The battle for growth in the telecommunications sector went up a notch with Equity Bank crossing the million subscriber mark with its subsidiary Finserve Africa trading as Equitel. Along with the announcement of a new prefix came the business model that will see mobile money transactions within Equitel and Airtel effected at no cost to the user. From a technology perspective, these services are homogenous and beyond pricing, one must look at the less visible differentiators such as service quality, emotional connection and brand reputation, remembering the peculiar habits of the Kenyan consumer.
Relegating the tech to the back burner, we are left to examine the marketing, and it does not get simpler than the 4 P’s. Commoditization kicks the wind out of a product comparison, mobile money is mobile money. Arguments about price are around the fact that the offerings could be cheaper. The question to ask is, cheaper in comparison to what? Mobile money took off after it provided unprecedented convenience and cost savings and that value still holds true. Promotion drives emotional connection and loyalty, a function of a smart CMO with a good agency to actualize. Place is where this game will be won and it ties in closely with pricing. Building a robust distribution network is key for any FMCG or in this case FMCS – fast moving consumer service company. An agent network is fed on commissions and this has to be plugged into the financial models that inform the final price. A zero price point means one of two things, either the value attributable to an agent will be met from other sources of revenue, cannibalizing other profit centers or the service reach is stunted as there will be no uptake by agents citing little benefit. The downline must be fed.
Airtel unfortunately looks like the pawn in this game with unused spectrum that has been availed to Equitel. A second layer disadvantage is that they are not even a close number two and will inadvertently pick the short straw long term as they also rank low in the global pecking order of the larger group.
Equitel with access to deep pockets from can hack promotion and place to present worthy competition to Safaricom, with Equity using them to control factors of production and increase the average return per user on financial services.
Still early days but the writing is on the wall.