MarketPlace

Popular products key to retaining customers

PHONE

Consumers likely to shift to another firm when popular product is discontinued. FILE PHOTO | NMG

Telecommunications company Safaricom #ticker:SCOM last week discontinued its Sh99 for 1GB daily data bundle for a few of days before returning it after complaints from consumers online.

Meeting the needs of the consumers by reinstating such popular products is one way of retaining consumers.

Research shows that discontinuing favourite products leads to consumers switching to competitors instead of choosing an alternate product from the same brand.

At the same time, the leading mobile services provider also rolled out new data plans offering consumers 500MB + 500 SMS + Unlimited WhatsApp in which consumers will be able to use the online messaging application for free for the validity of the bundle purchased, for the same Sh99.

However, consumers on social media demanded that Safaricom reinstate the 1GB data bundle or they switch to its competitors, Airtel or Telkom offering daily 2GB data bundle for Sh99.

The telco is still the industry leader but is facing increasing competition. According to the latest industry report by the Communications Authority of Kenya, Safaricom’s mobile/ internet subscriptions market share declined from 72.8 per cent in the third quarter for the financial year 2017/2018 (January to March), to 68.4 per cent in the previous quarter.

While Airtel Kenya’s increased by four per cent to reach 23.1 per cent and Telkom Kenya decreased from 7.8 per cent to 7.6 per cent.

Therefore, Safaricom could avoid losing more consumers in choosing to reinstate the popular data bundle amidst the growing competition.

According to a 2002 case study on the consumer responses to discontinuance of favourite products, after a popular product was discontinued, consumers were more likely to select an alternative from a different brand than select another alternative within the same brand.

The research, conducted by professor of Marketing, Melissa A. Martin of George Mason University in the US, studied 145 respondents asking them open-ended questions about a memorable discontinuance experience and their recollections were analysed for common trends and themes.

Some 43 per cent said they switched to an alternative product in a different brand while 34 per cent switched to another alternative product with the same brand and 23 per cent exited the category or switched between brands with no reported preference.

“Consumers who had switched to the discontinued product from another product in the same brand were more likely to select an alternative within the brand after discontinuance than to switch. Even among these subjects, though, 42 per cent either switched to another brand or cycled between brands frequently with no reported preference,” reported Martin.

Brands risk a decline in their market share and consumer appeal in choosing to discontinue a popular product that sets them apart from the competition.

However, brands that serve a niche market, discontinue products in order to still maintain their consumer appeal and brand value among competitors that offer cheaper products.

For instance, technology company, Apple last week, while launching its new smartphones for the year; iPhone XS, iPhone XS Max and iPhone XR announced that it was discontinuing older models; iPhone X, which was less than a year old in the market, iPhone 6 and iPhone SE.

In a January 2018 report by Ming-Chi Kuo, a then Apple supply chain analyst at KGI Securities, he noted that Apple will discontinue the iPhone X when it launches it new smartphones because just lowering the price will hurt the brand value of the other smartphones in the model line.

“Lowering iPhone X's price after the 2H18 new models' launch would be a negative to product brand value given that 3D sensing and OLED display are features of the new high-price model. Moreover selling the iPhone X at a lower price may have a negative impact on shipments of the new 6.1" LCD iPhone in 2H18.

Therefore, it is expected that the iPhone X will reach end-of-life around the middle of 2018,” reported Ming-Chi Kuo.

- African Laughter