Vol. 9(6), pp.

70-85, July 2017

DOI: 10.5897/AJMM2017.0526
Article Number: 94A107B65063
ISSN 2141-2421 African Journal of Marketing Management
Copyright © 2017
Author(s) retain the copyright of this article
http://www.academicjournals.org/AJMM

Review

Sustainable marketing at Safaricom Limited: The power

of a good strategy
Paul Mpuga
Economic Commission for Africa, Ethiopia.
Received 2 Aprıl, 2017; Accepted 12 June, 2017

The study uses data and information from Safaricom Limited, a mobile telecommunications company
listed on the Nairobi Stock Exchange as a case study to shed light on the marketing strategies that can
work in Africa, a continent considered risky for potential investors. Given Africa’s abundance of natural
resources, good climate and large tourism potential and sustained high growth rates over the last one
and a half decades, the continent offers strong potential for both domestic and foreign investment. But
the marketing of the potential of the continent has not been successful, calling for increased attention
to this area. The traditional marketing approaches used in the developed world may not apply on
continent with a myriad of bottlenecks including weak poor infrastructure, civil strife, etc. Innovative
approaches and marketing support services are required in order to tap into this potential. The paper
argues that consistent application of strategic marketing approaches impacts profits and sustainability
positively. Safaricom has built a strong brand that is based on high quality services and customer
satisfaction. Controlling over 65% of Kenya’s mobile telephone market, Safaricom has mastered its
market through the use of differentiation, sustained investment in innovation and better understanding
of its customers, and the brand reverberates across the country. The M-PESA mobile money payments
and transfer platform, is one of such innovation by Safaricom that is transforming banking in the
country, and supporting financial inclusion. Safaricom is a responsible corporate citizen that invests in
communities and staff to advance livelihoods. Companies seeking to invest in Africa need to note that
the continent is not one homogeneous basket of failure – there are successes in different parts of the
continent and large potential to be reaped. The potential for good returns on investment exists in the
services sector and others such as agriculture, etc., well beyond the natural resources sector.
Sustained engagement in the market and clear understanding of clients’ needs, segmenting the market
and reaching out to the clients are important for success.

Key words: Brand, competitive advantage, differentiation, marketing strategy, sustainability.

INTRODUCTION

With the abundance of natural resources, good climate from increased investment (both domestic and foreign) as
and large tourism potential, sub-Saharan Africa‘s growth well as from good marketing of not only the available
and poverty alleviation programmes can benefit greatly products but also the large potential.

E-mail: [email protected].

Author agrees that this article remain permanently open access under the terms of the Creative Commons Attribution
License 4.0 International License
 Mpuga et al. 71

Over the past decade, Africa economic growth has that could be applied by other investors in Africa.
been phenomenal and the continent is among the fastest- Safaricom‘s transformation from a state-owned enterprise
expanding economic regions today: on average Africa‘s to a leading telecommunications company in Kenya and
gross domestic product (GDP) grew by 4.7% in the the East African region shows that good branding and
decade to 2011 (Chironga et al., 2011) and 3.7% during focusing on quality and customer satisfaction are
2011 to 2015 (ECA, 2017), one of the continents that important for success. High-return investment
sustained growth during the recent global recession. opportunities in Africa beyond the natural resources
However, marketing in Africa remains a daunting sector exist, and can be reaped with sustained market
challenge. For example, formal retail distribution engagement, clear understanding of clients‘ needs and
infrastructure and marketing support services are weak, reaching out to them as well as appropriate market
implying that the conventional solutions for market segmentation. Innovations such as the M-PESA money
analysis cannot work effectively. transfer platform and investing in corporate social
Estimating the purchasing power of market segments responsibility as part of the company strategy are also
or the impact of conventional value propositions require critical.
careful review. Large proportions of African economies
are informal, with about 48% of non-agricultural
employment in North Africa and 72% in the rest of Africa About Safaricom limited
occurring in the informal sector (ILO, 2009), making it
difficult to account for retail sales, for example, to Company
estimate market size or to value opportunities and 1
accurately target audiences or market segments Safaricom Limited is a public company established in
(Chironga et al., 2011). Africa‘s market is not fully April 1997 and the leading mobile network and
explored by many Western firms, and yet has strong communications company in Kenya and the Central and
potential. Eastern African Region. It started as a department in the
formerly state-owned enterprise, the Kenya Post and
Telecommunication Corporation. By virtue of the 60%
Motivation of the study shares held by the Government of Kenya at inception,
Safaricom initially operated as a state corporation, as
Widespread poverty and inequality in Africa (Beegle et defined in the State Corporations Act (Chapter 446) Laws
al., 2016; Chironga et al., 2011; ECA, 2017, 2016), of Kenya, until May 2002 when its shares were floated on
coupled with civil strife and political instability in many the stock exchange.
parts, poor infrastructure, low levels of education and To-date, Safaricom accounts for 65.2% of Kenya‘s
skills, and weak purchasing power (Agyenim-Boateng et mobile telephone subscribers, and 42% of the enterprise
al., 2015) make marketing in Africa, and marketing Africa solutions market (Safaricom, 2016a). The other three
as an investment destination a challenging job. Some of mobile telecommunications companies in Kenya are:
the most promising countries in Africa present the highest Airtel Limited, controlling 16.6% of the market share,
risk to business (Chironga et al., 2011). Orange Telecom Limited (13.2%) and Equitel Limited
Investors and marketers need information on success (5.1%). Among the many products and services,
stories of businesses in Africa, and what is required to Safaricom provides mobile telephone network services:
build and sustain strong brands. The emerging brand- voice; short messaging service (sms); data; mobile
2
conscious consumers in sub-Saharan Africa are as money (M-PESA ); handsets as well as financial services
connected to the rest of the world and as demanding as and enterprise solutions to individuals, businesses and
those in the Western world; and as African economies government (Safaricom, 2014a). Listed on the Nairobi
grow and businesses expand, there is potential for Stock Exchange, Safaricom‘s leading shareholders are
marketers to tap into the expanding markets through new Vodafone Group Plc of the United Kingdom (40%) and
approaches (Bhan, 2014). Almost everyone in Africa is the Kenya Government (35%); the rest of the shares are
an entrepreneur (Law, 2016) and the potential for traded on the stock exchange, as indicated in Figure 1
marketing of consumer and industrial products, (Appendix 1).
electronics, equity investment opportunities, healthcare, In 2016, Safaricom‘s total revenue amounted to
etc. is large. US$1.96 billion, a 20% growth over the 2015 level
3
However, the knowledge and practices used by (Safaricom, 2016a). A good brand, high quality, wide
marketers elsewhere, for example, brand knowledge, range of products offered and excellent marketing
consumer valuation of products and how to best to reach approaches, within a conducive business environment:
them, may not apply to the fragmented African markets.
In addition, there is a dearth in literature on the mobile
telephone network marketing, especially in Africa. 1
Referred to as Safaricom onwards.
This study helps to shed some light on the marketing 2
Pesa means money in Swahili, with M standing for mobile.
strategies that have worked for Safaricom Limited, and 3
Financial year is April to March.
72 Afr. J. Mark. Manage.

sustained economic growth and stable exchange rate could arise in Safaricom‘s way, for example, new and
underscore Safaricom‘s impressive performance cheaper sources of data, sms and voice interchange.
(Safaricom, 2016a; 2016b; 2015b). Kenya‘s devolved Safaricom practices healthy competition as it is core to
governance system that was introduced in 2013 has business ethical conduct, and brings higher value to
expanded Safaricom‘s enterprise solutions offerings to clients (Safaricom, 2016a).
the 47 counties (Safaricom, 2014a).
The Four Cs of good marketing: Company, Customers,
Competitors, Community that take into account a broad Community
view of the company, its key stakeholders and
sustainability (Korngold and Little, 2012; Nager, 2009) Including civil society and government which can weigh
are well underscored in Safaricom‘s business strategy. great influence on business. Safaricom‘s maintains
Safaricom is a well-managed company with good healthy engagement with its community including the
understanding of and interaction with its internal Communications Authority of Kenya, government
stakeholders–the executives, major investors as well as authorities; environmentalists; labor unions; media;
all shareholders and employees. As a public company, celebrities; suppliers and vendors; people living near
Safaricom values and practices good corporate transmission masts; other people and organizations
governance as being essential to sustainable stakeholder outside of your company (Safaricom, 2014a). For
value. It complies with the Capital Markets Authority example, environmentalists and people living near the
Code of Corporate Governance Practices for issuers of Safaricom masts and boaster stations have often
securities to the public (Safaricom, 2016a). Safaricom‘s complained about possible health hazards and
marketing and sustainability strategies fit its consumers complain about dropped calls. Safaricom
competencies, interests and values. The company embraces its community through continuous engagement,
undertakes regular and open communication with information sharing and undertaking corporate social
shareholders, producing timely half-year and annual responsibility (Safaricom, 2016a, 2016c). Existence of
reports, responding to queries, investor briefing sessions electricity, especially in the rural areas is a major
and roadshows. complement to Safaricom services. Thus, investing in
solar power provision in rural areas as part of its
corporate social responsibility would make business
Customers sense. Collaborators include all businesses using M-
PESA to make/receive payments. Almost everywhere
Safaricom has over 25 million registered subscribers and one goes across Kenya (airports, kiosks, supermarkets,
about 24 million M-PESA clients. It offers over 100 shopping centres, etc.) he/she finds a sign for M-PESA
different products in its portfolio and has over 200,000 and Safaricom, helping to expand awareness of the
touch points to serve its customers efficiently (Safaricom, Safaricom brand.
2016a; 2015b). Customers include individual end-users
(B2C), businesses, government institutions, and civil
society organisations (B2B). Safaricom maintains its core METHODOLOGY
customers through promotions of concessional offerings,
The study uses data and information from Safaricom Limited as a
especially on data and voice packages. case study to assess how strategic marketing approaches impact
the company‘s brand, market share and profitability. The paper
uses a desk review of literature on marketing and Safaricom‘s
Competitors annual and sustainability reports as well as site visits to assess the
company‘s marketing strategies, and how it applies the key
The most direct competition for Safaricom services is principles of marketing: branding, competitive advantage,
differentiation, commoditization and segmentation. Recent company
from the other suppliers of mobile telephone and mobile financial returns, investments in corporate social responsibility
money services. These include Airtel, Equitel and Orange (CSR) and literature on strategic marketing are reviewed to
network providers which together control about 34% of underscore the company approaches to marketing and
the market share (Figure 2, Appendix 1). Commercial understanding of its clients. The findings show that Safaricom has
banks and online payments systems such as VISA are mastered its market and continues to invest to better understand its
customers and what they want. The company applies the strategy
competing with M-PESA for a share of the mobile money
of differentiation, with continuous innovation and engagement of its
payments market. Local fibre operators providing internet customers to remain a market leader in Kenya and beyond. M-
and other on-demand entertainment, over-the-top players PESA, a mobile money payments and transfer platform and now a
offering internet-based voice calls for example, WhatsApp household name, is one of such innovation by Safaricom that is
and mobile virtual network operators for mobile money transforming banking in the country. Companies seeking to invest in
services are emerging as direct competitors (Safaricom, Africa need to note that the continent is not one homogeneous
basket of failure – there are successes in different parts of the
2015a). Other consumer needs such as school fees, taxi continent and large potential to be reaped. The potential for good
fares, food and beverages, etc. constitute indirect returns on investment is not only in the natural resources sectors
competition. Emergent competitors but also in the services sector, agriculture, etc. Second, sustained
 Mpuga et al. 73

engagement in the market and clear understanding of client‘s mouse (Chouinard, 2005).
needs, segmenting the market and reaching out to the clients are
important for success.
Competitive advantage
Conceptualisation
Safaricom‘s three-pronged strategy: customer first;
Marketing plays a critical role in a company‘s bottom-line relevant products; and operational excellence drives its
of profits and sustainability. The marketing strategy and advantage. Safaricom‘s services cover the entire country
how it is implemented provides the interface between the and the company prides in innovative and unique
company, its customers and key stakeholders. The products. The innovative M-PESA mobile money service,
company‘s approach to marketing should be part and for example, is a phenomenon in Kenya with almost all
parcel of its overall strategy. A good brand, differentiation, individual subscribers, businesses and other institutions
innovation and sustaining customer satisfaction are key using it to make/receive payments. Spearheaded by
to success. Applied well, good branding and differentiation Safaricom, Kenya is a global market leader in mobile
create strong competitive advantage, which underscores money usage, with a penetration rate of 985 registered
the existence and long-term survival of organization mobile money accounts per 1,000 people (Twinpine
(Porter, 1990, 1985). Firms succeed in competitive Network, 2016). In 2013, Kenya‘s mobile-payments
environments by doing things that differentiate them from platforms led by M-PESA, handled more than US$2
the crowd in ways that are recognized and appreciated billion per month in transactions (Aye-baoteng et al.,
by current and potential customers, for example by 2015). Competitive advantage is achieved through
focusing on the equality of products or service, customer providing comparable buyer value more efficiently than
care, etc. This helps to pull away and maintain a the competitors, or through differentiation, that is,
dedicated section of customers. In this digital age, with producing at comparable cost but in unique ways that
rapid technological advancements, the mobile create more buyer value than competitors (Porter,1985).
telecommunications sector provides a good opportunity Competitive advantage persuades executives to
to explore how a company can thrive through undertake internal reflection of the company (The
differentiation as it has to constantly adopt competitive Economist, 2008), which Safaricom does annually
strategies. (Safaricom, 2016a).

Description of findings Commoditisation

As a telecoms company, branding is critical to Safaricom. Commoditization where goods with economic value
Since its inception, the company has strived to create a become ‗simple commodities‘ due to creative destruction
strong brand as a mobile telecommunication service (Giachetti, 2013) has not yet permeated the mobile
provider with a difference. Safaricom is a purpose-driven telephone service, Safaricom‘s core products. Compared
company with the vision ―To transform lives‖ above profits to the other providers, Safaricom give more to their
(Mutinge, 2016). Brand includes a company‘s or product customers for its products. For example, in 2016 the M-
trademarks and the meanings invested in those PESA accounted for almost 84% of all registered users
trademarks by its stakeholders; it is a product of and 91% of value of mobile money transactions in the
communication, and increasingly, relevant communication country (Twinpine Network, 2016).
comes from customers, critics and marketers (Martin and Safaricom also sells hand-sets including smartphones,
Schouten, 2012). The most important element in branding tablets and other accessories, with some handsets selling
is that it is what the people feel about the product, service for as low as US$25. Consistent with the fact that many
or organization; the image of what consumers and people in Africa have their first experience with a screen
stakeholders perceive a business, product or serve to be via a mobile phone (Twinpine Network, 2016) most of the
(Neumeier, 2003). Therefore, companies aiming to Safaricom customers have their first internet experience
develop brands for or to sell brands in Africa need to through a mobile phone, which increases smart phone
4
understand the unique features of the continent and to sales (Safaricom, 2016a).
design approaches that help to reach different segments While mobile phone network services in Kenya are still
of the markets. And as a trusted and valued household growing and have not yet matured like in Europe or the
name, this is true of Safaricom and its innovative M- United States where they have reached commoditization
PESA mobile money platform. Thus, authenticity, ethics, level (Kuzmic and Bowen, 2014), the emerging
integrity, transparency and trust are key in building and competition from commercial banks and other online
sustaining a brand. In today‘s digital world, consumers
remain engaged with a brand through social media long
after a purchase (Edelman, 2010), and satisfied consumers 4
However, handsets constitute a very small proportion of Safaricom’s total
spread the word by mouth (Edelman, 2010) and by revenues (averaging 4.4 percent during 2014-2016).
74 Afr. J. Mark. Manage.

payment mechanisms and money transfer services such Indeed, the Four Ps of good marketing: Products, Price,
as VISA risk the commoditization of M-PESA in the Place and Promotion (Ehmke et al., 2007) are well
medium term. The company understands this risk and is underscored in Safaricom‘s marketing strategy.
thus continuously investing in innovation, quality
improvements and new offering to guard against it.
Products

Differentiation Safaricom offers quality and relevant products and

services, including voice, sms, data, M-PESA and
Safaricom‘ main strategy is differentiation focusing on enterprise business solutions for corporate clients. Add-
innovative and high-quality products as well excellent on applications offer customers more value to Safaricom
consumer experience. Market segmentation and pricing products (Safaricom, 2016a); the Appstar‘ and Appwiz
strategies, along with business plans and policies to innovation challenges provide innovative clients the
minimise costs are also implemented (Safaricom, 2016a). opportunity to experiment with local mobile applications
Given its market dominance, the company is also a and content development (Safaricom, 2014a).
price leader (Njuguna, 2012), and able to offer large To improve network quality, Safaricom invested
discounts, ranging from 0 to 90 percent (Oloko et al., US$321 million in infrastructure upgrades and increased
2014) as well as bonus airtime for extended use. The the number of base stations in 2016 to almost 7,000, as
company has reduced call rates from the equivalent of indicated in Table 1 (Appendix 2). Proprietary fibre is
around US$0.08 per minute in 2009 to about US$0.03 harnessed to build a dedicated enterprise business
per minute currently. The minimum charge for sending infrastructure to support for quality IT services to
money has also been reduced to US$0.01, and corporate clients (Safaricom, 2016a).
transactions below the equivalent of US$1 are not In 2007, Safaricom pioneered commercial mobile
charged (Safaricom, 2016b). money transfer, M-PESA, the most successful service of
Safaricom aims to be the best mobile network and its kind (Safaricom, 2016a). There are over 100,000
high-speed data provider in Kenya (Mutinge, 2016), with agent outlets countrywide. During April to September
the mission to ―Transform the lives of our customers … 2016, M-PESA revenue grew by 33.7% to US$259 million
as they interact with us, our products and our services. (Safaricom, 2016b). Users can link M-PESA accounts to
We focus on need-driven, relevant solutions that offer their bank accounts making shopping and payments for
unrivalled value‖ (Safaricom, 2016a, 2016b). products and services an easy experience.
Safaricom was the first mobile telephone company in
Kenya and in the region to introduce mobile money
services, M-PESA (an affordable, convenient and fast
Price
platform for transferring money and effecting paying) is
now a business in its own right, generating over 20% of
revenue (Safaricom, 2016b). M-PESA is the largest Safaricom products are appropriately priced to attract and
cashless payment system in East Africa, in terms of maintain customers; and Safaricom has the most call
number of users and value of transactions. Safaricom tariffs and internet bundle offerings compared to other
partners with commercial banks to link customer accounts mobile phone service providers (ref. Table 2; Appendix II;
to M-PESA, making seamless transfers between the Safaricom (2016a); SoftKenya (2017); Airtel (2017);
bank and M-PESA transactions. Orange (2017) and Sudi (2017) for a comparison of
The Safaricom marketing strategy goes beyond brand- calling and internet tariffs). Pricing takes into account the
driven approach of segmentation, targeting, and different interests of customers, with base prices for
positioning. Customer equity, retention, and add-on airtime, data, sms and appropriate bundles to meet
selling as well as continuous awareness marketing customer needs. The price elasticity of Safaricom
5
(Blattberg et al., 2006) are applied. While the Safaricom products is relatively low , because of low quantity
brand awareness is right in the hands of the customer consumed and low share in customers‘ total consumption
through the mobile phone or tablet and exists in basically budgets. Other factors including level of competition,
all shops and supermarkets, the company continuously business strategy, seasonality, nature of goods--luxurious
advertises to attract new customers and retain existing goods or perishable vs. non-perishable have implications
ones with relevant products, quality improvements, on pricing (Martin and Shouten, 2012), which is not lost
security and solution features. on Safaricom. These qualities make products price
The company also experiments with auditory marketing, inelastic to demand, helping Safaricom to be a price
new product creation, animation, place, content maker on most of its offerings.
localization, brand alliances, use of celebrities and
constant promotions to keep its brand alive among its
customers. Some of Safaricom‘s marketing campaigns 5
A unit change in price leads to less than a unit change in the quantity
have received national marketing awards (Njuguna, 2012). demanded.
 Mpuga et al. 75

Place (1) Mass segment: includes the bulk of its pre-paid

customers who account for 96 percent and general users
Safaricom services are available across the country and of voice, data, sms and M-PESA.
service points are strategically located in major cities and (2) Hustler segment: artisans, taxi drivers and owners,
urban centres. In 2016, Safaricom had 44 service centres small-scale commercial farmers and traders who use
and 3,800 sites, in addition to over 100,000 M-PESA their phones to transact business and seek market
agents (Safaricom, 2016a). In its services points, information. For this category, a minimum balance of
customers are attended to in a timely manner: on entry airtime for voice calls and M-PESA is key.
customers pick a number with identification of the service (3) Discerning professional: mid- to top level employees
required. Staffs are polite and show mastery of customer in corporations, civil society and government. These are
concerns. Display in the service points is elegant, with clients who require mainly voice, data and M-PESA and
the Safaricom green colour and logo providing a warm occasionally sms.
welcome. (4) Youth: the young and dynamic segment. For a
longtime, Safaricom has focused on this group—they
require the whole package of voice, data, M-PESA and
sms. They are on the internet and social media (facebook,
Promotion
twitter, whatsapp, etc.) all the time.
Safaricom promotes its brand through adverts in the (5) Corporates and government institutions. These
media, billboards, the mobile phone through SMS and require bulk voice and data plans for their staff as well as
social media; discounts and special offers are made, enterprise solutions.
customer days and special events are arranged to keep Further segmentation is achieved through the pre-paid
the Safaricom brand alive and offer solutions. Its well- and post-paid voice clients and pricing plans, e.g. basic
designed, with easy navigation website promotes the short messaging services (SMS) and discounted SMS
Safaricom brand and products. For success, it is bundles for the different clients.
important to understand what consumers want (Mugica,
2004); promotions should reach the right customers and
attract attention without annoying the viewer, which Solutions approach and quality assurance
requires a combination of science (targeting) and art
(compelling messages) (Nager, 2014). A solutions approach is fully integrated in Safaricom‘s
operational and marketing strategies, with product
packages and service centres that meet customer
Segmentation expectations. All Safaricom service centres are staffed
with technical personal to respond to customer needs, in
In 2016, Safaricom made a major shift in focus from a friendly and timely manner. The company invests in
products to customers with a view to offer high-value online applications and self-paced solutions to address
services to different segments and sub-segments of its customer concerns. By seeking and responding to
market (Safaricom, 2016a). feedback, Safaricom provides informed solutions to
Indeed, for a mobile network company with internet customer needs and concerns.
connectivity, dynamism in market segmentation and Continued innovations and solutions for different
seeking to continuously understand and address market segments are critical in the evolving mobile
customer needs is key. As underscored by Yankelovich telephone service market. Long-term market dominance
and Meer (2008), effective segmentation is dynamic, based on position and resources is possible in a stable
focusing on adaptable consumer needs, attitudes and environment; rapid changes in technology, demand,
behavior, rather than on longer-lasting personality traits. demographics and lifestyles call for rapid adaptation in
Traditional demographic traits: age, sex, education and order to sustain competitive advantage (Reeves and
income are less important in today‘s marketing strategies; Deimler, 2011). These issues are alive in the mobile
non-demographic traits for example; values, tastes and telephone service industry. Safaricom responds to
preferences influence consumers‘ purchases more signals of change through continuous innovation with its
(Yankelovich, 1964). Thus, understanding actual products and services, business models and marketing
purchasing behavior and updating consumer segments strategies. An innovative culture is promoted within the
as buying patterns change is very important for a organisation and with external innovators to promote new
company (Nunes and Cespedes, 2003). and exciting innovations that meet and exceed
Segmentation helps to discover customers whose stakeholder and customer expectations; and partners
behavior can be changed or those whose needs are not with relevant bodies to increase awareness on intellectual
being met and developing messages that speak to property rights and to safeguard against copyright
different consumer groups (Yankelovich and Meer, 2008). infringement (Safaricom 2015a). A time line of key
Safaricom has identified five market segments: innovations since 2013 is provided in Table 3 (Appendix
76 Afr. J. Mark. Manage.

2). As noted in Box 1, quality of products and wowing Risks and response
consumer experience are at the heart of Safaricom‘s
strategy. Key risks include; complex and dynamic regulatory
framework, overall economic performance, exchange rate
Box 1: Safaricom Service Quality Management instability, information and cyber security, fraud and
misappropriation of company assets and funds. Rigorous
Network is the lifeblood of Safaricom business; internal audits, continuous fraud monitoring,
network availability and quality are therefore critical to investigations–internally and working with law
running and growth of the business since all the enforcement authorities, subscriber protection through
services are delivered through the network platform. secure products and safeguard policies and rising
The network allows for differentiation in a highly awareness with customers through cell and sms
competitive market. It is the medium through which broadcasts are employed to curb fraud. As indicated in
Safaricom transforms lives. Thus quality management Figure 3 (Appendix 1), these measures have helped to
and regular upgrades are key. In 2015, Safaricom was reduce cases of fraud since 2014. Overall, cases of fraud
the first Kenyan network operator to deploy 4G, which investigated declined by 67 percent and 6.9 percent in
offers between 5-10 times faster speeds than 3G 2015 and 2016, respectively.
(Safaricom, 2015b).
In 2015 average dropped call rate* was maintained at Sustainability
0.3 percent of all calls made. This was thanks to
proactive capacity development, investments in fibre Safaricom is one of the few companies in Kenya that has
network, new sites, modernising network equipment embraced the concept of sustainability and is committed
and acquiring competitor spectrum. However, to the triple bottom-line of people, planet and profits. It
Safaricom remained in second place in terms of invests in innovation, its staff and society. Safaricom‘s
‗dropped call ratio‘ and ‗speech quality‘ during 2015 annual sustainability reports, informed by the Global
and 2014. Reporting Initiative, measure and report its carbon
A key constraint to network quality is the fact that footprint and recommend mechanisms to limit harm
spectrum is allocated evenly among all network (Safaricom, 2016c, 2015b).
providers in Kenya, regardless of the number of Based on its vision of transforming lives and material
customers and volume of traffic. With the increasing matters, Safaricom has identified nine sustainability
number of customers, adequacy and network coverage objectives that balance its short-term position and long-
are strained. Safaricom‘s responds through the Best term goals: the best network quality; minimal business
Network in Kenya programme (Best Network for You) disruption; continuous innovation and transformational
and the corresponding regulatory Quality of Service products; inclusive financial and wealth growth; client
targets. data security; positive customer experience; valuing staff
Network availability, which depends on reliable power and supportive work environment; environmental
supply, is key to the quality of services. Network power protection and sustainable practices; and compliance
failures remained high during 2014 and 2015 at 77 with regulations (Safaricom, 2016a).
percent and 49 percent, respectively, above the 40 In 2016, Safaricom identified nine out of the 17
percent target. Strategies to minimize energy Sustainable Development Goals (SDGs), the global
failure/outages at sites include use of grid supply, framework for sustainable development (United Nations,
generators and alternative sources. Energy use and 2016b) against which to benchmark its sustainability
consumption targets are managed through deploying interventions (Safaricom, 2016b), as summarized in Table
more energy-efficient technologies and alternative 4 (Appendix 2).
energy solutions. Solar water heating systems in
buildings, energy efficient, intelligent Building
Management Systems and LED lights in all facilities Customer satisfaction and quality products
and shops are deployed. These approaches also
As indicated in Figure 4 (Appendix 1), the customer base
contribute to reducing carbon footprint.
increased by 11% in 2016 to over 25 million, attracted by
a superior network, convenient airtime distribution and
Source: Safaricom, 2015b. Safaricom Sustainability
attractive consumer propositions and promotions
Report, 2015, pp. 28-34.
(Safaricom, 2016a). Safaricom boasts of the best network
*This is calculated as a ratio of calls terminated while callers are talking
in terms of quality and coverage across the county.
and none has hang-up to all calls on the network. Reasons include: Continuous engagement with clients through the
inadequate coverage; low signal quality due to poor radio coverage; customer special days, cell broadcasts and feedback
interference between different subscribers; network congestion; and portal is important to Safaricom. Innovation ensures
imperfections in network functioning. Dropped-call rate is a key indicator
used by network operators and regulators to assess network
product offerings meet customer needs helping to sustain
performance (TRAI undated). loyalty.
 Mpuga et al. 77

Staff of the United Nations Global Compact (United Nations,

2016a). Safaricom has child development spaces within
Safaricom invests in a dynamic, motivated and its offices and mobilises other businesses on the same
technically competent staff and continuously builds their (Safaricom, 2016a, 2016c; UNICEF, 2014).
capacity through training. As indicated in Figure 4, The Safaricom marathon started as an idea to save
Safaricom employed 4,258 permanent staff in 2016, 49% endangered species in the Lewa Conservancy and has
of them women; and over 86 percent in the age range 25 transformed many lives. Communities benefit from
to 40 years (Safaricom, 2015a), which is key to health, water and community projects with funds from the
sustaining a growing number of customers. marathon collections. In 2015, the marathon raised
US$600,000 and had 1,400 participants, up from 180 in
2000 (Safaricom, 2016a).
Environment
The Safaricom foundation was established in 2003 to
Safaricom takes seriously its responsibility to mitigate any make meaningful and sustainable investments in and for
negative environmental impacts of its activities. Since Kenyan communities. The foundation increased access
2011, Safaricom publishes an annual Sustainability to health, education and water as well as economic
Report, underscoring the impacts of its activities on empowerment, environmental conservation, disaster
mother earth. The 2016 and 2015 reports, for example, response, technology for good, arts and culture
consider Safaricom‘s material economic, environmental development. Since 2003 a cumulative US$290 million
and social impacts and opportunities while exploring has been invested to implement over 1,100 projects
ways its technological footprint contributes to transforming across the country (Safaricom, 2016a). Its strategic plan
lives and sustainable living (Safaricom, 2015a;, 2016c). for 2014 to 17 aims to strengthen support for social,
Total carbon footprint, e-waste collected, alternative economic and environmental transformation among
energy solutions, environmental impact assessments and communities.
environmental audits are quantified. During 2014 and Established in 2010, the M-PESA Foundation uses
2015, for example, Safaricom reported a reduction in mobile money technology in social investments focused
carbon dioxide (tonnes equivalent) footprint from 72,362 on the most vulnerable communities and people for
tCO2e to 61,452 tCO2e (18%) and the cumulative e-waste maximum impact. The foundation partners with the
collected increased from 50 tonnes to 220 tonnes (340 government and other organisations like Accenture, the
percent) (Safaricom, 2015b, 2014b). However, the African Medical Relief and Emergency Fund (AMREF),
carbon-dioxide emissions increased to 67,760 tCO2e in Kenya Red Cross Society and local societies to make
2016 (Safaricom 2016a). lasting impact in health and education. The M-PESA
Foundation Academy, a state-of-the-art mixed boarding
high school, serves talented but economically challenged
Innovation students and those with disabilities (Safaricom, 2016a;
2016c; 2015b). It promotes innovation and leadership.
Investment in innovations is key in a continuously Currently, total investments in the M-PESA Foundation
changing environment and customers demanding the right amount to almost US$4.7 million in five projects:
products and excellence (Safaricom, 2016). Innovations Rebuilding Kinango dam; Conserving our environment;
in healthcare provision, the mobile broadband access for Samburu maternal, neonatal and child health impact
schools and simplified platforms for application project; Health enablement and learning platform; and the
developers are important for sustainability. Eburu Forest-Lake Naivasha Wildlife Corridor Initiative
(Table 5).
Financial sustainability and profitability In pursuing such objectives, credibility and protection of
reputation is key; the worldwide cultural shift in consumer
As indicated in Figure 5, Safaricom has recorded a attitudes towards the environmental and social
steady growth in its financials: net profits reached sustainability drive branding today (Martin and Schouten,
US$380 million in 2016 (18.8 percent increase on the 2012). Sustainability brings more value to firms through
2015 level); dividends paid out amounted to US$304 increased customer confidence and loyalty, competitive
million (an increase of 15.4%). In 2016, Safaricom paid advantage, increased sales, lower costs, higher profits
almost US$177 million in taxes to the government, an and long-term growth (Martin and Schouten, 2012;
increase of 24 percent on the 2015 taxes (Safaricom, Chouinard, 2005). And these principles are not lost on
2016a). Safaricom; the company is transparent and trusted.
Social responsibility is key to Safaricom‘s strategy, with
engagement and investments in various areas in this
regard. Safaricom is among the few Kenyan companies CONCLUSIONS
partnering with United Nations Children's Fund (UNICEF)
to advance the Child Rights and Business Principles, part This study highlights the major marketing principles
78 Afr. J. Mark. Manage.

employed by Safaricom to become a national and emergencies, etc. by appealing to big populations
regional leader in the mobile telecommunications and through sms and email. Messages delivered through the
money services. Delivering relevant products, customer- ‗big-seed‘ and ‗viral‘ marketing approaches (Watts and
focus, accurate reporting, integrity and transparency of Peretti, 2007) can reach the millions of Safaricom
company activities and impact on the environment and subscribers at once and then be spread to others in a few
society are important in Safaricom‘s marketing strategy screen-touches and word-of-mouth.
and for sustainability. (4) Implications for policy and other companies: As noted
Aligning brand practice with the brand promise and earlier, Africa is a continent on the raise, with large
engaging stakeholders in a company‘s offerings as done prospects for increased demand for consumer goods,
by Safaricom through platforms for innovation, supports telecommunications, etc. and thus investors and
sustainability. Engaged customers, employees, regulatory marketers need to pay attention to it. Africa‘s rate of
authorities and communities have stories to tell, which urbanization is the highest in the world and the majority of
stories say much more than advertising (Martin and consumers are young and willing to spend: 53% of
Schouten, 2012). Because marketing allows the company income earners in Africa are between 16 and 34 years
both to communicate its difference and to change old. If Africa maintains its current growth and consumption
consumers‘ attitudes, it is key to delivering business trajectory, demand for consumer goods services will raise
commitments on sustainability and embedding such to US$1.4 trillion in 2020 (Agyenim-Boateng et al., 2015).
goals into product development and business models
(UNEP and Utopies, 2005). These principles are This study shows that attention to strategic marketing
important in Safaricom‘s sustained competitive advantage pays large dividends to companies. Strategic marketing
and impressive progress—the Safaricom brand and M- has been critical in Safaricom‘s transformation as a
PESA are flourishing across the country, appreciated and leading mobile telephone service provider, from a little-
used by individuals and businesses, big or small, formal known state-owned enterprise. Safaricom innovated the
or informal alike. M-PESA and today Kenya is a global market leader in the
mobile money usage. The telecommunication companies
in Africa continue to expand at phenomenal rates. Owing
RECOMMENDATIONS to low cost of labour, land and limited competition, Africa
offers the highest returns compared other emerging
Address staff concerns and strengthen controls: markets. To succeed investors and marketers need to
Safaricom annual reports and online commentaries carefully study the market and growth poles and learn
highlight staff concerns that require attention. For from the failures and successes others (Agyenim-
examples, during 2015, 106 accidents were reported, Boateng et al, 2015). Companies need to plan and take
four of which were fatal (Safaricom, 2015a). During 2012 stakes on the ground, with appropriate distribution
to 2014, Safaricom sacked 126 employees on allegations channels. Consumer markets in African can provide the
of fraud. Promises of permanent contracts to some staff perfect laboratory for new solutions to the global
are unmet and staffs wait too long before final decisions. disruption of traditional marketing (Bhan, 2014). And for
(1) Continue to address quality and limit waste: In 2013, investors seeking opportunities in Africa, Leke et al.
Safaricom paid US$5,000 in fines to regulators due to a (2016) identify six sectors of ―white space‖ characterized
high number of dropped calls reported by clients (The by high growth, high profitability, and low consolidation:
Star, 2014). During 2016, dropped calls remained a wholesale and retail; food and agri-processing; health
concern (Mutinge, 2016). Investigating the causes of care; financial services; light manufacturing; and
dropped calls and establishing measures to address construction. With manufacturing output expected to
them is needed. Limiting the quantities of materials used double to US$930 billion in 2025 (Leke et al., 2016),
in packaging and deploy e-coupons for all airtime sales Africa‘s growth and potential for investment will continue
will help to reduce Safaricom‘s carbon footprint. As much to attract interest.
as possible, materials should be sourced from within
Kenya, to benefit the local economy, reduce costs and
currency risk effects on Safaricom (Mugica, 2004). CONFLICT OF INTERESTS
(2) Loyalty Programme: Safaricom should consider a
loyalty community programme to which members can The author has not declared any conflict of interests.
sign-up to share experiences and ideas. A loyal
community programme, such as Legofan.org can do
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Appendix 1: Figures

40% 25%

35%

Free float Government of Kenya Vodafone Plc

Figure 1. Safaricom shareholding (2015) (Data Source: Safaricom (2015b).

Orange
13%
Equitel
4%

Airtel
17%

Safaricom
66%

Figure 2. Mobile phone market share in Kenya 2016.

89
90
80
70 56
58
60
No. of cases

50
40
29 27
30 16
16 18
20 7 13
4 2
10
0
2014 2015 2016
Fraud cases investigated Dismissals Disciplinary warnings Reported to law enforcement

Figure 3. Anticorruption measures (Data source: Safaricom 2016a).

82 Afr. J. Mark. Manage.

30 4,192 4,258 4,500

4,037
4,000
25 25.16

No. of customers, million

23.35 3,500
21.57

No. of employees
20 2,667 3,000
19.42 2,500
15
2,000
10 1,500
1,000
5
500
0 -
2013 2014 2015 2016

Employees Customers

Figure 4. Steady growth in customers and staff (Data source: Safaricom (2016a)).

Figure 5. Safaricom financials for 2013 to 2016; A: Total revenue and costs.Voice is the biggest single source of revenue, but
as a share of total revenue it is declining as revenue from data and M-PESA grows faster: in the first half of Financial Year
2016 (March-Sept, 2015), voice revenues accounted for 53% of total revenue, but it declined to 47% in the corresponding
period in 2016 (Safaricom 2016b). Revenue growth is much higher than the growth of costs. During 2013-2016, revenue grew
by about 16.4% per year while costs grew by about 11.6% per year; B: Net income and dividends/ taxes paid. About 80% of
net income is paid out as dividends. Dividends per share have been growing, from 0.31 in 2013 to 0.76 in 2016 (Data source:
Safaricom (2016a)).
 Mpuga et al. 83

Appendix 2: Tables

Table 1. Safaricom base stations.

Variable 2015 2016

2G+3G 3.382 3.800
3G 1.943 2.517
4G 236 467
WiMAX 195 193
Total 5.756 6.977
Data source: Safaricom (2016b).

Table 2. Kenya mobile phone service tariffs.

Internet
charges Daily bundles Weekly Monthly
Airtel Kenya
Bundles – no
6MB 15MB 20MB 50 MB 125 MB 350MB 750MB 5 GB 3GB 8GB 20GB - - - - - -
time definition
Cost, US$ 0.05 0.10 0.20 1.00 1.00 2.50 5.00 10.00 19.90 39.90 79.90 - - - - - -
Unlimited offer,
2.50 - - - - - 12.99 - - - 34.99 - - - - - -
US$
UnlimiNet - - - - - - 5.00 - - - 20.00 - - - - - -

Orange Kenya
Bundles 20MB 50MB 100MB - - - - - 50MB - 100MB - 500MB 1GB - 5GB -
Cost, US$ 0.20 0.50 1.00 - - - - - 0.50 - 1.00 - 5.00 7.50 - 27.50 -
Unlimited Daily Weekly Monthly - - - - - - - - - - - - - -
Cost, US$ 0.50 2.49 9.90 - - - - - - - - - - - - - -

Safaricom
5MB + 15MB + 35MB + 60MB + 150MB + 7.5G
Package 5MB 10MB 30MB 65MB 130MB 100MB 300MB 1GB 3GB 12GB -
5SMS 15SMS - 35SMS 60SMS- 150 SMS B
Cost, US$ 0.05 0.10 0.20 0.30 0.50 0.05 0.10 0.30 0.30 0.50 1.00 2.50 5.00 10.00 20.00 30.00 -

Calling rates Domestic call rates International rates

Canada,
Madagascar, N.
China, India, East Africa Uganda, South Africa, UAE & All other Africa except
Airtel Peak time: 08h00 – 22h00 Off Peak: 22h00 – 08h00 Airtel Korea, Western - - -
USA, UK- Rwanda, South Sudan UK-Mobile Madagascar
Samoa
fixed line
US$, /minute 0.04 0.02 0.04 0.10 0.18 0.30 0.50 - - -
Orange-to-Orange all South Africa, UAE &
Orange Orange to other net works Orange - - Madagascar North Korea - - -
time UK-Mobile
US$, /minute 0.03 0.02 0.05 0.10 0.18 0.85 2.00 - - -
Rest Rest
SA,
Safaricom /1 Peak time: 08h00 – 22h00 Off Peak: 22h00 – 08h00 Safaricom - Uganda, Rwanda Burundi, Tanzania - - of of
UK
Africa World
US$, /minute 0.04 0.02 0.05 0.10 0.25 0.50 1.00 0.18 0.30 0.40
1
Data sources: Safaricom (2016a); SoftKenya (2017); Airtel (2017); Orange (2017); Sudi, D., (2017). In addition, Safaricom offers calling bundles, with cascaded per minute cost at different rates for
Safaricom to Safaricom and Safaricom to other networks. For example, a US$5.00 bundle allows for a calling rate of US$0.30 on Safaricom to Safaricom or US$0.035 per minute on Safaricom to other
networks; and a US$30.00 bundle permits calling at US$0.0125 and 0.025 for Safaricom-to-Safaricom and Safaricom-to-Other Networks, respectively. The maximum bundle is US$100, which allows for
calls a cost of US$0.01 and 0.02 per minute for Safaricom-to-Safaricom and Safaricom-to-Other Networks, respectively.
84 Afr. J. Mark. Manage.

Table 3. Safaricom innovations timeline 2013 to 2016.

Year Innovation Objective Key features/ outcomes

Airtime top-ups; request for M-PESA statement; view, redeem and transfer
Aimed at improving customer experience; App mirrors the user‟s account and incorporates key
My Safaricom App Bonga points; purchase data and SMS bundles; talk to customer care
shortcuts; Empowers users with self-care features to resolve most issues on their own
agent via Live Chat and Facebook; SMS management
Supports strategy of transforming lives; Allows customers to send packages motorcycles
Sendy, a technology enabled courier Riders can be tracked via GPS until delivery of the goods; Financed
(bodabodas) and small trucks and track them in real time; Offers 24/7 delivery service accessible by
service through the Safaricom Spark Venture Fund
customers via mobile and web
Provide better coordination between sponsors, patients and providers in the health sector; Fast and
2015-2016 M-tiba mobile centric medical management Diversifying solutions offering to cater for the needs of enterprise
affordable internet connection located in the various buildings that are connected onto Safaricom
platform customers to suit their different business requirements
fibre
Increased access to government services; Stronger collaboration with national and devolved
The e-Citizen platform and M-PESA Saves time and implements the digitalisation agenda of government
governments to develop relevant/tailored solutions; The portal allows people access to government
payments services
services via mobile phone.
Eneza Education partnership e-learning Low-cost study tool offering learners lessons and tests via SMS, web and mobile app platforms; Teachers and parents and guardians can review performance reports of
startup Includes “ask-a-teacher” feature, for learners to ask questions virtually to a teacher leaners and school performance via SMS

M-Ledger is an M-PESA financial journal that provides Android phone users with statements on
Launched in November 2014, the application closed the year with over
Safaricom M-ledger their M-PESA accounts, search for Paybill, Bank to M-PESA and Lipa Na M-PESA merchants; It is a
120,000 users
partnership with Dynamic Data Systems, a start-up from Safaricom Appwiz 2013
US$900,000 venture capital fund to support development of high potential mobile technology start-
Spark venture fund ups; Building and nurturing innovative entrepreneurs; Support in form of capital investment and Start-ups to receive funding of between US$60,000-220,000
technical assistance
Innovation portal targeting external innovators, replaced submission of ideas via email. Launch was
2014-2015
Zindua Cafe themed “How to protect it and monetise it”; Partners Kenya Industrial Property Institute (KIPI) and Supports innovators‟ property rights
the Kenya Copyright Board (KECOBO)
A partnership with Kenya Power (national electricity distributor) to provide micro-credit to retail
Okoa Stima (Light up) -
consumers allowing them to continue using electricity services
Strengthened partnerships with local developers and organisations to promote applications;
Led to increased uptake of local applications. Over one million downloads
Safaricom Appstore Partnerships with OLX, Hello Food and Easy Taxi promoting relevant applications; increased
over the last financial year
downloads from Safaricom Appstore

Establish 3G Wi-Fi hot spots in public transport vehicles, „matatus‟; Enable the youth to conduct Some 24.5 GB worth of data is used in the matatus daily; Helped business
Vuma online
academic research on the go owners on the programme differentiate themselves.
Online merchandising platform offers free auction services through mobile phones. Includes jobs,
Safaricom Mymarket Can be accessed via USSD
classifieds, automobiles, property, mobile phones and electronics
60-day Google campaign gave Safaricom mobile users free access to Google+, Gmail and Google
Google Free Zones 100,000 customers became users over the two month period
Search; Customers warned about data charges for links outside the Free Zone
Safaricom partnered with Fast Moving Consumer Goods (FMCG) companies in Kenya to introduce Benefited distributors and M-PESA agents with FMCG companies to cut
Cashless FMCG distribution using M-PESA
cashless payments via M-PESA their cash handling costs
2013-2014
Offered subscribers daily 20MB data bundle at US$0.10 per day to browse and communicate via
Chattitude and 10+10 for 10 Created excitement around the Safaricom brand, especially among youth
social media channels such as Facebook, Whatsapp and Twitter
Bonga part payment and tablet Gives option of using part cash and part loyalty points to purchase internet capable devices Contributed to sales of over 1 million devices
Safaricom Appstore Aimed at availing data to everyone; Allows customers to download apps on their phones. Safaricom
subscribers can browse Safaricom Media store (www. safaricom.com), view information and Applications developers can upload and monetise their apps
In collabotion with Vodafone reviews, download and install them on their devices
Promote local content; Joint effort of Safaricom and Vodafone; Open to local developers and Winning apps are hosted on the Safaricom appstore and available to
The Safaricom Appstar competition
students Vodafone customers
Innovation is fundamental to Safaricom‘s differentiation strategy. Many of the products and services are industry firsts, setting benchmarks for telecommunication innovation in Africa and beyond.
Safaricom introduced the ground-breaking mobile banking solution, M-PESA, in 2007, which has transformed the lives of millions of Kenyans and beyond. Innovations in education, healthcare, on
airtime sharing, micro savings and credit service, etc. are helping communities (Sources: Safaricom, (2016a, 2015a, 2014a).
 Mpuga et al. 85

Table 4. Safaricom sustainability benchmarking against the SDGs.

Goal Short name

3 Good health and well-being
4 Quality education
7 Affordable and clean energy
8 Decent work and economic growth
9 Industry, innovation and infrastructure
10 Reduced inequality
12 Responsible consumption and production
16 Peace, justice strong institutions
17 Partnerships for the goals
Data source: Safaricom (2016a); United Nations (2016b).

Table 5. M-PESA foundation projects 2016.

Investment, US$,
Project Objective Sector
million
Rebuilding Kinango dam: Improve the living conditions of at least 2,500 people directly and 10,000 others
integrated food security indirectly. The community donated 105 acres as part of their ownership of the Environment 2.07
project food security scheme
Conserving our Achieve the Nairobi Greenline ambition through establishment of a green buffer
Environment 0.43
environment zone
Saving our mothers - Provide health care services to the most vulnerable communities, focusing on
Samburu maternal, improving maternal health care and reducing under-five mortality. At least
Health Not indicated
neonatal and child health 300,000 community members reached and 3,360 community health volunteers
impact project trained
Health enablement and
learning platform: Ensuring the most vulnerable and marginalised people get access to health care Community
0.54
improving community services health
health
Support the conservation of the Eburu ecosystem. 55,000 community members
The Eburu Forest-Lake reached; over 200 of endangered animal species protected from poaching; 22
Naivasha Wildlife Corridor threatened tree species protected from destruction; 8,715 hectares of wildlife Environment 1.65
Initiative habitats protected from poaching and water tower host protected from
encroachment
Total investment 4.69
Source: M-PESA Foundation (2017); Safaricom (2016a).