There are no shortage of options when it comes to mobile payments these days, so it’s not a surprise to see some vendors going after the niche markets.
Perhaps one of the biggest niche markets around is the “developing markets” sector, and when it comes to developing markets these days, Africa is one of the biggest such fields there is. Safaricom, meanwhile, is one such company pursuing this major developing market.
In a bid to make a greater push on the market, Safaricom has been using the strength of its customer based to boost its Lipa Na M-Pesa revenue by 30 percent by the end of the fiscal year. Given that there have been a host of system delays already, the high-end customers in the market would seemingly prefer to take their collective business elsewhere rather than wait for a transaction message to show up with M-Pesa.
Meanwhile, competitors like Visa and MasterCard have been cheerfully offering up product lines for the Kenyan middle class, which is actually growing, by some reports.
This provides some opportunity for M-Pesa to make a wider run, but it clearly needs to bolster its services. In the meantime, though, Safaricom is taking M-Pesa to some surprising new places: lower-end retailers like gas stations and supermarkets.
It’s a strategy that seems to be working, if on a limited basis; Safaricom has reportedly struck deals with Uchumi and Tuskys supermarkets, as well as several gas stations in major towns to give customers the option to use mobile payments systems for more everyday purchases.
Some might consider this a desperation move on Safaricom’s part, going after the last scraps of services in a hope to stay relevant. But there’s another way to look at this that makes sense, and it’s based on a marketing tactic known as “penetration”.
Regarded as the opposite of “skimming”, where a company tries to hit the highest end purchasers rapidly before competitors can get in and entrench, penetration goes specifically after the lowest-end of the market, gathering together a kind of coalition market that’s likely to remain loyal even in the face of new competition thanks to inertia, if nothing else.
Of course, there’s no way to know just how well Safaricom’s strategy will do at this stage of the game. But it’s a safe bet that it will work out in the end, because with a penetration market, at the end of it all, you still have a market. That’s a platform from which a larger entrance can be staged, and it might just be enough to keep Safaricom in the game.
