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KCA UNIVERSITY
SCHOOL OF BUSINESS
PRINCIPLES OF MARKETING
ASSIGNMENT THREE
GROUP MEMBERS
1. WANYONYI JEREMY SIMIYU -22/06934
2. DIANA WANJALA - 25/00829
3. JACKLINE MUTHONI - 24/09020
4. EMMANUEL MWENDWA - 22/03280
5. ROBINA NJERI KANGETHE - 25/01802
6. JUDAH MUMO - 25/00782
7. KENNETH KIPRUTO - 20/04586
8. MOHAMUD NASRA - 24/09205
9. AMIN MOHAMED YAKUB - 20/01515
10. HAJI ZEINAB MAHAMAD - 25/00727
QUESTION ONE
It has been generally observed that the Kenyan Market was more responsive to the
introduction of Money transfer services-Mpesa, as compared to Life Assurance Services. By
looking at the characteristics of this products, discuss the possible reasons for this behaviour.
[10 Marks]
The differential reaction between M-Pesa and Life Assurance Services in the Kenyan market can
be explained by the analysis using the basic features of these products and their correspondence
to consumer needs and market environment.
● Product Complexity and Consumer Understanding
To the consumer, M-Pesa was an innovation in convenience. An ordinary Kenya would get the
idea in a saturated second: press, choose send money, key in recipient number and amount. This
was in contrast to life assurance products where consumers needed to understand the
complicated aspects of the products such as premiums, policy terms, beneficiaries and actuarial
estimations. An example can be a case study of a rural farmer who would immediately
comprehend the importance of sending money to Nairobi without travelling but the same farmer
would not have an idea how paying premium monthly over decades will help their family once
they die.
● Immediate Gratification versus Future Planning
M-Pesa provided quick and practical solution which consumers could access instantly. When one
sent 1,000 shillings through M-Pesa they were able to ensure that they received the sending
within a few minutes and resolved an emergency. Life assurance however came at a time when
Kenyans have been asked to consider ahead by decades as to their financial commitments on the
benefit they may never experience themselves. Since most Kenyans led day-to-day lives, the
psychological switch towards long term financial planning was a big gangue that the life
assurance players never managed to jump.
● Social Norms and Cultural Compatibility
M-Pesa effectively exploited the Kenyan culture of community support systems, and informal
systems of money transfer. Kenyans had been sending remittance through trusted people or
informal channels since the beginning of time. M-Pesa merely computerized such a practice. On
the contrary, life assurance contradicted some of the cultural beliefs regarding death and
financial planning. The traditional Kenyan communities have always enjoyed the extended
family and communal support in times of crisis and the individualistic notion of personal life
insurance is thus alien and superfluous.
● Economical Accessibility and Financial Inclusion
Economically, the startup cost of M-Pesa was minimal; only a simple phone and a transaction fee
was all one needed to start. Even the low-income Kenyans were able to use the service every
now and then. Life assurance required them to pay premiums on a regular basis which frequently
surpassed the monthly disposable income of most Kenyans. An example is that whereas a
domestic worker, who earned 8,000 shillings per month, could afford extremely rare M-Pesa
transactions, paying 500-1,000 shillings per month toward a life insurance policy was a financial
burden that could not be overcome.
● Trust and Risk Evaluation
Kenyans trusted M-Pesa since it was supported by Safaricom, a well -known
telecommunications provider with existing customer relationships. It was not a risk as
transactions were small and reversible. The life assurance companies, however, were frequently
overseas companies or otherwise unknown finance organizations seeking long-term payments
with unpredictable results. Risk perception that the consumer could lose decades of payment
made on the premium in case the company failed or the policy terms underwent changes posed a
major consumer resistance to which these firms found impossibility of conquering this resistance
through marketing alone
QUESTION TWO
Indomie Kenya carried out a Market survey to assess the acceptance of Indomie by Kenyans.
The following is an extract of some of the responses received.
● Mr Moyh Said, “ I take Indomie for dinner every Tuesday, I guess I was among the
first Kenyans to try it”
● Mr Ruto, was surprised that there actually was such a product in the Kenyan Market.
● Mr Raila confirmed he has heard about indomie and thinks it’s a great innovation,
but he is yet to taste it
● Mr. Kenyatta he has taken indomie and it was great, though he cannot recall the last
time he used it.
● Mr. Mudavadi admitted to have begun using Indomie recently. He said he was
initially reluctant but when he saw many people use it he tried it and loved it.
● Ms. Wanga talked of her nasty experience with Indomie, she didn’t like its taste and
would never ever use it again
● Ms. Waiguru stated that from the information she has gathered, she believes indomie
is a product for the poor and less fortunate and she does not belong to this class.
Required.
a) State whether each of the above is an Adopter or Non- adopter, then Place each in
their adopter/non-adopter category. [ 7 Marks]
Respondent Adopter/Non- Category Justification
Adopter
Mr. Moyh Said Adopter Early Adopter Frequency of use,
early adopter,
reveals
commitment
Mr. Ruto Non-Adopter Unaware Non- Total lack of
Adopter product awareness
Mr. Raila Non-Adopter Aware Non- Aware and
Adopter interested but has
not tried the
product
Mr. Kenyatta Non-Adopter Discontinuer Tried but stopped
using, indicates
rejection after trial
Mr. Mudavadi Adopter Late Majority Adopted after
seeing others use it,
shows social
influence
Ms. Wanga Non-Adopter Rejector Tried but had
negative
experience, actively
rejects product
Ms. Waiguru Non-Adopter Aware Non- Aware but does not
Adopter plan due to
perceived social
status issues
b) A new multinational company that produces diapers and sanitary towels seeks to sell
its products in the Kenyan market. Advise them on:
● The strategies they can employ in segmenting this new found market. [ 4
Marks]
The multinational company should to use a multi-dimensional segmentation
strategy in order to venture into the Kenyan market in an effective manner.
Demographic would form the basis where the infant and toddler age category would
be targeted in diapers and teenage girls to adult women segment in sanitary towels,
age segmentation aside income levels would be put in consideration by creating
premium, mid-range, and the economy segments that would fit the different
purchasing power segments. Geographic segmentation is also important, since it is
necessary that the company differentiates between the urban and rural markets, well
knowing that the former might be more convenience and brand-prestige oriented
and the latter might be the case, where pricing might be more important and
distribution channels might need to be adjusted accordingly. The lifestyle
preference should be used in psychographic segmentation where the convenience
working mothers, environment conscious consumer, and health conscious families
are the buyers concentrating on quality and safety should be targeted. Lastly,
behavioral segmentation would assist opening up use pattern, the degree to which
individuals are devoted to brands and seasonal purchasing behavior; thus, the
company may customize communicating with consumers in regards to their
behavior and taste.
● How they shall ensure an effective segmentation for the new market. (3 Marks)
The company needs to pay more attention to three important criteria through which
the success of segmentation is destined. Measurability demands that all the
identified segments should be able to be measured and be evaluated using thorough
market research, demographics and consumer survey to know the size and
characteristics of segment. Accessibility is the assurance that targeted segments
could be impacted through distribution channels, networking, available retailing
and marketing media based on the Kenya infrastructure and media environment in
such a way that the marketing messages reach the target consumers in an efficient
manner. Substantiality requires each segment to be large enough and earning
enough to warrant different marketing treatments and different use of resources so
that the cost of serving the segments is not greater than that segment revenue and
sustained profitability.
● How they shall select a differentiation and positioning strategy. (3
Marks)
To segment the company ought to consider 3 main criteria that determines
segmentation success. Measurability implies that all the segments being identified
are measurable and quantifiable by employing a large amount of market research
capability, demographics and consumer surveys to understand the size of the
segment and segment attributes. Accessibility would dictate that the recognized
segments can possibly be attained through available distribution mechanisms,
distribution network, and the marketing media keeping the infrastructure and the
media environment of Kenya in mind such that, marketing messages shall reach out
to the target consumers effectively. Substantiality, each of the segments must be
large and should be profitable such that the incorporation of the separate marketing
programs and allocations besides the segment being so desirable that it would well
justify the outlay of funds on it to make sure that acquisition of the center at the
segment would not bring with it more expensive than what we will ultimately earn
when all revenue and final profitability are factored together.
● Strategies they may employ in selecting suitable market segment(s) (3
Marks)
The company needs to have a step wise market segment selection strategy that
would most likely maximize market penetration with minimum risk. To start with,
an intense marketing would be very effective which will include targeting urban,
middle income family with intensive marketing so that the brand presence and trust
would have been created within the most accessible and profitable market segment
through which the company can create the brand equity and learn the dynamics of
local markets. In order to achieve the successful penetration of urban market
selective specialization would focus on few high-potential markets like working
mothers willing to spend on convenience products and time saving products and
rural people which are rigid in demand and have need of quality products at
reasonable price with brand difference in packaging and distribution modalities.
This should be a long-term approach where market coverage is undertaken
gradually with a clear move of the system out of the urban centers into the rural
markets as the brand is eventually accepted, distributors to better markets located
are gained and the company learns more about the various needs of the various
consumers in the various regions and income groups in Kenya.