Safaricom Uses Marketing Research Insights to Turn a Crisis on Its Head

Abstract:

The case ‘Safaricom Uses Marketing Research Insights to Turn a Crisis on Its Head’ describes how Safaricom, a Kenyan mobile communications company, used marketing research insights to effectively respond to a potential loss of market share and brand image due to dissatisfied millennial customers. The case brings to light the importance of understanding consumer segments and sub-segments and Safaricom’s efforts to customize products, services, and marketing initiatives according to sub-segments, a practice that was previously not common in the Kenyan telecommunications industry.

Safaricom gained a reputation in the Kenyan market through its successful mobile banking initiative M-Pesa, which provided basic banking services to several unbanked Africans. The company was also known for several non-profitable activities carried out through the Safaricom Foundation to improve the health and wellbeing of Kenyans and provide good education and training to Kenyan youth. However, in 2016, the company began to face a severe backlash from its customers, especially the millennials, who accused it of unethical business practices.

As millennials accounted for most of Kenya’s population and were the largest subscribers of mobile services in the country, Safaricom’s executives realized that they could ill-afford to turn a deaf ear to their complaints. The company commissioned marketing research studies to understand the needs of the millennials. Safaricom divided its consumer segments into four broad categories: ‘young flashers,’ ‘savvy loyalists,’ ‘mature trendies’, and the ‘prudent young’. It also started a customer segmentation department to customize its product offerings for and align its marketing initiatives to each segment. In 2016, it launched a millennial exclusive sub-brand called Blaze to placate existing millennial customers as well as attract newer customers into its fold. As part of this, Safaricom launched a website that acted as the platform for youth and held several youth-centric events and training programs. The number of Blazers increased from 1.6 million in 2016 to 3.7 million in 2019. During the same time period, mobile data revenue increased from US$211 million to US$362 million, while messaging revenue increased from US$173 million to US$196 million. The case discusses the marketing research findings of Safaricom as well as the products, services, marketing strategies, and youth-centric initiatives of Blaze. It brings to light the importance of marketing research insights for contemporary businesses and of customizing products and services as per customer segments, something that till then had been alien to the telecommunications industry.

Issues: » Understand the need to regularly track consumer perceptions on marketing practices. » Understand the importance of customer segments and behavioral segmentation. » Learn the importance of co-creating products and services with customers. » Learn the importance of a well-designed and honest promotional campaign. » Learn about brand communications to millennial segment. Introduction Safaricom PLC (Safaricom), a Kenya-based public telecommunications company, was established in 1997 as a subsidiary unit of Telkom Kenya, a telecommunications company owned by the Kenyan government. In May 2000, the UK-based Vodafone Group PLC acquired a 40% stake in Safaricom and in 2008 the government offered 25% of its 60% shares to the public through the Nairobi Securities Exchange. As per the annual report 2019, Vodafone Kenya Ltd. held a 40% stake in the company, the government of Kenya a 35% stake, and the general public a 25% stake. Safaricom was one of the 400 African companies with annual revenues of over US$1 billion..

Key words:
Marketing Research Plan; Psychographic Segmentation; Millennial Behavior; Youth-Centric Marketing Campaign; Marketing Mix; Brand Loyalty; Consumer Perception; Consumer Needs; Brand Communication; Promotional Strategy; Customer Service; Product Co-creation; Digital Marketing"

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.