Safaricom marketing mix and it's environment

Prepared by Fred M’mbololo

SAFARICOM MARKETING MIX AND IT’S

ENVIRONMENT.

PREPARED BY FRED M’MBOLOLO

(ACCA), CPA (K)


Table of Contents

1.0 Brief History of Safaricom

1.1 Business Objective

1.2 Safaricom Vision statement

1.3 Strategic (SWOT) analysis

1.4 The STP model

2.0 What is marketing

2.1 Marketing mix (7PS)

2.1.1 Product

2.1.2 Place

2.1.3 Promotion

2.1.4 Price

2.1.5 People

2.1.6 Process

2.1.7 Physical evidence

2.2 Marketing Mix (4CS)

2.2.1 Competition

3.0 What is a Brand.

4.0 Global Networking

4.1 A brief summary of market expansion plans


4.1.1 Kenya

4.1.2 Tanzania

4.1.3 Afghanistan

4.1.4 South Africa

4.1.5 India

4.1.6 Eastern Europe

4.1.7 Other markets

5.0 Pestle overview

5.1 Political

5.2 Economic

5.3 Social

5.4 Technological

5.5 Ecological

5.6 Legal

6.0 Porter’s 5 forces

7.0 Ansoff Matrix

7.1 Market Penetration

7.2 Market Development

7.3 Product Development

7.4 Diversification


8.0 Future Expansion Opportunities

9.0 Conclusions

10.0 References

Table 1.1-Internal Environment

Table 1.2-External Environment

Table 3.0 Pestle for Safaricom

Table 4.0 Ansoff Matrix

Figure 1.1 Safaricom’s Logo

Figure 1.2 The STP model

Figure 1.3 The 7PS marketing mix

Figure 6.1 Five forces analysis of Safaricom Kenya

Figure 8.1 Kenya’s GSM Subscriber distribution


Disclaimer Statement

The information contained herein is provided as a public service with the

understanding that the Author makes no warranties, either expressed or

implied, concerning the accuracy, completeness, reliability, or suitability of

the information. Nor does the Author warrant that the use of this information

is free of any claims of copyright infringement.

The Author does not endorse any commercial service providers or their

products.


1.0 Brief History of Safaricom

1.1 Safaricom’s Logo

Safaricom Limited was incorporated on 3 April 1997 under the Companies Act as a

private limited liability company as a fully owned subsidiary of Telkom Kenya.

It was based on an analogue ETACS network and was upgraded to GSM in 1996

(licence awarded in 1999). By virtue of the 60% shareholding held by the Government

of Kenya (GoK), Safaricom was a state corporation within the meaning of the State

Corporations Act (Chapter 446) Laws of Kenya, which defines a state corporation to

include a company incorporated under the Companies Act which is owned or controlled

by the Government or a state corporation.

In May 2000, Vodafone group plc, the world’s largest Telecommunication company

acquired a 40% stake and management responsibility for the company. It was

converted into a public company with limited liability on 16 May 2002.

Until 20 December 2007, the GoK shares were held by Telkom Kenya Limited (“TKL”),

which was a state corporation under the Act. In accordance with the Government of

Kenya’s policy of divesting its ownership in public enterprises, the Government of Kenya

through the Treasury Department, on 28 March 2008 made available to the public

10,000,000,000 of the existing ordinary shares of par value Ksh 0.05 each, of the

Company. This represents 25% of the total issued share capital of Safaricom from the


Government of Kenya’s shareholding in Safaricom Limited. therefore GoK ceased to

have a controlling interest in Safaricom under the State Corporations Act and therefore

the provisions of the State Corporations Act no longer apply to it.

Safaricom’s aim is to remain the leading Mobile Network Operator in Kenya. With the

growing subscriber base, the company has employed over 1000 employees and

opened 10 retail shops in Nairobi, Mombasa, Nakuru and Kisumu. The firm has a wide

dealer network of over 152 dealers countrywide, (www.safaricom.co.ke)

Safaricom is partly owned by the Government of Kenya 35%, Vodafone 40% and 25%

is owned by the shareholders. It is worth forty billion Kenyan shillings in shares. This is

approximately four hundred million Euros. Its market capitalization is worth two

hundred and twenty two billion Kenyan shillings as at 31st of March 2010.

Safaricom is listed in the Nairobi stock exchange market with a rather low but steady

share price ranging from 4-6 Kenyan shillings. This share price is interestingly low as it

has been trading in the stock exchange market for more than 2 years having started at

5 shillings during its Initial Public Offering (IPO) way back in 28th March 2008. Some

reports indicate the Safaricom IPO was oversubscribed by 532%.

1.1 Business Objective

“Our key initiatives are targeted at sustaining customer focus and positioning us for

future success and maintain the number one- market Position”

1.2 Safaricom Vision statement:

Safaricom is dedicated to transforming the lives of our customers, communities and

colleagues. We pride ourselves in our track record of the same, and know that this is

just the beginning; we will continue to work collaboratively to impact positively the lives

across the country and beyond.


1.3 A Strategic SWOT analysis

A Strategic SWOT (strengths, weaknesses, opportunities and threats) Analysis provides

a comprehensive insight into the company’s history, corporate strategy, financial data,

business structure, business divisions and key operations. Each report contains a

detailed SWOT analysis with additional information on the key competitors, market

structure, major products, brands and services, as well as detailed financial data for the

last 5 years.

Southerland and Canwell (2004, 276)

“Swot analysis is a very suitable technique in understanding the overall future of

an organization considering the launch of new projects. Taking advantage of

these strengths and opportunities will enable this company to manage its threats

and weaknesses to ensure it maintains its high market share and provide better

services for its customers”.

In the table below depicts a detailed SWOT (Strengths, Weaknesses, Opportunities and

Threats) analysis to identify their strengths and how it can be utilized in view of available

opportunities in the market; and how their weaknesses can be downplayed such that it

does not adversely affect them, considering the threats from the internal and external

environment. Analysis for Safaricom indicates that the Internal Environment is

addressed using the strengths and weaknesses of the company and the External

Environment is addressed using the opportunities and threats facing the company.


Table 1- Internal Environment

Strengths Weaknesses

Strong capital base and

partnership with vodafone

Safaricom has strong roots in the

Kenyan market, being a home-

grown company.

A good knowledge of local

cultures and purchase-behavior of

intended customers

Huge Investments in research &

development activities in

equipment and other facilities (a

wide network coverage)

Commitment to corporate social

responsibility that has ingratiated

them to the hearts of the people,

like sponsoring the economic

empowerment projects, medical

camps, water projects and sports

projects among other projects

Wide range of products to offer.

Tough start-up and operations

legislations

Operating M-pesa (mobile

banking) has seen its subscription

base grow even more.

Even though they have a vision of

being the biggest network in Africa,

their major operations are still limited

to a few East African countries.

Relatively low levels of customer

satisfaction characterized by slow

moving very long queues at the

customer services stations

Jamming of network because of

many subscribers

Telecoms business is capital-

intensive, hence the slow pace of

international expansion.

Higher mobile charges and money

transfer charges as compared to its

competitors Airtel, Orange, Yu


Table 2 – External Environment

Opportunities Threats

A wide market potential in Africa, a

developing continent.

Communication is a basic necessity in life,

not a luxury, so the market is limitless.

It is stability provides assurance in it is

customers. It is biggest competitor has had

many changes in ownership and leadership

over the past years.

M-Pesa and its related products and

scope to increase customer base

New fiber network

Global Market

New Products and Services

Price Wars and competition

Network congestion due to many subscribers

Government regulation like changes in tax

rates and further MTR cuts

Increase in labour costs

Lack of basic amenities like power supply,

roads and water in Kenya, leading to high

cost of doing business.

Strong competitors: especially Airtel Bharti


1.4 The STP model

The STP model is useful when creating marketing communications plans since it helps

marketers to prioritize propositions and then develop and deliver personalized and

relevant messages to engage with different audiences. This is an audience rather than

product focused approach to communications which helps deliver more relevant

messages to commercially appealing audiences. The diagram below shows how plans

can have the flow from.

Audience options > Audience selection > Production positioning

Figure 1.2 The STP model diagram

Through segmentation, you can identify niches with specific needs, mature markets to

find new customers, deliver more focused and effective marketing messages.


The needs of each segment are the same, so marketing messages should be designed

for each segment to emphasize relevant benefits and features required rather than one

size fits all for all customer types. This approach is more efficient, delivering the right

mix to the same group of people, rather than a scattergun approach.

Safaricom broad customer base encompasses the full spectrum of individuals and

organizations across Kenya. They offer voice, data and financial (mobile money)

products and services to both consumer and enterprise customers.

Consumer customers are individual purchasers of goods and services while

enterprise clientele are business of all sizes, ranging from small-to-medium

enterprises (SMEs) to large corporate firms. Their total customer base, 99% are

consumer customers and 1% are enterprise clientele.

Each type of customer is managed by its own Business Unit; namely, the

Consumer Business Unit (CBU) and the Enterprise Business Unit (EBU).

They also have two customer segments in the Enterprise Business Unit these are the

SMEs and large corporate clients.

Currently the individual customers are given a bonus storo time after hitting a certain

target time of talking, also if one subscribes to their facilities, the customer can send

text messages at subsidized rates, voice mail services and automatic call me back text

messages. The M-pesa money transfer services though expensive is very reliable and

has wide network coverage unlike its competitors. It also offers roaming facilities to

individual customers, at times free promotions for Facebook and wattsapp users.

In respect to the enterprise customers they provide them with reliable internet

connection, calling services, M-pesa services, web-hosting and data solutions, on-line

payroll and on-line accounting.


2.0 What is marketing

Marketing can be defined as a process by which organizations, individuals and groups

investigate the needs and wants of the customers, create products/services that

satisfies them to the intended markets (Kotler 2000, 8).

Services marketing can be used to market a product or service and is based on

relationship and value. A service unlike a product is intangible and this means that the

service cannot be returned by the customer in case of dissatisfaction. Service Marketing

mix adds 3 more ps such as, People, physical environment and process. (Baron &

Harris 2003, 21-26).

The role of advertising is to create demand for a product. It is also important to consider

the cost of advertising so that it does not exceed the intended return. However the

expenses to be incurred vary based on the nature of the product. For example, new

products need a larger advertising budget to help create awareness and to encourage

consumers to try the product. A product that is highly differentiated may also need more

advertising in order to gain competitive advantage, emphasizing on the difference.

To achieve the objectives, marketers should select carefully their market segments.

Attractiveness of the market may be due to size, income level and competition

available. The implication of selecting target segments is that the business will

subsequently allocate more resources to acquire and retain customers in the target

segments than it will for other, non-targeted customers. In some cases, the company

may operate to the extreme of discouraging customers that are not in its target

segment.(Baron & Harris 2003, 8-9).


2.1 Marketing mix

In order to understand which strategy Safaricom has used to achieve its

objectives, we will look at the different kinds of marketing mix of the company.

As marketing strategy shapes the marketing mix for the products and services

offered by the company, the marketing mix will point to the strategic choice of the

company.

The marketing mix is a synonym for 7ps, which is constructed of the four most

important components of every product’s strategy - Product, Price, Promotion

Place, People, Psychical evidence and Process.

Figure 1.3 The 7PS Marketing Mix


Marketing mix is a process where specific marketing elements are used to achieve an

organization’s or individual’s objectives and satisfy the target market. This is achieved

by using seven tools such as Product, distribution, promotion and price. Besides the

four Ps, services marketing comprises more categories such as People, which means

any person meeting customers. They are particularly important because, to the

customers, their personal presentation creates either a positive or a negative impact to

them. Because of this, they must be appropriately trained, well-motivated and the right

type of person assigned the duties. Process involves the steps in providing a good or

service and the behavior of people, which can be important to customer satisfaction.

Physical evidence is important to be considered because unlike a product, a service is

intangible. This, therefore, means that potential customers could perceive greater risk

when deciding whether to use a service. To reduce the feeling of risk, thus improving

the chance for success, it is often important to make the consumers visualize what a

service would be (Baron & Harris 2003, 5-8)

Kotler (2006,536) discovered that the effectiveness of promotion in marketing of

services is generally affected by four distinct elements, namely advertising, public

relations, word of mouth and point of sale. It was realized that there is an outcome when

promotion uses the four principle elements together, which is common in film promotion.

Advertising involves any communication that is paid for, from television and cinema

commercials, radio and Internet advertisements through print media and billboards.

Public relations is where the communication is not directly paid for and includes press

releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and

events. Word-of-mouth is any apparently informal communication about the product by

ordinary individuals or satisfied customers.


2.1.1 Product

Followings are products of SAFARICOM

Safaricom Pre-paid services

Safaricom Post-paid services

M-Pesa money transfer, M-kesho, M-Co-op, M-shwari and other related

products

Cell phones with warranties depending on their sizes and prices

Discounted cell phone prices

A Safaricom SIM-Card plugged into their customer mobile devices, this

promotes loyalty in a market in which many customers own multiple SIMS.

Value Added Services (VAS)

Fixed line and telephony

Broadband and fixed-line internet services

Digital television and IPTV

DTH operator

The different value added services provided by Safaricom are-

Instant Balance Enquiry

Bonus talking time and bonga points that can be redeem later as air time.

Okoa jahazi, where short time credit facilities for buying air-time is extended to

pre-paid customers

Caller line identification

Call divert, Call wait & Call Hold

Multimedia messaging service (MMS)

Live Portal

SMS based Information Service


Product refers to all the goods and services a company offers to the market. Also

products may comprise physical products, services, information, places, organizations

or ideas that can be offered for attention, acquisition or consumption that might satisfy a

want or a need.

Products are classified in two categories; tangible and intangible products.

(Kotler 2001, 7)

The product is therefore more than a branded, packaged good offered for sale. Its

definition has been widened to include services and benefits and the services that can

be achieved from the product. This refers to a core product or service, which can be

changed by adding features and options. It consists of multidimensional entities and

benefits offered to customers. In business-to-business markets, products satisfy buyers`

wants or needs. The products should be developed to satisfy the group intended.

Product should clearly define who the intended users are and the customer’s

preferences and needs. Through the product concept, the product idea can be analyzed

through several concepts by considerations such as who will use the product, what are

primary benefits and when it should be consumed (Kotler 2001, 164).

Product consists of elements such us packaging, branding labeling and product

attributes that are of good quality, style, features and design. Strong brand preference is

an added feature to the product. A product which is an object or a service, is produced

or manufactured on a large scale with a specific volume of units. A less obvious but a

common mass produced service is a computer operating system. A successful new

product is the result of careful marketing (Kotler & Keller 2009, 46).

A product has its concepts; brand, product line and product mix. A brand is a distinctive

product offering created by use of a name, symbol, design, packaging or some

combination of these intended to differentiate these from competitors. A product line is a

group of brands that are related in terms of the functions and benefits they provide.

Product mix is a total set of products marketed by the company. (Jobber 2004, 296).

The use of information technology influenced introduction and application of effective

promotion methods that eased marketing of organization services in the target market


With the advancement of technology there have been new channels of selling products,

and this has also provided consumers with a good quality of the products, this is due to

high rate of competition. The product information can be accessed easily. The

consumers can sort products based on any desired attribute. IT has made the

companies to be flexible in changing and managing their portfolios of options and

products. Another impact is that IT has significantly reduced transaction cost, thus

making products cost cheaper and ease of doing business and actual product

improvement. The use of information technology increases the pace of product

development and this facilitates effective marketing of communication services.

The evolution and introduction of more effective communication services is greatly

influenced by development of new information communication technology. New product

development leads to a wide product range that influences attraction and retention of

many customers.

Lack of product development leads to loss of market share, as the few products do

not satisfy many customers’ interests.

This also negatively affects marketing of communication services in various market

segments. (Turban, Lee, king & Viehland 2004, 16)

2.1.2 Place

SAFARICOM is getting its products to the market through distributors channels

both formal (traditional) ones and informal channels.

It mainly sells its Products and services through Mobile operators and retailers,

which is common for the industry with a distict Safaricom logo

The Safaricom retail shops adopted a strategy of being a one shop for all

mobile telecommunication equipment.

It has wide and extensive presence even in the remotest areas, Safaricom

boasts of a distribution foot print of 2,000 exclusive distribution network and

ensuring that subcribers can access airtime wherever they are

Safaricom Customer Care centres and Distributors like E.g. shops, stalls,

supermarkets, chemists, retail outlets etc. also helps as a place of availability of

product.


Has a reputation for a strong and wide coverage, it owns 75% of base stations

in Kenya, of which 53% are 3G, enabled.

Place or distribution involves delivering of products or services to the final user.

The channel of distribution is very important to be considered depending on the size of

the company and the nature of the product. It should also be estimated on whether to

sell directly to the consumer or use intermediaries such as wholesalers and retailers.

Cost is the most important factor to be considered when deciding on the distribution

channel. Proper distribution planning which means a systematic distribution decision

making process, is also important for effectiveness and cost reduction (Evans & Berman

1994, 480)

The distribution channel needs to be designed and monitored frequently to withstand

changes in the market and to reduce channel problems resulting from inefficiency using

features such as transportation and storage in the market place. (Chaffey 2002, 314)

Distribution chain or the channels refer to the stages involved in delivering the product

to the market. Each of the elements in these stages has specific needs it meets for both

the seller and the end user and are very important to be considered especially by the

producer because the main objective is to satisfy the needs of the customers. There are

different types of these channels such as selling direct to the consumer, wholesalers

who sell in bulk and retailers who sell the products in smaller units to the customers.

There are two basic types of channels, a direct channel of distribution and indirect

channel of distribution.

Direct involves the movement of goods and services from producer to consumers

without the use of independent intermediaries. It is mostly preferred by companies that

want control over their entire marketing programs, desire close customer contact and

have limited target markets. An indirect channel of distribution involves the movement of

goods and services from producer to independent intermediaries to consumers and is

usually used by companies that want to enlarge their markets, raise sales volume,

reduce distribution functions and costs, and are willing to waive some channel control

and customer contact.(Evans & Berman 1994,486)


2.1.3 Promotion

Biggest artistes in Kenya music scenes like gospel master Daddy Owen, P-Unit,

gospel sensation-Gloria Muliro, love ballads are roped in to support the product.

Two way communication channels, such as social media marketing like the Bring

Zack back home and Kenyans for Kenyans promotions won the best private

sector product/services campaign actually 2nd place on twitter and 4th place on

facebook.

Safaricom uses the SKIZA tunes which are widely downloaded at a small fee.

Customer awareness of new products and services offered to them.

Safaricom uses following promotion ways...

Television

The print media

Posters

Internet

Hoardings can be related to compulsive buying (such as never passing up a

bargain), the compulsive acquisition of free items (such as collecting flyers), or

the compulsive search for perfect or unique items (which may not appear to

others as unique, such as an old container).

Sponsors of various events like football, athletics and rugby management.

Promotion is important because the consumers are informed about the new products

and their attributes before they develop positive attitudes toward them. For the goods

and services in the market, promotion acts as a way to persuade and informing the end

users so that they attain the product knowledge and hence like the product. A Satisfied

customer will send word-of-mouth to the others thereby increasing the demand of the

product. A good promotion involves product, distribution and price components of

marketing. (Evans & Berman 1994, 574)

A business' total marketing communications programme is called the "promotional mix"

and consists of a blend of advertising, personal selling, sales promotion, brand


management, product placement and public relations tools. It has been established that

many companies apply these promotion mix elements in order to increase sales

revenue. Decline in sales revenue has been a result of poor implementation of the most

effective promotion mix elements.

Each of the applied promotional mix elements has strengths and weakness and it

should be the company management`s responsibility to determine the most effective

promotion mix element that will increase sales revenue. (Evans & Berman 1994, 591)

2.1.4 Price

Customers often perceive high priced brands to be of higher quality and less

vulnerable to competitive price cuts than low priced brands

Call rates available are communicated via cell broadcast service (CBS)

This price varied for different kinds of services like the caller ring back tone and

money transfer charges

Content localization, that is the process of adapting a product or service to a

particular language

Customer based pricing strategies.

Communication commission of Kenya (C.C.K) has gradually decreased the

mobile termination rates (M.T.Rs)

Price represents the value of a good or service for both the seller and the buyer. In

order for it to be of importance there has to be a defined price planning which means a

systematic decision-making relating to all aspects of pricing by a company involving

both tangible and intangible factors, purchase terms, and the non-monetary exchange

of goods and services. It is the only element in the marketing mix that produces

revenue; the others produce costs.

Price balances demand and supply because it makes the buyer and the seller agree on

a certain value for goods and services. (Evans & Berman 1994, 690)

Price is one of the positioning methods and should be implemented in relation to target

market, product mix, services and competition. Price should involve all the cost,

otherwise companies will incur losses. Therefore, the management and the managers


should understand how to set the price by considering lost margin and lost sales. Also

factors such as demand, competition, distribution channels, internal environment and

public authorities affect price setting. Understanding how to set a price is an important

aspect of marketing decision-making because of changes in the competitive market that

many believe will act to decrease prices in many countries. Developing a coherent

pricing strategy assumes major significance (Jobber 2004, 376).

Pricing decisions include determining the overall level of prices (low, medium, or high),

the range of the prices (lowest to highest), the relationship between price and quality,

the emphasis to place on price, how to react to competitors` prices, when to offer

discounts, how prices are computed and what billing terms to implement such as cash

or credit policy. (Evans & Berman 1994, 37)

Customary pricing occurs when a company sets goods or service prices and seeks to

maintain them for a period. Price does not change for a given period. It is used for items

such as candy, gum, magazines and restaurant food. Rather that modify prices to

reflect cost increases, a company may decide to reduce package size or change

ingredients. The consumers will tend to prefer these alterations to price increment. Odd

pricing is used when selling prices are set at levels below currency values for instance

dollar or Euro. It is a popular strategy for several reasons. Consumers like obtaining

change, they also gain an impression that the company thinks carefully about prices

and sets them as low as possible and customers may believe that odd prices represent

price reduction. Prestige pricing is a pricing strategy that indicates consumers may not

buy a product when the price is low. Many people tend to correlate price and quality and

perceive that a high quality product should be expensive. People will buy a premium

priced product because they believe the high price is an indication of good quality and a

sign of self-worth. It indicates their success and status. It is a signal to others that they

are a member of an exclusive group. In psychological pricing, the consumers are

sensitive to certain prices and tend to avoid purchasing products decreasing the

demand. Customary, odd and prestige pricing strategies are all forms of

psychological pricing. (Evans & Berman 1994, 716-718).


2.1.5 People

Total Employees about 5,000 workers

Dedicate and passionate workforce.

One of the best customer support base and service in the industry.

Overall, our employees are young, dynamic Kenyans, with 70% of our

workforce in their 30s, 16% still in their 20s and 85% of our workforce are

based in Nairobi.

On the whole, our staff complement is pretty evenly split between men and

women, although the number of women in more senior management

positions remains relatively low

Safaricom is one of the best employers in Kenya.

Of both target market and people directly related to the business.


Thorough research is important to discover whether there are enough people in your

target market that is in demand for certain types of products and services.

The company’s employees are important in marketing because they are the ones who

deliver the service. It is important to hire and train the right people to deliver superior

service to the clients, whether they run a support desk, customer service, copywriters,

programmers…etc.

When a business finds people who genuinely believe in the products or services that

the particular business creates, it’s is highly likely that the employees will perform the

best they can.

Additionally, they’ll be more open to honest feedback about the business and input their

own thoughts and passions which can scale and grow the business.

This is a secret, “internal” competitive advantage a business can have over other

competitors which can inherently affect a business’s position in the marketplace.

2.1.6 Process

Safaricom shops are easily accessible and everywhere in the country

Processes for services are very simple, easy and customer can access it very

easily.

100 and 234 are the customer support numbers which can be dialed from

anywhere in Kenya and are also free of charge.

Through M-pesa pay system, one can deposit and withdraw money from their

bank accounts, send money to relatives, employees and also buy airtime.

The systems and processes of the organization affect the execution of the service. So,

you have to make sure that you have a well-tailored process in place to minimize costs.

It could be your entire sales funnel, a pay system, distribution system and other

systematic procedures and steps to ensure a working business that is running

effectively. Tweaking and enhancements can come later to “tighten up” a business to

minimize costs and maximize profits.


2.1.7 Psychical evidence

Safaricom products are well packed and labeled with the Safaricom logo.

The Safaricom staff are well informed and aware of their brand name and their

product and services

On line experience of dealing with customer’s queries

Interface of the customer care centres

In the service industries, there should be physical evidence that the service was

delivered. Additionally, physical evidence pertains also to how a business and its

products are perceived in the marketplace.

It is the physical evidence of a business’ presence and establishment. A concept of this

is branding. For example, when you think of “fast food”, you think of McDonalds.

When you think of sports, the names Nike and Adidas come to mind. While in Kenya

when you think of telecommunication, you think of Safaricom first.


You immediately know exactly what their presence is in the marketplace, as they are

generally market leaders and have established a physical evidence as well as

psychological evidence in their marketing.

They have manipulated their consumer perception so well to the point where their

brands appear first in line when an individual is asked to broadly “name a brand” in their

niche or industry.

2.2 Marketing Mix 4C’s

The 4Cs marketing model was developed by Robert F. Lauterborn in 1990. It is a

modification of the 4Ps model. It is not a basic part of the marketing mix definition, but

rather an extension. Here are the components of this marketing model:

Cost – According to Lauterborn, price is not the only cost incurred when

purchasing a product. Cost of conscience or opportunity cost is also part of the

cost of product ownership.

Consumer Wants and Needs – A company should only sell a product that

addresses consumer demand. So, marketers and business researchers should

carefully study the consumer wants and needs.


Communication – According to Lauterborn, “promotion” is manipulative while

communication is “cooperative”. Marketers should aim to create an open

dialogue with potential clients based on their needs and wants.

Convenience – The product should be readily available to the consumers.

Marketers should strategically place the products in several visible distribution

points.

Whether you are using the 4Ps, the 7Ps, or the 4Cs, your marketing mix plan plays a

vital role. It is important to devise a plan that balances profit, client satisfaction, brand

recognition, and product availability. It is also extremely important to consider the overall

“how” aspect that will ultimately determine your success or failure.

By understanding the basic concept of the marketing mix and its extensions, you will be

sure to achieve financial success whether it is your own business or whether you are

assisting in your workplace’s business success.

The ultimate goal of business is to make profits and this is a surefire, proven way to

achieve this goal.

According to Philip Kotler (2001, 215) technology is taking us back to an era of

negotiated pricing. The internet, corporate networks, and wireless setups are linking

people, machines, and companies around the globe connecting sellers and buyers than

before. Websites such as compore.Net and priceScan.com allow buyers to compare

products and prices quickly and easily. Price is one of the flexible elements and can be

changed quickly. The pricing power has changed from companies to consumers e.g. in

auction homes such as ebay.com and priceline.com, the customer proposes the price to

the company. IT has also reduced many transactions, hence lowering the prices. This is

also due to intense competition. It provides comparative price information that may

reduce the cost. Concerning the consensus over competition on the internet, it has also

created the issue of price discrimination, whereby the seller can charge different prices

to different consumers for the same product.

From the figure below, it can be established that the pricing process involves the steps

shown and based on the market segment and the prevailing market situation.


2.2.1 Competition

The competitive environment often affects a company’s marketing efforts and its

success in attracting a target market. Thus, a company needs to analyze the structure

of the industry in which it operates and to examine it competitors on the basis of these

characteristics: It is important that a company to develop reputation for reliability, sell

products at the lowest profitable prices, and convince as many distributors or retailers

as possible to stock their products. (Evans & Berman 1994, 43)

3.0 What is a 'Brand'

www.investopedia.com/terms/b/brand.asp website defines a brand as:

A brand is a distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use to distinguish their product from others in the market. Legal protection given to a brand name is called a trademark”

Doole and Lowe (2008, p.283) opine that because a brand’s image is the most visible

part of a product or service, customers relate it to the perceived value and it plays a vital

role in positioning the product in the market. I concur that a brand, if managed properly,

is capable of generating additional value to a company and is a source of strategic

competitive advantage. Brands are custom-made to the demands of the target market

using the marketing mix of product, price, place and promotion. However, in a service

industry they are additional 3 P’s namely people, physical evidence and the process.

The concept of corporate branding finds its origin in product branding. Branding refers

to the creation of such a distinctive product or service. Corporate branding brings to

marketing the ability to use the vision and the culture of a company as part of a unique

selling proposition (Hatch and Schultz, 2003). The idea of corporate branding is based

on the assumption that consumers create images of companies based on the whole

experience of these companies (Heding et al., 2009). Corporate branding requires a

http://www.investopedia.com/terms/b/brand.asp


holistic approach to brand management, in which all members and aspects of an

organization behave in accordance with or are in line with the brand (Harris and de

Chernatony, 2001).

Figure 3.1 Corporate Reputation

Basically Branding is about creating a unique position and distinguishing

the organization from its competitors. Schmidt and Ludlow (2002) defined positioning as

it is normally used in marketing to denote the distinctive market position which a

brand has, or wishes to have in regard to competition. They presented a holistic

approach to positioning . Keller (2000) identified some characteristics for a

successful brand which is effectively positioned. De Chernatony and McDonald (2003)

explored two types of competitive brand advantage: cost -driven and value -added

Positioning is the differentiation of a brand or a product according to the target market

perception relative to similar offerings in the given markets. All elements of a

company’s behavior affect the position in customers mind.


Brand positioning refers to consumer’s perception and insights about a special brand

as well as the niche the brand occupies in their minds. Strategic position of a

corporation is the outcome of decisions made at the corporate level , and is influenced

by external environment and internal environment such as the availability of internal

resources and core competencies, and expectations of various internal

stakeholders and external stakeholders (Johnson , Scholes , and Whittington, 2006)

Strategic Position at organizational level is a long term process of developing the

organizational overall competitive advantage in market place. It identifies

organizations place in the environment in relation to vision, mission and core

competency (Hooley, 2001; Hamel and Parahalad ,1993). The primary motivation

for Safaricom to expand locally is the company’s business objective that its key

initiatives are targeted at sustaining customer focus and positioning themselves for

future success and maintain the number one- market position”

When Niko na Safaricom was launched in 2009, the subsequent campaign in 2010

captured a stunning glimpse of Kenya’s diversity in a heartwarming way that was

culturally relevant to them and in line with the company’s vision which is dedicated to

transforming the lives of their customers, communities and colleagues.

This campaign not only helped them define them through the brand, but also to define

their lives with a single and powerful line said in everyday-speak, Mimi ni Safaricom.

This was a proud statement of ownership and progress by their customers.

With time, Niko na Safaricom has been the single most compelling association with their

brand. It is thus a dynamic brand and wherever you go in Kenya, Safaricom is closely

woven into our cultures, making it an essential part of every Kenyan’s life. For

the brand, a natural progression would flow from this insight. The direction of the brand

commercial explores this mutual relationship of brand and consumer by cleverly delving

into our lives.

It also requires manager to take deliberate and proactive actions to identify and

develop the organization‟s competitive position based on its operational and


experimental dimensions rather than promotional effort ( Kalafaties ,Tsogas ,and

Blankson ,2000)

Safaricom M-pesa is such a strong brand with a wide network coverage and it is also

fast and reliable though fraudsters have recently targeted the customers.

M-PESA (M for mobile, pesa is Swahili for money) is a mobile phone-based money

transfer, financing and micro financing service, launched in 2007 by Vodafone for

Safaricom and Vodacom. M-PESA was originally designed as a system to allow

microfinance-loan repayments to be made by phone, reducing the costs associated with

handling cash. But after the pilot,testing it was broadened to become a general money-

transfer scheme. M-Pesa is devised from a Swahili word that denotes to send money; it

is a product that enables customers send money via the mobile phone not only locally

but also internationally. Through continued customer sensitization and education they

are able to help minimize the cases of fraud that affect our M-PESA customers.

They have well developed systems and procedures in place to protect our customers on

all these fronts.

Also Safaricom partnered with Equity Bank and launched a service known as M-KESHO

on the 18th March, 2010, M-KESHO, is a full savings account issued by Equity Bank but

marketed as an “M-PESA Equity account.” Like M-PESA accounts, M-KESHO accounts

have no account opening fees, minimum balances or monthly charges. But unlike M-

PESA accounts, M-KESHO accounts pay interest, do not have a limit on account

balances, and are linked to limited emergency credit and insurance facilities. And unlike

its regular Equity account holders who can only transact at the bank’s 140 branches,

Equity’s M-KESHO customers is able to transact at any of the 17,000 retail outlets that

accept M-PESA.

Also Safaricom partnered with Commercial Bank of Africa (CBA) to launch M-Shwari, a

banking product within M-Pesa in the year 2012. M-Shwari is invented from a Swahili

word that denotes to smoothen or make something better or good, it is a revolutionary

product set to change the lives of millions of Kenyans. It is not accessible through any

CBA branches but, on the consumers handset. All the consumer’s requires is their


handset and be registered on M-PESA! There are no physical forms or additional

documentation required for them to sign up into M-Shwari (www.cbagroup.com).

In 2014 Safaricom partnered with Britam and Changamka Micro Health to provide

insurance to Kenyans with low income and launched another service called Linda Jamii.

Safaricom also partners with the Government of Kenya through E-citizen to provide one

Paybill number 206206 for use in payment of government services through the

governments e-citizen platform. It is also partners with so far 17 banks that have been

on boarded for the Real-Time Gross Services (RTGS)

Michael Porter, in 1980, identified three generic strategies that organizations use in

gaining competitive advantage namely Cost leadership, Differentiation and Focus.

Safaricom uses the differentiation and focus strategy to market its products and

services, where by they gain market share by having using their brand loyalty and

maintaining high and having higher returns and profitability through offering a wide

range of products like M-Pesa, M-Shwauri, M-Kesho.

(Porter 1980, pg 67-68) in his book on the competitive strategy he reckons that:

Differentiation provides insulation against competitive rivalry because of brand loyalty by

customers and resulting lower sensitivity to price. It also increases margins, which

avoids the need for a low-cost position. The resulting customer loyalty and the need for

a competitor to overcome uniqueness provide entry barriers. Differentiation yields

higher margins with which to deal with supplier power, and it clearly mitigates buyer

power, since buyers lack comparable alternatives and are thereby less price sensitive.

Finally, the firm that has differentiated itself to achieve customer loyalty should be better

positioned vis-a-vis substitutes than its competitors.

Achieving differentiation may sometimes preclude gaining a high market share. It often

requires a perception of exclusivity, which is incompatible with high market share. More

commonly, however, achieving differentiation will imply a trade-off with cost position if

the activities required in creating it are inherently costly, such as extensive research,

product design, high quality materials, or intensive customer support. Whereas

http://www.cbagroup.com/


customers industry wide acknowledge the superiority of the firm, not all customers will

be willing or able to pay the required higher prices.


4.0 Global Networking

Networking depicts a relationship between two or more individuals or organizations that

involves sharing of mutual resources and information to their individual advantages

(Boonchoo and Tongurai, 2012). Companies expanding into international markets utilize

networking in activities like identifying the target customers and their needs, establishing

relationships with suppliers, identifying competitors and their activities and identifying

with professional bodies/ trade unions to enable them survive in those markets.

A company starting up in a new market has to analyse and get as much information as

they can from the market (macro environment) and compare it with their internal

processes (microenvironment) before they decide for or against investing. There are

several approaches to study the external environmental but I emphasize two for the

purpose of this paper, i.e., PESTEL and Porter’s Five Forces analysis.

4.1 A brief summary of Safaricom M-pesa markets

expansion plans

4.1.1 Kenya

M-Pesa was first launched by the Kenyan mobile network operator Safaricom, where

Vodafone is technically a minority shareholder (40%), in March 2007. M-Pesa quickly

captured a significant market share for cash transfers, and grew to 17 million

subscribers by December 2011 in Kenya alone.

The growth of the service forced formal banking institutions to take note of the new

venture. In December 2008, a group of banks reportedly lobbied the Kenyan finance

minister to audit M-Pesa, in an effort to at least slow the growth of the service. This ploy

failed, as the audit found that the service was robust.

At this time The Banking Act did not provide basis to regulate products offered by non-

banks, of which M-Pesa was one such very successful product. As at November 2014,

M-Pesa transactions for the 11 months of 2014 were valued at KES. 2.1 trillion, a 28%

increase from 2013, and almost half the value of the country's GDPOn 19 November

2014, Safaricom launched a companion android app Safaricom M-Ledger for its M-Pesa

users. The application, currently available only on Android, gives M-Pesa users a

historical view of all their transactions.


4.1.2 Tanzania

M-Pesa was launched in Tanzania by Vodacom in 2008 but its initial ability to attract

customers fell short of expectations. In 2010, the International Finance Corporation

released a report which explored many of these issues in greater depth and analyzed

the strategic changes that Vodacom has implemented to improve their market position.

As of May 2013, M-Pesa in Tanzania has five million subscribers.

4.1.3 Afghanistan

In 2008 Vodafone partnered with Roshan, Afghanistan's primary mobile operator, to

provide M-Pesa, the local brand of the service. When the service was launched it was

initially used to pay policemen's salaries set to be competitive with what the Taliban

were earning. Soon after the product was launched, the Afghan National Police found

that under the previous cash model, 10% of their workforce were ghost police officers

who did not exist; their salaries had been pocketed by others. When corrected in the

new system, many police officers believed that they had received a raise or that there

had been a mistake, as their salaries rose significantly. The National Police discovered

that there was so much corruption when payments had been made using the previous

model that the policemen did not know their true salary. The service has been so

successful that it has been expanded to include limited merchant payments, peer-to-

peer transfers, loan disbursements and payments.

4.1.4 South Africa

In September 2010 Vodacom and Nedbank announced the launch of the service in

South Africa, where there were estimated to be more than 13 million "economically

active" people without a bank account. M-Pesa has been slow to gain a toehold in the

South African market compared to Vodacom's projections that it would sign up 10

million users in the following three years. By May 2011, it had registered approximately

100,000 customers. The gap between expectations for M-Pesa's performance and its

actual performance can be partly attributed to differences between the Kenyan and

South African markets, including the banking regulations at the time of M-Pesa's launch


in each country. According to MoneyWeb, a South African investment website, "A tough

regulatory environment with regards to customer registration and the acquisition of

outlets also compounded the company's troubles, as the local regulations are more

stringent in comparison to our African counterparts. Lack of education and product

understanding also hindered efforts in the initial roll out of the product." In June 2011,

Vodacom and Nedbank launched a campaign to re-position M-Pesa, targeting the

product to potential customers who have a higher Living Standard Measures (LSM) than

were first targeted.

Despite efforts, as at March 2015, M-Pesa still struggled to grow its customer base.

South Africa lags behind Tanzania and Kenya with only c.1 million subscribers. This

comes as no surprise as South Africa is well known for being ahead of financial

institutions globally in terms of maturity and technological innovation. According to

Genesis Analytics, 70% of South Africans are "banked", meaning that they have at least

one bank account with an established financial institution which have their own banking

products which directly compete with the M-Pesa offering

4.1.5 India

M-Pesa, was launched in India as a close partnership with ICICI bank in November

2011. Development for the bank began as early as 2008. The service continues to

operate in a limited geographical area in India. Vodafone India had partnered with both

ICICI and ICICI bank, ICICI launched M-Pesa on 18 April 2013. Vodafone plans to

rollout this service throughout India. The user needs to register for this service by

paying 100 Rupees, on which 25 Rupees will be credited back to the users account and

there are charges levied per M-Pesa transaction for money transfer services and DTH

and Prepaid recharges can be done through m-pesa for free


4.1.6 Eastern Europe

In March 2014, M-Pesa expanded into Romania, while mentioning that it may continue

to expand elsewhere into Eastern Europe, as a number of individuals there possess

mobile phones but not possess traditional bank accounts. It is unlikely, as of May 2014,

however, that the service will expand into Western Europe anytime soon.

In May 2015, M-PESA was also launched in Albania.

4.1.7 Other markets

M-Pesa expanded into Mozambique, Lesotho, and Egypt in May, June, and July 2013,

respectively. A full listing of countries in which M-Pesa currently operates can be found

on M-Pesa's website.


Table 3- Pestle for Safaricom

Political factors:

The Kenya Information and Communications (Amendment) Act, 2013

Concerns over radiation from Mobile Telephones

Industry regulation bodies

Economic factors:

Middle income families in Kenya encourage its expansion.

Inflation and low incomes in other East African countries

Currency exchange fluctuations

There is also rising competition from it is main competitor Airtel Kenya and the other competitors like Orange and Essar-Yu in terms of services offered and the lower prices charged.

Social factors:

Inclination towards Internet Information

Increasing need for communications

Internet at home and in public places

Technical / technological factors:

Wireless and Mobile communications

Real time and on-demand communications

The next generation nextwork and 4 G speed mobile phones

Legal factors:

Licensing framework

Mobile phone and driving

Environmental factors:

Corporate social responsibilities through transformation of lives of its customers, communities and colleagues.

The Waste Electrical and Electronic Equipment recycling


5.0 Pestle Overview

Enterprise planning involves taking a look at the environment in which you operate as

well as looking inside the organisation to see what’s working well and what needs to be

improved. The PESTLE analysis is a common tool for helping you articulate and

structure this type of analysis. It focuses on the external environment and can be a

useful piece of analysis to inform the areas that you will need to highlight and / or

address through your business plan.

The PESTLE framework allows you to evaluate, anticipate and plan for external factors

that affect your organisation. PESTLE analysis groups these factors into Political (P),

Economic (E), Social (S), Technical (T), Legal (L) and Environmental (E). Note these

categories will necessarily be equally important to your enterprise

5.1 Political

Regulation and KYC rules

M-Pesa sought to engage Kenyan regulators and keep them updated on the

development process. M-Pesa also reached out to international regulators, such as the

UK's Financial Conduct Authority (FCA) and the Payment Card Industry (PCI) to

understand how best to protect client information and adhere to internationally

recognized best practices.

Know Your Customer (KYC) requirements impose obligations on prospective clients

and on banks to collect identification documents of clients and then to have those

documents verified by banks. The Kenyan government issues national identity cards

that M-Pesa leveraged in their business processes to satisfy their KYC requirements

This partnership comes months after Safaricom roped in Vodacom Tanzania and MTN

Rwanda to introduce cross-border transaction between customers on the respective

networks

5.2 Economic:

The middle income earning families in Kenya has encourage Safaricom’s expansion

plans

The East African markets, in which Safaricom has established presence, comprise of

developing countries. Such markets are not predictable and are characterized by


economic uncertainties like inflation and currency/exchange rate fluctuations and low

income earning families.

In Afghanistan, it has been very successful, and soon after the product was launched,

the Afghan National Police found that under the previous cash model, 10% of their

workforce were ghost police officers who did not exist; their salaries had been pocketed

by others. When corrected in the new system, many police officers believed that they

had received a raise or that there had been a mistake, as their salaries rose

significantly. The National Police discovered that there was so much corruption when

payments had been made using the previous model that the policemen did not know

their true salary. The service has been so successful that it has been expanded to

include limited merchant payments, peer-to-peer transfers, loan disbursements and

payments.

There is also rising competition from it is main competitor Airtel Kenya and the other

competitors like Orange and Essar-Yu in terms of services offered and the lower prices

charged.

5.3 Social:

Social normally includes cultural issues like life style, language and demography.

Inclination towards Internet Information has contributed to the growth of Safaricom

subscribers by offering them internet facilities on their mobiles and other public places

through the usage of wifi wireless internet.

There have been challenges for instance that 70% of South Africans are "banked",

meaning that they have at least one bank account with an established financial

institution which have their own banking products which directly compete with the

M-Pesa offering. Lack of education and product understanding also hindered efforts in

the initial roll out of the product in South Africa.

Increasing need for communication in Africa, the population has been on a steady

increase and there are few telecom operators per country. This translates to an

increasing potential market for Safaricom. They offer Wireless and mobile

communication, real-time and on demand communications, the next generation

nextwork and 4 G speed mobile phones

5.4 Technological:

Safaricom invests highly in research and development activities and the infrastructure to

render outstanding services, especially in the telecoms industry that is highly dependent

on information technology.


5.5 Ecological:

Include environmental issues and natural occurrences like earthquakes and floods. The

African climate is not prone to such, but there are tendencies in the East European

countries and Asian countries where Safaricom has strategic alliances.

There is also a need to carry out some social responsibilities, they aim to support

sustainability in many aspects of living and improve the general living standards through

the transformation of the lives of their customers, communities and colleagues.

The Waste Electrical and Electronic Equipment recycling needs to done and the waste

which cannot be recycled disposed of safely

5.6 Legal:

Usually includes regulatory laws and bodies guiding businesses.

In the year 2014 Safaricom has been on an expansion plan for its mobile money

transfer service M-Pesa across the region, after the Central Bank of Kenya (CBK)

awarded it a cash remittance operating license, enabling it to carry out money transfers

out of the country

Telecommunications in Kenya is governed by the Communication Commission of

Kenya; in Uganda, by Uganda Communications Commission, in Tanzania by, the

Tanzania Communications Regulatory Authority (TCRA)


6.0 Porter’s 5 Forces

The model of the Five Competitive Forces was developed by Michael E. Porter in his

book „Competitive Strategy: Techniques for Analyzing Industries and Competitors“ in

1980. Since that time it has become an important tool for analyzing an organizations

industry structure in strategic processes.

Porters model is based on the insight that a corporate strategy should meet the

opportunities and threats in the organizations external environment. Especially,

competitive strategy should base on and understanding of industry structures and the

way they change.

Porter has identified five competitive forces that shape every industry and every market.

These forces determine the intensity of competition and hence the profitability and

attractiveness of an industry. The objective of corporate strategy should be to modify

these competitive forces in a way that improves the position of the organization. Porters

model supports analysis of the driving forces in an industry. Based on the information

derived from the Five Forces Analysis, management can decide how to influence or to

exploit particular characteristics of their industry.


THREAT OF NEW ENTRY

The Telecoms business is capital intensive and requires

huge start-up capital and technological expertise so

there is little threat of new entrants. Safaricom has a few

competitors in Kenya. Vodafone Kenya owns 40% stake

in Safaricom and hence it has strong corporate

governance. However, there is room for more players

because some parts of the population still don’t have

access to telephone services.

COMPETITIVE RIVALRY

Safaricom main competitor is Airtel Kenya, a

subsidiary of the Indian-owned company Airtel

Bharti which has apparently partnered with

MTN, a South African-owned company to

expand internationally. Its main rival is Airtel

Kenya. Other rivals include Essar's YU (which

they recently purchased, in conjunction with

Airtel) and Orange Wireless.

THREAT OF SUBSTITUTION

The substitutes to Safaricom GSM services are the

fixed lines and mobiles. SAFARICOM is the market

leader in Kenya. Their great achievement is the

coverage area, which assisted by Aviat. It was the

first company in East Africa to possess 3G Internet

technology with recent success of 4G / LTE

connectivity currently in Nairobi and Mombasa.

Safaricom use LTE (advanced) offers 4G services, the

substitutes are other Internet Service Providers like

Airtel that offer only offer 3G services at the

moment. Other substitutes offer only 1G and 2G

services.

BARGAINING POWER OF BUYERS

Subscribers switch networks mainly for quality

network coverage and price. Switching cost is very

low; free for a new SIM card. The new number

portability introduced in Kenya was futile and does

not enable subscribers to switch service provider

whilst maintaining old numbers. Hence, Safaricom

still dominates this market due to the superiority and

reliability of their goods and services.

BARGAINING POWER OF SUPPLIERS

The main suppliers to Safaricom are its human

resources. Safaricom operates a direct employment

policy and their remuneration is the highest in the

industry. They partner companies like Equity Bank,

Commercial Bank of Africa, Alcatel and Aviat

Networks, a leading global provider of microwave

networking solutions roll-out. Hence, no supplier has

monopoly or control.

Fig 6.1: Five Forces Analysis of

Safaricom Kenya


7.0 Ansoff Matrix

To portray alternative corporate growth strategies, Igor Ansoff presented a matrix that

focused on the firm's present and potential products and markets (customers). By

considering ways to grow via existing products and new products, and in existing

markets and new markets, there are four possible product-market combinations.

Ansoff's matrix is shown below:

Table 4.0 -Ansoff Matrix

Existing Products New Products

Existing

Markets

Market Penetration

Product Development

New

Markets

Market Development

Diversification

Ansoff's matrix provides four different growth strategies:

7.1 Market Penetration

The firm seeks to achieve growth with existing products in their current market

segments, aiming to increase its market share. Safaricom had penetrated the market

through advertising on different media platforms, increasing it is customer

responsiveness, marketing and image management, in responding to the complexity of

the environment. Through its dealer management team, most of its customers have

been able to get access to goods and services provided by Safaricom. M-PESA being


the useful brand, with more than 13 million registered customers and served on

consistently branded stores, has ensured customer experience has been transferred to

local communities. The stores are recognizable as they are painted Safaricom green

with a prominent M-PESA logo.

On the number of agency networks, Safaricom has more than 5000 Head office agent

networks supported by over 90,000 agent outlets. This has helped the company widen

their reach and preach the gospel of their products and services

7.2 Market Development

The firm seeks growth by targeting its existing products to new market segments.

Differentiation involves achieving competitive advantage by providing unique services or

products that provide an added value to consumers. Its aim is to provide products and

services that are different from those of competitors. The uniqueness of the provided

service or product can be derived from different activities, including product

performance, marketing, technology, location and experienced employees. Since most

of the mobile telephony industry products are the same and the current regulation of

ceiling imposed by the government on interconnection fee discourages firms from

lowering further their call charges, then the mobile companies had to look other ways of

differentiating themselves to attract and retain customers.

Safaricom Kenya Ltd has continuous come up with unique products to satisfy the

various levels of customers they serve. M-PESA product for example has yielded more

than 50 unique products. Other unique products serve particular segments of customers

for example Zidisha products, corporate value packs. Segmented customer service

experience also has been created to elevate the brand. Platinum shops and both

prepay and Post Pay sections have been set up in their retail outlets.


7.3 Product Development

The firms develops new products targeted to its existing market segments. Product

development involves modification of existing products or the creation of new but

related products to be marketed to the existing customers through the existing

channels. When asked whether Safaricom Kenya Ltd adopted new product

development strategy in their quest for growth, all the interviewees, from the

findings, indicated that Safaricom Kenya Ltd has continuously developed new

products and services to meet the needs of the consumers. They do so by analyzing

market needs and determining the opportunities available in the industry.

The company serves most of the market segments within the environment it operates in

therefore have to come up with strategies that will enable it maintain and grow its

business and customers. Examples of New Products and modified are fourth

Generation Internet access recently launched in the brand name 4G, Mobile Money

Transfer Services in the Brand name of M-PESA which has generated other products

like Lipa na MPESA, Paybill services, M-ticketing, M-distribution, Mshwari & KCB-

MPESA loans and

savings account, Wifi Services for Internet, Short Messaging Services (SMS) promotion

offers and Directory services. The company has also been reviewing existing products

and introducing more value added benefits like Okoa Jahazi for prepay customers to

borrow airtime and repay later, Call back Ringtone Services in the brand name SKIZA

for all customers.

The company has also been in fore front to ensure new products and services are

availed. From the findings, the interviewees affirmed that the company has invested

heavily on development of new products and services through their strategy and

innovation division. The team ensures the company comes up with new products and

services that give their customers continuous satisfaction through different products and

services availed. The company runs promotions and does customer education to

ensure that all its customers are aware of their new products. They ensure that


customers participate in the roadmap towards new product release by way of

interviews, opinions, roadside shows and pretest launches. For example for the launch

of latest products for example advantage plus services for post pay, promotions like

Shangwe Mtaani, customers are educated by w ay of text messages, newspapers

adverts and outsourced marketing companies.

7.4 Diversification

The firm grows by diversifying into new businesses by developing new products for new

markets. Diversification is a strategy that allows a company to enter additional lines of

business different from the current products, services and markets. Diversification

strategies help organization widen organization’s scope across different products and

market sectors.

Safaricom’s core business which is mobile voice service provider, however over the

years it has diversified to mobile and fixed data services, video conferencing and mobile

money transfer services under the brand name M-PESA. The data services target both

corporate and individual consumers mainly for internet access services, e-mail services.

Cloud services have been the latest development which the company has launched.

The various diversification options include Concentric Diversification which has seen

Safaricom Kenya Ltd add new products to fully utilize existing technologies and market

systems. This includes MPESA Products, Data services. It has also practiced corporate

diversification through production of unrelated but definitely profitable goods for

example Data services and M-PESA. Also Safaricom partnered with Equity Bank and

launched a service known as M-KESHO on the 18th March, 2010, M-KESHO, is a full

savings account issued by Equity Bank but marketed as an “M-PESA Equity account.

Also Safaricom partnered with Commercial Bank of Africa (CBA) to launch M-Shwari, a

banking product within M-Pesa in the year 2012. In 2014 Safaricom partnered with

Britam and Changamka Micro Health to provide insurance to Kenyans with low income

and launched another service called Linda Jamii. It has also invested in Venture Capital

markets and started a Safaricom Investment Committee where citizens can get credit

and buy parcels of land over a given period of time.


Safaricom also partners with the Government of Kenya through E-citizen to provide one

Paybill number 206206 for use in payment of government services through the

governments e-citizen platform. It is also partners with so far 17 banks that have been

on boarded for the Real-Time Gross Services (RTGS)

8.0 Future Expansion opportunities

In considering what course of action a company will take in order to expand its market, it

has to consider several options and the determine the most lucrative markets, the

strengths, weaknesses and the intended strategies to be implemented by the company.

The characteristic risks in international expansion can be lessened by appropriate

planning, employing competent personnel and expertise, use of the required information

technology and skills.

Figure 8.1 Kenya’s GSM Subscriber Distribution

The CA report was as at 3rd, March, 2015 and it indicated that Safaricom was the

leading telecommunications operator in Kenya in terms of subscriber base,

commanding a


67.4 % of the total subscribers, Airtel were the second largest operator, accounting for

22.6% of the entire market and then followed by Orange which had only 10% of the total

market as at that date.

9.0 Conclusions:

Safaricom has been successful due a combination of factors especially it is marketing

mix of the Seven (7Ps) of marketing and other strong marketing strategies. It has also

managed to partner with several parties with the aim of enhancing it is brand name and

increasing it is customer base.

Safaricom's mobile banking product MPesa has been wildly successful in Kenya, but

similar products have not taken off in countries like South Africa or India. The success

of M-PESA was driven by mainly two factors which were particularly instrumental.

The first factor was the financial exclusion was pervasive in Kenya before the launch of

M-Pesa and proliferation of MFIs and SACCOs (Micro-credit savings unions). A

significant majority of Kenyans, mainly from lowly penetrated rural areas and low

income earners, were not captured by the incumbent banking institutions. Banks were

not accessible in remote areas and had done little to bring financial services to the

inhabitants of these areas.

The requirements for opening a bank account were stringent and unfavorable to low

income earners. A banking service had little to offer to a low income earner. These

people need to access their money in form of cash as most of their daily expenses are

met in such. A debit card or standing order offers no value for a person who lives day to

day based on what he earns. MPESA offered a more accessible 'banking' option that

was simple to use, less discriminative and fit right in with liquid requirements.

Another factor is the regulatory environment in Kenya that fostered and continues to

foster an enabling environment for innovation and financial inclusion through mobile

money. Financial regulators in this region, East Africa, have recognized the power of

mobile money (and MPESA) in driving a more inclusive financial system that contributes

to economic growth. Regulators work collaboratively with commercial issuers to bring


value to customers and mobile money (MM) operators. The Central Bank of Kenya, the

regulator, recognizes the global position of Kenya as a pioneer of mobile money( MM)

The global attention motivates them to lead the pack in mobile money (MM) innovations

through favorable policy and regulation.

It is thus obvious that marketing plays a fundamental role in enhancing a company’s

growth and performance in capturing new markets, retaining the market and stimulating

financial strengths in income returns of an organization.


10.0 References

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Websites

www.cbagroup.com

www.investopedia.com/terms/b/brand.asp

www.safaricom.co.ke

http://en.wikipedia.org/wiki/Internet

www.smartinsights.com/marketing.../marketing.../4cs-marketing-model/

www.smartinsights.com/.../segmentation-targeting-and-positioning/

www.mindtools.com › Strategy Tools

http://www.investopedia.com/terms/b/brand.asp

http://www.safaricom.co.ke/

http://www.smartinsights.com/marketing.../marketing.../4cs-marketing-model/

http://www.smartinsights.com/.../segmentation-targeting-and-positioning/

Safaricom marketing mix and it's environment

Marketing

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