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Q1. You have been appointed as the marketing manager of Mifugo Bora Dairy
Co-operative Society.Wanadume Dairy Co-operative Society; a competitor has
undertaken a major price reduction for its products.

Advise the management committee of Mifungo Bora Dairy Co-operative Society

on the strategies to undertake in order to maintain their market share. (15

The recent price reduction by Wanadume Dairy Cooperative Society needs to be

checked. Their price reduction will easily resonate with consumers in this period of
economic difficulty, which is a catalyst for changes in consumer spending habits.
Consumers naturally turn to low-priced brands out of necessity and discovered
performance and quality above expectation. This answer advices the management
committee on the appropriate strategies inorder to maintain Mifugo Bora market
According to previous global research from McKinsey & Company, an average of
18% of packaged-goods bought by consumers were lower-priced brands. Of the
consumers who switched to cheaper products, 46% said that the cheaper products
performed better than expected. The large majority of these consumers said the

performance of such products was much better than expected. This is a danger to
Mifugo Bora. If the global research holds true to the Kenyan situation, the company
may not recover from a market share loss.
In this times, frugality is the new norm, with consumers still looking to save money
whenever possible. Those who switched have remained loyal to the cheaper brands
and it is likely that more will follow as consumers continue to seek value. This is
bound to have an impact on the market share held by Mifugo Boras brands. Having
insight into Wanadumes pricing strategies has never been more important.
The management need to start knowing Wanadume, as a competitor, intimately.
Ofcourse Mifugo Bora is probably already monitoring its competitors but does it have
the latest information and is it focusing on the right things? If not, its time Mifugo
Bora starts to know Wanadume all over again. This will take the form of: their key
product offerings, their key competitor pricing strategies and, what else other than
lower prices do they offer.
The management should review everything that they know about Wanadume, for all
its brands. This will ensure that Mifugo Bora positions its products accordingly. The
question the management need to ask themselves at this point is, where do Mifugo
Boras products currently sit and what needs to change with regards to this?
The management need to review Mifugo Boras Unique Selling Points (USPs) while
also highlighting the value of its products. In a competitive market, Mifugo Boras
USPs can make the difference between their customer buying from them or their

competitor. In the case of Wanadume, they are competing on price, and it may be
price alone, so what additional benefits can Mifugo Bora offer? Could it be a special
ingredient? Is it Recommendations from dairy board, childcare, or healthcare
professionals? Is it complementary product ranges?
Mifugo Bora will need to personalize its marketing. Personalising its marketing is a
must. There are so many ways that they can speak to their customers directly, improve
their customer service and even offer value outside of purchasing their product.
Through online marketing and social media, they can create a community and culture
which they can use to build relationships with your customers. These developing
relationships and higher levels of engagement will give them valuable insights into
their customers behaviours and preferences.
Mifugo Bora could offer advice and thought provoking content, positioning their
brand and team as thought leaders in your market. If one consider the well-known
Royco brand. Through their Mpishi Poa Tv programme and social media activity, they
have created useful content for mums, cools and created a supportive community .
Mifugo Bora could do the same.
Mifugo Bora can also review their products packaging. The question the management
need to consider is; Is Mifugo Bora packaging still selling thier products? With all of
the additional information they have gathered on the market and current consumer
buying habits, the answer to this question may be no. Is it standing out on retailers

shelves and does it highlight the key benefits of choosing their products over those of
Wanadume? If not, its time to carry out a review and redesign.
Customer retention is one of the most important marketing strategies for any
organization. Mifugo Boras ability to keep customers is reflective of their skill in
satisfying them. Yet, satisfying customers not as simple as delivering what Mifugo
Bora said theywould, and when they said they would.
Satisfying increasingly demanding customers requires communication and action.
Mifugo Bora language must be specific and consultative, and

they must fulfill

beyond expectation. Mifugo Bora must know what competitors are offering, and ask
its customers how important it is that they receive this difference. Mifugo Bora must
improve their service continually to strengthen the relationship. Mifugo Bora must
investigate and uncover new opportunities for their growth. Most importantly, Mifugo
Bora must revere its customers and never take for granted their vital role in their

Q2. The microfinance sector is a fast growing entity in Kenya, due to the high
demand of financial needs of its people and opportunities available, in this light,
Explain the stakeholder analysis in microfinance institutions in Kenya. (15mks)

The management of a transforming MFI is faced with the difficult task of responding
to the concerns of various stakeholders. One of the concerns is the apprehension by
stakeholders that the MFIs original vision and mission of targeting the poor might
change in due course. This change of vision and mission is referred to as mission
drift. This concern arises because of the dual nature of the goal of transformation,
namely, large outreach and sustainability (Christen, Rhyne, Vogel & McKean, 1995;
Wright, 2001). To reach large numbers of the poor, a transformed MFI must also seek
to become sustainable (CGAP, 1996; Rhyne, 1998). As a transformed MFI grows, it is
expected to start lending out larger loan amounts to meet the demands for commercial
viability (Campion & White, 1999; Rosengard, Rai, Dondo & Oketch, 2000). The
MFI stakeholders may, therefore, have a legitimate concern about the possibility of a
mission drift once the transformation, which entails a change in ownership structure
and status, is complete (Lauer, 2008). The above, forms the backdrop against which
this question will be answered.
Donors or owners. These are likely to raise concerns regarding the use of funds
(Campion & White, 1999, Hishigsuren, 2006). Since grant funding for MFIs is
generally meant to benefit poor and low income people by supporting the
development of institutions that offer formal financial services to such people, donors

might be against the transfer of an NGOs assets to a private company. The existing
policies and agreements might even be against such an eventuality. Thus, the
management has the task of convincing such donors that using the funds to create a
sustainable institution that is able to serve more of the beneficiaries is just another
strategy to accomplish the primary purpose of increasing access to financial services
by the poor. The NGO should be compensated, for example with shares or other value
in exchange for its transfer of assets to the new institution, for the transfer as has
happened in most donor approved transformations (Lauer, 2008). However, the
pricing of the shares should be done in such a way as to ensure a fair transfer of the
NGOs assets, including grant funds, to private parties.
Lenders to the MFI. An MFI might be having debt or other contractual
encumbrances. Debt liabilities create this class of stakeholders. The relationship
between creditors (banks) and organizations is accredited for increasing an
organizations access to funding (Gerschenkron, 1962, and Hoshi et al., 1994). It is
documented that creditor representation on boards has two implications for
organizations - through loans to organizations and the aggregation and exercise of
proxy voting rights (Agarwal and Elston, 2001). Their representation on boards also
provides a strong channel of information in both directions. For example, if banks
have access to private information that is used to reduce agency costs, organizations
with close bank relationships (creditors on boards) may benefit from better access to
finance. These relationships should lead to both higher social and financial
performance of organizations. On the other hand, creditors on boards may cause a

potential conflict of interest that may manifest itself in organizational financing

decisions (Kroszner, 2001). For example, conflicts of interest could include the bank
influencing management to undertake higher risky projects in case that the bank is
financing the project. These projects might not bring the expected returns, which may
hamper organizational performance. These arguments imply that creditors on boards
are able to influence the MFI. They may make the process rational since they have
crucial information and they can make the process to be characterized by political
behavior because of different interests. A study by Hartaska and Mersland
(forthcoming) found boards with creditor representation to be more efficient in
reaching poor clients, which may imply that creditors are still important on boards and
strategic decision-making.
Owners. Another group of stakeholders are the owners. Owners who are shareholders
and/or investors of MFI have important roles in SDMP. These owners appear in
different forms. Some are international agencies, or NGOs, such as Consultative
Group to Assist the Poor (CGAP), who through its Council of Microfinance Equity
Funds place equity in return for shares or influence (Rhyne, 2005). Some are local
members of societies who contribute to MFI and some are local and international
institutions who own shares. Similar to other corporate organizations, MFI boards are
mostly represented by owners. MFI owners are further divided into classic and mixed
types (Labie, 2001) depending on the interests of the owners. Classic shareholders are
highly profit motivated and their involvement on boards and decision process is
basically on the side of making decisions that are profit-oriented. On the other hand,

mixed shareholders (or social responsible investors) would like to have some level of
profit and social impact. For them, the board should have a variety of stakeholders
and decisions made should meet the organizations dual objectives. The most
important role of shareholders is to monitor the management and make decisions that
will lead the organization to be sustainable.
Another category of stakeholders whose interests the management needs to address is
the employees. With transformation, the new MFI may be required by operational and
legal demands to incorporate experienced bankers, human resource managers, experts
in asset and liability management, and management information systems specialists
(Campion & White, 1999; Rosengard, Rai, Dondo & Oketch, 2000). This prospect is
likely to cause a lot of anxiety amongst the existing staff, especially regarding job
security. MFIs like K-Rep and Mibanco responded to this by engaging the existing
staff in dialogue, capacity building and ultimately retaining most of them.
Policymakers & Regulators. Policymakers and Regulators play a vital role in
facilitating pricing disclosure within the microfinance industry. They can improve
practices by designing and implementing policies that facilitate transparent pricing
practices, pricing disclosure to clients, and the reporting and publishing of pricing
information for the broad benefit of the industry in general.
Networks & Associations. The main role of this stakeholder group is conducting
discussion among their members to develop standards for pricing disclosure, acting as
a liaison between their membership and the regulatory agencies and identify capacity
needs among members to coordinate the process of acquiring technical assistance.

Administrators of programs dealing with financial literacy. One potential role is

taking the lead in promoting client financial education about pricing. This could
include a number of activities such as conducting baseline studies to identify client
financial education levels, administering government-mandated and/or designed client
financial education programs or coordinating with donors and technical assistance
providers to develop and implement client financial education programs. Some
participants believed that this role might better fall to consumer protection agencies or
specialized NGOs, but regardless of the primary leader of these activities most agreed
that networks have an important role to play as the voice of the industry and hub for
information dissemination.
Financial Institutions. As the organizations actually charging the prices, the main
role that financial institutions in the microfinance market play in facilitating
transparent pricing is to practice responsible pricing, disclose prices to their clients
and comply with the pricing disclosure standards required in the regulatory