One of the most basic principles of economics – opportunity cost – according to the Economist’s definition, is ‘the true cost of what you have to give up to get it.
Brad was shopping for his first hi fi stereo and had spent an hour debating between a R6 600 Pioneer and a R5 000 Sony. Fearing Brad’s indecision might cost him a sale, the salesman interjected saying “Think of it this way – would you rather have the Pioneer, or the Sony and R1 600 worth of CDs?”
Brad’s face lit up. The decision was clear, the Sony – and by a large margin. Fifteen new CDs were too great a sacrifice for the slightly more attractive Pioneer. Although Brad was quite capable of doing the math, he hadn’t considered that until the salesman pointed it out.
One constant in all our lives is that we must make choices. You make choices from the time you get out of bed in the morning until you go to sleep at night. All decisions involve opportunity costs, no matter the size of the decision.
Opportunity cost is your next best alternative – your second choice – and something you value. A brilliant ad by De Beers depicted two large diamond earrings with the tagline “Redo the kitchen next year.” Implying the cost of the diamonds was merely a slight delay in a renovation.
Why is opportunity cost important? Opportunity cost is what you give up when you make a decision. When you ask yourself what you are giving up when you make a certain choice, it forces you to think more critically about all of the other options that you are not choosing. It also forces you to think about the follow-up question connected to your decision – is it worth it? You may find that when you think clearly about all of your options and identify the opportunity costs of your choices, perhaps your choice is not worth what you will choose to give up.
How much is your time worth?
Your time is valuable, but how much is it really worth? When your flight is delayed by two hours, you might say ‘what a waste of time’ but do you ever say ‘that’s R1 000 of my time down the drain? It’s whatever your salary works out to per hour.
The opportunity-cost equation simply tells you what the cost of your time is, not how you should spend it or how you want to spend it. If you would prefer to read a book than work another hour, that says that you value the time relaxing more than your salary rate. All this calculation gives you is a benchmark against which to consider what you are doing with your time. The crucial application is in thinking about how you want to spend your time
Consider stationery shopping. You can order through your stationer and have the supplies delivered in a day or two. Or you can go to a wholesaler and spend two hours out the office. There’s no delivery fee for the former, but maybe there are higher priced items and a markup. Which is the better way to shop? This opportunity-cost idea makes the decision easy: Is the markup or higher prices smaller than the value of two hours of your time? If yes, delivery. If no, head to the car.
Applying opportunity-cost theory won’t always change your behaviour but can simply be a useful tool to understand why things are the way they are.
A quick look at the pros and cons of entering the online retail market
Online shopping in South Africa has continued to hit record highs, especially during last year’s holiday season when online spending increased between 30-40% compared to previous years. The country’s internet economy has been projected to double to R103bn by 2016 from the R51billion recorded in 2011.
Recent studies reveal that the internet economy contributes 2% to South Africa’s GDP and this contribution is rising by about 0.1% every year, resulting in 2.5% increases by 2016.
What does this mean for South African’s retailers?
An increase in online shopping is driving structural changes in the retail sector, according to a recent report issued by PwC.
Online users in South Africa tend to fall within the medium to high-income sector of the population. “This group appears to have a strong pent-up demand for online services,” says John Wilkinson, PwC Retail and Consumer Leader in South Africa.
However, Wilkinson says that South Africa’s online retail market is still relatively small and niche with a strong focus on consumer products such as books, music and DVDs. “This is unlike many of the developed markets, such as Asia and Australia, where there has been an explosive growth of online retailers. Suffice to say there is huge online potential that has yet to be discovered and tapped in South Africa.”
Having already set up an important channel for their long-term future are Edcon’s CNA division, Walton’s with their e-store and Mr Price which are all already operating in the online retail market.
So how easy is it to tap into this market? Let’s consider the pro’s and con’s:
There’s no loss to theft
You have access to 24 hour sales
You have national and international reach
Less employees are required
You can collect more data and get better visibility of your customers buying behaviour online, from age and location demographics, initial search terms, related items they are interested in and much more, easily collected via a simple analytics program.
You look bigger than you actually are
You van stock more items. A retail storefront will perform better for a business that sells a select amount of products, while an online store may work better for a business that carries an extensive selection.
Environmental factors such as position, weather, traffic, parking or increased petrol prices don’t affect you.
No bottlenecks or customer queues
Your customers can easily promote your products via sharing on social platforms such as Twitter, Facebook and Pinterest at the click of a button. (Word of mouth marketing is very powerful and it is much easier for you to encourage this via an online store.)
There is more competition online – the web is where people go to get bargains and consequently competition is fierce. Margins in online retail tend of be lower than on the high street and so retailers need to compensate by selling more.
There is more admin required
There is less customer contact
There is no touch or feel of quality for customers and returns are time-consuming
There are lower margins. It has been found that consumers pay significantly more for products they can view in person and for the ‘experience’ within a retail store.
Postage and shipping costs can be expensive
There is no passing foot traffic
There is less impulse buying
There is a dependency on hardware
There is less trust of the brand or product.
The solution? To have both of course.
What you will need:
An online payment system such as Paypal for example.
You will need to pay for web hosting and technical support
You will pay for shipping and accepting online payments.
You will pay for your desired domain name and for someone to develop your website and e-commerce platform.
You will need to handle fulfillment and shipping
You will need to maintain it.
Building a customer base is one of the most-essential components of starting a successful retail business, online or offline. With a retail store, the potential customer base is limited to the surrounding area. Online, the customer base is limitless.
E-learning makes educational content available electronically, free from language, literacy, and social constraints.
In the current economic climate, many businesses find themselves having to cut training costs, however companies can save up to 70% on training costs if they consider the opportunity of e-learning to up skill their workforce.
E-learning refers to any form of electronic learning or teaching. Designed to be interactive and to incorporate quizzes, games and video to enhance learning, learner material is provided through film, animation, learning games or learning mobile applications, depending on which is the best solution for the intended audience, delivering “what is needed, when it is needed”, aligning training with the company’s business goals and objectives.
E-learning classes tend to be up to 50% shorter in duration than traditional classes and, according to certifyme.net, retention of information is increased by up to 60%. This contributes to increased productivity, which in turn adds to further cost savings.
Being highly accessible, e-learning means that trainees can use it just about anywhere, at any time, on any device and it is intended to remove the focus from the trainer and transfer it onto the student, who is able to assess his or her own development, as they progress with the course. Question types, time limits, pass marks and the type of assessment used, are tailored to each unique situation.
Africa has become the most dynamic e-learning market in the world with a 38.6% growth rate of cloud-based e-learning products. “E-learning is currently a $56.2 billion business globally, and is likely to double in size before 2015 and this is because it works,” says e-learning expert, Kirsty Chadwick, of e-learning design and development company, The Training Room Online, a company which designs and develops tailor-made e-learning material for the corporate, industrial and private sectors.
“Many organisations in Africa who choose e-learning also benefit from the fact that language, literacy and numeracy gaps are overcome by highly visual e-learning material that makes vital training available to all, irrespective of differing education levels.”
“E-learning products are tailor-made to suit the specific needs of the company and more specifically, the learners and include basic computer literacy courses available, which will teach learners anything from turning their computers on, to connecting a printer,” said Chadwick.
Brand is made up of quality and service. The logo is the image of the brand, and people remember it through the experience your business delivered.
Your brand is your reputation — the most valuable thing you possess. A strong brand and the trust it engenders are the only aspects of your company that competitors can’t steal.
Brands are also the most powerful business tools in business as they help customers to understand the positioning of products in their market contexts, and encourage customers to come back for repeat business.
The path to brand awesomeness is 1) a promise 2) a personality and 3) unwavering focus on that promise that will ultimately deliver you brand equity.
What remains key for a brand to be successful in its industry is consistency. It must consistently deliver great services and great results from its product lineup or multiple services.
Research into current trends and your own brand’s data will improve your products and services in the creation of a successful brand, and enable the company to compete efficiently. This is why research and development is a must in any business.
What do great brands share?
- a compelling idea that captures customer’s attention and loyalty by filling an unmet or unsatisfied need.
- A resolute core purpose and supporting values. These remain in place even through the business strategy, where tactics are regularly revised to address and take advantage of the circumstances of the changing business environment.
- A central organisational principle. The brand position, purpose and values are employed as management levers to guide decision-making. This becomes so ingrained in leading organisations that they consciously ask themselves, “How will this decision impact upon the brand?” or “Is this on-brand?” According to Shelly Lazarus, chairman of Ogilvy & Mather: “Once the enterprise understands what the brand is all about, it gives direction to the whole enterprise. You know what products you’re supposed to make and not make. You know how you’re supposed to answer your telephone. You know how you’re going to package things. It gives a set of principles to an entire enterprise.”
- An ability to stay relevant. Leading brands constantly maintain their relevance to a targeted set of customers, ensuring ownership of clear points of differentiation compared to the competition.
Not all brands are successful and successful brands can lose their way, the most common cause being that of lost leadership taking the brand for granted. This usually happens when brand owners treat their asset as a cash cow, eroding the original brand idea and marginalising the customer experience. It goes without saying, a good product is only as good as the accompanying service.
How do you create a great brand?
– Brands should look to relevance, differentiation and credibility. Never lose touch with your customer or ignore a potential new audience. Make your customer real. Determine your ideal customer and market to that person.
Be authentic and consistent in your messaging, visuals, and experience. If you claim customer service is your most important differentiator, then return calls and emails in a reasonable amount of time and don’t leave people in an automated telephone maze to get the help they need. If you claim quality, make sure your products are up to scratch.
Bear in mind that people need to experience things multiple times before they stick. Be clear but be consistent – they need to see your message seven times before they are likely to remember it. The Nike swoosh did not see overnight success, it spent years and lots of money making that mark mean something to people. Don’t expect one ad to get you to your sales targets, or a website to get you all your customers. Branding is not the same as direct response marketing – it takes time and it should be integrated across all your customer touch points.
Brands that communicate unique selling propositions are the most convincing to clients and the easiest for them to remember. Ensure all of your communications – not just advertising and marketing pieces – are consistent with your brand. Everything your company distributes must reflect it.
Continually promote, publicise, and invest in your brand. Building a business brand can be compared to training and conditioning an athlete: The harder he works, the better the results.
Who is a brand manager?
Brand-building skills require creative, intelligent, innovative, adventuresome, nurturing, disciplined and service focused managers. Brand managers are role models who portray appropriate behaviour and act in the best interests of the brand and company. Conversely, they must also challenge convention to keep the brand fresh by questioning what has become the status quo. They must be continually searching out what makes the brand unique. Customer preferences, competitive frameworks and market conditions are incredibly dynamic. Renewing and refreshing the brand to ensure continuing relevance, differentiation and credibility are the most strategic tasks and perhaps the most consuming tactically. Brand managers must determine what cannot change and what must change.
The questions CEO’s should be asking are:
How can my company ensure delivery on its brand promises to customers?
How can I meet sustainability concerns and protect brand value?
And how do I develop the type of workforce associated with a world-class brand?
Ultimately, brand custodianship should not just be left in the hands of the brand manager or CEO. Rather, each and every staff member should carry their own brand loyalty through their every spoken word, action and service orientation… at the end of the day it is people who interact with brands and it is their emotional dynamics that the message is tapping directly into.
With 11 official languages in South Africa, we live in a culturally diverse society and when you need help, you need help…
I confess. I have never had ability with languages. I struggled with Afrikaans at school and nearly lost my University exemption to it, only to discover to my horror that my chosen career had it listed as one of the required subjects. There I sat after lectures at 19 years of age with a set of headphones on my head repeating after a no-nonsense type of voice the correct syntax of a sentence…
I have always felt a flash of envy when watching translators in action – they possess a freedom of communication that opens borders, cultures and whole networks of business and lives. Effortlessly, they seem able to switch not only languages and accents but the very way the tongue and jaw forms the sounds, mysteriously and instantaneously taking on the haughtiness of a Parisian or the gung-ho adventurism of an Alpine-climbing Bavarian.
What wasn’t so available to me back in my day, was the availability of language learning facilities, and leading-edge technology on offer today that will launch learners into a borderless business world that will encompass the globe.
Whether you are a new learner at just over knee-height or a grizzled CEO stuck behind an oak desk, you have dedicated schools, Universities, private facilities, and corporate and legal business assistance and services at your fingertips.
The Independent Schools Association of Southern Africa (ISASA) carries a list of language specific international schools offering language education in schools, eg the Deutsche Internationale Schule, Lycée Jules Verne, Crawford Preparatory, Waldorf and Redhill schools
Fundamental to learning is the role of publishers. Heinemann Educational Publishers, Van Schaik and Via Afrika Publishers publish academic textbooks in all South Africa’s official languages and in all new learning areas. Projects such as the Reprint of South African Classics in Indigenous Languages promote reading of literature written in African languages even outside the school curriculum. HSRC Press, due to the increasing numbers of computers and diffusion of the internet around the world, looked at localisation of the technology and the content it carries via its book ‘African Languages in a Digital Age: Challenges and opportunities for indigenous language computing’. Localisation includes translation and cultural adaptation of user interfaces and software applications, as well as the creation and translation of internet content in diverse languages.
Other private services include Alliance Française, the Goethe-Institut Johannesburg and businesses accredited to train legal translators for our South African Courts.
Along with corporate talks and presentations, Craig Charnock of Ubuntu Bridge, evolves corporates into the ‘new’ South Africa: “”Craig’s classes inspired me more than I ever dreamed Xhosa classes would. The side-effects have been the building of stronger relationships with some of my colleagues, building greater trust, and allowing me to feel genuinely part of the real society of our country,” said Alan Dickinson, HR Director, SunAir International.
Ubuntu Bridge offers free downloadable MP3’s via their newsletter and XHOSA FUNDIS CC, fully accredited with the ETDP SETA started teaching via Twitter in August 2009, with daily Xhosa phrase tweets also appearing on Facebook.
Learn a new language or improve on a current language and access your world.
How often have you left a meeting feeling it was a waste of time; felt unclear as to whether anything had been accomplished; and questioning if all those action items would ever really be followed up?
If you answered yes to any of the above, chances are it’s not you – it’s your outdated meeting routine and lack of collaborative business communication tools at hand.
What makes a meeting effective?
The meeting achieves its objective, it takes up a minimum amount of time, it leaves participants feeling that a sensible process has been followed, it effects decisions, generates collaborative sharing and new ideas, and creates a process, supported by follow up status reports.
Enhanced computer-aided technologies have enabled levels of communication that leaps time and distance. From electronic mail, instant messaging, intranet and extranet links, translation, note-taking, videoconferencing and online training to more custom focussed tools for businesses to meet, share, agree and process business transactions, we have no excuse not to be communicating more precisely, fluidly and efficiently.
Streaming the digital highway
Electronic mail has overtaken the humble dialling tone, with more email addresses in the world than telephone numbers and more people have multiple e-mail addresses than multiple telephone numbers.
Instant messaging (IM) has become essentially real time e-mail, keeping managers in touch with employees and employees in touch with each other, without the delay and inbox clutter of email. The adoption of IM has been at grassroots level, much like the rise of the IPad in the business setting, where workers have carried over the habit from home or social settings in order to add speed and ease to workplace communication and eliminate time typically lost to “telephone tag” or wasted trips to a co-workers office who is absent or otherwise occupied.
Integrated web, audio and video conferencing solutions have not only streamlined, but captivated, audiences of web meetings, webinars, audio conferencing, online training seminars and multi-point video conferencing with the addition of technology that makes the best of sound, light, and emotive influences.
Increasingly sophisticated electronic collaboration tools are further facilitating audience participation by stakeholders regardless of their location and complement face-to-face meetings, email, and teleconferences, by trimming time and expenses and fostering open communication and better evaluation and project management within teams.
Regardless of differences in time zones or work schedules, software integral to the platform provides documentation of threaded discussions, audit history, and other mechanisms designed to capture the efforts of many into a managed content environment be it workflows, projects, deadlines, or sign-off on deliverables. While several well-known commercial electronic collaboration products exist such as SAP and Microsoft’s Sharepoint, there are other customised products available that offer advanced document management and user participation, for example via electronic voting systems that provide proper authentication of votes and assurance of confidentiality.
Meetings with social media
It’s been said that the social media phenomenon really isn’t anything new, it’s just new and better technology. With origins most likely born from e-mail and instant message correspondence, social media is rapidly moving from an emerging communications medium to the mainstream of marketing.
Adding a new dynamic to how we communicate before, during and after meetings and events, social media creates the ‘buzz’, listing who is going to be there and giving participants a reason to go tell others by adding embedded links to specific sites, videos or forums that promote more sharing.
Event professionals know to make sure their venue is well covered with high-speed wireless to ensure attendees will be able to use Twitter and post to blogs and other sites more easily. And they data mine the most active bloggers and attendees via their online profiles so they can invite them to associated groups, blogs and forums. The life of a meeting is then seamlessly extended by building a thriving online community that remains open to further valuable insights, interaction and information.
Digital tools still face the challenge of the human factor – the fear of technology and the resistance to investment in technical knowledge and time, as well as some of the more traditional corporate cultures that do not support open discussions and sharing of power.
What they offer in its place is anywhere (online) capability which avoids travel time and cost, increased participant availability (any place, any time), increased interactivity and participation, more sophisticated analysis and automatic, comprehensive, neutral documentation.
Modern meetings get results. Modern meetings become an action plan with assignments and timelines that are automatically tracked. The visibility of decisions and assignments during the meeting keeps everyone engaged and allow for automatic follow-up resulting in less wasted time and greater accountability.
Isn’t it time to rethink your ‘meeting of minds’?