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The role of marketing strategies in the performance of telecommunication

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 MS 100

The Role of Marketing Strategies in the Performance of

Telecommunication Companies: A Comparative Study of
TNM and Airtel.

MBA (MARKETING)

NAME OF STUDENT: JOHN CHINKHWESA JERE

REGISTRATION NUMBER: 109101629
CENTRE: Malawi (8019)

A Research Dissertation submitted in fulfillment of the requirements for the

award of MASTER OF BUSINESS ADMINISTRATION

PRESENTED TO:
The Co-ordinator (Projects),
School of Management Studies,
IGNOU, Maidan Garhi, New Delhi-110068.

SUPERVISOR NAME: DR. A. A. Mwenifumbo

SCHOOL OF MANAGEMENT STUDIES

IGNOU, NEW DELHI

i
 CERTIFICATE OF ORIGINALITY

This is to certify that the project titled “THE ROLE OF MARKETING STRATEGIES IN
THE PERFORMANCE OF TELECOMMUNICATION COMPANIES: A
COMPARATIVE STUDY OF TNM AND AIRTEL” is an original work of the Student and
is being submitted in partial fulfillment for the award of the Master‟s Degree in Business
Administration of Indira Gandhi National Open University. This report has not been
submitted earlier either to this University or to any other University/Institution for the
fulfillment of the requirement of a course of study.

NAME OF SUPERVISOR NAME OF STUDENT

DR. A. A. MWENIFUMBO MR. JOHN CHINKHWEASA JERE

SIGNATURE OF SUPERVISOR SIGNATURE OF STUDENT

PLACE: PLACE:

DATE : DATE :

ii
 ACKNOWLEDGEMENT

To God be the Glory for being the pillar of my strength; for never leaving nor forsaking me;
for letting every word He said upon me come to pass. Thank you Lord for the strength,
wisdom, grace and every provision I needed in the whole of this course.

I would like to thank all those who supported me in completion of my study and the thesis. In
particular I would like to thank Wilma Chalulu (Public Relations and Sponsorship Manager)
of TNM and, Enwell Kadango (Marketing Director) and Almond Chinula (Marketing
Manager) of Airtel for not only allowing me to research on their companies but also for
providing me with vital information that has been crucial in the writing of this edifice.

To my wife Fides, I say thank you for all the support during my tedious studies; for assisting
me with data analysis, presentation and automation. To my son Wisdom, I greatly appreciate
your support by understanding that I needed to work much as I love playing with you.

My sincere appreciation goes to my supervisor Dr. A. Mwenifumbo for seeing through all the
stages of this project. Thank you for your time, guidance, critique and encouragement. I
would not have done this without you. To my friend and former Head teacher Mr. Fiddelis
Makaula for helping in clarifying my topic and for encouraging me, I say thank you.

Finally, my sincere gratitude to my family, friends and all colleagues for all the support and
encouragement they gave me throughout the course. Special gratitude should go to my fellow
MBA students. The road was tough but we made it.

iii
 DEDICATION

To God be the Glory

What would I have done without you Lord?
The Lord is my shepherd; I shall not want… though I walk through the valley of the shadow
of death, I will fear no evil; for you are with me; Your rod and Your staff, they comfort
me…. (Ps.23:1-6) You will never leave me nor forsake me (Hebr 13.5)

To my beloved and loving mother

Jane (Nyagwira)
and my late father
Mackson Chinkhwesa Jere
Who have always loved me and believed that I can achieve great things even when many
doubted and despised me. This is yours too. To my brother, Vyanekha and my sister
Funny and all those who have contributed to my success, this is yours and God bless
you.

To my wife Fides, know that you are precious to me. This is for you too. My success is
your success.

To my sons Moses and Wisdom and my beautiful daughter Shalom, you are the reason I
go the extra mile. The standards have been set; at least you have a way to follow that I
never had. Do your best.

iv
 TABLE OF CONTENTS

CERTIFICATE OF ORIGINALITY ........................................................................................... II

ACKNOWLEDGEMENT...................................................................................................... III

DEDICATION .................................................................................................................... IV

TABLE OF CONTENTS ........................................................................................................ V

LIST OF ACRONYMS AND ABREVIATIONS ....................................................................... VIII

LIST OF FIGURES .............................................................................................................. IX

LIST OF TABLES ................................................................................................................. X

ABSTRACT ....................................................................................................................... XI

CHAPTER ONE ............................................................................................................. 1

INTRODUCTION AND BACKGROUND ................................................................................. 1

1.1 INTRODUCTION ........................................................................................................... 1

1.2 MALAWI: COUNTRY BACKGROUND ...................................................................... 2
1.2.1 POPULATION TRENDS ............................................................................................... 2
1.2.2 THE SOCIO-ECONOMIC ENVIRONMENT ................................................................... 4
1.3 PROBLEM STATEMENT .............................................................................................. 6
1.4 OBJECTIVES OF THE STUDY ..................................................................................... 7
1.4.1 AIM ............................................................................................................................ 7
1.4.2 SPECIFIC OBJECTIVES ................................................................................................. 7
1.4.3 RESEARCH QUESTIONS .............................................................................................. 7
1.5 JUSTIFICATION OF THE STUDY ............................................................................... 8
1.6 ORGANIZATION OF THE STUDY .............................................................................. 8
1.7 CHAPTER SUMMARY.................................................................................................. 8
CHAPTER TWO ............................................................................................................ 9

LITERATURE REVIEW......................................................................................................... 9

2.1 INTRODUCTION ........................................................................................................... 9

2.2 THEORETICAL FRAMEWORK ................................................................................... 9
2.2.1 THE PLACE OF MARKETING ....................................................................................... 9
2.2.2 SERVICE MARKETING .............................................................................................. 11
2.2.2.1 SERVICE MARKETING MIX ....................................................................... 12
2.2.2.2 SERVICE QUALITY ...................................................................................... 14
2.3 UNDERSTANDING STRATEGY ............................................................................... 14
2.3.1 PORTER’S GENERIC STRATEGIES ............................................................................. 15
2.3.2 INTERNATIONAL MARKETING STRATEGIES............................................................. 16
2.3.2.1 INTERNATIONAL STRATEGY ................................................................... 16

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 2.3.2.2 MULTIDOMESTIC STRATEGY................................................................... 16
2.3.2.3 GLOBAL STRATEGY ................................................................................... 17
2.3.2.4 TRANSNATIONAL STRATEGY .................................................................. 17
2.4 MARKETING STRATEGIES....................................................................................... 17
2.4.1 ANSOFF’S GROWTH STRATEGY MODEL .................................................................. 18
2.5 TELECOMMUNICATION SERVICES IN MALAWI ................................................ 20
2.5.1 TELECOM NETWORKS MALAWI (TNM) ................................................................... 21
2.5.2 COMING OF MALAWI TELECOMMUNICATION LIMITED (MTL) .............................. 23
2.5.3 THE MALAWI COMMUNICATION REGULATORY AUTHORITY ................................. 24
2.5.4 AIRTEL MALAWI ...................................................................................................... 25
2.5.5 THE STATUS OF TELECOMMUNICATION IN MALAWI ............................................. 26
2.5.5.1 MOBILE TELECOMMUNICATION IN MALAWI ..................................... 27
2.6 RESEARCH RELATED LITERATURE ON TELECOMMUNICATION ................. 29
2.6.1 CORPORATE STRATEGIES OF TNM AND AIRTEL ...................................................... 32
2.6.1.1 TNM’S CORPORATE STRATEGIES ..................................................................... 32
2.6.1.2 AIRTEL’S CORPORATE STRATEGIES .................................................................. 35
4.2.3.6 AIRTEL BAND STRATEGY ......................................................................... 37
2.6.1.3 MARKETING STRATEGIES OF TNM AND AIRTEL............................................... 38
2.7 CHAPTER SUMMARY................................................................................................ 39
CHAPTER THREE ............................................................................................................. 40

RESEARCH METHODOLOGY ............................................................................................ 40

3.1 RESEARCH DESIGN ......................................................................................................... 40

3.2 TYPE OF DATA ................................................................................................................ 41
3.2.1 SECONDARY DATA................................................................................................... 41
3.2.2 PRIMARY DATA ....................................................................................................... 42
3.2.2.1 SAMPLING AND SAMPLE SIZE .......................................................................... 42
3.2.2.2 METHOD OF DATA COLLECTION ...................................................................... 43
3.3 DATA ANALYSIS .......................................................................................................... 44
3.4 LIMITATION OF THE STUDY............................................................................................ 44
3.5 CHAPTER SUMMARY ...................................................................................................... 45
CHAPTER FOUR ......................................................................................................... 46

DISCUSSION OF FINDINGS....................................................................................... 46

4.1 INTRODUCTION .............................................................................................................. 46

4.2 DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS .................................................. 46
4.3 PHONE USAGE ................................................................................................................ 49
4.4 NETWORK SWITCH ......................................................................................................... 50
4.5 CUSTOMERS’ ATTITUDE AND RESPONSE TO TNM AND AIRTEL STRATEGIES ................ 52
4.5.1 PROMOTION STRATEGIES ....................................................................................... 52
4.5.2 PRODUCTS STRATEGIES .......................................................................................... 57
4.5.3 DISTRIBUTION STRATEGIES ..................................................................................... 61
4.5.4 PRICE STRATEGIES ................................................................................................... 65
4.5.4.1 LATER PRICING DECISIONS ............................................................................... 65
4.5.4.2 LOYALTY PROGRAMMES .................................................................................. 69

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 4.5.4.3 YAKWATHU AND YANGA ................................................................................. 70
4.6 BRAND VISIBILITY ........................................................................................................... 70
4.7 CUSTOMER SATISFACTION WITH THEIR NETWORKS .................................................... 70
4.8 IMPACT OF MARKETING STRATEGIES IN THE PERFORMANCE OF TNM AND AIRTEL.... 73
4.6 CHAPTER SUMMARY ...................................................................................................... 76
CHAPTER 5 ..................................................................................................................... 77

CONCLUSION AND RECOMMENDATIONS ........................................................................ 77

5.1 INTRODUCTION ............................................................................................................ 77

5.2 CORPORATE STRATEGIES ............................................................................................... 77
5.3 MARKETING STRATEGIES ............................................................................................... 78
5.3.1 PRODUCT STRATEGIES ............................................................................................ 79
5.3.2 DISTRIBUTION STRATEGIES ..................................................................................... 80
5.3.3 PROMOTION STRATEGIES ....................................................................................... 80
5.3.4 PRICING STRATEGIES ............................................................................................... 81
5.4 IMPACT OF THE STRATEGIES.......................................................................................... 81
5.5 RECOMMENDATIONS .................................................................................................... 82
5.5.1 RECOMMENDATIONS ON AIRTEL ........................................................................... 82
5.5.2 MARKETING STRATEGIES ........................................................................................ 82
5.5.2.1 PRODUCT STRATEGY ........................................................................................ 82
5.5.2.2 DISTRIBUTION STRATEGIES .............................................................................. 82
5.5.2.3 PROMOTION STRATEGIES ................................................................................ 82
5.5.2.4 PRICE STRATEGIES ............................................................................................ 83
5.5.3 RECOMMENDATIONS ON TNM ............................................................................... 83
5.5.4 MARKETING STRATEGIES ........................................................................................ 84
5.5.4.1 PRODUCT STRATEGIES ..................................................................................... 84
5.5.4.2 DISTRIBUTION STRATEGIES .............................................................................. 84
5.5.4.3 PRICE STRATEGIES ............................................................................................ 84
5.5.4.4 PROMOTION STRATEGIES ................................................................................ 84
5.5.4.5 CUSTOMER CARE ............................................................................................. 84
5.6 AREA FOR FUTURE RESEARCH ....................................................................................... 85
5.7 CHAPTER SUMMARY ...................................................................................................... 85
REFERENCES ................................................................................................................... 86

APPENDIX....................................................................................................................... 92

APPENDIX 1: GUIDING QUESTIONS FOR INTERVIEW WITH TNM AND AIRTEL OFFICIALS ....... 92
APPENDIX 2: QUESTIONNAIRE FOR SUBSCRIBERS OF TNM AND AIRTEL ............................ 94
APPENDIX 3: TNM AND AIRTEL BUNDLES .................................................................................... 100
APPENDIX 4: APPROVED SYNOPSIS ............................................................................................. 102

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 LIST OF ACRONYMS AND ABREVIATIONS
ACE Accelerate, Consolidate and Expand
AMA American Marketing Association
ATM Auto Teller Machine
BTS Base Transceiver Stations
CEO Chief Executive Officer
CIM Chartered Institute of Marketing
FMCG Fast Moving Consumer Goods
GSM Global System for Mobile Communication
GDP Gross Domestic Product
GNI Gross National Income
IGNOU Indira Gandhi National Open University
ISP Internet Service Providers
IMF International Monetary Fund
ITU International Telecommunication Union
JCE Junior Certificate of Education
MACRA Malawi Communication Regulatory Authority
MDC Malawi Development Corporation
MPTC Malawi Postal and Telecommunication
MSI Mobile System Interconnection
MSCE Malawi School Certificate of Education
MTL Malawi Telecommunication Limited
NSO National Statistical Office
R&D Research and Development
SADC Southern Africa Development Committee
SAP Structural Adjustment Programme
SPSS Statistical Package for Social Sciences
SWOT Strength, Weakness, Opportunities and Threats
TMB Telecom Malaysia Berhad
TNM Telecom Networks Malawi
UNDP United Nation Development Programme
USA United States of America

viii
 LIST OF FIGURES

Fig. 1 Population distribution by region ………………………...…………………….….3

Fig. 2 Population composition by age in Malawi…………………………………………..4
Fig. 3 Mobile telecommunication penetration……………………………………….........28
Fig. 4 TNM‟s new logo…………………………………………………………………….34
Fig. 5 Airtel‟s logo…………………………………………………………………………38
Fig. 6 Sex of respondents…………………………………………………………………..46
Fig. 7 Education level………………………………………………………………………47
Fig. 8 Age group……………………………………………………………………………47
Fig. 9 Monthly income of respondents……………………………………………………..48
Fig. 10 How long respondents have been with their networks…………………………….49
Fig. 11 Choice of network………………………………………………………………….50
Fig. 12 Network switch …………………………………………………………………….51
Fig. 13 Reasons for switching ……………………………………………………………..51
Fig. 14 Source of promotion information ………………………………………………….53
Fig. 15 Perception of promotion competition ……………………………………………..55
Fig. 16 Preferred products offered by TNM and Airtel …………………………………...57
Fig. 17 Network coverage through installation of BTS…………………………………….61
Fig. 18 Satisfaction with bundles…………………………………………………………...66
Fig. 19 Satisfaction with normal prices ……………………………………………………66
Fig. 20 Frequency in the use of bundles ……………………………………………………68
Fig. 21 Rating experience with your network ……………………………………………..72
Fig. 22 Network recommendation …………………………………………………………72
Fig. 23 Subscriber growth for TNM and Airtel ……………………………………………74
Fig. 24 Growth in market share for TNM and Airtel ……………………………………….75

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 LIST OF TABLES

Table 1 Product market development matrix …………………………………………….18

Table 2 Telecommunication penetration rate …………………………………………….27
Table 3 Money spent on airtime during promotion ……………………………………….54
Table 4 Perception on sales promotion …………………………………………………...56
Table 5 Customers‟ perception of TNM and Airtel products and services ………………58
Table 6 Products and services first introduced by TNM and Airtel………………………60
Table 7 Customers‟ perception on distribution …………………………………………..63
Table 8 TNM and Airtel tariffs ………………………………………………………….67
Table 9 Customers‟ perception on prices ………………………………………………...68
Table 10 Level of satisfaction of respondents with their networks ………………………71

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 ABSTRACT
Significantly, marketing strategies are very essential for the growth and success of any
company. This is more applicable to telecommunication industry which is usually marked by
tense competition as network providers fight for subscribers. The aim of this study was to
determine the role of marketing strategies in the performance of telecommunication
companies using a comparative study of TNM and Airtel. TNM was the first to start its
operations in Malawi. Airtel came four years later but it managed to overtake TNM within a
few years. However, TNM is coming back strongly and is gradually regaining the lost market
share from 28% in 2006 to 44% in 2012.

The study was conducted in the city of Zomba. It employed a mixture of approaches such
exploratory descriptive and comparative. Face to face qualitative methodology was used to
gather data from marketing officials from TNM and Airtel. A total of 84 subscribers of both
TNM and Airtel in equal number also responded to a questionnaire to determine their attitude
and perception of their networks‟ services. Descriptive and comparative approaches were
employed in the analysis and presentation of the results. SPSS was used a great deal in the
analysis of data collected. Secondary sources were also crucial in writing this edifice.

The results indicated that Airtel followed aggressive strategies right from the time of its
operations. Airtel has followed product strategies that have made it to be an innovative
company and has gained a lot from first mover advantage. It has also gained a lot from
distribution and promotional strategies. However, the results also indicate lack of flexibility
in Airtel strategies in that they are rarely reviewed to be in line with the changing business
environment.

TNM had no clear strategy before Airtel came along and was not prepared for competition.
The results show that TNM lost a lot on the market. It first survival strategy was to follow
Airtel‟s business lead. TNM follows customer-centric strategies which are reviewed yearly or
when it is necessary. It also follows low-cost and low-prices strategies which are peoples‟
favourite.

The results also show that TNM customers are more satisfied than Airtel customers. Results
also indicate that more Airtel customers are joining TNM. However, both companies have
weaknesses which have to be properly addressed as recommended, if they are to remain
competitive on the market.

xi
xii
 CHAPTER ONE

INTRODUCTION AND BACKGROUND

1.1 INTRODUCTION

Research in telecommunication sector in Malawi is probably long overdue as

telecommunication is now the hub for the economic development of the country. It is one of

the most important factors that drive trade and economy in general. Telecommunication is

amongst the most important driving factors for globalization and the emergence of the

information and technological era. Its importance to any country cannot be overemphasized.

Invention of mobile phones has been a milestone in the telecommunication industry.

Since its introduction in Malawi in 1995, mobile phones have become the most preferred

method of communication by the majority of Malawians. This is because of easy accessibility

and convenience making the transfer of information very quick.

TNM was the first mobile phone company to start its operations in Malawi in 1995. It is a

home grown company with most of its shares held by the government through Malawi

Telecommunication Limited (MTL) (www.tnm.com). Airtel was the second mobile company

to come to Malawi and started its operations in 1999 as Celtel. Since then these duopoly

networks have been involved in a tense competition to the extent that TNM has been

overtaken in terms of market share. However, it seems like TNM has not given up the fight as

it has started gaining some ground with a 4% increase in market share in 2010 alone moving

from 33% to 37% of market share (www.tnmivestor.com ). By 2012, TNM reached 44% of

market share (www.tmn.com ).

1
It should also be pointed out that the market war between the two companies has been fought

mainly along their marketing strategies. As such their growth, success or failure can best be

explained in terms of their marketing strategies. Mwenefumbo (1984) observes that

marketing is accountable for the present and responsible for the future growth and success of

a company. This is why this study concentrates much on the marketing strategies of the two

mobile companies to ascertain how they have contributed to their performance over the years.

1.2 MALAWI: COUNTRY BACKGROUND

Malawi is a beautiful country found in Sub Saharan region. She shares its borders with

Tanzania to the north, Zambia to the west and Mozambique to the south and east. Malawi has

a land mass of 118484 square kilometers and has three regions namely the North, Central and

Southern regions.

1.2.1 POPULATION TRENDS

According to the 2008 Population and Housing Census, Malawi‟s population is 13,066,320

(National Statistical Office (NSO), 2008). Malawi‟s population grew from 0.74 million in

1901 to 9.9 million in 1998. The results show that between 1998 and 2008, the population of

Malawi increased by 32 percent, representing an intercensal annual growth rate of 2.8 percent

per annum. When Malawi became a republic in 1966, the population of Malawi was 4.04

million increasing to 5.55 million in 1977 and by 1987 to 7.99 million. Between 1977 and

1998 Malawi‟s population grew at approximately 2.0% (NSO and International Food

Research Institute, 2002). It is estimated that currently Malawi‟s population has reached

14million and is estimated to reach 17million by 2015 (www.tnminvestor.com ).

2
According to NSO (2008) approximately 80% of Malawi‟s population lives in rural areas

with only 20% living in urban areas. There has been a significant increase in urban

population in Malawi since 1977 and 1987 when 8.5% and 11.0% respectively, lived in urban

areas. Malawi has one of the highest levels of urbanization in the world which is currently at

20% (NSO, 2008).

A little less than half of the population (45%) lives in Southern region of Malawi while 42%

and 13% live in Central region and Northern region respectively (NSO, 2008). This

information is crucial in assessing the distribution strategies of TNM and Airtel. Figure 1

below illustrates the population distribution by region.

Population Distribution by Region

Southern Region
Central Region
Nothern Region

Figure 1: Population Distribution by Region

With regards to distribution, the 2008 census reported that approximately 44% of the

population was aged below 15 and 4.0% of the population was above 65 years of age and

52% between 15-64 years (NSO, 2008). It can be derived from this that a significant

proportion of Malawi‟s population is composed of young people. TNM defines this age group

as the Malawi mobile addressable market (www.tnminvestor.com). The chart below shows

the population composition in Malawi by age.

3
 below 15 years

15-64 years

above 65

Figure 2: Population Composition by Age in Malawi

1.2.2 THE SOCIO-ECONOMIC ENVIRONMENT

Malawi is one of the poorest countries in the world ranking 160 out of 185 countries

according to the UNDP Human Development Index (UNDP, 2011). According to the NSO

(2011), 50.4% of the population of Malawi is considered poor. About 22% of the population

is ultra poor and cannot meet the recommended daily food requirement (Government of

Malawi and World Bank, 2006). The country has per capita Gross Domestic Product of

US$900.

Soon after independence in 1964 up to 1979, Malawi‟s economy preformed very well as

every sector of the economy especially agriculture registered rapid growth (Chilowa and

Chirwa, 1997: 141). During this period, Malawi‟s economy grew at an average of 6% per

annum against the population growth of 2.9%. The favourable conditions that prevailed at the

time, the expansion of large scale estate agriculture and the high level of gross domestic

investment, constituted some of the factors that led to the impressive economic growth

(Chilowa, Milner, Chinsinga and Mangani, 2000:123).

4
At the end of 1970s however, Malawi‟s economy started declining very sharply to the extent

that Structural Adjustment Programme was adopted following the advice of World Bank and

IMF (Chilowa and Chirwa, 2000:126).

Malawi‟s economy relies on agriculture which contributes more than 30% of GDP and more

than 90% of the export earnings (Capplen, 2008: 99). Since 2004, macroeconomics

performance has generally improved and government has also pursued sustainable

macroeconomic policies. As a result of good macroeconomic management, Malawi has seen

better macroeconomic indicators. For example, inflation reached 9.2% in January 2007 and

this was the first time Malawi hit single digit inflation after a decade. As of June 2007,

inflation had reached 7.7%. Over the period 2004-2006, Malawi‟s economy has grown at an

average of 5.2% (Capplen, 2008:102). This was a remarkable business environment for most

companies. TNM and Airtel experienced remarkable growth in this period as it will be seen

later on.

In the years 2010 and 2011, Malawi‟s economic environment has continued to weaken.

Growth has been slowing down from a peak of 9.7 percent in 2008 to an estimated 5 percent

in 2011 (www.tnmivestor.com). Imbalances in the foreign exchange market, fuel and

electricity supply shortages continue to make the business environment less favourable, and

the cost of living keeps going up. Inflation is on the rise, standing at 28.4 percent as of

September, 2012 for urban non-food inflation, compared to single digit figures in 2010 (NSO,

2012).

The economic environment continues to sour following Reserve Bank‟s raising of bank

lending rate to 31 percent forcing the commercial Banks to raise their lending rate from 17.5

5
percent in 2010 up to 30 percent (Chiyembekezo, 2012). The situation has been exacerbated

by the 48% devaluation of the currency in June, 2012. Therefore, the current business

environment has a lot of challenges and companies have to strategically position themselves

in order to continue being competitive on the market.

1.3 PROBLEM STATEMENT

Man has relentlessly devised ways of relating to one another. The 20st century has seen the

invention of mobile cellular phone which has greatly changed the face of telecommunication

and is gradually becoming a very important pillar of information and technology era. Mobile

cellular networks have revolutionized the communication sector to the extent that mobile

phones have become the most preferred method of communication across the globe.

TNM was the first mobile telephone company established in 1995. It was soon wholly

owned by the government and it enjoyed government protections. However, Airtel which

started its operations five years latter has overtaken TNM with an unimaginable margin. It

had more than 71% of market share with a total of 2.6million subscribers as of 2009.

(www.macra.mw.org). However, the two networks which are enjoying a duopoly status in

Malawi, have been involved is very serious market wars outsmarting one another in the

process. The difference in their market strategies could better explain such margins.

The common saying that “business is war and the best strategy wins” (Craven & Piercy,

2003: 34) has proved correct in as far as the two mobile phone companies are concerned.

Marketing strategies have played a significant role in the growth and success or failure of

these mobile phone companies. However, this assertion would better be justified through an

in-depth research on the marketing strategies of the two companies and the impact they have

had on their companies.

6
1.4 OBJECTIVES OF THE STUDY

1.4.1 AIM

The aim of this research is to assess the role of marketing strategies on the performance of

telecommunication companies through a comparative study of TNM and Airtel. It is believed

that the growth and success of these companies depends on their marketing strategies.

1.4.2 SPECIFIC OBJECTIVES

The specific objectives of the research were:

 To understand the corporate strategies and focus of TNM and Airtel

 To compare marketing strategies of TNM and Airtel.

 To assess customers‟ response to the implementation of marketing strategies.

 To assess the impact of marketing strategies on the performance of TNM and Airtel.

1.4.3 RESEARCH QUESTIONS

The following were the research questions for the study:

1. What are the corporate strategies and focus of TNM and Airtel?

2. What are main differences in the marketing strategies of TNM and Airtel?

3. How have the subscribers responded to different marketing strategies employed by

TNM and Airtel?

4. What has been the impact of the marketing strategies on the overall performance of

TNM and Airtel?

7
1.5 JUSTIFICATION OF THE STUDY

Mobile Telecommunication is a growing industry. Its penetration level in Malawi is still

minimal at 29 percent. This means that the industry is still very young with a lot of potential

for growth. It is hoped that this research will contribute to the growing body of knowledge

about telecommunication bearing in mind that Malawi is a growing market for the industry.

The research is also useful because it puts marketing strategies in context through a

comparative study of the two mobile telephone operators. This brings a better understanding

of the concepts. It also raises interest in the study of marketing strategies. It is anticipated that

others will use the findings of this research as the basis for further scholarly research in the

areas of telecommunication and marketing strategies.

1.6 ORGANIZATION OF THE STUDY

The study is organized into six chapters. Chapter 2 contains literature review. This has a

theoretical framework on which the study is based. It also reviews different literature in the

areas of marketing strategy and telecommunication. Chapter 3 is about methodology. It

explains the research type adopted, sampling methods, tools used for data collection and

methods of data analysis. Presentation and discussion of research findings are contained in

chapter 4 of the thesis and chapter 5 gives conclusions and recommendations of the study.

1.7 CHAPTER SUMMARY

This chapter is mainly an introduction to the whole study. It started by giving a brief

background of the country. It has highlighted the country‟s population trends and its socio-

economic and current business environment which are crucial for the operations of any

company. The chapter has also outlined the aim and objectives of the study. A direction into

the organization of the thesis by chapter has also been offered.

8
 CHAPTER TWO

LITERATURE REVIEW
2.1 INTRODUCTION

Literature review has been done by taking into consideration two aspects; a theoretical

framework on which the research is built, and review of researches and findings related to

mobile telecommunication and marketing strategies.

2.2 THEORETICAL FRAMEWORK

2.2.1 THE PLACE OF MARKETING

The chartered Institute of Marketing defines marketing as “a management process of

identifying, anticipating and satisfying customer requirements profitably” (CIM in Wilson

and Gilligan, 1997: 3). American Marketing Association (AMA) defines marketing as the

process of planning and executing the conception, pricing, promotion and distribution of

ideas, goods and services to create exchange that satisfies individuals and organizational

objectives (AMA, 1985). Unlike the picture portrayed by AMA‟s definition, marketing is

increasingly conceptualized as an organizational philosophy or as an approach to doing

business.

This strategic approach as opposed to functional approach is further captured by McDonald

(1989: 8) who argues, “Marketing is the management process where the resources of the

whole organization are utilized to satisfy selected customer groups in order to achieve the

objectives of both parties. Marketing then is first and foremost, an attitude of mind rather

than a series of functional activities.”

9
Blythe (1998) asserts that marketing requires objective setting, marketing audit and tactical

planning which should be built within the organization‟s overall strategic plan. This includes

a mission statement which states the main business of the organization, shared values, culture

and beliefs and attitudes of the organization. The organization has to breakdown its mission

into specific goals and objectives which the organization sets out to achieve.

Drucker (1973) echoes the same as he puts it: “marketing is so basic that it cannot be

considered a separate function on a par with others such as manufacturing or personnel. It is

first, a dimension of the entire business. It is the whole business seen from the point of view

of final results, that is, from the customer‟s point of view.”

However, Mwenefumbo slightly differs from the above by observing that marketing is a

philosophy of business and a business function as well. He states that as a philosophy of

business, a producer has to start with the needs and wants of customers and try to maximize

their satisfaction. As business function, marketing is concerned with the management of

different elements of marketing mix (Mwenefumbo, 1984: 102). This two tier perspective of

marketing shall be the underlying theoretical perspective of this research.

Furthermore, Mwenefumbo (1984) states that strategic planning in essence involves a

determination of a corporate mission and objectives in addition to plans and programmes

designed to accomplish a set of objectives. According to Mwenefumbo, marketing executives

are well positioned to lead the way since they, more than anyone else, are responsible for

controlling the interface between the company and the environment (Mwenefumbo, 1984:

103). Mwenefumbo further states that such an assessment should start by examining the

economic, political, social, legislative and technological changes and how these affect the

10
market, the distribution networks and the policies and practices of the company. Such an

assessment is crucial for strategy formulation.

2.2.2 SERVICE MARKETING

Services are becoming very important part of the world's economy in the 21st century. It is

stated that over 80% of USA economy is service oriented and its contribution to the economy

is over 60% and above in most countries (IGNOU, 2012: 5).

The term service has been defined in different ways by different authors. Kotler (1989)

defines service as, “any activity or benefit that one party offers to another that is essentially

intangible and does not result in the ownership of anything.” Stanton (2009) views services

as, “those separately identifiable, essentially intangible activities which provide want-

satisfaction, and are not necessarily tied to the sale of a product or another service.” Banking,

restaurant, education, health, telecommunication etc. are just a few of many examples of

services.

Services have unique characteristics that distinguish them from products. Lamb, Hair and

McDaniel (2008) identify five of these characteristics. The first is intangibility which refers

to the fact that services cannot be touched, seen, tasted, heard or felt in the same manner as

goods. The second is inseparability which refers to inability of production and consumption

to be separated. Consumer must be present during production. A good example is that of a

barber‟s service to the customer. Services are also perishable because they cannot be stored,

warehoused or inventoried. The other service characteristic is heterogeneity. This is because

there is variability of the input and output of services which cause services to be less

standardized and uniform than goods. The last service characteristic is that there is no

11
ownership in the sense that payment is not for purchase but only for the use and access to or

for hire of an item or facility.

2.2.2.1 SERVICE MARKETING MIX

The distinguished nature and characteristics of services require different marketing

approaches. The different elements of marketing mix such as product, price, place and

promotion are approached differently in case of service marketing. Lamb et al. (2008) give

several examples of approaches in the marketing mix that are likely to be different as

opposed to marketing of goods. Product for example, will consist of core services and

supplementary services. Core services are the most basic benefits the customer is buying.

Supplementary services are services that support or enhance the core services. Lovelock

(1996) observes that firms usually emphasize supplementary services to create competitive

advantage.

On pricing strategies in services, Lamb et al. (2008) identify three categories that are more

applicable. These are revenue oriented pricing which focuses on maximizing the supply of

income over cost; operations oriented pricing which seeks to match supply and demand by

varying prices, and lastly patronage oriented pricing which tries to maximize customers using

the service. This pricing varies with different market segments, ability to pay and method of

payment.

Promotion approaches in services according to Lamb et al. (2008) concentrate on tangible

cues in an effort of tangibilising the intangible. It also concentrates on creating a strong brand

image and engages in post purchase communications.

12
The uniqueness of services has necessitated marketers not only to view the marketing mix

differently but also to add three more Ps to service marketing mix. These are people, process

and physical evidence (Boone and Kurtz, 1995: 45). People constitute service personnel and

customers. Employees represent the first line of contact with customer. The behaviour and

attitude of the personnel providing the service is an important influence on the customer‟s

overall perception of the services. The customers are important because if they are satisfied

they are likely to come back. They are also a source of influencing other customers through a

word of mouth.

Parasulaman and Berry (1991) relate the concept of internal marketing to service personnel.

Internal marketing refers to treating employees as customers and developing systems and

benefits that satisfy their needs. Parasuraman and Burry (1991) argue that, “a service is a

performance and it is difficult to separate the performance from people. If people do not meet

customers‟ expectations, then neither does the service; investing in people quality in a service

business means investing in product quality.” The importance of people is service marketing

cannot be overemphasized.

Physical evidence refers to the environment in which the service is delivered and where the

service industry and customer interact (Boone and Kurtz, 1995: 45). It represents the

physical aspect of the service. The aircraft by itself, the seating configuration meant to be

comfortable and spacious, and the in-flight food provide physical evidence to the airline

service. The process is the system by which you receive delivery of the service. A sound and

swift process is crucial for the satisfaction of customers. It also contributes towards the

assessment of service quality (Groonroos, 1991: 24).

13
2.2.2.2 SERVICE QUALITY

Determining service quality is among the most challenging aspects of services because of

their characteristics. Unlike physical goods which tend to be relatively high in search quality,

services are more of experience and credence qualities. Search qualities are attributes which a

customer can determine prior to purchasing a product, such as colour, style, shape, price etc.

Experience qualities can only be discerned after purchase or during consumption such as the

quality of a network or quality of food in a restaurant. Credence qualities on the other hand,

refer to characteristics that consumers find hard to evaluate even after consumption such as

surgery at the hospital (Lovelock, 1996: 17).

Customers evaluate service quality by considering reliability, responsiveness, assurance,

empathy and the tangibles (Lamb, et al. 2008). Groonroos, (1991) observes that customer

retention to a great extent depends on service quality and customer satisfaction.

2.3 UNDERSTANDING STRATEGY

Strategy has been defined by different authors. Gluek (1984) defines strategy as “a unified

comprehensive, integrated plan that relates the strategic advantages of the firm to the

challenges of the environment and is designed to ensure that basic objectives of the enterprise

are achieved through proper implementation process.” On the other hand, Bennet (1999: 4)

defines it as “a proposed series of actions intended to beat the competition by unifying the

various decisions of the organization and determines logically and coherently the direction it

is to follow.”

The strategy formulated at the top executive level is called corporate strategy. These define

the very nature of business, the line of activities in which the enterprise is to be engaged, the

overall allocation of physical, human and financial resources, and the firm‟s general long

14
term goals (Bennet, 1999: 4). Functional strategies on the other hand are concerned with

specific operational areas such as marketing, human resource and finance (IGNOU MS11,

2010:13).

The current perspective of strategy is that of market driven strategy in which the market and

the customer that forms the market should be the starting point of business (Cravens &

Piercy, 2003: 4). This has an advantage of gaining market orientation and an understanding of

market and how it is likely to change in the future.

2.3.1 PORTER’S GENERIC STRATEGIES

In line with market driven strategy, Potter (1980) identifies three generic types of strategies;

overall cost leadership, differentiation and focus. Under low cost strategy an organization

concentrates upon achieving the lowest costs of production and distribution so that it has the

capability of setting its prices at a lower level than competitors. Differentiation gives

emphasis to a particular element that is seen by customers to be important that it becomes

basis for competitive advantage. Through this customers are able to pay premium price.

Differentiation can also be achieved through brand image and packaging.

Focus strategy on the other hand concentrates its effort on one or more narrow market

segments rather than pursuing broader based strategy. With this, a firm is able to build greater

in-depth knowledge of each segment as a way of creating barriers to entry by virtue of its

specialist reputation. Zikmund et al. (1995:297) only recognizes two of these; low cost- low

price strategy and differentiation. These are referred to as the two basic marketing strategies.

15
2.3.2 INTERNATIONAL MARKETING STRATEGIES

Hill (2003) observes that with the breakthrough in technology and communication, business

is now becoming boundary-less. He states that global market is becoming the focus of most

companies. With this in view, he identifies four basic strategies through which companies

enter and compete in the international market: an International Strategy, Multinational

Strategy, Global Strategy and Transnational Strategy. These make so much sense in as far as

the telecommunications environment is concerned in Malawi. A brief description of these

strategies is imperative since they provide a good theoretical understanding of international

business which is not new to telecom companies.

2.3.2.1 INTERNATIONAL STRATEGY

Hill (2003:342) states that firms that pursue international strategy try to create value by

transferring valuable skills and products to foreign markets where indigenous competitors

lack those skills and products. Most international firms have created value by transferring

differentiated products and services. An international strategy makes sense if a firm has

valuable core competences that indigenous competitors in a foreign market lack, and if the

firm faces relatively weak pressure local responsiveness and cost reduction. However, due to

duplication of manufacturing facilities, firms that pursue this strategy tend to suffer from high

operational costs making the strategy inappropriate for manufacturing industries where cost

pressures are high.

2.3.2.2 MULTIDOMESTIC STRATEGY

Firms pursuing a multidomestic strategy according to Hill (2003) orient themselves towards

achieving maximum local responsiveness. The distinguishing feature of multidomestic firm is

that they extensively customize both their products offering and their marketing strategies to

16
much national conditions. They also tend to establish a complete set of value creation

activities including production, marketing and R & D in major national markets in which they

do business. A multidomestic strategy makes much sense where there are high pressures for

local responsiveness and low pressure for cost reduction.

2.3.2.3 GLOBAL STRATEGY

Firms pursuing global strategy focus on increasing profitability by reaping the cost reductions

that come from experience curve effects and location economies. They pursue low cost

strategies. The production, marketing and R & D are located and concentrated in a few

favourable locations. They have no customization of products because it raises costs. They

prefer market standardized products worldwide so that they can reap from economies of

scale. These firms market their products worldwide. This strategy is most applicable where

there are strong pressures for cost reduction and where demand for local responsiveness is

minimal.

2.3.2.4 TRANSNATIONAL STRATEGY

This is a business strategy that seeks experience based economies and location economies,

transfers distinctive competencies within the firm and pays attention to local responsiveness.

This strategy makes more sense when a firm faces high pressure for costs reduction and high

pressure for responsiveness. Firms pursuing this strategy are trying to simultaneously achieve

low cost and differentiation advantages. However, the strategy is not easy to pursue.

2.4 MARKETING STRATEGIES

Marketing strategies have a central role in the comparative analysis of the two mobile

telephone operators. Wilson and Gilligan (1999: 33) define marketing strategy as “a process

that can allow an organization to concentrate its limited resources on the greatest

opportunities to increase sales and achieve a sustainable competitive advantage.” Marketing

17
strategies serve as the fundamental underpinning of marketing plans designed to fill market

needs and reach marketing objectives. They are developed as multi-year plans, with a

tactical plan detailing specific actions to be accomplished in the current year guided by the

corporate mission statement. Bennet (1999:176) observes that Marketing strategies are

dynamic and interactive. They are partially planned and partially unplanned.

Marketing strategy involves careful scanning of the internal and external environments which

are summarized in a SWOT analysis. Marketing strategies involves a careful manipulation of

the marketing mix such as product, price, place and promotion. Wilson and Gilligam (1999:

5) add people, physical evidence and process management as also vital elements of the

marketing mix.

From these elements different strategies can be formulated. These include product strategies,

price strategies, distribution strategies, promotion strategies. These shall form the basis for

assessing the performance of TNM and Airtel in line with their marketing strategies.

2.4.1 ANSOFF’S GROWTH STRATEGY MODEL

The main strategic model on which this research is based is that proposed by Ansoff called

the Growth Strategy Matrix or the product/market expansion matrix. The table 1 illustrates

the model.

Table 1: Product Market Development Matrix

Existing products New Products

Existing Market 1. Market penetration 3. Product development

New Market
2. Market development 4. Diversification

18
Ansoff identifies four product-market development strategies presented in a matrix in relation

to existing market, new market, existing products and new products. These are market

penetration strategies, market development strategies, product development strategies and

diversification strategies.

Market penetration strategy is an appropriate strategy for a company seeking to increase sales

in the existing products in the existing market through more aggressive effort. The company

can try to stimulate current customers to increase their current rate of purchase. The company

can also increase its efforts to attract competitors‟ customers to increase its market share. It

can also increase its efforts to attract non users located in its current market areas.

The second strategy is the market development strategy. This consists of the company

seeking increased sales by taking its current products into new markets. This can be achieved

in two ways: the company can open additional geographical markets through regional,

national or international expansion. It can also try to attract new market segments through

developing product versions that appeal to those segments, entering other channels of

distribution, or advertising in other media.

The third strategy is the product development strategy. This consists of company seeking

increased sales by developing new or improved products for its current markets. To achieve

this, the company can develop new product features or content through attempting to adapt,

magnify, substitute, rearrange, reverse or by combining existing features (Kotler, 1980: 74).

The company can also develop different quality versions of the product or develop additional

models and sizes.

19
The last is the diversification strategy. This involves developing new products for the new

market. The company would attempt to identify fields that make use of its distinctive

competencies or help it overcome a particular problem. Diversification can take three forms.

Concentric diversification is when a company adds new products that have technological and

marketing synergies with the existing product line. These products will appeal to the new

classes of customers. Horizontal diversification is when a company adds new products that

could appeal to its current customers. Conglomerate diversification is when a company adds

new products for new classes of customers if that represents great environmental

opportunities for the company (Koltler, 1980: 75).

This study demonstrates how Ansoff‟s model reflects in the operations of TNM and Airtel

mobile telephone companies. The research also takes Product Life Cycle (PLC) Model into

consideration especially in the treatment of the whole mobile telephone industry (Kotler,

2003). It is assumed in this research that Malawi‟s mobile telephone industry is still in its

growth stage in as far as the PLC is concerned.

2.5 TELECOMMUNICATION SERVICES IN MALAWI

In Malawi a major breakthrough in the telecommunication sector started with the

establishment of the first post office at Chiromo in Nsanje on 20th July 1891 when Malawi

became a British protectorate (Phiri, 2011). During this time mail was carried on heads for a

long distance. With passage of time, cars were used for the same purpose.

Telecommunication started taking a new shape with the introduction of telephone in Malawi

(Phiri, 2011). With increase in number of post offices and the introduction of telephone,

Malawi Post and Telecommunication (MPTC) was formed in 1994 to be in charge of post

offices and telecommunication as a state owned operator. Previously government operated

both post office and telecommunication services (www.tnminvestor.com).

20
Before 1998/99, MPTC dominated the telecommunications sector in Malawi. It had a

monopoly over local and long distance fixed line services, had the only international gateway

and was a part owner of the only cellular provider and the only Internet Service Provider

(ISP). It also had a monopoly over the provision of postal services (Clarke, Frew, Gebreab

and Mgombelo, 2003:12).

In addition to being the sole provider of these services, Malawi Posts and Telecommunication

was also responsible for most regulatory functions. MPTC was responsible for licensing

operators in all areas of telecommunication (e.g., Internet Service Providers (ISPs) and

cellular companies) spectrum frequency allocation, type approval of equipment, technical

standards and numbering plans (Clarke et al. 2003:13). Because MPTC controlled licensing,

it was able to prevent entry by potential competitors in several areas where competition

would have been possible.

MPTC previously operated as a department of the Ministry of Information, Broadcasting,

Posts and Telecommunication. It was corporatized in January 1995 (Clarke et al. 2003:5).

2.5.1 TELECOM NETWORKS MALAWI (TNM)

On 13 January 1995, MPTC and TMB, a Malaysian telecom company, entered into a joint

venture agreement to undertake a project to provide GSM mobile cellular telephone, fixed

telephone and data network services (Clarke et al. 2003:6). Telekom Networks Limited was

incorporated as a private limited company on 24 March 1995 and the name of the new

company became Telekom Networks Malawi limited (TNM). Under the terms of the joint

21
venture agreement, MPTC and TMB agreed to hold 40% and 60% respectively, of TNM‟s

share capital (www.tnminvestor.com ).

By 1995 cellular operators were providing services in 25 Sub-Saharan African countries

including Malawi, as compared to 24 where no cellular operators were operating (Clarke et

al. 2003:7). Further to this, it was common for the incumbent to either provide the services

directly or for it to partially or completely own the cellular provider.

By the end of 1995 Malawi became the second country in Southern Africa to introduce

mobile telephony services and TNM became the third operator in the region after South

Africa‟s MTN and Vodacom who launched their services about 6 months earlier

(www.tnminvestor.com). TNM was therefore an integral part of the introduction of mobile

telephony in Africa. TNM was assigned all the frequencies in the GSM900 band (Clarke et

al. 2003:6).

TNM started its commercial operations in January 1996 with 36 Base Transceiver Stations

(BTS) covering Blantyre, Lilongwe, Mzuzu and Zomba offering post-paid services with a

capacity of 7000 subscribers. In the same year capacity was increased to 10 000 subscribers

(www.tnminvestor.com). In June 2000, TNM launched its pre-paid services and its SMS

services in 2001. By 2005 TNM recorded 100 000 customers and by 2010 TNM customers

reached one million milestone. TNM has a geographical coverage of 74% and population

coverage of 85%. It enjoyed a market share of 37% with a subscription of 1 140 000 both

pre-paid and post-paid as of 31 December 2010 (www.africanir.com). However, as of

December, 2011 TNM recorded 1500 000 subscribers with 42% of market share (TNM,

2011).

22
2.5.2 COMING OF MALAWI TELECOMMUNICATION LIMITED (MTL)

In August 1998, the Government published a statement setting out a national policy for the

development of communications services, covering telecommunications, postal and

broadcasting services. In keeping with the objective of maximizing the telecommunication

sector‟s contribution to the continued development of Malawi‟s economy, various targets

were set to:- increase the number of working telephone lines; raise the quality of service to

international standards; stimulate the provision of new services; reduce the price of

telecommunications services in real terms; and extend access to modern telecommunication

services throughout the country according to a defined programme covering rural areas

(Ministry of Information, 1998:8).

Subsequent to the publication of the policy statement and in order to give effect to its

principles and policies, the Communications Act was enacted in December 1998 (Clarke et

al. 2003:16). This established the framework for the regulation of communications services in

Malawi and provided for the separation of the provision of telecommunications from postal

services.

Malawi Telecommunications Limited (MTL) was incorporated as a Government owned

public limited company on 30 May, 2000 in order to own and operate MPTC‟s

telecommunications business. On 31 August, 2000 all of the telecommunications property,

rights, assets and liabilities, comprising MPTC‟s telecommunications business, including

MPTC‟s 40% holding in TNM, were transferred to MTL by operation of law and in

accordance with the terms of the Communications Act (Clarke et al. 2003:17). Since then

MTL was the sole provider of fixed telephony services in Malawi.

23
2.5.3 THE MALAWI COMMUNICATION REGULATORY AUTHORITY

The Malawi Communications Regulatory Authority (MACRA) was established in 1999

pursuant to Section 3 of the Communications Act, 1998 of the Laws of Malawi to assume the

regulatory functions of the communications sector which had been performed by the Malawi

Telecommunications Corporation Limited (www.macra.org.mw ).

Under the Communications Act (1998), MACRA is charged with the responsibility of

spectrum planning; creating new allocations, fulfilling frequency planning coordination and

assignments, issuing licences, regulating and administering the use of radio frequencies; and

the monitoring and enforcement procedures. It is further responsible for establishing

regulations, frequency fees structure, technical parameters and standards governing the use of

each band ensuring that current international regulations are met (www.macra.org.mw).

The general duty of MACRA is to ensure that, as far as practicable, reliable and affordable

communication services, sufficient to meet the demand for them, are provided throughout

Malawi. In doing so MACRA is required to protect consumer interests; promote efficiency

and competition; promote open access; promote research in telecommunications and

encourage the introduction of new communication services. MACRA is to be independent in

the performance of its functions. MACRA'S regulatory activities take the form of:

 Licensing of service providers

 Providing advice to relevant Ministers on regulation and policy

 Monitoring the activities of licensees to ensure compliance with the terms and

conditions of their licenses and other applicable regulations.

24
2.5.4 AIRTEL MALAWI

Although the 1998 Communications Sector Policy in Malawi advocated the issuance of a

second cellular license, the Government actually started the process of doing this before it

issued the Policy. To offer a second license, the Government first had to re-negotiate the

allocation of spectrum with TNM, which had been allocated the entire GSM 900 band in its

provisional license. Further, since the negotiations for the second license preceded the

establishment of MACRA and the 1998 Communications Act, the license had to be bid under

the earlier 1994 Telecommunications Act and was offered by the Ministry of Information on

the recommendation of the Post Master General, the head of MPTC (Clarke et al. 2003:33).

The fifteen-year license was awarded to Celtel Limited on December 25, 1998. Celtel was 80

percent owned by Mobile Systems International (MSI) of the United Kingdom, 10 percent

owned by the Malawi Development Corporation (a Malawian parastatal holding company)

and 10 percent owned by Indebank (a second Malawian parastatal). MSI has extensive

cellular operations in other countries in Sub-Saharan Africa including in Uganda, Zambia,

Gabon, Congo-Brazzaville, Guinea, Chad, and the Democratic Republic of Congo.

Following the negotiations with Celtel, the Commission proceeded to negotiate a similar

fifteen-year license with TNM (Clarke et al. 2003: 36). Prior to starting operations in October

1999, Celtel negotiated an interconnection agreement with MPTC and TNM.

Airtel rolled out its operations in October, 1999 as Celtel. It offered pre-paid services unlike

TNM which offered Post-paid services. However, in its early days the company faced the

problem of interconnectivity which favoured MPTC and TNM against Celtel to the extent

that Celtel had to sue MACRA and MPTC (Zuze, 2001: 5).

25
Celtel Malawi grew quickly due to its pre-paid system which was more appealing to the low

income citizenly. By 2005, Celtel had already overtaken TNM with over 300 000 customers

against TNM‟s 100 000. In August 2008, Celtel changed its brand to Zain. In 2010, Airtel

acquired the Zain African Operations. This led to change in brand name once more from Zain

to Airtel (www.zain.com ). Airtel started its operations in Malawi as Celtel. It was a second

mobile phone company to come to Malawi. Celtel was acquired by Zain Africa in 2008 and

later by Airtel in 2010.

Airtel is part of Bhart Group of companies started by Sunil Bharti Mittal in 1995 in India

(Singn, 2010). Bharti Airtel paid US$700million (MK105 billion) for the acquisition of Zain

Malawi (Khanje, 2011). Airtel Malawi is solely owned by Bharti Group of Companies

headed by Sunil Bharti Mittal.

Airtel Malawi has population coverage of 90 percent and a geographical coverage of 72

percent. By 2009 it had over one million customers with 71percent of market share with

TNM taking the remainder (www.ide.go.jp). However, by 31 December, 2010, Airtel lost

about 4 percent of its market share to TNM who reached 37 percent of market share

(www.africanir.com). This happened within a year after Zain Africa was acquired by Airtel.

2.5.5 THE STATUS OF TELECOMMUNICATION IN MALAWI

Malawi‟s telecommunication penetration rate is still very low as compared with the African

and the world rates. The table 2 below shows the general telecommunication penetration rates

as of October, 2012 (www.macra.mw.org ).

26
 Table 2: Telecommunication Penetration rate

Market Penetration rate

Mobile 29%

Fixed 1%

Internet 7%

(Source: www.budde.Com)

2.5.5.1 MOBILE TELECOMMUNICATION IN MALAWI

Since the introduction of mobile phone in Malawi with 7000 subscribers in 1995, the industry

has grown at a very low pace especially in its first five years during which TNM had no

competitor. Since then penetration rate has increased. By 2000, there were 49 000

subscribers, in 2005 there were 421 163 subscribers. Subscription reached a million mark in

2007 (1 050 852), two million mark in 2009 (2 374 051) and three million mark in 2010

(3 037 469) (www.macra.org.mw). It is stated that penetration rate is at 29 percent as of

October, 2012 (www.budde.com). It is estimated to reach over 40 percent by 2016

(www.africanir.com). The figure 3 below shows the mobile telecommunication penetration

rate by figures since 2001.

27
 Source: www.tnm.com

Figure 3: Mobile Telecommunication Penetration

In 2011 MACRA introduced a universal licence meaning that fixed phone operators (MTL

and ACCESS) can also provide mobile phone services. This is likely to increase competition.

Additionally, a national fibre backbone is being implemented and the country is set to gain

access to international submarine fibre optic cables for the first time when a transit link via

neighbouring countries is completed. This is expected to reduce the cost of mobile phone

services in Malawi. It will be very interesting to understand how the two main mobile service

providers have fared on the market and how they are strategizing to face the new business

challenges and opportunities lying ahead of them.

As already noted TNM is gaining ground. It will also be very interesting to see what

strategies it is employing at the same time understand strategies of Airtel as it jealously

guards its market share. As such this research which aims at assessing the marketing

strategies of TNM and Airtel through a comparative study is more relevant now than ever

before.

28
2.6 RESEARCH RELATED LITERATURE ON TELECOMMUNICATION

There is not much literature on mobile phone telecommunication. However, a few related to

the research in question have been reviewed in the following passages.

One important research worth noting is that conducted by Clarke et al. in 2003 titled

Telecommunication Reform in Malawi (Clarke et al. 2003). They point out that Malawi

Postal and Telecommunication (MPTC) was at the centre of industry as an operator and

regulator since 1994. However, it was marked by inefficiency to the extent that a waiting list

for connection in 1997 would take it about 25 years to clear at the rate of its expansion then.

As a regulator MPTC is blamed for slowing down development of telecommunication by

deliberately preventing competition in the industry by not awarding licences to the upcoming

operators who were likely to be its competitors. The article also points out that MPTC held

40 percent of TNM shares since its inception and awarded it all the frequencies in the GSP

900. The assumption one can draw from this is that MPTC as well as TNM never expected

competition and TNM was set to be a monopoly mobile phone provider.

Clarke et al. (2003) point out that despite early entry of TNM in 1995 with 7000 subscribers,

cellular penetration was very slow. By 1998 there were only 10500 subscribers. They point

out that TNM‟s policy of offering only post-paid services excluded the majority low citizenly

that could not afford monthly phone bills. The impression one gets is that TNM targeted rich

people only in its early inception with no clear plan to incorporate the majority of the low

income populace. It will be observed in the research how the early attitude of TNM affected

the company as it faced competition by Airtel, Celtel then.

29
Another literature worth reviewing is a thesis by Mwenefumbo titled: Cement Marketing in

SDCC Countries with specific reference to Malawi: A comparative Analysis. The thesis

gives a detailed analysis of cement marketing in Malawi by looking at its strength and

weaknesses that affected its performance in comparison with other cement companies in the

SADC region. Mwenefumbo among others found that Portland Cement Company did not

explore much of the cement market provided by the local populace but relied much on the

contractors in the building and construction industry in the country. The other reason is that

the cement company in Malawi restricted itself to Malawi with no plans to explore

international market as other cement companies did in SADC.

He further observed that the company assumed that government protection of domestic

market was an automatic guarantee of demand of the locally made cement. Actually

mwenefumbo stated that Portland had very passive attitude to marketing to the extent that it

had very little sales promotion activities restricted on to exhibition at trade fairs. This outlook

affected the formulation of marketing strategies such as price, distribution, promotion etc.

which were not all that aggressive. This made the company to grow at a very low rate as

compared to its counterparts in the SADC countries. This made the company not ready for

competition in a liberalized market.

The research exposed very useful facts that tend to be common with most early Malawian

companies. However, it will be seen if the same reasons also applied to the first mobile

telecom companies. Since the research was based on a cement company in around early

1980s, the business environment might be very different from the one telecom companies are

found in this era.

30
Mubasshir Ahmed (2008) in his article titled „Zain: A New look with Global Vision’, exposes

useful information about Zain‟s strategies. He points out that Zain was the first mobile

operator in the Middle East and is growing fast. It envisions to become a global wireless

operator. He quotes the CEO, Dr. Saad Al Barrak who states: “now we are entering a new

and dynamic chapter in our history; one that will take us into the world top 10 mobile

telecommunication companies.”

Ahmed describes Zain‟s strategies by firstly exposing the 3x3x3 plan which seeks to make

Zain a global player in three stages: regional, international and global, with each stage

completed in three years, with an aim of reaching a subscriber base of 70 million, all this in

just nine years. He also exposes Zain‟s aggressive expansion strategies that would have four

strategic elements. Firstly, Mass markets focus and segmented customer strategy. Through

this Zain is focusing to enter mass market in full throttle. It targets to reach at least 70% of

the market – both in terms of subscribers as well as segment value. The subscriber growth

will be generated through aggressively targeting under-penetrated segments, whereas value

growth will come from the existing customer base. It aims to attain 50% market share in

markets where Zain is a “leader” and a minimum of 30% market share in markets where Zain

is a “challenger.”

Secondly, Zain is following a competitive positioning and differentiation strategy: Ahmed

observes that what makes Zain competitive and different is not its “price-only” but a

combination of differentiated elements of their value proposition. The company classifies

customers into value segments of different class and addresses them all.

31
The third is its high-value technology strategy. Ahmed points out that invention and

exploration are the technological buzzwords at Zain. Yet, it only invests in commercially

viable technologies in order to benefit the customer from the full range of services that at the

same time add value both internally and to end-customers.

Last is the company management strategy which aims at synergy realization and excellence

by assuming and promoting a people-oriented culture. It also rewards and empowers its

employees in line with their performance. Zain‟s marketing strategies were based on the

corporate strategy called ACE. ACE is an acronym that stands for Accelerate, Consolidate,

and Expand.

It will be interesting to see how these strategies applied in the context of Airtel Malawi which

replaced Zain in 2010. It will also be interesting to note if TNM had similar strategies or if

Airtel inherited the same as its marketing strategies.

2.6.1 CORPORATE STRATEGIES OF TNM AND AIRTEL

2.6.1.1 TNM’S CORPORATE STRATEGIES

TNM„s vision is “Always with you”. It was adopted in 2007 when TNM rebranded from

TELECOM to TNM. TNM„s mission is “to be Malawi's premier mobile company of choice,

offering best in class mobile telecommunication services to people everywhere." By premier

TNM means to be the best in terms of customer value, customer service, employee talent,

consistent and predictable growth (TNM, 2008:4).

TNM values its customers and treat them with respect, providing friendly, courteous,

knowledgeable and prompt service at all touch points. “We never forget that they come to us

32
by choice. We seek and are driven by our customers' feedback. We are committed to direct

relationships and outperforming the competition with value and a superior customer

experience” (TNM, 2011).

TNM started its operations in Malawi by following a niche strategy. Its focus was on the

corporate sector and a few rich individuals who could afford premium price and payment of

monthly phone bills (Chalulu in TNM, 2011). This strategy made sense considering the fact

that cell phones were very expensive at that time and not everyone could afford them. This

was also important to cushion the cost of new technology.

TNM had no clear strategy and did not expect competition just as its sister company MTL.

According to Chalulu, the network had a confused identity and lacked proper personality. A

decision was made to redefine TNM to make it a more consistent and appealing brand on the

market and to give it a proper personality (Chalulu in TNM, 2008). This took place in 2007.

Prior to this TNM was mostly reactive and tended to copy its rival‟s business strategies.

In 2007 TNM made a decision to carry out major changes in the company. Apart from

rebranding decision, it also adopted growth strategies that would eventually shape the

business activities of TNM and make it more competitive on the market. According to TNM

(2008:1) these strategies placed emphasis on the following thematic areas:

 Constantly improve and expand infrastructure and capacity

 Grow the depth and availability of telecommunication services.

 Promote telecommunication accessibility to Malawians.

 Protect and promote customer loyalty.

According to Chalulu (2012), TNM strategies are reviewed every year or when it is necessary

to do so. This is because the market trends and customers‟ preferences are always changing.

33
“What worked last year may not work again this year; the economic environment last year

may not be exactly the same this year; we always wants our services to be relevant to our

customers” (Chalulu, 2012).

In 2009 TNM‟s strategic focus was an aggressive rollout of network coverage and capacity

expansion at the same time looking to enhance efficiencies from a cost perspective in order to

improve availability, reliability and quality (TNM, 2009:2).

The company also envisioned to enhance customer loyalty, improve and optimise distribution

efficiency and position TNM as an innovative brand focussing on exciting customer‟s life

styles (TNM, 2010:8). Dr. Mathews Chikaonda, Chairman of the Board, announced that

innovation, cost reduction and appropriate infrastructure maintenance investment would be

the strategic focus of TNM„s attention in 2012 (TNM, 2011).

Following rebranding decision, TNM adopted a new logo with higher case scrambled „T‟ and

a lower case „tnm‟ beside it. TNM also adopted a promise “always with you”. It changed

colours from orange to green. TNM identified itself as a Malawian brand appealing to both

the older and younger generations. Its new colour, green, is fresh and synonymous with

Malawian‟s prosperity derived from agriculture and the environment (Chalulu, 2012; TNM,

2008). Figure 4 is TNM„s brand logo.

Figure 4: TNM’s New Brand Logo

34
TNM‟s main focus is Malawi and has no immediate plans to go international since Malawi„s

mobile industry is still young and growing with only 29 percent penetration rate as of 2012

(TNM, 2012).

TNM has divided its subscriber base into price conscious pre-paid and premium paying post-

paid subscribers. Initially, TNM‟s focus was on post-paid premium price paying customers.

However, with the change in market environment, TNM has redefined its focus on

subscribers. TNM has realized that Malawi‟s population is dominated by the youth aged 15 to

64. These make up to 52 percent of the population. TNM defines these as Malawi‟s mobile

addressable market. (www.tnminvestor.com). TNM regards these as its main focus at the

moment.

2.6.1.2 AIRTEL’S CORPORATE STRATEGIES

Bharti Airtel‟s vision is: “Airtel will be the most admired brand, loved by more customers,

targeted by top talent and benchmarked by more businesses” (Singh, 2010). According to

Chinula, Airtel Malawi‟s marketing manager, Airtel Malawi‟s vision is: “to be the most loved

brand to the lives of Malawians” (Chinula, 2012).

Airtel Malawi‟s mission is: “Airtel always thinks in fresh and innovative ways about the

needs of our customers and how we want them to feel. We deliver what we promise and go

out of our way to delight the customer with a little bit more” (www.airtel.mw.com). One of

Airtel Malawi‟s objectives is to increase its subscriber base from the current around 2 million

to 7million.

35
If Airtel is now a famous brand in Malawi, it is because of its strategic entry into the mobile

phone industry as Celtel. Celtel entered Malawi with a distinct market differentiation strategy

by offering unique pre-paid services which were more appealing to the majority of the low

income Malawians. TNM‟s focus was on corporate post-paid customers, Celtel tried to win

the majority of the low income customers who had great potential for growth. As such

Celtel‟s penetration strategies were very effective to the extent that within a couple of years

Celtel managed to overtake TNM in both revenue and market share. This was exactly what

the corporate strategy at that time entailed i.e. to grow in terms of customer number and

revenue (Chinula, 2012).

According to Chinula, corporate strategies have not really changed even though the company

has changed hands from Celtel to Zain and later to Airtel. Swain (2012) points out the same

observation about Airtel in India: “Bharti Airtel has somewhat missed the bus. With the

changing dynamics in the telecom space, it is still using the same strategies it had ten years

ago”. The current Airtel‟s corporate strategic objectives are:

 To grow our customer base

 To improve customer satisfaction levels

 To grow our revenue

 To grow our brand equity

In order to achieve these strategic objectives, the company has developed following

strategies:

 Maximising revenue margins

 Capture maximum telecommunication revenue with minimum geographic coverage

 Offer multiple telecommunication services to provide customers with one stop shop

solution

36
  Position itself to tap data transmission opportunities and offer advanced mobile data

services

 Focus on satisfying and retaining customers by ensuring high level of customer

satisfaction

 Leverage strength of its strategic and financial partners and emphasize on human

resource development to achieve operational efficiency

According to Bharti Mital on his first visit to Malawi in 2011, Airtel‟s corporate strategy is to

roll out a high quality network, add more people to the network and make its services more

affordable (Mittal in Khanje, 2011). This was anchored by Manoj Kohli, Bharti Airtel‟s

International Chief Executive who observed that Malawians talk only for an average of 40

minutes per month which is very low if compared to 450 to 500 minutes talk time per month

enjoyed by Indians. Airtel‟s plan was to increase talk time per month from 40 minutes to at

least 250 minutes per month by reducing tariffs (Kohl in Khanje, 2011).

4.2.3.6 AIRTEL BAND STRATEGY

Airtel came to Malawi as Celtel. It changed hands to Zain (a wonderful world) and later to

Airtel (express yourself). The change in brand name had strategic significance. It was a

growth strategy to grow the brand globally to gain competitive advantage and to enjoy

economies of scale. Airtel Malawi has greatly benefited from this (Chinula, 2012). Airtel is

now a global brand ranked 5th in the world in terms of subscriber base. Its main focus in

Malawi is on the low income population with emphasis on the youth. The figure below

presents Airtel‟s logo.

37
 Figure 5: Airtel’s Logo

Sunil Bharti Mittal described the brand as “youthful, international, inclusive and dynamic –

representing the journey of the first Indian brand to go truly global” (Khama, 2010).

2.6.1.3 MARKETING STRATEGIES OF TNM AND AIRTEL

TNM‟s current marketing strategies are focused on six pillars of continued business growth

as outline in TNM, (2011: 11). These include:

 Competitive tariffs and affordable prepaid bundles (Mtolo)

 A connection -focused distribution methodology

 Continued development of electronic vouchers distribution system

 Aggressive brand visibility

 Improvement of customer services

 Innovative technology and product development

According to Chinula (2012) Airtel has set out the following as its strategic marketing

objectives:

 Stimulate of usage through consumer and trade promotions

 Quality and product innovation to gain first mover advantage

 Introduction of new pricing solutions such as bundles

38
2.7 CHAPTER SUMMARY

This chapter has discussed the theoretical framework on which the study is based. It started

by exposing the definition of marketing as given by different authors. It also briefly discussed

service marketing. It then explained the general understanding of strategies where corporate

strategies among others were explained. Strategies involved when venturing in international

business were also highlighted.

The chapter also discussed different marketing strategies including the Ansoff Market

Growth Strategies. The coming of telecommunication and its related companies in Malawi

such as MPTC, TNM MACRA and Airtel were explained. It also reviewed the current status

of telecommunication in the country. Lastly, different research related telecommunication

literatures were also discussed.

39
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

The type of study adopted for this research is mainly exploratory. An exploratory study has

the goal of defining a problem precisely, gathering explanations, gaining insight and

formulating hypothesis (Kolb, 2008: 26). Churchill (1996:114) defines exploratory research

as, “a research design in which the major emphasis is on gaining ideas and insights; it is

particularly helpful in breaking broad, vague problem into smaller, more precise sub-problem

statements.” This study mainly uses qualitative research approaches (Kolb, 2008:26).

However descriptive and explanatory approaches have also been used in considerable depth.

Churchill (1996: 114) describes a descriptive study as a research design in which the major

emphasis is on determining the frequency with which something occurs or the extent to

which two variables differ. This approach provides important data that can be used for

comparative analyses (Chisnall, 2001: 36). Most of the data under descriptive study is

quantitative in nature and can be used to test hypotheses (Kolb, 2008: 25).

The study follows a comparative approach. A comparative study is the act of comparing two

or more things with the view of discovering about one or all of the things being compared

(www.wikipedia.com). This technique often utilizes more multiple disciplines in one study

(Chisnall, 2001: 51). This explains why several types of studies are prevalent in this research

combining both qualitative and quantitative approaches. The general method of comparing

things is the same for comparative research as it is in our everyday practice of comparison.

40
Like cases are treated alike, and different cases are treated differently; the extent of difference

determines how differently cases are to be treated (www.wikipedia.com).

For a study of this nature, it is inevitable not to use observational method of data collection

especially by considering the aspect of physical evidence that is also crucial in as far as

marketing of services is concerned. Observation approach was key in determining the

visibility strategies of the two networks.

3.2 TYPE OF DATA

This research has used both qualitative and quantitative types of data. When data is presented

according to some attributes (distinct categories) which are not capable of measurement, it is

known as qualitative data. Quantitative data is usually measureable and in number form

(Churchill, 1996: 45). This data can further be categorised according to their sources namely

primary data and secondary data. These are described in the following passages.

3.2.1 SECONDARY DATA

Secondary data refers to data collected for purposes other than the specific research needs at

hand. (Chisnall, 2001:51) The following are sources from which secondary data for this

research was obtained among others:

 Annual reports of TNM and Airtel

 Malawi Communication Regulatory Authority (MACRA) reports

 Marketing plans and reports of TNM and Airtel

 Telecommunication International Union (ITU) data and reports

 Newspaper and magazines

41
  Several internet sources including websites of the companies and their related

stakeholders.

3.2.2 PRIMARY DATA

This study has also used primary data. Primary data is data which is collected afresh and for

the first time specifically for the research situation at hand (Kolb, 2008:12). It aims to answer

the research questions for which the research was designed. The following passages provide a

description of how primary data was collected.

3.2.2.1 SAMPLING AND SAMPLE SIZE

TNM and Airtel networks cover almost the whole country. However they are more

conspicuous in the four cities of Malawi namely Blantyre, Lilongwe, Zomba, and Mzuzu.

This is partly because when the first network was introduced in Malawi, these were the first

to be targeted because of their business potential among other reasons. When Airtel then

Celtel, started its operations in Malawi the same cities were targeted. Each one of these cities

would equally provide a well representative sample in as far as research of the two mobile

networks is concerned.

The elements in these cities are heterogeneous though the cities are homogeneous. Therefore,

based on cluster area sampling and convenience sampling the city of Zomba was chosen to

provide samples for interviews. Simple random sampling was used to select subscribers as

samples for the research. Simple random sampling is when all the elements in the population

have an equal chance of being included in the sample (Kolb, 2008: 185).

42
A total of 90 subscribers of both TNM and Airtel were targeted for the study of which 45

would come from each of the networks. The main guiding factor for inclusion in the sample

was possession of a functioning mobile phone of either of the two companies mentioned and

the consent of the individual.

Purposive or judgment sampling was adopted to identify officials from the two networks for

an in-depth interview. Purposive or judgment sampling is when a researcher deliberately or

purposely draws a sample from the population that he thinks is a representative of the

population or when judgment or opinion of the expert forms the basis for sample selection

(chisnall, 2001: 78). Taking this into consideration, the Public Relations and Sponsorship

Manager and the Marketing Director of the two companies namely TNM and Airtel were

chosen for an in-depth interview respectively. These were better placed to provide the

information needed for the research.

3.2.2.2 METHOD OF DATA COLLECTION

Primary data for the research was collected using two main methods. The first method was

through in-depth face- to-face interviews involving open ended questions. This form of

interviews is also called Unstructured Direct Interviews (IGNOU, 2011: 36). Guiding

questions were used for the interviews. Refer to appendix 1. The purpose of this type of

interview was to get in-depth information about the companies‟ marketing strategies and how

they have transformed over the years with emphasis on the past five years. The information

on the impact of marketing strategies on the performance of the two telecommunication

companies was also realized.

43
The second method involved the use of a paper based semi-structure questionnaire (See

appendix 2). The research followed a self administered questionnaire where the subscribers

were identified and given the questionnaire to complete on their own. It was anticipated that

45 customers from each of the two mobile networks would be identified and included in the

sample making a total of 90 subscribers. However, a total of 84 questionnaires were returned

representing 93% response rate. Of these, 42 were from TNM and 42 were from Airtel. Data

collected reflected the perceptions of the subscribers of their mobile phone providers, their

knowledge and responses to different marketing strategies employed by their companies, and

the benefits they enjoy as customers.

3.3 DATA ANALYSIS

Comparative data analysis was the main tool for analyzing data for this research. However

both quantitative and qualitative data was coded summarized and presented using appropriate

tools before a meaningful comparison and conclusion could be drawn. For much of the data

Statistical Package for Social Science (SPSS) version 16.0 was used for analysis. Many

descriptive statistical approaches were applied on most of the quantitative data. Tables, charts

etc. were used for presenting data for comparison purposes. Qualitative tools such as

categorization of data, recognizing relationship and developing categories etc. were also used

for coding, summarizing, analyzing and presenting qualitative data.

3.4 LIMITATION OF THE STUDY

Since the two companies are rivals and in stiff competition it was not possible for them to

give the full information required especially considering the fact that the companies regard

strategies with great privacy. There was some information which they considered as private

and confidential. The other limitation is the relatively small sample. It may be difficult to

44
generalize the findings. It is also possible that the data collected from questionnaires do not

capture the complexity of subscribers‟ perceptions of their networks.

3.5 CHAPTER SUMMARY

This chapter has given a detailed account of the methodology followed in the process of

coming up with this research. It started by explaining the different research design on which

the study is based. These included exploratory study, descriptive study and the comparative

study. The chapter then discussed different types of data and the methodologies used in their

collection, analysis and presentation. It concluded by explaining area for future research that

is worth considering. The next chapter will look at the findings and discussion from the

study.

45
 CHAPTER FOUR

DISCUSSION OF FINDINGS

4.1 INTRODUCTION

This section is about the discussion of finding of the study. The presentation involves

descriptive statistics where graphs and tables have been used. The chapter used information

obtained through the use of questionnaires answered by TNM and Airtel subscribers. A total

of 84 questionnaires were returned. The information obtained relates to the customers‟

perception and response to marketing strategies of the two mobile companies. The other

sources of data used include interviews conducted with the Marketing Manager for Airtel

Malawi and the Public Relations Manager for TNM, annual reports and other secondary

sources.

4.2 DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS

Sex of the respondents

Female
Male

Figure 6: Sex of Respondents

46
Figure 6 above depicts the gender of respondents. A total of 82 respondents participated in

the study and the results indicate that there was a fair representation 52 % for males and 48%

for females.

Academic Qualification

PSLC
JCE
MSCE
DIPLOMA
DEGREE
ABOVE DEGREE

Figure 7: Education Level

Figure 7 depicts the academic qualification of the respondents. The sample was well

represented since it drew from all educational spectrums. Over 53% had a diploma and above

and 47% had MSCE and below.

40

35

30

25
PERCENT

20

15

10

0
Below 20 21-30 31-40 41-50 Above 50

Figure 8: Age Group

47
Figure 8 depicts the age group of respondents. The majority of the respondents are in the age

groups of 31-40 years (35.7%), 21-30 years (23.8%) and below 20 years (17.8%). Fewer

respondents fell in the age groups of 41-50 years (9.5%) and 50 above 13%.

Respondents' Monthly Income

below K25 000

K26000- k100 000
K101 000-k249 000
k250 000-k449 000
K500 000 above

Figure 9: Monthly Income of Respondents

Figure 9 indicates the monthly incomes of respondents. The results indicate that the majority

of respondents had a monthly income of between K26 000 and K100 000 (55%) and 21% had

income below K25 000). Only 7.1 % and 3% enjoyed monthly income of between K250 000-

K449 000 and K500 000 and above respectively.

Out of these respondents 25.2% were students, 11% were farmers, 21% were business men

and women and the majority were civil servants 33.3%. Those who worked in companies,

organizations and other occupations represented 10.7% of the respondents.

48
4.3 PHONE USAGE

A presentation is made in this section about information related to the use of mobile phone

service for both TNM and Airtel subscribers. Figure 8 below is about how long subscribers

have been with their networks.

100
90
80
70
60
50 AIRTEL
40
TNM
30
20
10
0
Less than 1year 1 to 3years 4years above

Figure 10: How long respondents have been with their network

Figure 10 illustrates how long respondents have been with the network. The results show that

majority of the subscribers of TNM (86.9%) and Airtel (92.9) have been with the network for

more than 4 years. The remaining 7.1% of Airtel and 10.7% of TNM have been with their

networks for less than one year and 1to 3years respectively.

On average, subscriber of the two networks spend equal amount of money per month on air

time which ranges between K2001 to K5000 (US$15). Figure 9 below depicts reason for

choosing the networks.

49
 60
Choice of Network
50

40
PERCENT

30
AIRTEL
20 TNM

10

0
Network coverage Efficiency and Has most family Cheaper phones
quality and friends available

Figure 11: Choice of Network

Figure 11 above depicts reasons why the respondents chose to subscribe with their networks.

The results show that 50% of both TNM and Airtel subscribers chose their networks because

most of their family members and friends were in these networks. A total 35.7% of TNM

subscribers chose it because of the efficiency and quality of its network against 23.8% of

Airtel. Airtel had a larger percentage of subscribers (19.1%) against 7.1% of TNM that chose

the network because of availability of network coverage. This means that Airtel was the first

to come to most areas before TNM. An equal number of subscribers (7.1%) each chose the

network due to availability of cheaper phones.

4.4 NETWORK SWITCH

A total of 66.7% of all the respondents say that they have ever switched networks. Of these

47.6% are from Airtel and 19% are from Airtel. This indicates that more subscribers from

Airtel move to other networks. Among those who switch networks 64.3% switch from Airtel

to TNM against 35.7% who switch from TNM to Airtel. Figure 12 illustrates the findings.

50
 Network Switch
64.3

35.7

TNM to Airtel Airtel to TNM

Figure 12: Network Switch

Cheaper prices for their services

Quality services by other network TNM to Airtel

Airtel to TNM
No network coverage

0 5 10 15 20 25 30 35 40
PERCENT

Figure 13: Reasons for Switching

Figure 13 above depicts reasons for switching from one network to another. Results show

that there are three main reasons for switching. A total of 35.7% of Airtel subscribers who

switch to TNM do that because they want cheaper prices. No TNM customers switch to

Airtel because of low prices. A total of 35.7% of Airtel subscribers move to TNM following

better quality of services while only 14.3% of TNM switchers go to Airtel for quality

services. A total of 14.3% of TNM subscribers switch to Airtel because of network coverage

51
while no one moves from Airtel to TNM because there is no Airtel network in an area. This

indicates that TNM has better quality and price scheme while Airtel has wider network

coverage.

The results above correspond well with reason why some subscribers decided to be

subscribers of both networks. A total of 40.0% did that because it is very expensive to call

across networks while 47% did that to enjoy benefits from both networks. Only 13% decided

to subscribe to both networks because of network coverage problem.

4.5 CUSTOMERS’ ATTITUDE AND RESPONSE TO TNM AND AIRTEL

STRATEGIES

4.5.1 PROMOTION STRATEGIES

The product or service must be communicated to prospective buyers and users. This is the

role of promotion in the overall marketing strategy- communication with the market to

stimulate demand for the company‟s products or services (Davidson, 1987). Advertising and

sales promotions are critical elements of the promotion mix in Malawi telecommunication

industry.

All respondents have ever heard about promotions conducted by their networks. The figure

below shows the sources of information for the promotions.

52
 Sources of Promotion Information

Television
Radio
Newspaper
Posters
SMS

Figure 14: Media for Promotions

Figure 14 above depicts sources of information for promotions. Most people hear about

promotions on radio (32%), SMS (27%), television (26%) and newspapers (16%). Only 6%

of subscribers get their information from posters. Both TNM and Airtel carry out heavy

advertising through these media. TNM stated serious advertising after the coming of Airtel

(Celtel) which entered the market with aggressive promotions.

All the respondents have ever entered a promotional competition. There is a remarkable

difference between TNM and Airtel in their sales promotion strategy. Since its introduction

in Malawi, Airtel has carried out heavy sales promotion one after the other with an average of

two major promotions per year. The purpose is to stimulate product and services usage. It is

also a way of maximizing revenue for the company and paying back to the community which

has made Airtel a success. Huge prizes are given usually cars and cash. The following are

some of promotions quickly recalled by respondents: Lololo (plenty) promotion where

Toyota Prados were given every week, Migolomigolo (plenty) promotion brand new Toyota

minibuses were given every week for sixteen weeks.

53
On the other hand, TNM has carried out its sales promotions courteously by avoiding

extravagant expenditure on the same. According to TNM (2012) “growing a business is not

just about promotions. TNM follows a multifaceted approach not just focusing on one aspect

of the marketing mix”.

Some of the promotions recalled by respondents are Zeni Zeni (real deal), Shop-a-Dream

promotion where people were encouraged to recharge and would stand a chance of winning a

1 million kwacha shopping voucher every week, and Call-for Free Promotion in which

customers were required to recharge their phones with any recharge voucher and enjoy free

calls from 9 PM to 7 AM. TNM promotions are very rare and they are not as extravagant as

Airtel‟s sales promotions.

The table below portrays how much subscribers spend during promotions.

Table 3: Money spent on Airtime during promotion

TNM AIRTEL
Variable No % No %
Below K5000 21 50.0 24 57.1
K5001-K10 000 8 19.0 6 14.2
K10 001-K15 000 4 9.5 9 21.4
K15 001-K 20 000 9 21.4 3 7.1

From table 3 it can be seen that half of the subscribers from both networks still spend less

than K5000 a month during promotions. However, there is general increase in expenditure

with an average expenditure of K6000 per month in both networks which is slightly higher

than the average expenditure where there is no promotion (K5000). In general TNM

subscribers respond well to promotion than those of Airtel.

54
All respondents said that they have never won grant prizes apart from minor prizes or

bonuses such as airtime. This has brought mix perception regarding promotional

competitions. The figure below portrays these perceptions.

100

80
PERCENT

60

40

20

0
Yes No

Airtel TNM

Figure 15: Perceptions of Promotional Competitions

Figure 15 above depicts perceptions of subscribers over promotional competitions especially

after failing to win major prizes. A majority of TNM (90.5%) and Airtel (66.6%) customers

indicate no change in the perception of their networks. However, 33.3% of Airtel customers

indicate dissatisfaction and frustration with failure to win in the promotions even after

spending a lot of money on the same. They feel that promotional competitions are used just to

steal even more from them. They are reluctant to join new competitions. The table below

gives a general perception regarding sales promotion.

55
 Table 4: Perception on Sales Promotion

TNM AIRTEL
Variable no % no %
Promotional prizes are well distributed Strongly agree 8 19.1 1 2.3
Agree 26 61.9 21 50.0
Disagree 5 11.9 10 23.8
Strongly disagree 3 7.1 10 23.8
Promotions attract subscribers and increase usage Strongly agree 16 38.1 12 28.5
Agree 18 42.8 24 57.1
Disagree 5 11.9 3 7.1
Strongly disagree 3 7.1 3 7.1
Not a good idea to enter promotional competitions Strongly agree - - 5 11.9
Agree 5 11.9 8 19.1
Disagree 21 50.0 18 42.8
Strongly disagree 16 38.1 11 26.1
It is easy to win a prize in a promotion Strongly agree 3 7.1 3 7.1
Agree 8 19.1 - -
Disagree 18 42.8 13 30.9
Strongly disagree 13 30.9 26 61.9
Promotions are just a waste of time and money Strongly agree - - 8 19.1
Agree 11 26.1 - -
Disagree 16 38.1 23 54.7
Strongly disagree 15 35.7 11 26.1
My network has grown fast because of promotions Strongly agree 5 11.9 8 19.1
Agree 21 50.0 13 30.9
Disagree 16 38.1 13 30.9
Strongly disagree 3 7.1 8 19.1
Promotions prevent switch to other networks Strongly agree 3 7.1 - -
Agree 13 30.9 5 11.9
Disagree 21 50.0 21 50.0
Strongly disagree 5 11.9 16 38.1

The results in table 6 above show that over half of both TNM (19.0%+61.9%) and Airtel

(2.3%+50.0%) subscribers agree or strongly agree that promotional prizes are well

distributed. Over three-quarter of both TNM (38.1%+42.8%) and Airtel (28.5%+57.1%)

agree or strongly agree that sales promotions attract subscribers and increase usage of

products and services. Similarly, a large number of TNM (88.1%) and Airtel (68.1%)

disagree or strongly disagree that it is not a good idea to enter promotion competitions.

However, over 30% of Airtel customers still show reluctance to enter Airtel promotions.

56
Likewise, a majority of TNM (42.8%+30.9%) and Airtel (61.9+30.9%) disagree or strongly

disagree that it is easy to win prizes in TNM and Airtel promotions. However, a large number

of them still disagree or strongly disagree that these promotions are just a waste of time and

money since they mean nothing to customers. Both TNM (61.9%) and Airtel (59.9%)

subscribers agree or strongly agree that promotions have played a vital role in the growth of

their companies.

However, respondents disagree or strongly disagree with the greater margin (TNM 61.1%

and Airtel 88.1%) that customers cannot switch to other networks if they love promotions of

their network. The findings indicate that sales promotions are very important for business.

However, it is not wise to overdo them and they should also be supplemented by other

elements of the marketing mix since, they do not prevent switching on themselves.

4.5.2 PRODUCTS STRATEGIES

It is common business phraseology that good product means good business (Lamb et al.

2008). Product strategy concerns determination of specific product that is consistent with the

company‟s marketing objectives. TNM and Airtel have identical products and services with

very minor variations. The figure below shows the preferred products and services by

respondents.

57
 Preferred Services
AIRTEL TNM

69

39.3 35.7
25 21.5
9.5

Internet Voice calls SMS

The figure 16: Preferred Products Offered by both TNM and Airtel.

Figure 16 above depicts preferred network services. The results show that more TNM

customers like calling while most Airtel customers prefer texting and internet. This could be

a function of price. Both TNM and Airtel observed that prepaid services bring greater profits

than post paid services. Table 5 below portrays customers‟ perception as regards their

networks‟ products and services.

Table 5: Customers’ perception of TNM and Airtel products and Services

Variable TNM AIRTEL

no % no %
My network is usually first to bring new products Strongly agree - - 6 14.2
Agree 12 28.5 14 33.3
Disagree 16 38.1 19 45.2
Strongly disagree 14 33.3 3 7.1
My network’s products are relevant to modern envt Strongly agree 10 23.8 3 7.1
Agree 25 59.5 30 71.4
Disagree 4 9.5 6 14.2
Strongly disagree 3 7.1 3 7.1
My net’s success is due to being first product mover Strongly agree 6 14.2 9 21.4
Agree 11 26.1 21 50.0
Disagree 10 23.8 9 21.4
Strongly disagree 15 35.7 3 7.1
Products and services are simple to use Agree 30 71.4 18 42.8
Disagree 12 28.6 24 57.2

58
The results from table 5 indicate that a total of 71.4 % of TNM subscribers disagree or

strongly disagree that TNM is the first to bring new products on the market while a total of

47.5% agree or strongly agree that Airtel is the first to do that. The subscribers of both TNM

(83.3%) and Airtel (78.5%) agree and strongly agree that the services rendered by both

networks are relevant to the modern environment. A total of 71.4% of Airtel Agree and

strongly agree that their network has grown faster because it is the first to bring new products

and services on the market.

The findings correspond well with the strategies of the two networks. Product innovation is

part of Airtel Marketing strategies. Airtel‟s aim is to be the first to introduce new products

and services on the market in order to gain first mover advantage and remain a leader in

innovation. According to Chinula (2012) this has greatly assisted the company to acquire

virgin customers and customer retention which have helped to grow the company‟s revenue.

However, from the table 57.2% of respondents indicate that most Airtel products are too

complicated to be used by an average Malawian. This is agreed by Swain (2012) who

observed that Airtel products and services are not simple enough to use for the majority of the

population in India giving the example of Airtel Money services. This indicates that Airtel

products and services are rushed into the market without thorough research. This can be

counterproductive if customers are disappointed with them. On the other hand, 71.4% agree

that TNM products and services are simple to use. The table 6 below shows some of the

products and services that TNM and Airtel were the first to introduce on the market.

59
 Table 6: Products and services first introduced by Airtel and TNM

Airtel TNM
Prepaid services Me to you
SMS Family and friends
International roaring 3.5 G
Blackberry solution Use of kwacha instead of dollars
Bundles
3.75 G
Kutapa
Yakwathu
5X
One network
Low cost phones
Internet

The table above indicates that it is Airtel that has been the first to introduce most new

products on the market.

Chalulu in TNM (2010) observed that TNM may not be the first to introduce most of its

products and services on the market, but once its products are introduced, they are loved by

customers and are sustained because TNM is customer- centric. Daniel Makata, TNM‟s

Strategy and Planning Manager stated: “Let me tell you what it means to be customer-

centric: all our decisions are driven by the customer. New products, new pricing, new

networking- all of it is first put to a customer focus group. When we have something new we

offer it because we know firsthand that there is demand for it, not because it might be the new

hot technology. Developing products and services with integrity means promising something

and being able to deliver it to the satisfaction of the customer” (Makata in TNM, 2010).

Chalulu substantiates that while Airtel may be the first mover; TNM is the perfect mover

(Chalulu in TNM, 2010).

60
Nevertheless, TNM loses a lot as a follower on the market especially since it take quite some

time before it responds to the new product introduced by Airtel. TNM has to seriously

consider its innovation strategy.

4.5.3 DISTRIBUTION STRATEGIES

Physical distribution is a term employed in business to describe the broad range of activities

concerned with efficient movement of finished products from the end of production line to

consumers (Blythe, 1998). The aim of distribution activities is to maximize the utility or

economic value of the product by transmitting the right product, at the right time to the right

place. Distribution policy and strategies have to be well formulated in line with demand and

supply.

Network coverage is very crucial as a distribution strategy in telecommunication. TNM and

Airtel have been locked in a tight race over mounting BTS to increase network coverage. The

figure below illustrates the rate at which the two networks have been establishing BTS

cumulatively.

600

500

400
number of BTS

300 Airtel
TNM
200

100

0
2007 2008 2009 2010 2011

Figure 17 Network coverage through installation of BTS

61
Figure 17 above shows that Airtel became a leader in construction of BTS. This was one of

Airtel‟s penetration strategies. By 2003 Airtel had already overtaken TNM in the installation

of BTS and by 2011 Airtel had 524 BTS while Airtel had 420. The implication of being the

first to have network coverage in an area is that all those who have an appetite for cell phones

have no choice but to subscribe with your network. Even after the other networks have come

to an area, the first network still influences friends and relatives who would prefer to

subscribe with the network with most of their friends and relatives. As such BTSs were of

strategic significance to both networks. Airtel as a global brand enjoying economies of scale

had enough resources to lead the way other than TNM which has had financial problem.

Currently, TNM has geographical coverage of 74% and population coverage of 85%. On the

other hand Airtel has population coverage of 90% and a geographical coverage of 72%. This

indicates that Airtel concentrated on areas with large population rather than merely

geographical coverage. The two networks concentrated on Southern and Central regions first

due to large populations in these regions. Northern region still have a lot of areas without

network coverage as depicted in coverage maps (www.tnm.com; www.airtel.mw.com). Table

8 below contains results about customers‟ perception on distribution.

62
 Table 7: Customers’ Perception on Distribution

Variable TNM AIRTEL

no % no %
Cards and recharge vouchers are easy to find Strongly agree 24 57.1 20 47.6
Agree 15 35.7 22 52.4
Disagree - - -
Strongly disagree 3 7.1 - -
My network still has network coverage problems Strongly agree 6 14.2 6 14.2
Agree 10 23.8 10 23.8
Disagree 16 38.0 20 47.6
Strongly disagree 10 23.8 6 14.2
My network has wider network coverage than rival Strongly agree 4 9.5 10 23.8
Agree 24 57.1 10 23.8
Disagree 10 23.8 16 38.0
Strongly disagree 4 9.5 6 14.2
Easy accessible airtime makes me buy more Strongly agree 10 23.8 6 14.2
Agree 30 71.4 17 40.4
Disagree 4 9.5 16 38.0
Strongly disagree - - 3 7.1
My network has grown faster due to wider coverage Strongly agree 10 23.8 6 14.2
Agree 24 57.1 30 71.4
Disagree 4 9.5 3 7.1
Strongly disagree 4 9.5 3 7.1
Cheaper phones helped in growth of market share Strongly agree 8 19.0 10 23.8
Agree 20 47.6 32 76.2
Disagree 8 19.0 - -
Strongly disagree 6 14.2 - -
My first phone was Mose wa Lero (low cost phone) Agree 28 66.6 31 73.8
Disagree 14 33.4 11 26.2
I have ever used Low cost phone Agree 36 85.7 38 90.4
Disagree 6 14.3 4 9.6

The results from table 7 above show that a majority of respondents (57.1%+35.7%) for TNM

and (47.6%+52.4%) Airtel agree or strongly agree that it is easy to find cards and recharge

vouchers. This indicates that both networks have good distribution channels in the form of

wholesalers and retailers. Only a few (38%) from both networks (14.2+23.8) agree or

strongly agree that the two mobile networks still have problems due to inadequate network

coverage. This indicates that there is still challenge for both networks to cover the whole

country.

63
The respondents of both networks also agree that easily accessible airtime increases the

frequency of buying and usage, (23.8%+ 30.0% TNM, and 14.2%+40.4% Airtel). A higher

percentage of interviewees (23.8%+57.1% TNM and 14.2%+71.4% Airtel) agree and

strongly agree that their networks have grown faster because of wider network coverage. A

total of 66.6% for TNM and 100% for Airtel agree or strongly agree that low cost phones

have greatly assisted in the growth of their networks.

The results also show that 66.6% of TNM and 73.8 of Airtel subscribers had low cost phone

as their first phone. Over 80.5% TNM and 90.4% Airtel subscribers have ever used a low

cost phone which in Malawi is called Mose wa Lero. These phones were first introduced by

Airtel to increase access and penetration into the low income rural market. Airtel‟s ZTE

phone cost K1, 400 ($12). The phones greatly increased subscription to the network. TNM

responded four months later with Hauwei phones which had improved functionality and

quality than the ZTE and its price was a little higher K1,800 ($15). Many people preferred

these phones to the ZTE phones.

These phones were called Mosewalero (Moses of today) because they came during the first

term of President Dr. Bingu Wa Munthalika who was accorded to title „Mose wa Lero‟

(Moses of today) after the biblical Moses for improving the lives of people and the economy

during the first term of his office 2004 -2009. During this period, mobile connectivity rapidly

scaled up to cover a majority of Malawi‟s predominantly rural population (Choleman, 2011).

Both networks continue to sell these phones though the price has slightly increased now. The

introduction of low cost phones had remarkable strategic advantage and Airtel as a first

mover gained a lot from this strategic move. Overall results indicate that distribution plays a

64
crucial role in accessibility and greatly affects usage of the products and services. It has been

instrumental in market penetration and development for both networks.

4.5.4 PRICE STRATEGIES

A huge difference is observed in the way respondents perceive prices of TNM and Airtel.

According to Chalulu (2012) price skimming was the initial TNM‟s pricing strategy. TNM

carried out a post paid service charging premium price targeting top corporate citizenry,

government departments and rich people who could afford paying monthly bills. The aim was

to quickly recover the cost of investment before facing competition.

Airtel (Celtel) on the other hand, entered the market with penetration price strategy. Airtel

(Celtel) introduced a pre-paid service where customers could buy airtime recharge vouchers.

This became more appealing to the majority of the low income populace who could not

afford monthly telephone bills. TNM introduced pre-paid services in 2000, a year later after

Airtel. This gave room for Airtel (Celtel) to consolidate its position on the local low income

masses.

4.5.4.1 LATER PRICING DECISIONS

By 2008, stiff competition started mounting up between TNM and Zain on pricing of their

products and services particularly on local calls and low cost phones which became crucial in

market penetration and market development. According to Werner Schrijver, TNM CEO,

TNM avoided price war tactfully by positioning itself differently (TNM, 2009). TNM

introduced lowest recharge vouchers which were more appealing to low income masses. In

2010, TNM started charging its tariffs in Local currency rather than US dollar. Airtel

followed a month later and introduced even a lower denomination voucher of K20 against the

K40 introduced by TNM.

65
The two networks have introduced many price schemes and customers have responded

differently to these schemes. Figure 18 depicts level of satisfaction of respondents to bundles

introduced by TNM and Airtel.

Bundles
70
60
50
PERCENT

40
30
20
10
0
Very satisfied satisfied Somewhat satisfied Not satisfied

AIRTEL TNM

Figure 18: Satisfaction with Bundles

The results from figure 18 indicate that both TNM (61.9%+33.3%) and Airtel

(26.1%+66.6%) customers are satisfied or very satisfied with Mtolo/ Bundles. This may be

the reason why this scheme is very successful for both networks. Figure 19 shows level of

satisfaction with normal prices.

Normal Prices
TNM AIRTEL

4.7
Not satisfied 33.3

19
Somewhat satisfied 33.3

71.4
Satisfied 33.3

4.7
Very satisfied

Figure 19: Satisfaction with Normal Prices

66
The results from figure 19 show that 76% of TNM customers are satisfied or very satisfied

with normal prices. On the other hand almost three quarters of Airtel subscribers indicate that

they are not satisfied or very unsatisfied with normal prices offered by their network. Swain

(2012) points out that even in India Airtel prices are a little higher than those of its

competitors.

TNM has successfully positioned itself as a low cost leader. Most of its products and services

are priced lower than those of Airtel. It has also carried out price related promotions that offer

better deal than those of Airtel. The table below 8 illustrates prices of TNM‟s normal tariffs

against that of Airtel in the month of July, 2012.

Table 8: TNM and Airtel Tariffs in July, 2012 per minute

TNM AIRTEL

tnm to tnm to others airtel to airtel to others

Local calls: Pick time K50 K64 K52 K66

Off pick K24 K33 K26 34

SMS : Local K10 K10 K12 K22

Table 8 shows that TNM tariffs for both calls and SMS are slightly lower than those of Airtel

in both pick time and off pick. Prices of SMS are also higher at Airtel than TNM.

Figure 20 below indicate frequency in the usage of bundles. The results indicate that close to

three quarters of respondents (38.0%+26.1% for TNM and 45.2%+14.2% for Airtel) use

bundles often or very often. This indicates that bundles are people‟s favourite. It also shows

that Malawian market is still very price sensitive.

67
 Use of Bundles
50
45
40
35
PERCENT

30
25
20
15
10
5
0
Very Often Often Rare Very rare

AIRTEL TNM

Figure 20: Frequency in the use bundles

Table 9 below shows results on customers‟ perception and attitude on prices of TNM and

Airtel.

Table 9: Customers’ Perception on Prices of TNM and Airtel

Variable TNM AIRTEL

no % no %
Bundles make phone services cheaper Strongly agree 16 38.0 11 26.1
Agree 21 50.0 28 66.1
Disagree 5 11.9 - -
Strongly disagree - - 3 7.1
Smaller vouchers increase frequency of purchase Strongly agree 8 19.0 14 33.3
Agree 26 61.9 24 57.1
Disagree 8 19.0 2 4.7
Strongly disagree - - 2 4.7
Bundles make you spend more than expected Strongly agree - - 14 33.3
Agree 8 19.0 14 33.3
Disagree 19 45.2 13 30.9
Strongly disagree 15 35.7 1 2.3
Competition between TNM and Airtel is on price Strongly agree 11 26.1 11 26.1
Agree 19 45.2 24 57.1
Disagree 12 28.5 5 11.9
Strongly disagree - - 2 4.7

The results from table 9 shows that over three quarters of respondents (TNM-38.0%+50.0%;

Airtel-26.1%+66.6%) agree or strongly agree that bundles have made phone services to be

cheaper than before. They also agree with similar margin that low denomination vouchers

68
increase frequency of purchase (19.0%+61.9% TNM and 33.3%+57.1%). However, over

66% of Airtel respondents agree or strongly agree that bundles make them spend more than

expected, about 80% of TNM subscribers disagree or strongly disagree with this. This may

indicate that TNM customers enjoy Mtolo better than Airtel. In addition, with TNM Mtolo

bundles a subscriber can make calls across networks. Airtel bundles on the other hand, can

only be used on Airtel network. TNM has at least one low price bundle that one can use

during the day from 7AM to 5PM. A good example is Mtolo 40 costing K40 implemented in

the month of September, 2012.

On the other hand, most Airtel bundles can only used at night. Those that can be used during

the day are very expensive for most people. For example, the cheapest Airtel bundle for calls

during the day in the month of September was Chezani Bundle 200 costing K200 which

could only be used between 11AM to 4PM. Appendix 3 gives more information about

bundles and other services offered by TNM and Airtel.

Results from the table also show that both TNM and Airtel funs agree or strongly agree that

competition between the two rival networks has greatly been through price. This indicates

that price strategies create competitive advantage on the market.

4.5.4.2 LOYALTY PROGRAMMES

Both TNM and Airtel have loyalty programmes that are aimed at encouraging subscribers to

stay longer with the network. TNM runs a usage bonus scheme where a subscriber

automatically gets 10 percent if they use K900 and more every 15 days. The bonus can be

used to call any network any time including SMS. TNM also introduced Muyaya (forever)

Loyalty Discount. Under this scheme subscribers automatically enjoy discount on their calls

69
according to how long they have stayed with the network. Those who have been with the

network for more than 4years get 20percent discount. See appendix 3.

The only well known loyalty schemes run by Airtel is the Airtel Rewardz (sic) in which

subscribers register to enter the scheme and accumulate points every time they recharge.

These points can then be redeemed into minutes which are used to call Airtel subscribers

only. This scheme is more complicated if compared to that of TNM no warder it is not as

popular as TNM‟s bonus scheme.

4.5.4.3 YAKWATHU AND YANGA

Airtel was the first to introduce a discount scheme called Yakwathu (ours) where subscribers

enjoy discount depending on time and location of where they are calling from. TNM

introduced similar scheme called Yanga (mine) and improved on Airtel‟s scheme by making

it easy to enter and indicating discount in percentage on the phone which one can enjoy

according to time and place. Yanga is the talk of the town since subscribers can enjoy up to

99 percent discount which runs concurrently with other schemes. People talk literary for free

with this scheme.

4.6 BRAND VISIBILITY

From observation, TNM has greater brand visibility than Airtel in both rural and urban areas

where most shops are painted in TNM colour and logo. This is a big change since Celtel and

Zain had great brand visibility than Airtel at the moment.

4.7 CUSTOMER SATISFACTION WITH THEIR NETWORKS

Table 10 below depicts level of satisfaction of respondents with the services offered by their

networks.

70
 Table 10: Level of Satisfaction of Respondents with their Networks

Variable TNM AIRTEL

no % no %
Customer care services Very satisfied 13 30.9 6 14.2
Satisfied 18 42.8 16 38.0
Somewhat satisfied 8 19.0 6 14.2
Not satisfied 3 7.1 14 33.3
Quality of the network services Very satisfied 3 7.1 6 14.2
Satisfied 33 78.5 16 38.0
Somewhat satisfied 3 7.1 9 21.4
Not satisfied 3 7.1 11 26.1
Prices of goods and services Very satisfied 8 19.0 - -
Satisfied 18 42.8 9 21.4
Somewhat satisfied 11 26.1 16 38.0
Not satisfied 5 11.9 17 40.4
Promotional activities Very satisfied 8 19.0 9 21.4
satisfied 8 19.0 17 40.4
Somewhat satisfied 21 50.0 16 38.0
Not satisfied 5 11.9 - -

The results from table 10 depict that more TNM subscribers are satisfied (30.9%+42.8%)

than those of Airtel (14.2%+38.0%) with customer services of their network. Likewise, about

85% of TNM customers show satisfaction with the quality of their network services against

only 53% of Airtel. Close to 62% (19.0+42.8%) of TNM are satisfied or strongly satisfied

with prices offered by TNM while 79% (38.0%+40.4%) of Airtel customers are somehow

satisfied or not satisfied at all with the price schemes of their network. However, a total of

61.9% of TNM respondents are somewhat satisfied or not satisfied with the promotional

activities of their network. However, a similar range (61.8%) of Airtel subscribers is satisfied

or very satisfied with the promotions by Airtel.

The results indicate that in general TNM subscribers are more satisfied with services of their

network than Airtel customers. This is especially in line with prices, customer care and

quality of the network. These variables are crucial determinants of switching networks. This

may explain why Airtel has more switchers than TNM. The above scenario is also reflected

in the level of experiences people have with their network as depicted in figure 21 below.

71
 Experience with Network
70

60

50
PERCENT

40
AIRTEL
30
TNM
20

10

0
EXCELLENT GOOD AVERAGE BELOW AVERAGE

Figure 21: Rating Experience with your network

On the overall, TNM subscribers have better experience with their network provider with

over 80% of subscribers rating their experience as either excellent (47.6%) or good (42.8%).

A total of 66.6% rate Airtel as excellent (7.1%) or good (59.5%). The Figure below indicates

a very interesting finding about network preference.

Recommending a Network
80
70
60
50
PERCENT

40
30
20
10
0
TNM AIRTEL

Figure 22: Network Recommendation

72
Figure 22 above indicates that 73.8% of all the respondents (62) said that they would

recommend TNM to a new subscriber while only 26.2% (22) said that they would

recommend Airtel. Of those who would recommend TNM a good number are Airtel

subscribers especially those who are subscribers of both networks. This indicates that TNM

has positioned itself strategically for continued growth and is now a greater threat to Airtel

than ever before. The results also show that TNM‟s strategies are effective on the market.

4.8 IMPACT OF MARKETING STRATEGIES IN THE PERFORMANCE OF TNM

AND AIRTEL

Marketing strategies as already observed, play a crucial role in the overall performance of

both TNM and Airtel. A remarkable impact is on the growth of the networks. Sound

marketing strategies have led Airtel to become the market leader in terms of market share

despite being second mobile company to start its operations in Malawi.

Airtel‟s success is attributed to its product strategies, promotional strategies and distribution

strategies. Airtel has demonstrated that it is an innovative company by being the first to

introduce cutting- edge products and services and the company benefited a lot from first

mover advantage. Airtel is also known for carrying out aggressive promotions usually with

huge grand prizes that attracted new subscribers. For example, Lololo Promotion with Toyota

Prado as a grand prize netted in over 500 000 new subscribers (Mtumbuka in Mhango, 2011).

Airtel was also very good with distribution strategies. It was able to cover a wide population

than it rival TNM. The figure below depicts subscriber growth for the two networks.

73
 Growth of Subscribers
2500000

2000000
SUBSCRIBERS

1500000

1000000

500000

0
1995 1997 1999 2001 2003 2005 2007 2009 2010 2011 2012

AIRTEL TNM

Source: Annual reports

Figure 23: Subscriber Growth for TNM and Airtel

Figure 23 above shows that Airtel grew quickly in terms of subscribers and overtook TNM

within three years of its existence. TNM did not have aggressive marketing strategies at the

time as a result it was easily outsmarted. However, TNM fought hard firstly by following the

footsteps of Airtel‟s strategies such as distribution and advertising heavily. TNM also

adopted pricing strategies that made its services more affordable to the price sensitive

Malawian population especially under economic recession. TNM is currently Airtel‟s strong

challenger as it is slowly but surely regaining its lost market share. Figure 24 below

illustrates the scenario.

74
 Market Share
120

100

80
PERCENT

60 AIRTEL
TNM
40

20

0
1995 1997 1999 2001 2003 2005 2007 2008 2009 2010 2011 2012

Source: Annual reports

Figure 24: Growth in Market Share of TNM and Airtel

The figure above indicates that the gap in market share between the two companies is now

narrowing down with TNM having 44% market share with Airtel still a market leader at 56%

as of 2012 (TNM, 2012).

Both TNM and Airtel have registered growth in revenue following growth in subscriber base.

For example, TNM‟ revenue has grown from K4.7 billion in 2006 to K12.8 billion in 2011;

EBITDA grew from K2.7 billion in 2006 to K7.9 billion in 2011 (www.tnm.com). The

margins at Airtel have been higher. However, in the last few years, Airtel has been

experiencing decline in revenue not only in Malawi but also as a global company. Swain

(2012) states that Bharti Airtel has lost 30% in revenue in the last three years. This may

indicate that Airtel‟s strategies are no longer as effective as they were in the past.

75
4.6 CHAPTER SUMMARY

This chapter has discussed the findings of the study. The various marketing strategies adopted

by the two companies and the response from their customers were exposed. The impacts of

these strategies on the performance of the two networks were also highlighted. The following

chapter deals with conclusions and recommendations.

76
 CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1 INTRODUCTION

This chapter is about conclusions and recommendations from the study. The study aimed at

assessing the role of marketing strategies in the performance of telecommunication

companies through a comparative study of TNM and Airtel. The specific objectives of the

research were: to understand the corporate strategies and focus of TNM and Airtel; to

compare marketing strategies of TNM and Airtel; to assess customers‟ response to the

implementation of marketing strategies and to assess the impact of marketing strategies on

the performance of TNM and Airtel.

5.2 CORPORATE STRATEGIES

The study found out that TNM did not have well formulated corporate strategies prior to the

coming of Airtel in 1999 and it lacked proper identity and personality. Like its sister

company MTL, it enjoyed government protectionism and was never expecting competition

soon. This was the trend for most government owned companies and most of them fared

badly when faced with competition. TNM‟s initial focus on post paid financially viable

customers was rather myopic since it did not anticipate growth in demand especially on the

low income masses. It shows lack of market research and open mindedness on what was

happening on a wider business environment.

TNM later adopted growth strategies that concentrated on improving infrastructure and

capacity, availability, accessibility and promotion of customer loyalty. Cost reduction and a

move towards low cost leadership strategy have proved to be vital for the growth of the

77
company. TNM reviews its strategies every year to make sure that it is always in line with the

customer‟s preference. Its focus is still wholly local although it is competing with one of the

world‟s largest telecom companies. TNM needs support in areas of finance and technological

innovation which are its major hiccups. It is commendable that TNM fought its way up and is

gradually setting itself as a force to reckon with as it is gradually regaining market share.

Airtel entered the market with growth strategy aimed at growing customer base and revenue.

Its market differentiation strategy through product innovation such as bringing pre-paid

services that appealed to the majority of low income populace was critical for its

establishment on the market. Airtel has established itself as a leader in product innovation

especially to gain first mover advantage. Airtel has managed to explore more of the growth

strategies such as market penetration, new product development, market development and

currently diversification. Though TNM has followed strongly, Airtel has been the pace setter.

Airtel for sure has been very important in the growth of telecommunication services in

Malawi by exposing Malawians to the technology they just dreamed of.

However, strategically, the results indicate that Airtel has not been versatile. It does the very

same things all the time. Airtel strategies are rarely changed. This makes the company to be

very predictable and vulnerable to competitors as already observed in literature review. This

may negatively affect the company in the near future. Both TNM and Airtel focus on the

youth as their target market.

5.3 MARKETING STRATEGIES

The marketing strategies of the two networks have been critical in the success of these

companies. TNM did not have aggressive marketing strategies in its early stages of its

78
existence in Malawi. This changed soon after Airtel came on the scene. Airtel had viable

product strategies, aggressive promotions and distribution strategies. TNM has no choice but

to follow Airtel‟s lead though with problems since it did not have the financial bag Airtel had

as a multinational company following international and global strategies. The marketing

strategies of TNM and Airtel have therefore, not been very different apart from a few

reasonable variations.

While Airtel continues to concentrate on stimulating usage through sales promotion and

product innovation to gain first mover advantage, TNM devised a multifaceted approach to

marketing. Among others, TNM concentrated on providing competitive tariffs, connection

based distribution, improved quality, customer retention and customer services, and

aggressive brand visibility among others. Some of the remarkable differences in marketing

strategies and customer perception about the two companies are highlighted below.

5.3.1 PRODUCT STRATEGIES

Airtel has demonstrated to be more innovative than TNM since it is always the first to bring

new products on the market. Over 71% of respondents agree that Airtel is first to bring new

products on the market. A similar percentage agrees that Airtel has grown faster because it

was first to bring new products on the market. Airtel has done very well in product

development strategy. However, most products and services that Airtel brings on market are

not user friendly. TNM on the other hand, is not usually the first mover but its products are

user friendly and more appealing to the majority of Malawians. This indicates that they are

well researched.

79
5.3.2 DISTRIBUTION STRATEGIES

Distribution was a major tool for both networks for market development. Airtel had an upper

hand in distribution especially in installing BTS since it had better financial position than

TNM. Airtel also led TNM is the selling of low cost phones that were crucial in market

penetration. Respondents are satisfied with distribution of both networks although Airtel has

benefited a lot as indicated by respondents. The two networks share a great deal in

distribution channels since most distributors stock both TNM and Airtel products. Both

networks still have network coverage problems which need to be addressed.

5.3.3 PROMOTION STRATEGIES

Promotion strategies are very importance in increasing awareness of products and services as

well as promoting usage. Both TNM and Airtel have very competitive advertising

programmes mainly on radios and television. These are the two main sources subscribers

have singled out as being the main sources of promotional information apart from SMS.

Sale promotions are still very important in telecommunication business. The study found out

that many subscribers enter promotional competitions. About three quarters think it is a good

idea to participate in sales promotions. It also found out that people spend more during

promotions which means usage is encouraged and the company gain more profits. The study

also revealed that more Airtel customers (61%) are satisfied with sales promotion than TNM

customers who feel their company should improve on the same. However, some Airtel

customer show resentment towards sales promotion following continuous loses in the many

competitions ran by their network.

80
5.3.4 PRICING STRATEGIES

TNM and Airtel demonstrated different price schemes in the early years of their existences in

Malawi. The two networks have had great competition in line with pricing decisions.

Recently TNM has emerged as having a better price scheme than Airtel. The study showed

that 71.4% of TNM subscribers are satisfied with the normal prices of their network while

66% of Airtel subscribers are not satisfied with normal prices offered by their network. They

think Airtel still has higher charges than its rival. This is one of the main reasons why Airtel

customers switch to TNM.

Bundles are favourites of both TNM and Airtel subscribers. Over 80% of respondents agree

that bundles have made phone services to be cheaper. The study also indicated that

Malawians still prefer low denomination vouchers. Results also show that TNM loyalty

schemes are liked better by respondents than Airtel‟s. The results point to the fact that

Malawi as a market is still very price sensitive especially under hard economic times. A

strategic decision that does not take price seriously is self defeating.

5.4 IMPACT OF THE STRATEGIES

Marketing strategies have led to growth of the two networks in terms of subscriber base,

market share and revenue. Airtel gained more on these due to its sound strategies. However,

TNM seems to have found its winning formula as it is quickly regaining market share. It can

be concluded that currently TNM is a better performer in as far as effectiveness of strategy is

concerned.

81
5.5 RECOMMENDATIONS

5.5.1 RECOMMENDATIONS ON AIRTEL

Airtel needs to take its strategies seriously. It should make them more versatile according to

environmental trends. Airtel should regularly review its strategies to be in line with what

people really want and the changing business environment.

5.5.2 MARKETING STRATEGIES

5.5.2.1 PRODUCT STRATEGY

Airtel should continue product innovation to get first mover advantage which has already

greatly benefited the company. However, Airtel should carry out thorough research before

bringing new product on the market. Airtel should try as much as possible to make products

user friendly. Airtel should also improve the quality of its services which is at the moment

being questioned by subscribers and should continue updating the network to avoid network

congestion problems.

5.5.2.2 DISTRIBUTION STRATEGIES

Airtel has so far done well with distribution. However, it should continue installing BTS

since many areas still do not have network coverage.

5.5.2.3 PROMOTION STRATEGIES

Airtel promotions have become too predictable. They are monotonous and no longer

inspiring. Airtel should consider slowing down on sales promotions since they create more

frustrated losers than winners. They should consider variations in the marketing mix. For

example reduce expensive competitions and offer lower price facility that can be enjoyed by

82
as many customers as possible. Airtel should also stop sending people too many useless SMS

which bore customers.

5.5.2.4 PRICE STRATEGIES

Airtel is strongly advised to consider revising its normal service prices since many people are

not satisfied with them and they move to other networks to that effect. Lower prices would

bring a great difference to Airtel and its subscribers. It should also make more flexible

bundles and loyalty schemes.

5.5.2.5 CUSTOMER SERVICES

Airtel is still poor on customer satisfaction. Airtel should start taking its customers grievances

seriously and solve them quickly. It should consider establishing parallel customer care

centres in each region to improve responsiveness. In general, Airtel should work hard on

satisfying its customers because it seems they have more reasons to leave than to stay with

the network. Airtel needs to improve its customer retention strategies since more customers

are leaving the network.

5.5.3 RECOMMENDATIONS ON TNM

Although TNM fared badly in the face of competition against Airtel, it should be commended

for establishing itself as a strong opponent. TNM should continue to be customer-centric in

its strategic approach. However, TNM should start contemplating of engaging a strategic

partner for financial and technological innovation support. This can also help TNM to venture

into international markets as is common with most Telecommunication providers.

83
5.5.4 MARKETING STRATEGIES

5.5.4.1 PRODUCT STRATEGIES

TNM should improve on innovation since it is perhaps its weakest point. It should try to be

first to bring quality products on the market to enjoy first mover advantage rather than always

following Airtel. TNM should continue providing quality services to its customers which is

one of the reasons it wins customers.

5.5.4.2 DISTRIBUTION STRATEGIES

TNM still has many areas not yet covered by its network. It should therefore, continue

installing BTS to increase coverage so as to live by its distribution motto “everywhere all the

time”. TNM should also continue upgrading its systems to avoid network failure.

5.5.4.3 PRICE STRATEGIES

This is probably TNM‟s strongest point. TNM should continue offering lower prices where

necessary since it is one of its strategic advantages. However, it should avoid price wars as

much as possible since it stands to lose a lot in that situation. Flexible Mtolo bundles and

Yanga price schemes should be continued as they are customers‟ favourite.

5.5.4.4 PROMOTION STRATEGIES

TNM should pay considerable attention on promotion. TNM should consider running sales

promotion with bigger prizes as well once in a while. This can bring excitement to customers

and increase usage.

5.5.4.5 CUSTOMER CARE

TNM is good at customer care and customer retention strategies. It is recommended that

more ways should be explored on how best to retain customers apart from the already

84
existing ways. Customer satisfaction is key in this industry; TNM should never retract on

this.

5.6 AREA FOR FUTURE RESEARCH

This research concentrated much on marketing strategies and the effects they have brought on

the companies both positive and negative using a comparative study. The comparative study

approach gives chance to discover diverse information about a company and how different it

has done its business in a competitive environment. However, it is not exhaustive. There are

still possible areas for future research. For example, Airtel seems have displayed different

marketing strategies each time it had rebranded i.e. from Celtel to Zain and from Zain to

Airtel. For instance, Celtel started at a moderate note, but after take over by Zain, growth and

market share grew exponentially. However, soon after take over by Airtel growth and

visibility has been minimal to the extent that within two year (2010-2011) TNM gained 9%

of the market share moving from 33% in 2009 to 42% by 2011. This area is rich for further

investigation especially by looking at focus and marketing strategies adopted after each

acquisition.

5.7 CHAPTER SUMMARY

This chapter has presented conclusions and recommendations for both TNM and Airtel. Both

networks need to correct their weak spots and continue what they do best to satisfy customers

if they are to remain competitive on the market.

85
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APPENDIX
Appendix 1: GUIDING QUESTIONS FOR INTERVIEW WITH TNM AND AIRTEL
OFFICIALS

1. What is your position in the company?

2. How long have you worked for the company?

CORPORATE STRATEGY
3. What is TNM‟S/Airtel‟s? (Provide necessary documents if available)
Vision
Mission
Objectives
4. What are the current corporate strategies for TNM?
5. Have they changed for the past five years? What necessitated the change?
6. What were the corporate strategies when TNM /Airtel was first introduced in Malawi?
In what ways have the corporate strategies affected the company over its existence
positively or negatively?
7. What are the main factors considered when determining the corporate strategies of
TNM/Airtel?
8. Of what significance was the decision of rebranding for your Networks? Has this
change placed the company at any strategic advantage?
9. What is TNM‟s/Airtel‟s main focus area?
10. Describe TNM‟s/Airtel‟s main target market/ customers.
11. Do you have plans to expand the network beyond Malawi? Why and when?
12. Where does the company want to be in 10 to 20 years time?

MARKETING STRATEGIES
13. TNM was the first company to start its operations in Malawi but it has been overtaken
by Airtel in terms of market share among others. Where did TNM go wrong and why?
14. What did Airtel do right?
15. Which areas do you think your company is better than its rival?
16. What are the current marketing strategies for TNM/Airtel? ( Please provide copies of
marketing plans for previous years if possible)
17. How have these marketing strategies changed over time? What are the factors that
have necessitated changes in strategies?
18. What are the direct and indirect effects of using the strategies mentioned over the
years?
19. What is your planned growth rate of sales for the period 2009-2015?

PRODUCT/SERVICES

20. What are the main products/services offered by TNM/Airtel?

21. How did such innovation assist the company to gain competitive advantage on the
market? Give example and figures where appropriate.

92
22. Which products or services bring the greatest profits?
23. Which products /services are mostly preferred by subscribers?

DISTRIBUTION
24. What are the major ways that have assisted TNM/Airtel in line with network coverage
and subscription?
25. Is the selling of cheap or low cost phones by TNM /Airtel of any strategic significant
in line with distribution? How do you compare with Airtel on this?
26. What would you comment on the rate at which you established BTS.
27. What are the main challenges TNM /Airtel is facing in line with network coverage
and distribution of airtime?
28. What distribution channels do you use?

PROMOTION
29. What are the main promotional strategies for TNM/airtel?
30. List down main promotions carried out by TNM/Airtel over the last 5 years and their
main impact on the company.
31. Provide information on promotion mix that you use.
32. Have these promotions put TNM/Airtel at any competitive strategic advantage?
Examples.
33. Many people think TNM offers very few promotion competitions than Airtel. Others
have attributed the success of Airtel to their aggressive promotional strategies. What
is your comment?
34. What are the media commonly used for advertising

PRICE
35. What was TNM/ Airtel rationale for using post-paid services /prepaid services as d to
in the first years of its establishment in Malawi?
36. What factors dictate your domestic prices?
37. Competition between TNM and Airtel has recently shifted towards pricing, why is
this the case?
38. How strategic has been the use of bundles or Mtolo for your company?
39. People have observed that telephone charges are becoming cheaper these days than
before. Do you agree? Comment why this is the case.

Thank you very much for your cooperation

93
APPENDIX 2: QUESTIONNAIRE FOR SUBSCRIBERS OF TNM AND AIRTEL

INFORMED CONSENT
My name is JOHN C. JERE. I am conducting a study on customers‟ perception on services
offered by TNM and Airtel. This information shall be used to write a thesis which is a
requirement for the award of Master of Business Administration offered by Indirah Gandhi
National Open University in conjunction with The University of Malawi-Chancellor College.

You are being asked to participate in this study by answering questions below. Your
participation is voluntary and there is no penalty for refusing to take part. The questionnaire
will take about 15minutes to complete.

The Information obtained will be treated as confidential and will only be used for academic
purposes. Thank you in advance for accepting to willingly participate in this research. You
may sign below to indicate your consent.
Respondent ______________________________________

A. Demographic Information of Respondents

1. How old are you?

Below 20 [ ] 21-30 [ ] 31-40 [ ] 41-50 [ ] 50 above [ ]

2. What is your level of education

Below PSLC [ ] JCE [ ] MSCE [ ] Diploma [ ] Degree [ ] above Degree [ ]

3. Your gender: Male [ ] Female [ ]

4. What is your monthly income?

Below K25000 [ ]
K26000-K100 000 [ ]
K101000 -K249 000 [ ]
K250 000-K449 000 [ ]
K500 000 and above [ ]

5. What is your occupation?

Student [ ]
Farmer [ ]
Business person [ ]
Civil servant [ ]
Company official [ ]
Other (specify)
_______________________________________________________________

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B. Phone Usage
6. Which network do you use? TNM [ ] Airtel [ ]

7. How long have you been using the network?

Less than one year [ ] 1-3 years [ ] above 4years [ ]

8. On average how much do you spend on airtime per month? Specify the
amount_______________________

9. What made you choose this network?

Network coverage in my area [ ]

Efficiency and quality of services [ ]
Most family and friends have this network [ ]
Availability of cheaper phone for this network [ ]
Other (specify) __________________________________________________________

10. Have you ever switched networks? Yes [ ] No [ ] If no go to question 14.

11. The switch was: From TNM to Airtel [ ] from Airtel to TNM [ ]

12. What made you switch networks?

No network coverage in my new area [ ]
Better and quality services by the other network [ ]
Cheaper price for their services [ ]
Chance to win in promotion competitions [ ]
Other (specify)
___________________________________________________________________________
___________________________________________________________________________

C. Only for those with both TNM and Airtel cards.

13. What made you to have cards for both TNM and Airtel?

Most of my friends were of the other network [ ]

Very expensive to call across networks [ ]
To enjoy benefits from both networks [ ]
Other (specify)
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
D. Customers’ attitudes and response to TNM/Airtel promotions
14. Have you ever heard that your network is conducting promotion? Yes [ ] No [ ]

15. How did you hear? Television [ ] Radio [ ] newspapers [ ] Posters [ ] SMS [ ]
Otherways_________________________________________________________________

16. What was the requirement for one to enter the promotion competition? Tick the ones
applicable.

Buy air time [ ] Answer questions and send with charged SMS [ ] buy SIM card [ ] Any
other (specify)
___________________________________________________________________________
17. Have you entered these competitions? Yes [ ] No [ ]

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 18. How many promotions have you entered quantified by percentage?

0-20 % [ ] 21-40% [ ] 41-60% [ ] 61-80% [ ] 81-100% [ ]

19. How much airtime do you buy during promotion? Specify
_______________________________________________________________________

20. Have you ever won any prize in Airtel promotion? Yes [ ] No [ ] If NO go to
question 20f

If YES
a. What was the Prize
_____________________________________________________________
b. How much did you spend to win the prize
___________________________________________________________________________
c. Did this change the perception of your network
___________________________________________________________________________
d. Do you think those people who win during promotions deserve it? Yes [ ] No [ ]
e. Why_______________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

If NO
f. What was the reason for not winning?
___________________________________________________________________________
g. Did this change the perception about your network provider?
___________________________________________________________________________
___________________________________________________________________________
21. Mention promotions that you can remember offered by your network.

22. Indicate the extent to which you agree or disagree with each of the statements as applicable
to your network: Tick the appropriate box.
SN Issue Strongly Agree Disagree Strongly
agree disagree
1. Promotion prizes are well
distributed
Promotion is used to attract more
2. subscribers and promote service
usage
3 It is not a good idea to enter
promotion competitions
It is easy to win prize in
4. promotions
Promotions are just a waste of
5. time and money since they mean

96
 nothing to customers

My network has grown fast

6. because of promotions

Customers love my network‟s

7. promotions as such they cannot
switch to other networks

E. PRODUCTS AND SERVICES

23. Which service/products do you find very useful?
Internet services [ ]
Call services [ ]
SMS [ ]
Others (specify) ______________________________________________________

24. Are you happy when your network is the last to bring a new product on the
Market? Yes [ ] No [ ]

a. Give a reason for your answer.

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
25. Show how you agree or disagree by ticking the appropriate box.
SN Issue Strongly Agree Disagree Strongly
agree disagree
1. My network is usually the first to
bring new products and services
on the market

2. My network‟s products and

services are more relevant to
modern environment
3. My network‟s products are more
appealing to the youth than the
older generation
The success of my network is
4. because of being the first to
introduce new products on the
market
My network‟s products and
5. services are simple to use

97
 F. DISTRIBUTION
26. Show how you agree or disagree with the following by ticking the appropriate box:
SN Issue Strongly Agree Disagree Strongly
agree disagree
1. My network‟s cards and airtime
are easy to find

2. My network still has problems

due to poor network coverage
Easily accessible airtime makes
4. you buy more.
My network has grown fast
5. because of wider network
coverage

6. Selling of cheap phones assisted

the growth of my network‟s
market share.
My first phone was Mose wa
7. Lero (low cost phone)
8. I have ever used Low cost phone

G. PRICE
27. How satisfied are you with the prices of products or services of your network?

Very satisfied satisfied Somewhat Not satisfied

satisfied
Mtolo/bundle
Normal prices

28. How often do you use Bundles?

Very often often rare Very rare Not at all

How often do
you use
Mtolo/Bundles?

29. Show how you agree or disagree with the following by ticking the appropriate box:
SN Issue Strongly Agree Disagree Strongly
agree disagree
1. Mtolo or Bundles make the
phone services cheaper
Smaller denomination airtime
2. increases frequency of purchase
3 Using bundles make you spend
more money than expected
More competition between TNM
4. and Airtel is through prices

98
 30. How satisfied are you with the following regarding your network?

Issue Very satisfied satisfied Somewhat Not

satisfied satisfied
Customer care services
Quality of network
Quality of voice calls
Diversity of products and services
Price of services
Distribution of the network
Promotional activities

31. How would you rate your experience with the following brands?

Excellent Good Average Below average

Airtel
TNM

32. Which brand would you recommend for a new subscriber?

TNM [ ] Airtel [ ]
a. Give a reason for your answer.

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
33. In which areas does your network perform very well?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
34. In which areas does your network fail to perform well?
__________________________________________________________________________
__________________________________________________________________________
________________________________________________________
35. What suggestions would you give to help improve your network services?

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Thank you very much for taking your time to complete this questionnaire

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Appendix 3: TNM and Airtel Bundles

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 Appendix 4: Approved Synopsis

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