Product Certification Strategy

Topics: BusinessManagement

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Last updated: April 18, 2019

1.

IntroductionAs you know, we are becoming increasingly concerned with the apparent perception that the SABS Mark is losing its brand equity in the market. (The “SABS Mark Scheme” is a Product Certification Scheme offered by TCS (Pty) Ltd, a subsidiary of the SABS.) It is accordingly necessary to decide upon an appropriate strategy that could be implemented to arrest the decline and to change market perception as to the extent of value added, or even if we should continue offering this service.2.

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BackgroundSince the introduction of the SABS Mark Scheme, whereby manufacturers were allowed to use the SABS Mark on the products and promotional material, (as depicted above), over 50 years ago, the brand equity of manufacturers and products has gained prominence. Whereas previously an endorsement by the SABS of a manufacturer’s product, provided credibility and “guaranteed” acceptance by consumers, this was no longer the case since manufacturers argue that we do not add value to their product and since their product brands are in fact stronger than ours.Moreover, concern has been expressed by industry as to the continued relevance of certifying compliance to national standards given the reality of a global economy and the need for product innovation to counter rising consumerism. Our operations are constrained by the fact that we only award the SABS Mark to products that can demonstrate consistent compliance with a national (i.e.

SABS) standard, that as you will appreciate can take up to five years to develop. As a result, many of the standards to which we certify products are often outdated and/or irrelevant.This negative trend has resulted in major clients withdrawing from the SABS Mark Scheme, resulting in diminishing revenue from this former cash cow over the past few years. If we do not implement a strategic intervention to arrest this decline soon, it may be too late.3. Strategic PositioningWhilst formerly the SABS mark provided a barrier to entry into a market, dominated by a few players, this was no longer the case. Accordingly the strategic challenge that we face is how to leverage our relative brand equity (i.

e. SABS Approved) in a manner to regain the high ground that we used to occupy, in order to create a sustainable competitive advantage. Consumerism and brand loyalty has made “SABS Approved” products irrelevant from a consumer perspective. This has been exacerbated by the unwillingness of the SABS to proactively promote its product endorsement service to the public.

There is little doubt that in a market filled with homogenous products, the SABS Mark can provide product differentiation, which clients can use to leverage access of their products within the market.Whereas previously the SABS Mark Scheme dominated the market, with reference to Porter’s five forces model, its competitive positioning, has been significantly weakened in recent years, (refer Annexure E).4. Strategic InterventionsAs a result of the aforegoing, given the relative demand for the service, the fiercely competitive environment and exacerbated constraint of the “South Africaness” of the SABS, I propose that the following strategic interventions be implemented to resuscitate the SABS Mark.

Whilst there may presently not be much demand for SABS approved products, there is little doubt that there is high awareness of the SABS Brand, although most people do not know what it represents.4.1 Change from a Product Driven Strategy to a Consumer OrientationThe operational strategy was based upon developing a certification process (i.e. the product), based on a national standard, and selling it to the customer. The service provided comprises the following steps:o Conducting an assessment of the operations and the manufacturing process of an organisation to ensure that it can consistently produce goods that comply with the requisite standard/specification:o Testing of the product to ensure complianceo Ongoing surveillance audits to ensure that the quality management system is operating as intended and that they have the capability to produce goods of the right quality, first time, every time.

What is being ignored in conducting the steps outlined above is the role of the end-user or consumer (including industrial and corporate consumers). As a result of “endorsing” the product of the fee paying client, we provide assurance to end-users that the products that they purchase from our clients, will comply with a predetermined standard, allowing them to buy the product with the confidence of knowing what they are going to get. This relationship is depicted diagrammatically in the value triangle below.Certification Services:- Assessments- Surveillance Audits & Confidence/Assurance- TestingDemand for goods and servicesIn essence what is being done is gathering sufficient evidence to provide reasonable assurance that the products of our clients, bearing the SABS Mark, complies with the relevant standard, consistently. The shift from a product to a consumer orientation will result in creating value for and end-user, that will encourage them to demand SABS Mark bearing products, stimulating demand for the products of our Mark holders.To restore the integrity and relevance of the SABS Mark Scheme will require:o Revisiting the fundamentals of the scheme (i.e. determining exactly what is being offered to clients)o Explaining the philosophy and approach of the triangular value relationship (i.

e. SABS, Client, Consumer) and the shift in focus to the consumero Developing a marketing channel on the benefits to the consumer of buying SABS branded products, whilst simultaneously looking at joint-marketing campaigns with clientso Improved and regular communication with clientso Protection of client interests and sanction/censure of non-compliant productso Structuring the operations to improve the effectiveness and efficiency of the customer service delivery mechanisms4.2 Cooperation with CompetitorsThe reality is that as a result of the insular manner in which the South African economy operated prior to democratization in 1994, the SABS brand was a barrier to entry to organisations competing within its borders. Since readmission, efficient South African firms are increasing wanting to access international markets for their products, only to discover that there are similar barriers to entry in their targets markets. Whilst the WTO prohibits the protection of inefficient industries, there is increasing trend for countries to be imposing “technical barriers to trade” (TBT) through the imposition of a requirement to comply with certain standards.Since a similar position exists in South Africa, there is room for reciprocal agreements with certain of our international competitors whereby we will recognise the certification services performed by their offshore operations (including surveillance audits, as well as the collection and testing of samples).

In order to retain control though and to protect the integrity of the SABS Mark, we will however, continue to perform the initial assessment, and every fourth surveillance audit. In exchange though we will enter into a similar arrangement with the overseas competitors to allow our clients to use their international marks on the products, whereby they too will accept the results of the certification services provided by SABS.4.3 International ExpansionThe market perception in South Africa is that products from the Far East (with a notable exception of Japan) and Eastern Europe are inferior and are not accepted as representing quality, irrespective of the extent of compliance with predetermined standards.

As a result, despite the production of a wide range quality products, firms based in the Far East and Eastern Europe are generally only managing to penetrate the bottom end of the Southern African market. Since an endorsement by the SABS provides credibility to products and leverages access to Southern African markets, we believe that a strategy of targeting manufacturers from these countries wishing to export these products to the SADC region should be embarked upon whereby we aggressively marketing our services as being a springboard for the access into the region. A SABS endorsement will provide credibility to their products, thereby facilitating access to the more lucrative upper end of the market, not previously available to products from these countries.4.4 Premium MarkThe effectiveness of the SABS Mark is constrained by the fact that we presently only certify to existing SABS national standards, which in many cases are inferior or outdated. The prominence of product, manufacturer and retailer brands that are perceived as superior (e.g. Woolworths), requires us to modify our offering to the public (i.

e. both clients and consumers), by developing and implementing a premium standard which can be used for product differentiation.5. ConclusionI have no doubt that should the above strategic initiatives be implemented that it will result in an effective resuscitation of a former cash cow, that is perceived by the market (i.e.

both clients and consumers) as adding value to the products of our clients

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