use their mobile phones for SMS and other entry-level features,” he says.

What digital divide?
In fact, five of the top ten companies in Brand Africa 100 are either telecoms or electronics companies. “With brands such as Nokia, MTN, Samsung, LG and Globacom featuring in the top ten, it is clear that mobile technology is huge in Africa. Handsets are important in Africa. As bandwidth improves and people get access to cheaper smartphones, the adoption rates will be even quicker,” says Higgs. He believes that as markets mature, mobile content and applications will gain relevance, with South Africa expecting to leapfrog the developed market in this regard. “However, there are many countries in Africa more advanced than South Africa when it comes to bridging the digital divide. Other African countries do not have the same bandwidth problems that exist here. While feature phones currently drive South African mobile adoption, the increasing availability of cheap Chinese phones will see this change as people jump past laptops and on to internet-driven handsets,” Higgs continues.

Quality issues
Adding to this is how people perceive the difference in quality between African and international brands. “African brands need to push their local agenda. They need to make people aware of their economic investment, development and the associated employment they create,” says Schmitz. Coca-Cola, which ranks second in the Brand Africa 100 in terms of admiration, sets the example of how a multi-national drives the local agenda. The beverage company is continuing to invest in the health of communities from an economic, social and environmental perspective. It feels that the content of its character is as important as the content of its beverages.

The prominence of Nokia and MTN are further testament to how people are more interested in technology that empowers them to drive their own businesses. “To a certain extent, technology is becoming more accessible and affordable in Africa. This is especially true when you compare it to the automotive industry. With South Africa containing 50% of all cars in Africa, it shows just to what extent product affordability comes into the equation,” Schmitz says.

Getting the brand strategy right
But it is not only because of technology developments that mobile brands feature strongly. “By brand value, MTN is the star of Africa. It was the only African brand to make our Global 500 survey, coming in at 199th position. MTN is doing the right kind of things when it comes to brand. It started small and then began its African expansion,” says Schmitz. For Absa Group chief marketing and communication officer Happy Ntshingila brands connect with the essence of human needs that transcend boundaries, culture, and social standing. And since Absa leads the Brand Africa 100 banking sector in terms of brand value, he just might have a point.

“The philosophy of building a brand remains the same irrespective of the geographical location. However, the nuances of each market’s particular needs call for different focus and investments to meet that particular need. Building a brand in southern Africa is much easier when you have a long heritage and recognised presence in the market,” says Ntshingila. But are there differences between African brand value and admiration and those of other international markets?

Schmitz feels so. “An example is Coca-Cola, which is seen differently in other international territories than it is in Africa. If one looks at the Brand Africa 100, there are a number of smaller brands that feature prominently. Having said that, 66% of brand value has been generated by international brands,” he says. He argues that African companies are not leveraging the full effect of what can be achieved in Africa. But it is difficult to pin it down to capital (local versus multi-national budgets) or intellectual property (limited local funding versus multi-national investment into research). “In Singapore for example, the government stepped in and tried to help develop local brands. This was done by subsidising brand value creation there. Whether something similar would work in Africa remains to be seen,” says Schmitz.

Another potential reason for the high proportion of international brands in the Brand Africa 100 could be trust. “Even though people pay a bit more for international brands, they argue that if it is good enough for the rest of the world, then it is good enough for us. There is still a stigma associated with African brands. One only needs to look at civil wars, local unrest and corruption to see the negative impact on local brands,” believes Schmitz. “One only needs to look at Nigeria to see this in action,” he says. Schmitz believes that it is difficult for Nigerian brands to go global because of the perceptions of the country. “South Africa is still seen to be the leader in terms of brand on the continent, in part due to the successful hosting of the 2010 FIFA World Cup. No matter how you look at it, though, there is still a lot of work for nations and governments to rebrand the negative perceptions,” he says.

Building brand Africa
For African brands to better position themselves in the continent, Schmitz says they need to leverage the defining moments in the countries in which they operate. “One need only look at the Ayoba brand campaign of MTN during last year’s World Cup to see those benefits. But not every company has the luxury of having huge budgets. To this end, companies need to examine what their employees think about them. They are brand ambassadors and will promote the company (and its brand) if it is warranted,” says Schmitz. He cites the trust Google has created in its brand and how it is attracting the best talent in the world to go and work there. Things like working conditions, benefits and a love for the brand are natural drivers to increase the brand.

Absa’s Ntshingila says, “We work each day with new opportunities and challenges to actively build the brand, which is not just the marketing department’s responsibility, but all of us that work for the Barclays Group. Our interactions with our customers present an opportunity to build and add value to both the Absa and Barclays brands.” Ultimately, African brands need to be measurable and accountable. “If one looks at how business is done in Africa, it is very difficult to get any type of information on brands. External stakeholders simply do not have access to updated information on African brands. Brands on the continent must therefore get into the culture of being measured. Once this is happening, they will be able to make changes to their brand strategy as they can see the results of how people view them,” Schmitz says.

Crystal ball gazing
In Africa, there is a massive case for electronics, mobile communications, and handsets that cater to the lower LSM segments. The beverage industry is still big with oil and gas generating significant business especially in Nigeria and Ghana.
One only needs to look at Shell which leads the oil and gas sector in terms of brand value. While the organisation in Africa is going through a period of transition by agreeing to divest the majority of its shareholding in most of its downstream business in Africa, it will still remain active in the continent.

But do Africans value brands the same way as their international counterparts? “People definitely find brand value important, but it is not on the same scale as abroad. As products and services become more commoditised, it is brand that becomes the differentiator. “Africa as a whole needs to understand the importance of brand value and the need to track that value,” concludes Schmitz.

The Brand Africa 100 awards
Brands are unarguably important channels for communicating national identity. The value in African brands receiving such accolades is that they help to boost the reputation and image of their countries of origin. This clearly illustrates that strong businesses and brands play an important part in the development and growth of a country’s economy and reputation. They influence inward FDI, increased trade and the growth in stature of their country of origin.

Therefore, building strong sustainable business brands benefits not only the companies but the economy of the country—by creating a positive environment for investment, job creation and prosperity for the citizens. In this way service and or product brand are critical flagships and drivers of economic development. Support by government and civil society for brands that contribute to the reputation of a nation is important. Brands contribute to competitiveness for example financial services brands have contributed significantly to South Africa’s global competitiveness.

This article originally appeared in the Mail & Guardian newspaper as an advertorial supplement

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