Beruflich Dokumente
Kultur Dokumente
09
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Acknowledgement
I would like to acknowledge and extend my gratitude to the following persons who have
made the completion of this project work would have been remained a dream. First of
all I would like to thank our Project Coordinator Prof. Andre Molajani for his great help.
As he is being my Project Coordinator he provided me very necessary and important
guidance and support until the submission of my project.
I thank all my faculty members of MBA department for their valuable suggestions
throughout my course.
Again I would like to thank GSMA association website to collect the data and the
respective company personnel as well.
I would like to express my gratitude to my previous company Zain and my previous boss
Mr. Nigel Williams for their flexibility and guidance throughout the program.
The importance of the moral support and good wishes of my parents and friends is
external and I am very much indebted to them. Finally I thank all my friends who directly
or indirectly helped me a lot during my project.
Lastly but not least, I would like to be very thankful for my wife Sheeba, son Afeef and
daughter Afya, for their tireless support from starting to end to complete this course.
They have sacrificed lot during my exams and studies.
Syed Thameem
Management Institute of Canada
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
DECLARATION
This report is submitted for the partial fulfillment of MBA program. It has
not been submitted to any other university or for any other degree.
Table of Contents
1. Introduction
1.1 Explanation about the Topic in brief (i.e. Consumer Behavior)
1.2 Reasons for selecting the Topic
1.3 Learning from the Topic
7. Limitations
✔ Bibliography
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
1. Introduction
Consumer Behavior:
“Consumer Behavior is the study of how individuals, groups and organization select,
buy, use and dispose of goods, services ideas or experience to satisfy their needs and
wants.”
– By Philip Kotler.
Marketer must fully understand both the theory and reality of Consumer behavior. A
consumer’s buying behavior is influenced by cultural, social and personal factors.
Cultural factors exert the broadest and deepest influence.
Consumer behavior is referred to as the study of when, why, how, where and what
people do or do not buy products. It blends elements from psychology, sociology, social
psychology, anthropology and economics. It attempts to understand the buyer decision
making process, both individually and in groups. It studies characteristics of individual
consumers such as demographics and behavioral variables in an attempt to understand
people's wants. It also tries to assess influences on the consumer from groups such as
family, friends, reference groups, and society in general.
1. Cultural Factors
Culture, subculture and social class are particularly important influences on consumer
buying behavior. Culture is the fundamental determinant of a person’s wants and
behavior. The growing child acquires a set of values, perceptions, preferences and
behaviors through his or her family and other key institutions. A child growing up in the
Western culture is exposed to the following values: achievement and success, activity,
efficiency and practicality, progress, material comfort, individualism, freedom,
humanitarianism, and youthfulness. A child growing up in a in Kenya is exposed to the
following values: respect and care for elders, hard work, achievement and success,
humanitarianism, and sacrifice. The best example will be the US President Barack
Obama.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
2. Social Factors
In addition to cultural factors, social factors such as reference groups, family, and social
roles and statuses affect the process of buying behavior.
Reference Groups:
A person’s reference groups are all the groups that have a direct (face-to-face) or
indirect influence on their attitudes or behavior. Groups having a direct influence are
called membership groups. Some of these are primary groups with whom the person
interact fairly continuously and informally, such as family, friends, neighbors, and
coworkers.
3. Personal Factors
A buyer’s decisions are also influenced by personal characteristics, such as age and
stage in the life cycle; occupation and economical circumstances; personality and self-
concept; and lifestyle and vales. Because many of the characteristics have a very direct
impact on consumer behavior, it is important for markets to follow them closely.
1. Motivation
2. Perception
3. Learning
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
4. Memory
- Fundamentally influences consumer responses.
This is my personal interest, since 2003 I have been working for a telecom company in
Africa. The current topic influenced me due to the 2 new operators entered in to the
market in 2008. It’s my curiosity how the market will change and what strategies are
applied to dethrone the market leader Safaricom.
From this topic analysis, we can able to find out what factors are critical to select a
mobile operator. This study will reveal the secrets of success for the market leader and
way forward in the competition.
In East Africa the Tax rates are high for the airtime below is the break down by country
wise.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
A ranking of the taxes levied on mobile services (excluding the fixed taxes) is shown in
the following figure. This shows that the East African countries face the highest tax
burden on mobile services.
GSMA association has conducted various studies and lobbied the government to
reduce the taxes on mobile services, which will enhance the growth. But the
governments are not willing to reduce the taxes due to lucrative cash cow for them.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Introduction:
Research always starts with a question or a problem. Its purpose is to answer to
questions through the application of the scientific methods. It is a systematic and
intensive study directed towards a more complete knowledge of the subject studies.
Once the problem is defined properly then one can easily chalk out the Objectives for
the research.
the most important stage in applied research as poorly defined problems will not yield
useful results.
After a problem has been identified, the next task is to formulate it precisely. This too
needs a good deal of care on the part of marketing researchers. Formulation implies a
clear statement or definition of the problem. A complete problem definition must specify
each of the following:
The subject matter for this research Project is to study the behavior of the Customers on
selecting a mobile operator in Kenya. This project consists of different objectives. They
are as follows:
Descriptive Research
The type of research Design for this Research Project is Descriptive Research. Under
the head of the Descriptive Research this project is based on the cross sectional
studies.
For this survey I have selected the Stratified random sampling method. A
stratified random sample is one where the population is divided into mutually exclusive
and mutually exhaustive strata or sub-group and then a simple random sample is
selected within each of the strata or sub-groups.
According to this approach, a sample size of less than a few hundred units is not
chosen. This is because when a field survey is undertaken, interviewers are appointed,
trained and asked to conduct field investigations. Since all this would cost substantially,
it would not be worth it for the marketing researcher if only a small sample is chosen.
Communication
The communication method, in effect, is the method of designing questionnaires with a
view to collect the requisite information. From the above both data collection method,
Questionnaire (Communication method) is selected as the instrument for collecting the
data as the respondents are directly interviewed by the researcher. The same
questionnaire is attached as an annexure to this report.
Questionnaire Design:
From basic aspects of measurement and meaning, we proceed to their application in
designing the instruments for seeking and recording data. Data may be obtained by
either observing or asking for them, and forms are needed for field used in observation
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
and interviewing. The accuracy and relevancy of the data gathered depend heavily on
the questionnaire.
Function of questionnaires:
One must be aware of these limitations in advance so that one is clear about what
Research can and cannot do:
1. Age Group:
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Interpretation:
Kenya has the strong young work force it accounts 74% of the respondents. Kenya has
good potential to grow their economy. Mostly kenyan speak English and Swahali and it
Advantageous for the foreign investors.
2. Sex:
Interpretation:
Out of 250 respondents, 46% female and 54% are male. This shows, male work force is
high.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Interpretation:
Current exchange rate is Kes 80 against USD. Kenya has low GDP country and her per
capita income is $1600/- Most of the work force are getting Kes 10,000/($125) pm. This
is on lower side. If we analyse the further data, the most young population age group
16- 25 categories are earning more than the experienced people. This may be due to
young population received higher degrees and technical experience.
4. Residential Status
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Interpretation:
Out of 250 respondents 74% are citizens of Kenya and remaining 24% are residents who work
in Kenya. Especially in Nairobi residents are more due to the Business / Capital hub.
Interpretation:
We would like to determine the purpose of the mobile phone in the context of personal
or official. 42% respondents declared as personal. 50% male respondents declared the
use of mobile phone as Personal.
Interpretation:
In order to find out handset type (high end or low end) around 50% respondents are
using the low handset which will be used only for voice and sms. There’s a correlation
between the income group and handset type, when the income goes up, people are
buying high end handset which will browsing internet. We have found another
correlation between young age and handset type. Mostly young people are possessing
high end handset as prestige issue.
Interpretation:
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Kenya being a poor economy, the ARPU levels are low, according to GSM and
Safaricom reports. Safaricom reported ARPU Kes 475 ($6) in the recent annual report.
34% of respondents reported they are using below Kes 500/- which depicts the low
income group (who are earning lower than Kes.10,000) . Mobile is not a luxury service,
so all sections of the people are using the mobile service.
When the income groups goes up, their usage also goes up and it clearly shows the
economical status. Prior to 2007, call rates are high more than Kes 20/- for local calls,
only last year, due to completion few operators reduced the tariff. So now it’s more
affordable and more people are using. In Q4 2006 total mobile connections was only 7.3
million and in Q1 2009 the mobile connections doubled it has more than 14 million. It
has grown 104% in two years.
Interpretation:
From the analysis we found out that, Safaricom is the preferred mobile operator in
Kenya. Zain being the second preferred operator. Orange and Econet wireless
launched in Q4 2008, yet still they are improving their subscriber acquisition.
From the analysis we found that, both new operators customers are mostly dual sims.
People are not fully confident on both networks, due to various factors like, quality,
coverage extra. If someone using either Orange or Econet (yu) they are using as a
backup line only. According to GSMA association, Safaricom holds 80% of the market
share. But from the above graph it depicts Safaricom has only 67% this due to the dual
sims.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
The above 8 questions are general and which helped us their age, sex, income group,
resident status, usage and preferred mobile operator. We asked next 11 questions are
critical important to determine the factors affecting the consumer behaviour to select the
mobile operator.
Interpretation:
Interpretation:
We asked about the Brand, do you consider the brand while choosing the mobile
operator, around 85% respondents told very important and important. The mobile
operator, should create the brand awareness by promoting their brands, CSR activities,
to enable reach the masses.
Interpretation:
We asked the question on the coverage issue, respondents told as it’s very keen to
select the mobile operator. Coverage is very important for the subscribers, because
population is dispersed, business need to move on; people have work in different
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
places. From this analysis, why Orange and Econet (yu) are not prominent among the
people because of they have not covered entire country.
Interpretation:
Around 86% respondents informed as customer service is keen while selecting the
mobile operator. In Kenya one of the operator has very poor customer service, that’s
why they are being in the market for a long time, unable to conquere the hearts of
customers. It’s important for the 2 incumbent new operators to keep their efficient
customer service.
Interpretation:
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Flexibility of service means, giving credit to the customers, missed call alert, free
incoming calls while roaming, prepaid roaming, etopup etc. People are so mobile and
they need flexibility in their services. Around 88% respondents specified it’s important
to select the mobile operator. Mobile operators should be innovative in offering their
services.
Interpretation:
After the millienium, especially service industries keen on retaining their customers, so
they offered many loyalty programs, take example of Airways is the pioneer industry to
offer the loyatly program. Customer acquisition cost is going up, so the companies
realised to offer the loyalty prorgram to retain their customers.
31% respondents strongly agree to have the loyalty programs to choose the mobile
operator. Another 34% also agreeing the same. In order to grow and acquire more
subs, they need to offer loyalty programs. It’s keen for the business. Otherwise they will
wintness lot of churn.
Interpretation:
Mobile companies they are launching too many promotions, the respondents gave
feedback, that majority of them, they don’t participate. From the data analysis, we found
that, the low income group are more interested to take part in the promotions. Telcos
should do something better.
Interpretation:
Respondent’s feedback summaries with the market leadership. The customers are
satisfied with the existing operators. The new operators have tough task to pull the
customers from other side.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Interpretation:
92% Respondents told to reduce the taxes. Kenya is one for highly taxed country on
airtime usage, currently it charges 16% VAT & 10% ED. GSMA had made several
attempts to reduce the taxes, but the Govt. is defiant and don’t want to reduce the taxes
on airtime. If they reduce, it will be a mutual benefit for the Govt. and citizens.
18. Are the Telecom companies doing enough to protect our Ecology?
Interpretation:
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
This is question is very important to the current scenario in the world. The environment
is getting affected second by second. Everybody should be responsible for it. We need
more greener initiatives. The telecom companies scratch cards, sim cards, Radio
Frequency, Ewaste, BTS, servers etc, do lot of emissions and detoriate the
environment. 60% of the respondents mentioned that, the telecom companies are not
doing enough to protect our environment. Disposing the used handsets has huge
challenge , the telecom companies should take a joint initiative to protect our
environment by way of sharing the towers, collecting ewaste, going for electronic topup
etc.
Interpretation:
Around 87% of the respondents have the same view to reduction in the tariff. High tariff
leads to low penetration and low growth. Telecom companies can’t reduce the tariff right
away due to high interconnect cost and taxes. The Regulator CCK should do enough to
reduce the interconnect cost and lobby the Govt. to reduce the taxes.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
National Flag
Map of Kenya
Brief History:
Kenya was liberated from British Colony in Dec 12 1963. KANU was nationalist party
and it has been ruling since independence up to 2002. Currently coalition government
ruling the Kenya.
Geography:
Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania
Area
Total: 582,650 sq km
Land: 569,250 sq km
Water: 13,400 sq km
(Link: https://www.cia.gov/library/publications/the-world-factbook/geos/KE.html)
Population:
39,002,772
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
Age structure:
Sex ratio:
Literacy:
Male: 90.6%
Economy - overview:
The regional hub for trade and finance in East Africa, Kenya has been hampered by corruption and by
reliance upon several primary goods whose prices have remained low. In 1997, the IMF suspended
Kenya's Enhanced Structural Adjustment Program due to the government's failure to maintain reforms
and curb corruption. A severe drought from 1999 to 2000 compounded Kenya's problems, causing water
and energy rationing and reducing agricultural output. As a result, GDP contracted by 0.2% in 2000
Kenya's communications market began full liberalization in 1999, when policy and
regulatory functions were de-linked from mainstream operation. As a result, the
Communications Commission of Kenya (CCK), an independent regulatory
authority, and the National Communications Secretariat (NCS), a policy advisory arm,
were created.
The Commission is financially and administratively independent, transparent in its
processes and protects the rights of both operators and consumers. This is meant to
ensure that operators make reasonable return on their investment while giving
customers value for money. The Commission is funded through annual licence fees and
spectrum management fees.
The Commission issues two main categories of operating licences: facility based
network operator licences (i.e. major licences) and non-facility based service provider
licences (i.e. minor licences).
Until 2005, Kenya had two mobile operator and 1 national operator, they opened up the
telecom sector for further competitive and investment purpose. They awarded two
licences one for Econet Wireless Kenya and another one for Orange Kenya which was
recently privatized by the government.
3. Telkom/ Orange – It started with fixed mobile operator. From 1948 to 1977,
postal service in Kenya, Tanzania and Uganda was provided by the East African
Posts and Telecommunications Corporation. The dissolution of the first East
African Community since that era forced Kenya to establish its own monopoly
communications company, KPTC. It was privatized in 2007, Govt. sold shares to
French operator Orange. Orange launched mobile service in Q4 2008.
4. Econet wireless Kenya won the 3rd license in 2004, due to financial crisis, it
launched only in Q4 2008.
From the below 2 graphs we can understand how the mobile customers are among
distributed between the 4 operators. Safaricom is leading the game by holding 80% of
the market share and 14 million customers as of Mar 2009.
From the above analysis, I would like to recommend for the mobile
operators either to retain their customers or acquiring the new customers. If
they follow the following strategies it will really benefit them.
7. Limitations
Like any other program or method, has its own limitation. Likewise, this
Research methodology has its own limitations. I have selected the I
questionnaire method for this project and it has the following limitations:
Questionnaires are impersonal, this means that it may be difficult to understand answers and thus
to act on them. Also, there is a chance that the question may be misinterpreted, rendering the
answer useless.
Questionnaires also invite people to lie and answer the questions very vaguely which they would
not do in an interview.
People are not always willing to fill questionnaires in so they may just throw them always.
Sometimes questions used are too standardized so some peoples preferred answers may not be
included, and this also does not allow for much detail.
Peer pressure of embarrassment may cause people to not want to answer certain questions, or
they may want to impress the researcher and fabricate the truth by filling in untrue answers,
making questionnaires unreliable and sometimes invalid.
We need to consider all the facts before making any judgement on this
project. Thanks for all reading my Research Project.
Consumer Behaviour on selecting a mobile operator in Kenyan Market
Principal Investigator: Syed Thameem
✔ Bibliography
Books
MarketingResearch–G.C.Beri
ResearchMethodology–C.R.Kothari
PrinciplesofMarketing–PhilipKotler
Websites
infocentre.gsm.org
www.cck.co.ke
www.safaricom.co.ke
www.zain.com
www.yu.co.ke
www.telkom.co.ke
www.cia.gov
www.worldbank.org
www.kenya.go.ke
www.gsmworld.com