Strategy, Consumers and the Company

Guest writer Tare Kadzura elaborates on firms in South Africa, and how they manage to put utmost importance of the fundamental premise of why an organization exists: to provide products or services to consumers at a price that reflect value as fairly as possible. Plus: how online developments play a vital role herein.

A few weeks ago, I visited my local bank branch with a simple query regarding a certain product they had on offer. Fast forward 45 minutes, after calmly entering the painted glass swivel doors, I was leaving the branch extremely frustrated by the sheer lack of help coupled with a petulant rudeness from the consultant I was referred to regarding qualifying criteria for the banking product.

Now, I must admit that I'm generally in the infancy stage of social media use. I only signed up to a few social media networks after opening up to it after some well-directed peer pressure. Needless to say, I took to my twitter account as I made my way back to the office venting my frustration at the ordeal. I had never directly felt the impact of these media tools until I saw someone reply to my post saying "Move to FNB, best customer service EVER".

While I was still recovering from the surprise (especially as a newbie) that someone actually saw my tweet as something worth replying to, someone else had commented and said "no, don't be fooled, bank service is just as poor all round". By this time, I was trying to digest how the information flows were happening and then a reply tweet came from one of the representatives of the complemented bank saying "thanks for the support" in response to the initial advice to switch. After that experience, I got to thinking about firms in the South African business environment and wondered if they actually know how customer sensitive this environment is and if so, what they should do to address it.

Value for money
In proceeding with my train of thought, I tried to evaluate and form a practical opinion on particular industries and their associated top as well as non performing companies. The key issue in the context of my opinion was looking at how firms are responding to growing consumer awareness to deliver what consumers want and provide that cliché term "value for money". Failure to impress the consumer has proven to be quite the downfall for many enterprises because we live in an era where simple price differentials are not enough to maintain competitive advantage. As one entity leaves a consumer satisfaction gap open, competitor awareness to swoop in to come and provide the bridge is at heightened levels.

In the current fragile global economic environment, South Africa, even as an emerging market nation is not immune to business slow cycle down. The pressure is high on firms to control costs but still provide the service that the consumer expects if the hope is to keep the consumer returning to their doorsteps. While inorganic growth based on cost control maybe enough to survive harsh economic times, it may prove inadequate to gain competitive edge on rivals.

Just looking at recent developments on the domestic scene seems to point at the necessity of harnessing consumer centric methods to drive firm strategy and success. Seeing Capitec becoming one of the best rated banks for improved customization of consumer interaction and added ease features such as extended office hours is an example from the banking industry. Another is seeing how VW sales volumes have as of 2011 managed to surpass Toyota in the local vehicle market with better comparative reliability marketing as well as after-sales service in viewing the process of selling vehicles at the augmented product level. On the flip side, firms like Velvet Sky are virtually fighting for economic survival with issues of poor financial management at the helm.

Hello Peter
However, if one has ever taken time to follow the Hello Peter complaint website, you would have seen that severe customer disgruntlement with the company was already rife in the past and therefore makes you wonder if maybe putting the customer first and delivering on schedule low cost airline travel might have generated the necessary consumer trust and thus income to navigate the overall crisis currently in play.

It has therefore been quite a common feature for bigger corporates - especially those with a retail services orientation - to have in place a position titled community manager or also referred to as online brand manager. Part of this entails trolling through web based communication relating to consumer comments and perspectives. The importance of knowing what your consumers want has become paramount to formulating strategy.

This knowledge empowers firms to set in place efficient supply chain links and financial management policy to make the foundation for satisfactory delivery to be passed on to the end consumer. An example of this is how Pick and Pay has been generally losing market share to the other food retailers mainly Shoprite Checkers, Spar and Woolworths. All of these competing food retailers made decisions to sort out their supply chains a while ago in order to improve delivery of products to consumers. Pick and Pay only recently centralized their supply chain during which time; they lost further ground in maneuvering through the transition others had already enacted.

All in all, the hope is that firms in South Africa manage to put utmost importance and weighting on this and develop a bottom line approach based on the fundamental premise of why an organization exists: to provide products or services to consumers at a price that reflect value as fairly as possible. It is my opinion that historically, firms never placed much value on these aspects in South Africa. Consumers weren't perceived to have the necessary options and on top of that, high levels of unemployment and poverty (which are still actually present), meant that the consumer made product or service decisions based on the price tag. However the modern consumer wants more and has the means to investigate with ease and hopefully, firms realize this and do something to address related shortfalls in this regard to set the necessary long term financial success bases.

Tare Kadzura is a Chartered Institute of Management Accountants Diploma in Mangement Accounting designation holder and is currently a management accountant at Ross Munro & Associates Professional Accountants. He has a well rounded academic background in finance with a bachelors degree from UCT in Economics and Finance as well as a top percentile pass mark Honours in Financial Analysis and Portfolio Management, also from UCT. He has an interest in financial management and overall business strategy. Follow him on @tare316 on twitter.

Category: guest articles