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Biggest challenge for brands

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Today, technology and fashion brands have become more prominent than the brands most of us grew up with or still use every day – how has this become the case? THOMAS OOSTHUIZEN, Global Consulting Director at Acceleration, delves into the theory behind this.

We know strong and differentiated brands drive revenue, profit margin and shareholder value growth. Apple, Google and Facebook are three recent examples of this.

Yet, overall, brands have declined in stature over the years. At least many brands are under threat. Just consider how traditional brands are now lagging in the annual BrandZ (WPP) survey of top global brands. Today, technology and fashion brands have become more prominent than the brands most of us grew up with or still use every day.

There are several reasons for this:

Low growth in many industries which led to the consolidation and rationalisation of brands. Brand efficiencies across manufacturing, logistics, technology and marketing have become key drivers for success. This means differentiation and consumer value proposition discussions now often take the back seat.

The commoditisation of many industries and brands. This is evident in the decline of margins in many industries and an increase in the number of price sensitive consumers. Consumers knowing they can get a “good deal” if they shop around online, which reduces the impact of brands. Also, because social media make brand comparisons between friends easy, it further reduces the impact of brands.

The result is that consumers are no longer that loyal to brands. Even within emerging markets – once seen as (new) positive momentum for brand stature – the consumers go through a fast learning curve enabled by technology.

The empowerment of the consumer – and the availability of information on brands as well as endorsements (or criticism) by other consumers or trusted independent advisors. This undermines simplistic and “un-true”/ “half-true” statements by brands, further eroding differentiation. Outside of brands that are very emotional, like watches and fashion, it is not easy for brands to justify margins if they are the same as other brands.

Perceptually, a decline in brand differentiation in many industries, notably in financial services, telecommunications, retailers, media, ISP’s, automotive, energy, utilities and airlines. Whilst there are exceptions, the vast majority are perceived as “so-so”. Consumer research has seen this decline over a period of years: consumers view these brands as more and more similar.

Parity of product and service quality. Most brands are simply similar in how they deliver to consumers. This may partly be as a result the notion of benchmarking – pursued by most corporates at some point – which essentially made the business foundation of brands the same within the same product or service category. The same technologies being available to all have also played a role in this, i.e. telecommunications companies.

Yet, one of the key issues that face brands – it has started very subtly but is about to accelerate, is the issue of dis-intermediation. Largely enabled by digital technology.

In more and more instances, the interface between consumers and brands has declined to a level where it will be hard to regain the high ground.

The most obvious place for this is comparative websites that compare offers from various brands to select the one most suitable for a given consumer. This is rife in banks, insurance, travel, consumer goods, etc.

Another example, the bank account and the bank that is debited at the end of an Amazon transaction, is less evident than when we physically took our cheque books out to pay accounts, do online banking or use a credit card in a store. We may not even remember what account is linked to what transaction anymore.

Similarly, the telecommunications service provider is far less salient when I use Facebook, LinkedIn, WhatsApp, Messenger, iTunes and any one of a given number of brand applications. Or when I use an independent retailer to top-up airtime. Whereas with voice and sms the service provider was clear, it is no longer as clear in the sheer number of hours spent on a device doing other things. This is until such time as the brand does not deliver (bad call quality, slow data speeds, coverage issues) – and then the trigger is negative.

Even in entertainment media and content per se, parity has started. We will be watching a program not knowing whether it was produced; aired or streamed through Sky, the BBC, Amazon Prime or Netflix.

The airline I may eventually use when booking through Xpedia; the hotel through Booking.com; the brand of fridge I buy through Amazon.com, even the backpack or shirt I buy online.

We know that new brands that offer simple, direct solutions (Uber, Airbnb) are – contextualising the competitive space for consumers. Hence in salience, they define different solutions amongst new groups of consumers. This may mean for younger consumers, some older brands will never take-on the significance they once had. To change this will require hard work by brands. Some industries – as a result – are under enormous threat, notably telecommunications, retailers and banks.

Yet, there is hope!

Simply considering the recent launch of the new Tesla smaller and cheaper electric car, differentiation still works if it is substantiated and credible. Yet, there is a window within which a brand needs to either redefine itself or create a new brand that will cannibalise it.

Bottom-line, don’t wait too long! Once a brand decline starts to accelerate beyond a certain level, it takes serious executive time and resources to correct – and the outcome is not guaranteed

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When will we stop calling them phones?

If you don’t remember when phones were only used to talk to people, you may wonder why we still use this term for handsets, writes ARTHUR GOLDSTUCK, on the eve of the 10th birthday of the app.

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Do you remember when handsets were called phones because, well, we used them to phone people?

It took 120 years from the invention of the telephone to the use of phones to send text.

Between Alexander Graham Bell coining the term “telephone” in 1876 and Finland’s two main mobile operators allowing SMS messages between consumers in 1995, only science fiction writers and movie-makers imagined instant communication evolving much beyond voice. Even when BlackBerry shook the business world with email on a phone at the end of the last century, most consumers were adamant they would stick to voice.

It’s hard to imagine today that the smartphone as we know it has been with us for less than 10 years. Apple introduced the iPhone, the world’s first mass-market touchscreen phone, in June 2007, but it is arguable that it was the advent of the app store in July the following year that changed our relationship with phones forever.

That was the moment when the revolution in our hands truly began, when it became possible for a “phone” to carry any service that had previously existed on the World Wide Web.

Today, most activity carried out by most people on their mobile devices would probably follow the order of social media in first place – Facebook, Twitter, Instagram and LinkedIn all jostling for attention – and  instant messaging in close second, thanks to WhatsApp, Messenger, SnapChat and the like. Phone calls – using voice that is – probably don’t even take third place, but play fourth or fifth fiddle to mapping and navigation, driven by Google Maps and Waze, and transport, thanks to Uber, Taxify, and other support services in South Africa like MyCiti,  Admyt and Kaching.

Despite the high cost of data, free public Wi-Fi is also seeing an explosion in use of streaming video – whether Youtube, Netflix, Showmax, or GETblack – and streaming music, particularly with the arrival of Spotify to compete with Simfy Africa.

Who has time for phone calls?

The changing of the phone guard in South Africa was officially signaled last week with the announcement of Vodacom’s annual results. Voice revenue for the 2018 financial year ending 31 March had fallen by 4.6%, to make up 40.6% of Vodacom’s revenue. Total revenue had grown by 8.1%, which meant voice seriously underperformed the group, and had fallen by 4% as a share of revenue, from 2017’s 44.6%.

The reason? Data had not only outperformed the group, increasing revenue by 12.8%, but it had also risen from 39.7% to 42.8% of group revenue,

This means that data has not only outperformed voice for the first time – as had been predicted by World Wide Worx a year ago – but it has also become Vodacom’s biggest contributor to revenue.

That scenario is being played out across all mobile network operators. In the same way, instant messaging began destroying SMS revenues as far back as five years ago – to the extent that SMS barely gets a mention in annual reports.

Data overtaking voice revenues signals the demise of voice as the main service and key selling point of mobile network operators. It also points to mobile phones – let’s call them handsets – shifting their primary focus. Voice quality will remain important, but now more a subset of audio quality rather than of connectivity. Sound quality will become a major differentiator as these devices become primary platforms for movies and music.

Contact management, privacy and security will become critical features as the handset becomes the storage device for one’s entire personal life.

Integration with accessories like smartwatches and activity monitors, earphones and earbuds, virtual home assistants and virtual car assistants, will become central to the functionality of these devices. Why? Because the handsets will control everything else? Hardly.

More likely, these gadgets will become an extension of who we are, what we do and where we are. As a result, they must be context aware, and also context compatible. This means they must hand over appropriate functions to appropriate devices at the appropriate time. 

I need to communicate only using my earpiece? The handset must make it so. I have to use gesture control, and therefore some kind of sensor placed on my glasses, collar or wrist? The handset must instantly surrender its centrality.

There are numerous other scenarios and technology examples, many out of the pages of science fiction, that point to the changing role of the “phone”. The one thing that’s obvious is that it will be silly to call it a phone for much longer.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube
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MTN 5G test gets 520Mbps

MTN and Huawei have launched Africa’s first 5G field trial with an end-to-end Huawei 5G solution.

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The field trial demonstrated a 5G Fixed-Wireless Access (FWA) use case with Huawei’s 5G 28GHz mmWave Customer Premises Equipment (CPE) in a real-world environment in Hatfield Pretoria, South Africa. Speeds of 520Mbps downlink and 77Mbps uplink were attained throughout respectively.

“These 5G trials provide us with an opportunity to future proof our network and prepare it for the evolution of these new generation networks. We have gleaned invaluable insights about the modifications that we need to do on our core, radio and transmission network from these pilots. It is important to note that the transition to 5G is not just a flick of a switch, but it’s a roadmap that requires technical modifications and network architecture changes to ensure that we meet the standards that this technology requires. We are pleased that we are laying the groundwork that will lead to the full realisation of the boundless opportunities that are inherent in the digital world.” says Babak Fouladi, Group Chief Technology & Information Systems Officer, at MTN Group.

Giovanni Chiarelli, Chief Technology and Information Officer for MTN SA said: “Next generation services such as virtual and augmented reality, ultra-high definition video streaming, and cloud gaming require massive capacity and higher user data rates. The use of millimeter-wave spectrum bands is one of the key 5G enabling technologies to deliver the required capacity and massive data rates required for 5G’s Enhanced Mobile Broadband use cases. MTN and Huawei’s joint field trial of the first 5G mmWave Fixed-Wireless Access solution in Africa will also pave the way for a fixed-wireless access solution that is capable of replacing conventional fixed access technologies, such as fibre.”

“Huawei is continuing to invest heavily in innovative 5G technologies”, said Edward Deng, President of Wireless Network Product Line of Huawei. “5G mmWave technology can achieve unprecedented fiber-like speed for mobile broadband access. This trial has shown the capabilities of 5G technology to deliver exceptional user experience for Enhanced Mobile Broadband applications. With customer-centric innovation in mind, Huawei will continue to partner with MTN to deliver best-in-class advanced wireless solutions.”

“We are excited about the potential the technology will bring as well as the potential advancements we will see in the fields of medicine, entertainment and education. MTN has been investing heavily to further improve our network, with the recent “Best in Test” and MyBroadband best network recognition affirming this. With our focus on providing the South Africans with the best customer experience, speedy allocation of spectrum can help bring more of these technologies to our customers,” says Giovanni.

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