Industry news

Why do brands succeed?
Tips from successful brand builders

Ten years ago New Balance was one of the Other brands when running shoe statistics were published and it hardly featured in other sports footwear categories. Today, it is the third biggest brand among distance runners and one of the top brands in adventure running. The SA distributorship is one of the best performers in the New Balance EMEA region ... in a nutshell, within less than ten years, New Balance has been built into one of the big three in the categories they supply.

Yet, worldwide the brand has a policy of never endorsing celebrity sport stars — they will, however, promote a sport by sponsoring events. Other than that, they believe that their products, not sport heroes, should do the talking.

Most people will agree that New Balance SA’s success can be attributed to Gary van Rooyen (he’ll say it is the whole New Balance team, but appointing the right people is obviously part of their success). We therefore asked him for tips for building a successful brand. His recipe is:

» Passion: Stephen Covey once said, If I had the choice of investing my money in a business full of MBA business-minded individuals, or in one that had passionate grafters, I’d choose the latter every time. If you are passionate about the brand or products that you wish to establish, you emit a certain aura of believability about you that makes retailers and consumers want to be a part of it.


» Market research: One swallow does not a summer make — don’t base your decisions on three or four points of view. Really go out there and spend time in the trade, connect with store owners, buyers and salespeople and establish what gaps there are in the other product lines. Are there pricing-related or product-related opportunities?

Don’t stop your investigation there! We often forget about the consumer — they will be buying your products and can make or break you, so spend as much time with them recruiting information.

Nowadays we also have the ease of Google and Yahoo websites that are rich with information.

» International assistance: International brand owners want you to succeed with their brands in SA. We are an emerging country and the stepping stone into Africa. Demand (diplomatically) assistance in all areas — from extended terms, use of advertising materials, POP, marketing funds etc. In a consumer magazine a full page advert costs R15 000–40 000 (much less in Sports Trader — ed), so having some international assistance goes a long way.
» Advertising and promotions: You will always face two major challenges when advertising and promoting a new brand. Decide whether it is a brand building exercise you wish to do, or if you are wanting direct results from that activity. Brand building entails on-going reminders and consistant messaging, whereas a call to action advert does not necessary build your brand but normally results in a public response that converts to sales.


Shelf space is very limited and in order to gain space for your brand, you will have to convince retailers to limit their stock of the big three brands that cover all price points and already have a following amongst customers. You also have to convince them why they need a 4th brand, cautions Darryl Kroll, who had helped build Umbro to the #3 football brand in retail when he was marketing and sales director. His advice: “Building relationships with retail buyers and convincing them that you are doing the things that will ultimately deliver sales, are of paramount importance.”

 

In order for a brand to have longevity, you have to understand the market where your brand is most likely to succeed. Forget about the chains, you first need to build your brand through the independents and create a demand before approaching chains.

You have to sell your brand based on the quality of the product. The product quality ensures the stamp of approval for the brand — the cherry on top is the brand name, says Gideon Abrahams of Kulca Klub, distributor of homegrown brand Loxion Kulca, and Everlast and Fila apparel.

» Capital: Too often people go into a new venture under-capitalised. It is critical that you do the sums beforehand, and while it’s always exciting at the outset, rather have someone with a non-creative or bean counter personality sit with you and throw spanners in the works. Marketing and sales personalities tend to always avoid the pitfalls or any possible negatives that could douse their burning creative flame.

If you are spending your own capital, you will quickly realise that your return on investment in a new business is anything from 3-9 months (especially imports with six month lead times).

A critical issue too is the Rand/dollar exchange rate. Consider the implications if the rand does what it did in 2002 and goes to R13.50/$ and you have sold in at R7/$ without any future cover (or hedging).

Unless your products are absolutely exclusive, chances are your customers will not accept the price increase and you would have to absorb the loss. This situation has crippled hundreds of businesses.

» Time Lines: It could take a long time before you can actually start selling your product.
» Samples: In the footwear and apparel industry, you have to purchase your samples 6-8 months before the actual goods arrive in your warehouse.
» Stock: You have to pay for the stock when it leaves from overseas and pay duties, taxes etc. on arrival here.
» Warehousing: Some stock may sit in your warehouse for 1–6 months. You have to pay for security systems (and there could still be thefts) and cover all overheads like rent, staff, transport, etc. during this period.
» Credit worthy accounts: there are many ways in which to check the credit worthiness of your accounts, but be thorough. Payments will be stretched out from 30–150 days, depending on the settlement discount that you offer, or how important you are for replenishment stock. This full cash to cash cycle ranges from a minimum of 90 –180 days and sometimes longer, and that does not include your sample purchases.


» Consignment stock: Selling goods on consignment is the easy-sell method, but I am yet to witness a successful partnership. Unfortunately, there is no real urgency by the retailer to get rid of your goods ahead of what he has outlaid money on.

The reconciliations never tie up and when the stock is eventually returned (notice I said when not if) to you, it will be damaged or shop-soiled with price markings all over the boxes. It’s a nightmare! Don’t do it!

Remember: If you’re passionate about what you’re doing, nobody will stop you!