Competition in the Mobile Phone Industry in Kenya

News - Technology

For the past decade Safaricom has been the most dominate phone service provider with an average of 80% of the market belonging to them. They have managed to maintain this dominance despite the entrance of new service providers such as Celtel which was taken over by Zain and now Zain wants to sell its stake to the original owners of the Business Verizon.

Safaricom's only true competitor has been Ken cell which was owned by Verizon since then Celtel has been unable to shake their dominance despite having better services , a wider coverage and better pricing. The only dominance that Celtel has been able to maintain over Safaricom has been over its corporate clients who are more focused on quality than popularity.

Over the years Safaricom that seemed to understand the market better than its competitors managed to maintain its dominance to a point that it did not even bother to come up with strategies to counter those of Celtel/zain its main competitor. Celtel therefore ended up hiring more temporary sales people, and giving more concessions on their tariffs which reflected at the end of the financial year by a huge loss. Eventually Celtel sold the company to Zain who came with refreshing new advertisements but no real changes apart from making the organization leaner and a year down the line wants to sell it Africa unit claiming it is unprofitable. Based on all the different management changes the company has gone through we may be forced to believe that they are may be circumstances that the investors had not fully assessed about the common market and when they got to the market it took they by surprise and had to adjust to them; but on the other had it may be that the organizations strategy was ineffective as well as the investors had really high expectation to the profitability of the company. It is a fundamental Law of Nature to profit through loss and therefore the quick retreat of Zain from the African Market due to not achieving their expectations is a wrong move.

Orange the new market entrant seems to be making more headway in capturing the Kenyan Market achieving its 1,000,000 millionth customer within eight months by the implementation of a marketing strategy that is appealing as well as provision of quality services to clients. Orange's strategy has worked so well that it has made safaricom jittery to the point that it is responding to Orange and their advertising campaign and has also led to the latest entrant Yu replicating its penetration strategy.

Orange that has been one new entrant in the market has taken over the market and has exponentially grown it especially its ISP to a level that is threatening to Safaricom that had been looking to get into the market. Safaricom that had bought one com in order to get into the market has been unable to fully get into the market that Orating with orange further introducing dial up modems that would allow mobility has further eaten it the Safaricom internet market to such a level that Safaricom had to increase its spending on advertising for their modem , decrease their download prices to the point of comparison with the orange and set up conferences in all major towns to introduce to the owners of the cyber cafes their new broadband and Wi-max products that they would offer to the Owner at a 15% lower cost than the competitor Orange with the choice of controlling the bandwidth they give to each computer.

This is basically a fist whereby Safaricom is no longer the market leader but instead the challenger and therefore has to change its strategies from one of defense to attack. So far it has been using promotional material and competitions these being its traditional strategy (dishing out money and goodies to maintain Customers). This is due to the understanding that Kenyans love free things and therefore the best strategy would be to give them the chance to get the things at a cost making Safaricom look like a  lottery than a service provider. The strength of the success of these beliefs cannot be fully accessed but one thing is for sure in order to upstage Orange from their new territory a lot need to be done and Safaricom may just not be up to the task.