Reading notes

IBUS 465 – Lecture Octobre 19th – Case M-Pesa FOR = frame of reference What do you want your customers to compare to 1. What do you think is the best way to get consumer insight in Kenya ? 1. Market Research and Surveys : Conduct market research and surveys to collect data directly from consumers. These surveys can be administered through various channels, including mobile phones, online platforms, or in-person interviews. The questions should be designed to understand consumer preferences, needs, and behaviors. 2. Focus Groups and In-Depth Interviews : Organize focus group discussions and in-depth interviews with a diverse group of consumers in Kenya. These qualitative methods can provide deeper insights into consumer motivations, perceptions, and attitudes. 3. Observational Research : Observe consumers in their natural environment to understand their behavior. This can be particularly useful in understanding how people use mobile phones and conduct financial transactions in their daily lives. 4. Mobile Surveys : Given the high penetration of mobile phones in Kenya, mobile surveys and SMS-based questionnaires can be effective for collecting consumer data. Many Kenyan consumers are comfortable with mobile technology. 5. Local Partnerships : Collaborate with local organizations, NGOs, or businesses to gain insights. They often have a better understanding of the local culture, customs, and consumer behavior. 2. How might M-Pesa’s positioning as a brand evolve over time in Kenya ? 3. Diversification of Services : M-Pesa may expand its range of services beyond basic money transfer and payments. For example, it could introduce savings accounts, microloans, or insurance products. This would position M-Pesa as a more comprehensive financial services provider. 4. Financial Inclusion Advocate : M-Pesa can further position itself as a champion of financial inclusion. It can focus on reaching even more unbanked and underbanked populations in Kenya, demonstrating a commitment to improving financial access for all. 5. Integration with E-commerce : As e-commerce and online shopping grow in Kenya, M-Pesa can position itself as the preferred payment method for online transactions. This would reinforce its role in enabling digital commerce. 6. Social Impact and Sustainability : M-Pesa can enhance its image by emphasizing its role in promoting sustainability and social impact.

For instance, it could highlight how digital payments reduce the environmental impact of paper money. 1. Target consumer evolve : Youth and Tech-Savvy Users : As technology adoption grows among Kenya's youth, position M-Pesa as a digital-first financial platform, offering mobile-based services and features that cater to the preferences of tech-savvy consumers. 2. Small Businesses and Entrepreneurs : Target small businesses and entrepreneurs by providing them with solutions for payment processing, invoicing, and financial management, positioning M-Pesa as a business enabler. 3. Rural and Remote Communities : Expand services in rural and remote areas, positioning M-Pesa as the go-to financial tool for individuals who live far from traditional banks. 4. E-commerce Shoppers : Target online shoppers by positioning M- Pesa as the most convenient and secure payment method for e- commerce transactions. Offer special incentives or discounts for users who choose M-Pesa for their online payments. 3. What are your recommendations with regards to developing the product/service ? For example, should money transfers be through SMS or a smartphone app ? What product/service features would you include ? 2. Mobile Accessibility:  Continue to offer money transfers through SMS (Short Message Service), as it is a crucial feature that caters to consumers who may not have smartphones or internet access. SMS-based transactions are essential for reaching a wide user base, especially in rural areas. 3. Smartphone App:  Develop a smartphone app in addition to SMS-based services. This can cater to tech-savvy users and those who prefer a more user- friendly and feature-rich interface. The app can provide additional functionalities and convenience. 4. Multi-Platform Compatibility:  Ensure that M-Pesa services are compatible with various mobile platforms, including basic feature phones, smartphones, and even web-based platforms. This approach allows flexibility and inclusivity. 5. Security Features:

3. Brand Recognition and Trust: Safaricom, the parent company of M-Pesa, was a well-known and trusted telecommunications provider in Kenya. This brand recognition and trust extended to M-Pesa, enhancing its credibility. 4. Regulatory Expertise: M-Pesa effectively navigated the regulatory environment and established compliant operations, which can be a significant barrier to entry for newcomers. 5. Network Effects: M-Pesa's growing user base and agent network created network effects, making it more attractive for users and businesses. As more people adopted M-Pesa, its convenience and utility increased. 6. Partnership Ecosystem: M-Pesa formed partnerships with various businesses and institutions, making it a versatile platform for diverse financial transactions, including bill payments and e-commerce. Competitive Threat from Commercial Banks: While M-Pesa enjoyed a sustainable competitive advantage, the entry of a copycat service by a commercial bank could pose a competitive threat for the following reasons: 1. Financial Resources: Commercial banks typically have significant financial resources that they can allocate to technology, marketing, and infrastructure development, allowing them to compete effectively. 2. Existing Customer Base: Banks may already have a substantial customer base, providing them with a built-in market for mobile money services. 3. Regulatory Support: Banks may have a regulatory advantage, given their established status and relationships with regulators. 4. Innovation: Banks can leverage their expertise in financial services to introduce innovative products and services, potentially offering a broader range of financial solutions. 5. Trust and Credibility: Established banks often enjoy a high level of trust among consumers, which can be a competitive advantage in the financial services industry. 5. What opportunities might there be for M-Pesa outside of Africa ? 1. Expanding to Other Developing Regions: M-Pesa could explore opportunities in other developing regions with similar financial inclusion challenges. South Asia, Southeast Asia, and parts of Latin America have large unbanked populations, making them viable markets. 2. Partnering with Local Telecom Operators: Collaborating with local telecommunications operators in target regions is crucial. Such

partnerships can provide access to a vast customer base and the necessary infrastructure for mobile money services. 3. Cross-Border Remittances: M-Pesa can facilitate cross-border remittances between African countries and other regions. Remittances are a significant source of income for many families, and M-Pesa's infrastructure can make transfers more accessible and cost-effective. 4. Integration with International Financial Services: Integrating with international financial services can provide M-Pesa users with access to global financial systems, including online shopping and payments. This could be particularly appealing for users who engage in cross-border commerce. 5. Investment and Expansion: M-Pesa can explore investments and partnerships in emerging markets to establish a presence and expand its services. Investment in local fintech startups could be a strategic move. 6. Financial Inclusion Initiatives: Collaborating with governments and international organizations to promote financial inclusion can create opportunities to introduce M-Pesa services in regions with limited access to traditional banking. 7. Migrant Worker Services: Focusing on regions with a significant population of migrant workers and offering services tailored to their needs can be a strategic move. Migrant workers often require efficient and low- cost remittance solutions. 8. Leveraging New Technologies: Embracing emerging technologies such as blockchain and cryptocurrency can expand the range of services offered and attract tech-savvy users. 9. B2B and Merchant Services: Expanding services for businesses, including merchant payments and business-related financial tools, can create opportunities in markets with growing SME sectors.