Verimark has demonstrated a history of success in direct response TV marketing – and owning its own brands has set it apart from the rest
Written by Ben Lobel & Produced by Stuart Shirra
JSE-listed Verimark is a huge name in South Africa and around the world, known primarily in the direct response TV marketing field – but the responsibilities of the firm branch out from there. On the company website, the mission statement reveals that the firm aims to “bring the best innovations from across the globe, to consumers in South Africa and other selected territories”. Speaking to CEO Michael Van Straaten, who has been nominated South Africa’s Best Entrepreneur (ABSA Bank/Ernst and Young) twice, is an illuminating experience, with the boss clearly a visionary overloaded with great ideas. Primarily, how did Verimark establish itself?
As Van Straaten reveals, Verimark opened its stores 32 years ago and was started by his brother. “I joined four years later and after buying out his 50 percent shareholding seventeen years ago, continued building the business into a company that ultimately got listed on the Johannesburg Stock Exchange,” he explains.
The original premise was direct response TV commercials, which take the viewer from total ignorance to a buying decision in one advert. “It’s not the typical branding advert, like for Mercedes Benz or IBM,” expands Van Straaten. Indeed, the commercials are longer, lasting anywhere from two minutes to 30 minutes, and taking the viewer through the AIDA process (attention, interest, decision and action). The idea was pioneered in South Africa 18 years ago. “Shortly after pioneering it, it became a hugely profitable business.” The customer would see an advert on TV, place an order through a call centre and the product would be dispatched to them. It seems fairly straightforward, but then comes the crux – Verimark owns the brand names and all the “IP” (Intellectual Property) of the bulk of its products on offer.
THE BEST NEW PRODUCTS
This means a continuous process of adding the best new products into the equation. “The product sourcing sounds relatively easy but it took a long time to set up the networking systems, where to source and develop these products,” says Van Straaten. “In some cases we’ll develop products from scratch, go through the process of patenting, designing, packaging a product. But we also go and find ready-made products overseas, the key criteria for us being that the product needs to be unique, top quality and every household should want one of those products.” Verimark visits all the big trade fairs and consumer shows across the globe, from Chicago to Hong Kong and beyond. “We also go into all the stores, looking through what is unique and to find what we identify as a home run – the products generating that massive turnover,” he adds. “You go to a trade fair and you could look at tens of thousands of products at one exhibition - identifying the top two or three is a tough task.”
The company sometimes uses overseas products but, as mentioned, a lot of the products are Verimark’s own proprietary products. In some cases, the firm licenses officially from another company; an example of this is an elliptical gym trainer feature that is licensed to Verimark from a company in Canada. “But our success has been that we have the ability to develop our own IP and we are one of the few companies that has a lot of patents filed in South Africa on consumer products.”
Crucially, none of the firm’s competitors do it – they would rather just take a ready developed product; whereas Verimark does it itself.
And it works a treat. Verimark’s cookware “Bauer”, as an example, is really the number one brand in South Africa. Exercise machine “Maxxus” is well recognised in households. Kitchen appliance slice and dicer “Twista” is also well remembered in the country – that one selling two million units. “We have created brands and there is phenomenal equity in those brands to reuse them and exploit them to the fullest,” says Van Straaten.
THE TV COMMERICIAL STAGE
So what happens after the product range development stage? Well, Verimark then produces the TV commercial (most of the creative is done in-house, whilst the production is outsourced). It brings in a test quantity, tests the product, then if the test goes well, Verimark can commit to big volumes and roll the product out right through the whole distribution channel (approximately 2000 outlets). That is through all the large retailers, as well as its own “Verimark Direct” stores.
It is not a patented concept by definition - there are similar companies throughout the world. However, Van Straaten believes the firm is recognised as the benchmark in this type of industry. “Also, if it’s a big seller, we license it out into other countries that use our commercials, translate it into the local language, and we would supply them with the product, take a small markup and they would obviously sell it,” he says.
Getting the first bite of the cherry is important too in relation to high quality products. “If someone in the US has a winning product they would, in most cases, offer it to Verimark. We would negotiate an exclusive distribution agreement for Southern Africa,” Van Straaten adds.
The company believes there’s still a lot of expansion to achieve in South Africa through the large retail groups, as well as the Verimark Direct store concept. “We’ve also been approached by a number of overseas companies that want to duplicate the Verimark model and because we have the expertise, the product ranges and commercials, we believe it’s a fantastic growth opportunity,” says Van Straaten.
FACTS AT A GLANCE
COMPANY NAME: Verimark
CEO: Michael Van Straaten
OPERATIONS: Direct response TV marketing
ESTABLISHED: 1977
EMPLOYEES: 600
REVENUE: R300 million
www.verimark.co.za