Rooibos Step Analysis

1. Conduct a STEP analysis for Rooibos.

1.1. Introduction

Over 300 years ago the local people of the mountainous Cedarberg region of the Western Cape were the first to come to the realization that the needle shaped leaves of Rooibos (Red Bush) could be prepared into a palatable liquid drink. The locals found the needle-like leaves of the wild Aspalathus Linearis plant produced an aromatic tasting tea. The tea also yielded health benefits.

Primitive methods were employed to harvest and process the plant to produce the tea. Production today is based on the same principles however producers do employ current technology, mechanization and refining methods using systematic cultivation and austere quality control.

The Rooibos market did collapse after the Second World War and the Clanwilliam Tea Co-operative established in 1948 resuscitated the market. In 1954 The Rooibos tea Control Board was initiated by the Minister of Agriculture to regulate marketing, stabilize pricing and more importantly standardize quality.

2. Analysis

2.1. Social Factors affecting Rooibos

Boyd et al. (1990) suggests values, attributes and general behaviour of individuals in a given society represents the environment.

A desire for a natural lifestyle has resulted in an increasing utilization of complementary and alternative health remedies. Modern pharmaceuticals are being based on natural herbs and are being used successfully to treat medical aliments.

The unique properties of Rooibos addresses some of the issues in the global shift to healthier living. Rooibos is a good source of antioxidants, is the only know source of the antioxidant aspalathin . Aspalathin is known to play a significant role in combating several lifestyle diseases. Rooibos has proven cancer fighting properties. Continued research is exploring the role of Rooibos in promoting healthier hearts and preventing diabetes. Rooibos is naturally caffeine free which makes is suitable for children, infants and breastfeeding mothers.

Continued impetus into research on Rooibos especially by the South African government is required. This will lead to greater understanding of Rooibos for the great good of society.

2.2 Technological Factors affecting Rooibos

Adopting technology should be a standard practice for marketing Rooibos. Technology introduces stronger, more effective and faster production methods.

Boyd et al (1990) state technological developments has an influence on all marketing undertakings. Boyd et al (1990) further suggests these marketing undertakings includes communications by utilizing new media or selling tools, distribution by opening new channels or modifying operations and monitoring performance of existing outlets as well as looking at packaging by allowing the use of new materials and designs.

Merging Rooibos, a traditional product with technology is essential to the sustainability of Rooibos. Technology is an important macro-environmental variable. Adopting technology for convenience i.e. development of packaging, quicker and easier preparation, palatable taste and increasing shelf-life, will contribute to consumer benefit and drive sales.

The health benefits of Rooibos is well documented, increasing social media consciousness through online campaigns i.e. facebook and twitter and dedicated blogs to augment the benefits to the world market.

2.3 Economic Factors affecting Rooibos

Economic factors are of significant apprehension for Rooibos. Both local and international economic factors are likely to impact demand, costs, prices and profit. Rooibos is a uniquely South African product and thus has direct influence on the South African economy. The current South African rand @ R6.86 (07/10/2010 - http://www.exchangerates.org.uk/Dollars-to-South-African-Rands-currency-conversion-page.html) negatively affects export revenue. Down the line this affects demand and production.

The economy is a universal component of the marketing environment states Boyd et al. (1990). Boyd et al (1990) further state that the economy is the most probed, however the ability to fully understand and forecast changes in the economy is restricted. In an uncertain economic climate, Boyd et al (1990) state that population demographics, the rate of economic growth, interest rates and currency exchange rates are the most likely economic variables to affect marketing activities.

Economic factors affecting Rooibos are significantly out of the control of Rooibos. Hence during this period focus on developing a robust market mix for the local market is vital.

2.4 Political Factors affecting Rooibos

Rooibos has been fortunate to be operating in the global environment. Rooibos is exported to first world countries like United States, Germany and Japan. Rooibos future lies in the political and legislative conditions of these countries.

According to Boyd et al (1990) legislation defines the regulatory environment within which Rooibos operates. Boyd et al (1990) suggests the political environment presents not only strategic threats to the business but opportunities as well. Deregulation could possibly open new markets.

Du Plessis et al (2005) state that in South Africa this environment has become significant to business. Recent laws promulgated has direct impact on Rooibos examples are Broad Based Black Economic Empowerment and Female Empowerment. Du Plessis et al. (2005) suggests the tasks of marketing strategies is to study and research both international and local political events.

Locally Rooibos requires the political stability of South Africa. Government needs to be seen as being favorable to both employer and employee. The South African government needs to encourage competition, fair labor practices, taxation which is favorable to producers as well as supporting previously disadvantaged producers.

2. Discuss growth opportunities that Rooibos may pursue.

Micheal Porter states that vertical intergration is the combination of technologically distinct production, distribution, selling and or other economic process and as such it represents a decision which Rooibos to use internally or administratively rather than market transactions to attain its economic goals. (Porter 1980)

The emergence of new segments, health benefical foods and cosmetics with pharmaceutical benefits, the market for Rooibos has improved substantially over the past decade. This inevitably has opened new opportunities for producers, enabling producers to position Rooibos amongst