Executive summary
In the modern world, manufacture and distribution of Mobile phone technology are increasingly becoming a major area of competition. Major manufacturers are attempting to apply their technological prowess to outdo each other in the world mobile phone market. With a prevailing over-competition and market flooding of exporters in the developed world, African nations are increasingly becoming the most potential and promising market for mobile technologies (Rao, 2012).
The economies of these nations are further growing by double-digits. Modern studies provide a strong indication that these nations have a brighter economic future. Moreover, the success of mobile banking and money transfer in these nations has shown a strong indication of potentials for massive opportunities for mobile phone corporations involved in investments (Rao, 2012).
AfriTech Corporation is a start-up business that seeks to take the advantage of mobile market opportunities in East Africa. The company will primarily be an importer, distributor and wholesaler of Apple iPhone technology in the region. Apple products are widely accepted in various parts of the world.
There is no doubt, therefore, that these products, especially the iPhone, have a great demand in Africa. However, there have been few corporations willing to introduce such products in the target region. AfriTech will therefore leverage on these aspects of low competition to build a market niche for Apple Inc’s iPhone.
Situational Analysis
As a start-up company, AfriTech will initially market its products from its market base in Nairobi, Kenya, but under control from its headquarters in San Jose, California. Currently, the company has furnished its offices, outlets and is involving regional and local partners. The company understands that market is all about recognition of the product’s strengths, weaknesses, opportunities and threats. Understanding the target market and its needs will be a major task in marketing the product.
Market summary
AfriTech will focus on marketing the products through own outlets in addition to partnerships with local supermarkets, hypermarkets and other retailers. This implies that the role of retailing will largely be left on the hands of the local partners. These retailers are more than willing to be among the first companies to introduce high tech products, but importers are generally lacking.
Market demographics
The most important features of the target market are a fast growing general population, a fast growing population of middle-class earners, and a fast expanding population of business people, young investors and urban dwellers. Within the three nations targeted, AfriTech anticipates that there is a population of 10 million people joining the upper and middle class as well as the business and service sectors every year. Moreover, a growing need for sophisticated mobile phones and technology to replace the older technologies is eminent.
Secondly, the rate at which potential partners in this business is growing is quite promising. For instance, AfriTech anticipates that between 2013 and 2015, more than 2,000 companies will have joined this business, but only a few international exporters are willing to venture into the market.
AfriTech has laid strategies to enter into partnerships with local retailer chains such as major supermarkets, gas station chains and mobile phone/computer retail chains. This means that AfriTech will invest heavily in major cities and urban centers across the region. AfriTech further estimates 21,000 such partners at the moment, but with an estimated growth of 10% in the next two years. In summary, AfriTech has an estimated market demographic outline as shown below:
Table 1: Market demographics
Market needs and Market Trends
Africa is increasingly becoming a major market for mobile telephones, with the demand for these products increasing significantly every year. According to recent studies, Africa’s rising demand for mobile phones has risen from a number of factors (The Daily Mail, 2011).
For instance, it has been shown that Africa has a poorly developed communication system compared to other continents (The Daily Mail, 2011). In addition, Smartphone technology is relatively new to Africa, with the majority of the available gadgets using the old models and technologies.
However, studies have shown that Africa has the highest demand for mobile phones and mobile phone accessories, which is also increasing every year. In fact, the demand for modern technologies such as Smartphones has increased significantly. It is worth noting that Africans, however, have a high sensitivity to price rather than value, which implies that most buyers will be looking for the cheapest Smartphone in the market.
A second aspect of market need in this region of Africa is the fact that mobile telephone service providers have ventured into banking business (The Daily Mail, 2011). For example, it is worth noting that Mobile Money, a money transfer and banking system that allows mobile users to register with a mobile banking corporation, was first tested successfully in east Africa (Bright, 2011).
Specifically, the British multinational Vodafone, through its Kenyan subsidiary “The Safaricom Limited”, first tested the so-called “M-Paisa” as a pilot study (The Daily Mail, 2011). However, its success as a popular form of money transfer and banking has been awesome, making Vodafone to patent the technology and introduce it to other regions in Africa and Asia (Philips, Page, Lyons & Viviez, 2012).
However, most old-age technologies for mobile phones used in Africa have to be reorganized in order to allow for this service, especially because they cannot be customized. To AfriTech, this is an opportunity to request for customized iPhone products from Apple Inc, a corporation that is situated in Silicon Valley and within the same region in which AfriTech has opened its headquarters. Currently, there are just a few, if any, competitors in this market niche targeted by AfriTech.
Thirdly, locals in this region of Africa are increasingly getting the need for Smartphones to fit their western and Asian counterparts, although they have the critical sense for price. For instance, with the increased impact of globalization, young and middle-aged people in Africa, most of whom have the basic high school education and beyond, feel need to own good mobile phone gadgets.
The population of these people, in addition to that of the mid-income earners, has significantly increased in the region. The people in these groups want to belong to the better class, to own computers and better mobile phones. In fact, it has been shown that one good way is to “show off” a person’s class is through owing some pieces of technology such as mobile phones and computers, but mobile phones are the most common way to demonstrate the class to which a person belongs.
SWOT Analysis
Market Strengths for AfriTech
In general, competition in supplying Smartphone technology in this region of Africa, especially iPhones, is generally weak. Afritech’s competitors are actually retailers who have to rely on regionally appointed suppliers. Major Smartphone producers seem to have little concern with a region wrongly considered as a low-income section of the world.
Secondly, while regional and local suppliers, who are AfriTech’s major competitors, have to rely on intermediaries and appointed distributors; Afritech has entered into a contract with Apple Inc to assume the rights to deal with importation, distribution and retailing in the region.
Moreover, while competitors have to obtain the products and resell them in their own outlets, AfriTech has decided to involved local corporations such as supermarket and Hypermarket chains, oil and petroleum distribution chains and major mobile phone service providers to stock the products in their already established and advertised stores.
AfriTech’s reputation will be built through acquisition and provision of customized iPhone technologies, where our only major obligation is to seek for the best partners to market and distribute the products.
Weaknesses
The demand for iPhones in this region of the world could be hampered by market characteristics. For instance, most people are generally poor than their colleagues in the western world, Asia and South Africa, which means that they are price-sensitive. In fact, they are sensitive to price more than they are to any other aspect of the product (Bright, 2011). Secondly, the presence of cheaper Chinese and Indian low-quality products in the region is a significant weakness that may affect AfriTech’s potential as a leader in iPhone marketing.
Opportunities
Large populations, a fast growing population of the middle income and young and middle age persons in the region are promising. Secondly, the dire need for these persons to own quality and high-class mobile phone gadgets, combined with reduced access to these products, has created an opportunity for companies like AfriTech to venture into the market.
Local retail chain, supermarkets and oil retail chains are willing to enter into partnership contract with us, thus providing an addition opportunity to venture into the business with reduced advertisement and marketing costs.
Threats
A number of threats have the potential to affect our presence and profitability in East Africa. First, the presence of cheap Chinese products is a real threat to our survival and stability.
Secondly, due to social development, economic prowess and development, demographic potentials, peace and other positive factors demonstrated by the east African region in the last five years, especially after discovery of massive oil deposits, a number of corporations are eyeing the region the same way we are doing. This could turn out to be a real threat to our survival.
Products and Product offering
At AfriTech, we shall offer three classes of products: iPhone Smartphone products, iPads and accessories for both the iPhone Smartphone and iPads. Customized iPhones will be a major part of our market products, as it is expected that they will support mobile banking and money transfer, a major economic activity carried out through mobile phones in East Africa.
In addition, our products will be enhanced with internet technology, which is currently growing to be a major form of communication and socialization in a region where most people cannot afford to own their own computers.
Moreover, customization will involve an inclusion of local language such as Swahili, which according to research, is the national, business and official language in some nations like Tanzania and Zanzibar and a business language in Kenya and Uganda. Providing mobile phone gadgets customized to use Swahili language will make the phone user-friendly.
Marketing strategy
Mission
AfriTech’s mission is to introduce and provide customers with high value, quality and cheap priced solutions to the Smartphone technology in communication and mobile banking to the east African region.
Pricing strategy
The customized and non-customized products will maintain a price that is 12% less than that offered by local providers. This is because AfriTech will import the products directly from Apple manufacturers in East Asia and distribute them to our outlets located in major supermarket, hypermarket and oil retail chains.
Features: AfriTech’s products will be primarily Smartphone technology products and their accessories. Customization will be a major customer-attracting feature as it allows an easy access to and use of mobile banking and the internet with a person’s language of choice.
Service: Afritech seeks to include a servicing section for the gadgets with minor errors. Each outlet will have two technicians and supportive staff to ensure customers gets these services.
Marketing Mix
Pricing: the company will seek to maintain a 12-18% advantage below the normal price offered by local distributors and retailers. Pricing will be set based on customer needs, product quality and competitors pricing range
Promotion: advertising will mainly be through local media channels such as FM radios, Newspapers and customer referrals. However, we have identified an added channel that will involved sponsoring major events such as talent shows for students in universities, colleges and corporations, churches and community based programs.
Services: AfriTech will provide one to two-year warranty and in servicing for the products.
Financials
Sales forecast
Figure 2: sales forecast
References
Bright, P. (2011). Africa is the second largest mobile phone market. Digital Journal. Retrieved from http://www.digitaljournal.com/article/314828
Philips, T., Page, M., Lyons, P., & Viviez, L. (2012). African Mobile Observatory 2011: Driving Economic and Social Development through Mobile Services. European Mobile Industry Observatory, 1(2), 11-23
Rao, M. (2012). Mobile Africa Report 2011Regional Hubs of Excellence and Innovation. McKinsey Quartery, 2(1), 2-13.
The Daily Mail. (2011). Mobile market booms in Africa, with 735 million using phones for everything from banking to mini cinemas. Retrieved from https://www.dailymail.co.uk/sciencetech/article-2059741/Mobile-market-booms-Africa-735-million-using-phones-banking-mini-cinemas.html