Celtel Nigeria-Serving the Rural Poor Harvard Case Solution & Analysis

Bargaining Power of Buyer: High

The bargaining power of buyer is high for the industry. The reason for this is amount of low income people in Nigeria. An average income of $32 per month shows that the income level is very low when compared to the global population. People do not have cell phones in rural areas and have to travel 100 kilometers to call. With an inclination of not buying the telecommunication sector products, it makes their bargaining power higher than normal.

Rivalry among competitors: High

The rivalry among competitors is also high. Most of them offer similar services and products with similar price structure. This makes all of them strong competitors for each other. The only advantage a company can take is to gain the first mover advantage in rural areas which is still not catered to complete extent.

Threat of Substitutes: Moderate

Threat of substitutes is moderate for the industry. With umbrella man available through the country including rural and urban areas. Along with the number of calling kiosks available also increases threat of substitutes. With Skype and viber arrival the threat of substitutes will continue to increase.

Threat of New Entrant: Low

Nigerian telecommunication industry is one of the fastest growing telecom industries in the world. It is attractive, profitable and with less than 60% market un-tapped in the industry. The industry however requires government licensing therefore, it is not an easy industry to enter with all the energy and corruption issues in the country.

The 4As framework – Marketing to low-income consumers

Availability:

Shared phone usage:

In Nigeria only 1% of rural population owns a mobile set. More than 60% of the rural users or the population accesses a shared phone predominantly through kiosk and umbrella man. Only 14% of rural people within convenient access of an umbrella man or the kiosk use the service.

Products:

Celtel has almost no direct or indirect access to normal customers beyond the distribution network that it has established. These distribution channels are highly urban centric with no formal route to market for rural areas.  Less than 2% of revenues come from sales through rural areas.

Network availability:

Guards are required at each station because of the increasing theft incidence in the area. Need for diesel generators at each tower are necessary because of the energy crisis. Vandalism and theft of equipment is also a concern, along with this poor network quality that becomes a deterrent to consumption.

Affordability:

Cost of telecom services:

Due of the poor infrastructure of distributing telecom products, distributors charge extra from rural population, which increases the overall cost of products and services. This cost represents almost 50% of monthly saving of each rural family. Consumers however, prefer a recharge value of $1.20 or less if they own a cell phone. 

Cost of mobile phone:

The cost of cell phones is also a barrier, but a notable aspect of the industry is that more than 80% poor families own a television set and 20% poor families even own a DVD player which shows they have the capacity...................................

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