South Africa Marketing Report

International Marketing Fall 2014BUSA 460 Professor: Sven Tuzovic

International Marketing Brooks Running Shoes in South Africa

Written by:Zach Martinson

Rasmus B. AndersenMorten Christensen

Jonas Harreskov


Contents1 Introduction..................................................................................................................................3

2 Part 1: Economic and Cultural analysis.......................................................................................3

2.1 Political System and Legal System........................................................................................3

2.2 Economic and Business Environment Analysis....................................................................5

2.3 Cultural dimensions of doing business in South Africa........................................................8

2.3.1 Religion and Language...................................................................................................8

2.3.2 Recreation and Sports.....................................................................................................8

2.3.3 Communication and business customs...........................................................................9

3 Part 2: Market Analysis and Marketing Plan.............................................................................11

3.1 The Market...........................................................................................................................11

3.2 Consumer buying patterns...................................................................................................12

3.3 Market size...........................................................................................................................13

3.3.1 Brooks sales..................................................................................................................13

3.3.2 Industry sales................................................................................................................13

3.4 Competitors..........................................................................................................................14

3.5 Marketing Plan.....................................................................................................................15

3.5.1 Target Market...............................................................................................................15

3.5.2 Positioning....................................................................................................................15

3.5.3 Distribution...................................................................................................................15

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3.5.4 Promotion.....................................................................................................................16

4 Summary....................................................................................................................................19

5 Appendix....................................................................................................................................22

5.1 Appendix A..........................................................................................................................22

5.2 Appendix B..........................................................................................................................22

5.3 Appendix C..........................................................................................................................23

5.4 Appendix D..........................................................................................................................23

6 Bibliography...............................................................................................................................24

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1 Introduction

This paper is set out to do a country analysis of South Africa, involving the political and legal

system, culture and the market, followed by a Marketing Plan. The Political and Legal system

mainly talks about how it is a young and stable country, but still facing issues as a growing

economy. The economic and business environment mainly discusses the inequality, unemployment

and how it is still an emerging market. Next, the cultural dimensions will discuss the effect

Religion, Languages and Sports have on the population and how business is usually conducted in

South Africa. For the second part of the paper, the Market will be discussed highlighting the

consumer buying patterns, consumer motivation and the competitive market. Finally, the paper will

set up a Marketing plan for Brooks in the South African Market, considering what they are already

doing.

2 Part 1: Economic and Cultural analysis

2.1 Political System and Legal System

South Africa has been a constitutional democracy since 1994, where Nelson Mandela was the first

fully representative democratic elected president of the Republic of South Africa. The Republic of

South Africa has a three-tier system of government. The constitutional democracy is divided into

the following three branches; Executive branch, Legislative branch and Judicial branch.The Chief

of State and head of government is Jacob ZUMA, who is the President of the republic of South

Africa. Jacob ZUMA has been the president of the republic of South Africa since 2009 (CIA World

Factbook, 2014). Jacob ZUMA is the leader of the Cabinet, which is the committee of ministers and

acts as executives for controlling government policies in different departments (Jacobs).

South Africa is a representative democracy, where the public elects a total of 400 members to sit on

the National Assembly. Furthermore is 10 people elected by each province legislatures (9 provinces

in South Africa), which gives a total of 90. The 90 members form the National Council of Province,

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which job is to protect regional interests, including cultural traditions and economic interest. The

National Assembly and National Council of Province is the legislative branch of the South African

democratic system (CIA World Factbook, 2014).

In the National Assembly a total of 11 parties are represented, which makes for a multiple-party

system. The larges party is the ANC (Africa National Congress). The leader of the ANC is president

Jacob ZUMA. The other parties are; African Christian Democratic Party (ACDP), Congress of

People (COPE), Democratic Alliance (DA), Economic Freedom Fighters (EEF), Freedom Front

Plus (FF+), Inkatha Freedom Party (IFP), National Freedom Party (NFP), Pan-Africanist Congress

of Azania (PAC), United Christian Democratic Party (UCDP) and United Democratic Movement

(UDM) (CIA World Factbook, 2014).

The Republic of South Africa is still a young country since it has only existed in 20 years (form in

1994). The government in South Africa has been fairly stable since the first fully representative

democratic election in 1994. Back in 1994 there was a major fear for a violent and peaceful

transition, but it has turn out to be a peaceful and stable transition to democracy. Political stability is

the key to further investments in South Africa, and it is therefore crucial that the South African

Government continue to been stable as it has been the last 20 years (Jacobs).

In April 2014 South Africa was downgraded by the AON, which produce a Political Risk map

every year. AON found that South Africa is at the moment struggling with persistent strikes. The

strikes has become a major factor in South African wage setting, and have weaken South Africa’s

competitiveness due to raising financing costs. This have a direct effect on the amount of FDI

invested in South Africa. Even though South Africa has increased the strength of it political

institutions, AON still downgraded them. Furthermore is the likelihood of war or civil war limited

in South Africa, which implies a low level of political risk (Aon, 2014).

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The last branch is the Judiciary system, which is a mixture of Roman-Dutch civil law, English

common law and customary law. The highest authority is the Supreme Court of Appeals, which

consists of the court president, deputy president and 21 elected judges.

The court president and deputy president is appoint by the president of the Republic of South Africa

(CIA World Factbook, 2014).

2.2 Economic and Business Environment Analysis

Often publicized as the 5th member of the BRICs alongside Brazil, Russia India and China, South

Africa is a major emerging market with a stable financial system, and is the driving force behind

Sub-Saharan African real GDP growth. South Africa accounted for 22.5% of total Sub-Saharan

African GDP in 2013 and ranks highly among its regional peers in the Ease of Doing Business

2015. On the downside, growth of real GDP will slip to 1.7% in 2014, down from 1.9% in 2013.

Investment and exports provide moderate support, causing the economy to grow by 0.6% during the

April-to-June period. Economic potential is estimated by the central bank to be 3.5%. (Euromonitor,

2014)

South Africa is a middle-income, emerging market with an abundant supply of natural resources;

well-developed financial, legal, communications, energy, and transport sectors and a stock

exchange that is the 16th largest in the world. Even though the country's modern infrastructure

supports a relatively efficient distribution of goods to major urban centers throughout the region,

unstable electricity supplies hinders growth. Eskom, the state-run power company, has built two

new power stations and installed new power demand management programs to improve power grid

reliability. Construction delays at two additional plants, however, mean South Africa is operating on

a razor thin margin; economists judge that growth cannot exceed 3% until those plants come online.

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South Africa's economic policy has focused on controlling inflation, however, the country has had

significant budget deficits that restrict its ability to deal with pressing economic problems. Inflation

is expected to be 6.2% in 2014. The central bank’s target range for inflation is 3-6%. (Euromonitor,

2014) After cutting interest rates several times in 2013 to help the struggling economy, the central

bank has raised rates in 2014 in an effort to combat the sharp depreciation of the rand and its impact

on inflation.

Unemployment, poverty, and inequality with a GINI index on 65.0, among the highest in the world,

remain a challenge. (World Bank, u.d.). Official unemployment is at nearly 25% of the work force,

and runs significantly higher among black youth. The jobless rate was 24.7% in 2013 and it will

slightly edge up in 2014. According to the country's latest labor force survey, two-thirds of all

unemployed are under the age of 35. The central bank estimates that GDP must grow by at least 5%

a year to reduce the jobless pool. The pace of growth should gradually improve, reaching about

3.0% in the medium term as new infrastructure projects relieve bottlenecks and private investment

strengthens. (Euromonitor, 2014) However, such rates are still much lower than required to curb

unemployment and poverty. As for the distribution of wealth, statistics indicate that the highest 10%

have over 51% of South Africa’s income and the 10% poorest have less than 1.2% of the income.

With that said, the 10% richest have a disposable income of $80,000 and the 10% poorest have a

disposable income of $427. (CIA World Factbook, 2014)

When dealing with industry contribution for employment, there are three main powerhouses,

agriculture, manufacturing, and mining. Agriculture employs about 45.8% of the work force.

Manufacturing accounts for 11.4% of GDP and employs 12.3% of the workforce. Mining accounts

for around a third of total exports and employs about 500,000 people. South Africa has diamonds,

iron ore, copper, manganese, platinum, limestone and chrome, making them one of the most

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important mining countries. The country has the world’s largest gold deposits and about 80% of

world’s platinum reserves. (Euromonitor, 2014)

The contribution of the tourist sector to the economy has doubled since the end of apartheid.

Because of its job-creating potential, the sector has been singled out as a priority by the

government. The real value of tourist receipts rose by 9.6% in 2013 and gains of 10.9% are forecast

for 2014. The government intends to raise the number of arrivals to 15 million (up from 7 million

today) by 2020 and to create a quarter of a million jobs. (Euromonitor, 2014)

South Africa’s population in 2013 totaled 52.8 million and it will reach 55.1 million by 2020. The

median age is steadily rising as well, as it reached 25.9 years in 2013, up from 19.0 years in 1980.

Fertility has been halved since 1980 and stood at 2.4 births per female in 2013 and the birth rate per

thousand in 2013 was 20.9. With a growing population, South Africa’s distribution of population

for age, sex, and ethnic groups are as follows. The age distribution starts with 0-14 years at 28.3%,

15-24 years at 20.2%, 25-54 years at 38.2%, 55-64 years at 7.1%, and 65 years and over at 6.1%.

The sex distribution is at 48.5% males and 51.5% females. The ethnic group distribution is at 79.2%

Black African, 8.9%, 8.9% colored, 2.5% Indian/Asian, and 5% other. (Global Edge, 2014)

The share of South Africa’s exports in GDP amounted to 24.7% in 2013, down from 29.6% in

2008. Exports dropped by 2.3% (in dollars) during 2013. Total exports in 2013 amounted to

86,715.5 (US$ million). Gains of 11.3% are expected in 2014. Exporters should benefit from the

fact that the rand is still relatively weak. The exchange rate per US dollar in 2013 was 9.65 and

11.12 for 2014. South Africa’s export markets are geographically varied. In 2013, China accounted

for 32.4% of the total. The EU took another 15.4% and the USA received 6.4% of the total. Basic

manufactures made up 23.9% of total exports in 2013 followed by exports of crude materials

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(excluding fuels), which amounted to 19.1%. South Africa’s export destinations in 2013 for percent

share are as follows: Asia Pacific=47.5, Europe=18.6, Africa and the middle east=16, Other

countries=8.8, North America=6.9, Latin America=1.4. (Euromonitor, 2014)

South Africa continued to depend on industrial imports. Imports totaled 101,285.7 (US$ million) in

2013.‘Machinery and Transport Equipment’ was the largest import item, accounting for 34.1% of

total imports in 2013, followed by ‘Mineral Fuels’ (22.8%). Import demand suffered in the face of

industry-related shocks in the country; 35.1% of total imports were sourced from the Asia Pacific

region in 2013, led by China at 16.2%, followed by Europe at 30.0%. Subdued economic activity in

China and the eurozone could potentially create supply shocks, thereby making imports costlier for

South Africa. (Euromonitor, 2014)

2.3 Cultural dimensions of doing business in South Africa

2.3.1 Religion and Language

Christianity is the main religion, with different variations, like Protsetants (36.6%) being the biggest

religion, followed by Other Christians (36%) and Catholic (7.1%) (CIA World Factbook, 2014).

The country, however, is officially secular. In a business context, religion is a topic rarely

discussed. South Africa is a very diverse country as there is 11 official languages, but most people

also speak English which is also the language used by government and in the media. So despite the

fact that the majority if languages spoken differs having English being used on the webpage, social

media and other advertising messages will not be a problem.

2.3.2 Recreation and Sports

The three most popular sports in South Africa is Soccer, Cricket and Rugby respectively. South

Africa hosted the World Cup in Soccer in 2010, which really brought the nation together. Sport in

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general is a topic which unites this, rather young Republic despite of race, social status or likewise.

Brooks’ South African distributor informed us that Trail Running, Park Runs and Time Trails are

increasingly getting popular, which is also why Brooks is present at these events every weekend.

Likewise, a major attraction is the Exhibitions: Comrades Marathon Expo and Two Oceans

Marathon Expo, which are attended by 45,000 people and over 11,000 runners.

2.3.3 Communication and business customs

In terms of non-verbal communication, one thing that should be considered in a business context is

eye contact. It should be maintained, but South African’s might “roam”, because maintaining eye

contact too long is seen as a “challenge” and because of the Apartheid history in the country, the

black population often do this. Likewise, direct confrontations are usually avoided by the black

population, otherwise it is fairly direct. Sensitive topics like religion, class and race should also be

avoided in a professional setting. As mentioned, sport is very popular and would probably be a

relevant informal topic. The initial contact will differ a bit depending on gender. Usually shaking

hands, smiling and making eye contact is the norm, but women might just nod their head. In any

case, one should wait for them to extent their hand for a handshake. Likewise Women should expect

condescending behavior in a meeting, as they rarely hold high.-level jobs. South Africans in general

seek a win-win situation but do not like haggling over price. They view deliver dates as fluid, so it

should be clearly determined.

Hofstede’s Model of Cultural Dimensions

- Power Distance (49): To a large extent, South Africans accept hierarchical order.

- Individualism/Collectivism (65): South Africa is an individualistic society

- Masculine/Feminine (63): It is a masculine society,

- Uncertainty Avoidance (49): Fairly low, as they have flexible work schedules, etc.

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- Pragmatism (34): They respect tradition, save little for the future and attempt to achieve

quick results

- Indulgence (63): They want to release impulses, have fun and enjoy leisure activities

If you take a look at the Hofstede Dimensions of SA and compare it the United States, there are

very similar trends. Where Individualism is the only one which differs more than 9 points, the rest

are similar. It should however be considered that these numbers are based on the White Population,

and this this picture might be misleading. As mentioned, the black population still act as

subordinates to white people in certain context (like the “roaming eyes”) and therefore the Power

Distance Dimension might be higher than shown here. Unfortunately, no other data is available.

The Hofstede analysis also shows that there is a high level of individualism, but this might not be

reflective of the rural, black population. "The coloured and more traditional Afrikaans cultures

consider their extended family to be almost as important as their nuclear family, while the English-

speaking white community places more emphasis on the nuclear family." (KWintessential, u.d.)

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Material Life: South Africans Middle-Class families tend to enjoy shopping in malls as a leisure

activity. It has also been where Brooks is currently selling most of their products. Brooks currently

sell around 12,000 shoes a year and have achieved a number 3 position in the Performance Running

market. A future concern, could be how "Many consumers are keen to enjoy the status of wearing

apparel and footwear carrying the name of leading sportswear brands but are unwilling to pay a

high price for genuine articles and have little interest in quality or design with regard to these

products." (Euromonitor, 2014) With the economic growth and a hopefully lesser level of

unemployment, those who lack affordability now will gain it in the future, but their consumption

patterns might reflect this trend as they would likely want to display their “wealth”. The lacking

affordability is a problem due to unemployment. The distributor informed us of an unemployment

rate of 60%, where we ourselves found the number to be around 25 %. In any case, a great deal of

the possible target market is currently excluded

Education: Education in SA is a status symbol. "South Africans, in general, regard education as

the most important asset in life and would be delighted if you also have experience in your area of

expertise." (Centre for Intercultural Learning, u.d.)

3 Part 2: Market Analysis and Marketing Plan

3.1 The Market

The sports footwear market in South Africa can be separated in to sport inspired footwear and

performance footwear, brands like Nike and Adidas are in the category of sports inspired footwear

and Brooks and their biggest and closest related competitors (that we will mention who are later in

this report) are in the performance footwear category. But both Nike and Adidas are now also trying

to address some of their models to the performance footwear category. The general sports footwear

market in South Africa is highly affected by the consumer who wants flashy shoes in powerful

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colors. A lot of the South Africans like to show that they have the money to buy well-known brands

and especially Nike and Adidas is very attractive and popular brands. The market is also affected by

the economy and the fact that there are a lot of poor people in South Africa and that the diversity

between the rich and poor people is really big as mentioned in the section about the economy. The

rich people love to show their economical wealth by wearing these popular brands, but the poorer

people do also want to wear this type of shoes but they can not afford to buy them, the market

therefore experience a strong competition from counterfeit products (Euromonitor, 2014).

3.2 Consumer buying patterns

Sportswear in South Africa (Euromonitor, 2014)

As mentioned above the South African consumers like flashy and colorful shoes, and if the

consumer is wealthy they tend to buy well-known brands, this is the typical pattern for the

consumers who buys sports inspired shoes, from brands like Nike and Adidas. The mentality from

South Africans is that they want to wear these brands, but they do not want to pay the high prices,

and they have a little interest in quality, so that is the reason for counterfeit products being such a

strong competitor in this market area.

Running is gaining popularity in South Africa and endurance and marathon running attracting a lot

of tourists. As an impact of the gaining interest for running also long distance running, the South

African consumer that wants to run is now more aware of the quality of the shore that is a reason for

that the performance footwear category is not as effected as the sports inspired footwear by

counterfeit products. This is really good news for Brooks.

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3.3 Market size

3.3.1 Brooks sales

From the distributor in South Africa we received the sales number from Brooks. The distributor told

us that there was two seasons every year each of them covering 6 months. Every season Brooks

sells 6,000 pairs of shoes so a total of 12,000 pairs of shoes each year. The first season is from

January until June and second season is from June to January. Brooks experience their sales peak

just after going into a new season, so in January and June. The prices in South Africa follows the

prices in USA, which put the Brooks shoes as some of the most expensive ones on the market,

especially right now because of the depreciation of the Rand against the US Dollar. The price range

for a pair of Brooks running shoes in South Africa is between 135$ and 200$ (Sportsmans

Warehouse, 2014). The distributor told us that the most popular model was the Glycerin for both

men and women, followed by the Ghost and Adrenaline GTS model. The Glycerin model is also the

most expensive model. Without knowing the exact sales number of each model we have calculated

the total sales for Brooks shoes in South Africa by taking the average price of their shoes which is

167.5$ multiplied with the total sales of 12,000 pairs the total sales for Brooks shoes is:

167.5*12,000=2,010,000$ per year.

3.3.2 Industry sales

The industry sales for Brooks can cover both apparel and footwear because they are both selling

clothes and shoes. But for this project we will focus on the footwear market. Euromonitor divides

sports footwear into three groups; Performance footwear, outdoor footwear, and sports-inspired

footwear. Brooks shoes fall into the category of performance footwear, this category is more

focused on high performance for runners and is products of high quality. In 2013 this category

generated a total sale of 5,096,800,000 Rand or approximately 459,000,000$ the total sale of sports

footwear in 2013 was 1,216,000,000$ according to Appendix A

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The sports footwear industry is experiencing a quiet high growth, from 2012 to 2013 the total sports

footwear market had a growth of 8.2% and performance footwear had a growth of 9.9% according

to Appendix B. That especially the performance footwear experiences a high growth is good news

for Brooks because this is exactly the type of product they are selling.

Euromonitor do also have a forecast for the growth in sales of sports footwear from 2013 to 2018.

As seen in Appendix C the expected total percentage growth in performance footwear from 2013 to

2018 is 7.3%. Which is also good news for Brooks because that means that their target market will

continue to grow in the future compared to for example the numbers for sports-inspired footwear

that will experience a decline of 0.3% in the same period.

3.4 Competitors

The distributor told us that Brooks’ biggest competitor in South Africa of the brands operating in

the performance footwear category is Asics. The distributor told us that Asics hold a market share

of 42% of shoes sold in Specialists Running Account stores, and hold 23% of market share in

performance footwear in all stores. This is a high number, so Asics is by far the biggest brand of the

high performance shoes. Other big competitors that our distributor mentioned are New Balance,

Nike, Adidas, and Saucony.

The competitors prices range from 65$ to 215$. Generally, for all of Brooks competitors are that

their price range are bigger and the prices starts lower than Brooks’ prices. Asics price range is from

80 to 215$, Nike range from 80 to 170$, New Balance range from 65 to 170$, Adidas from 65 to

205$, and Saucony range from 140 to 175$ (Sportmans Warehouse, 2014). Comparing Brooks and

their competitors price ranges indicate that Brooks is placed in the higher end of the price range.

Asics use different retail stores like Brooks to sell their shoes in. But as mentioned before there is

these Specialist Running Accounts where Asics holds 42% of the market share in, so Asics both use

generally retail stores and these special stores to distribute their shoes.

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3.5 Marketing Plan

3.5.1 Target Market

Because of the high, inflexible price of the product, the target market is set by the differences in

affordability. Mainly adults, 25 and older, who look for a superior quality product will be

purchasing the shoes, as they more likely have a stable income and are interested in keeping in

shape, by running. Brooks’ target is thus everybody who enjoys running and values high quality

products.

3.5.2 Positioning

Some of Brooks’ competitors also focus on other sports than running. A couple of the most known

companies who do this are Nike and Adidas, who sell sports shoes for almost every sport in the

world. Asics also operates in other markets than running, such as the production of rugby shoes as

well as sponsoring the South African National Rugby Team (Asics.com, 2014). Because Brooks’

only focus is on running, we recommend that they keep positioning themselves as a high-end

running performance shoe. For example, Asics shoe models are priced in a wider range than

Brooks’ shoes, the cheapest can be bought for 80$ and up to 215$ for the most expensive model

which can send out mixed signals about the quality (See Appendix D) Brooks should keep focusing

on running especially because Brooks is still a small competitor in the market, so it is even more

important that they send out a clear signal about their positioning on the market, so that they will be

known as this high end product.

3.5.3 Distribution

From a macro perspective there is two distribution channels, one selling through selling through

retail chains and another through small specialty stores. The leading brands such as Asics, Nike,

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Adidas and New Balance are all represented in both. Brooks should therefore attempt to get their

product into these stores. One of the retailers is Sportsman’s Warehouse who is owned by

Holdsport. “The company operates through a network of 35 sportsmans warehouse and 20 outdoor

warehouse stores. It operates around 54 retail stores in South Africa and one in Namibia.”

(Marketline, 2014) Using this distributor will be ideal, as it has a great amount of stores in South

Africa. Because South Africans like shopping in malls Brooks will need to be present in these. A

challenge is getting out to the rural areas, as the current distributor also pointed out to us, but

because of the affordability issue – and the fact that most poor people live in the rural areas, it is an

unwise decision to have distribution in those areas, especially the Eastern Cape Province, with an

GDP per captia under $4,000. (Geocurrent.info, 2014) We therefore target urban areas. Currently

Brooks have one wholesaler who works as their export/import partner and has the direct contact

with the retailers and do the promotion currently. Brooks currently also sells their product in the

Specialized Running Accounts (SRAs), which are small independent stores throughout South

Africa. These types of stores often have better service and sales personnel with greater expertise and

can therefore often guide the customer to the right shoe. In the major chain-retailers as part of our

promotion, we still want to give the customer guidance when they are buying their shoes. Therefore,

we want to put a salesperson, from Brooks, out into these stores to guide, help and promote brand

awareness.

3.5.4 Promotion

The cost of 80 TV-spots, each being 30 seconds, long costs around 33,000 USD (375,000 Rand)

(SABC, 2014), meaning TV-spots are not an option with the 50,000 USD advertising budget. Most

of the advertising and promotion will therefore be done via the Webpage, Social Media and Direct

Sales.

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3.5.4.1 Social Media in South Africa

“Facebook still remains South Africa’s favourite social media platform with 11,8m users locally.”

While YouTube has 7,2 million users, Instragram has 1,1m users, but has increased from 680,000

last year. (van der Berg, 2014) Despite these relatively low numbers compared to a 48 million

population, internet usage is increasing rapidly.

(Euromonitor, 2014)

What we propose to do is, to have photo competitions on Instagram. Instagram is a social media

driven by its users, meaning firms should limit their level of advertising on it, and rather interact

with the customers. Searching for hashtags (#) with #Brooks or #Running and replying to the users’

posts is a great way to interact with them and make them feel appreciated. It is a way to spread

Word of Mouth. The article, “SA in social media by the numbers” also concludes that firms are

heavily increasing their budgets in the next year as to Facebook and Twitter. Brooks needs to be

present here as well, with their promotion. Facebook is a place to post promotional videos, pictures

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and other advertisement, Twitter and Instagram is interactive and Brooks needs to be better at

finding these posts and giving their consumers feedback. Brooks should furthermore encourage this

interaction by doing competition on the social media, having the consumers post pictures and giving

away running gear for the winner.

3.5.4.2 Direct Sales

As customization is important when buying running shoes, some expertise and guidance is

necessary to sell product, the salesperson will have knowledge about running and knows how to

find the right shoe that fits the customer. Brooks’ core competencies lies in its superior

specifications on the shoes and the fact that it is a company, which only sells running gear.

Therefore, the customer must associate these things with Brooks as well as a Consumer Perceived

Benefit. When the customer goes to the major retail stores, they will not get the guidance they could

have gotten in the SRAs. Because there are more customers the amount of time the sales personnel

will have for each, is less than in the SRAs. That is why we need a Brooks salesperson in these

stores. He/She will help and guide the customer about the product and have them sign up on

Brooks’ webpage, creating a profile with the type of shoe fits them, so that they can order a new

pair, online when the current ones are worn out. That way we can exploit the increasing internet

retailing in South Africa as well as keep track of the consumers and their consumption patterns.

Furthermore, Brooks will have running programs, diet-plans and likewise adjusted for the

customer’s profile. That way they can be more engaged with Brooks and keep track of their own

progress.

3.5.4.3 Events

The distributor told us that they already participated in different events such like road running races,

trail races, triathlons etc. The distributor told us that they were having exhibitions of Brooks

products at two of the biggest running events the Comrades Marathon Expo and the Two Oceans

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Marathon Expo. These events are more professional but since Brooks’ slogan is “Run happy”

Brooks should look more into amateur and family events. Cause it does not matter whether you are

able to run 2 miles or a whole marathon, you can still have fun while you are running, and that is

what Brooks should look in to in the future. An example of an event Brooks could consider to

sponsor or be represented at are Onrus (Onrus 10km & 6km Fun Run, 2014) 10k or 6k fun run, this

event is placed close to the metropolitan city Capetown. At this event it is both possible to run and

walk, so almost everybody can participate in this event and that gives Brooks a broader target

group.

4 Summary

There is definitely a move to improved fitness and wellness amongst South Africans. The number

of races, walking and running, have increased substantially with events scheduled every weekend

across the various provinces in South Africa. Events are a key focus for Brooks and currently are at

events every weekend. Profiling the brand at a grass roots level gives them the opportunity to

connect with runners. As Brooks expands throughout South Africa, events will extend to Road

Running Races, Trail Races, Triathlons, Duathlons, Time Trials, etc.

Although running is becoming increasingly popular throughout South Africa, Brooks also faces a

number of challenges. Brooks is considered as a technical performance running brand. From a

pricing point of view this places the brand in the upper tear pricing category for running shoes. The

pricing strategy for Brooks in South Africa follows that of US and Europe which is to price within

the top tear pricing bracket for running shoes. The continuous depreciation of the rand against the

dollar is challenging Brooks’ competitiveness. In performance running, Asics holds approximately

42% market share, followed by New Balance (price point driven), followed by Nike (Nike Free

contributes to this success) and then Brooks, Adidas and Succony would be more or less on par with

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each other. Each of the competing brands has more than 13 years on Brooks. Currently Brooks has

the most expensive shoe in the market within the core collection. Thus, a major challenge is to

convince the market that Brooks makes the highest performing shoe among its competitors.

Considering everything up to this point, the primary challenge is affordability. South Africa has a

very high unemployment rate and the Mass Market, for the most part, is excluded due to

affordability. Outlying provinces like Mpumalanga, North West, Limpopo and Northern Cape

predominately offers a limited distribution and these areas are very price sensitive given the

economic conditions of these areas.

As for the future of Brooks, specifically for advertising, it is important that they focus on the

Brooks South Africa Website as well as Social Media channels. Advertising in Magazines will still

play a role with financial growth, and the advertising budget will increase, giving Brooks the

opportunity to get a broader spread in advertising and an increase in the frequency.

The Target Market is runners in all shapes and sizes as well, but mainly adults 25 and older, with

stable income

The Positioning Strategy has to maintain the running focus, as competitors are focusing on other

sports. Likewise, the price ranges are also more flexible by the competitors, further enforcing a

Top-quality, high-price product.

Lastly, we gathered a few fun facts from our in depth research of South Africa. One interesting fact

that aids in South Africa’s economy is that it is extremely rich in mining and materials. South

Africa is considered the world’s leader with about 80% of all the world’s platinum reserves and the

top ranked gold producing country with around 41% of all the world’s gold. Another interesting fact

about South Africa is that it was formed only 20 years ago in 1994. It is a young country that has an

emerging market and forecasted for growth in the coming years. Lastly, South Africa is rated as one

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of the most unequal countries in the world. According to the Gini Index, it is rated 4th at 63.1 out of

100. (World Bank, u.d.)

5 Appendix

5.1 Appendix A

21


(Euromonitor, 2014)

5.2 Appendix B

(Euromonitor, 2014)

5.3 Appendix C

(Euromonitor, 2014)

22


5.4 Appendix D

6 Bibliography

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South Africa Marketing Report

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