Big Data, Brexit and Trump

One of the most defining milestones ever achieved by big data analytics platforms is 2016 USA presidential election and Brexit. In both cases, the winning sides adopted a tool developed by the University of Cambridge to psychometrically profile people by mining data through the social media. Cambridge Analytica, used by the Brexit leave campaign and Trump’s election campaign-, is a legend phrase in the tech industry.

Cambridge Analytica is said to use behavioral microtargeting, through combining people’s personalities  with demographics to predict and influence mass behavior. Big data analytics tools are already know to profile and target people by demographics e.g. age, income and gender, but a platform that can perfect psychological targeting offers a more potent tool: Ability to manipulate behavior based on how a person thinks or react to a particular event.

Cambridge Analytica, is known to administer online questionnaires promoting them using social media ads that promises to tell you about your personal traits. It then uses these tests mine data from thousands of participants.

The data is then used to develop ads geared towards the agreeable personality of an individual. For example, political ads warning about the danger posed by climate change can be targeted to voters deemed as anxious rather than targeting those identified as skeptics.

The fertilizer market in Kenya

The liberalization of the Kenya fertilizer market in early 1990’s led to price and marketing controls, import permits, licensing arrangement and quotas being eliminated. Consequently, fertilizer use doubled from 200,000 mt in 1990 to 450,000 mt in 2009. This impressive growth is closely associated with the smallholder farmers. Liberalization also led to an upsurge of private distributors with more than 10 importers, 500 wholesalers and 6,000 retailers entering the market.

Fertilizer consumption and market prices

Fertilizer is mainly applied to food crops such as maize and domestic horticultural crops, and cash crops such as tea, sugarcane and coffee. Usage per/ha has  substantially increased in the high-potential zones of Western Kenya where roughly 87% of small-scale farmers use fertilizer. From 2008 to 2012, the average use of fertilizer was 36.98 kg/ha of arable land.

Avg use of fertilizer (2008-2011)

Source: IFDC

Crop Group Metric Tons ‘,000’
%
Cereals 365.4 75%
Tea 63.0 13%
Horticulture 33.0 7%
Coffee 27.0 6%
Tobacco 0.5 0%
Total 488.8 100%

 

Most farmers (70%) use DAP fertilizer, with the rest using CAN, NPK and Urea respectively. Kenyans use mainly DAP and Urea on cereals and apply CAN and NPK on cash crop. For cereal crops, fertilizer is heavily used during the long rain season (late April- early June).

Percentage of Small-Scale Household Using Fertilizer in 03/04

Source: Tegemeo Institute

Region %
Coastal lowlands 6%
Western Lowlands 8%
Margina Rain Shadow 27%
Eastern Lowlands 46%
Western Transitional 51%
Western Highlands 74%
High Potential Maize Zone 90%
Central Highlands 94%

 

The price of fertilizer is highly volatile as it is affected by outside factors such as energy and raw material prices, growth in demand from emerging markets, biofuel sector in USA and Europe. DAP prices increased from KES 1,500 (per 50 kg packet) in 1990 to KES 2,400 (per 50 kg packet) in 2008, however, with inflation adjustments the prices of DAP fertilizer tend to be decreasing.

The most common supply chain channel is of importers, wholesalers, retailers who then sell to farmers kilograms’ packet of 50, 25, 10, 2, and 1 kg packet is becoming more popular.

Opportunities and challenges in the Fast Moving Consumer Goods Sector in Kenya

Overview

In Kenya, a rapid expansion of the consumer class represents a growing opportunity for Fast-Moving Consumer Goods (FMCG), this is reinforced by the strong demand for food and beverages and personal care products. Some of the renowned FMCG multinational companies operating Kenya are Coca-Cola, Unilever and Procter’s & Gamble.

Opportunities

Between 2004 and 2016, the country’s economy expanded at an average growth of 5.46 %. The growth is expected to remain robust at a rate of 6.8-7 % from 2016 to 2020. In turn, consumer spending which currently stands at $25bn is expected to nearly double by 2020. Rising personal income will bring up a new middle-income class that is more likely to spend money on FMCG.

According to a survey conducted by Nielsen in the year 2015, Kenya is Africa’s second biggest formalized retail economy after South Africa; the survey further indicates that 30% of Kenyans do their shopping in retail outlets. From a PWC report, Nakumatt, Tuskys, Naivas and Uchumi are the four largest home-grown supermarket retail chains in Kenya, and they all stock a variety of food, home and personal care, electronics and clothing products. The attractiveness of this market has encouraged international companies like Massmart Holding’s Game, Botswana’s Choppies and Carrefour to enter the market. Expansion and spread of retail outlets throughout the country increase options for FMCG sales and make global brands available to new customers.

Risks

In the year 1998, Kenya experienced a major terrorist attack when the US Embassy was bombed by the Al-Qaida group, resulting in a significant number of deaths and injuries. Since the Kenyan military incursion into Somalia through an operation called “Operation Linda Nchi” in 2011, there has been an upsurge in terrorist attacks that emanates from the Al Shabaab group and homegrown Islamist militants. Some of the documented cases are the 2013 Westgate Mall attack and the 2015 Garissa University College attack. Terrorist incidences have negatively impacted Kenya’s economy and instilled fear among Kenyans. The net effect of terrorism may inhibit the growth of the middle-income class, and lower the consumer confidence; this may in turn hamper the growth of the FMCG sector.

Compounding the terrorism threat, political instability is a real threat facing Kenya. After the announcements of the 2007 presidential election results, the country plunged into violent protests that transformed into ethnic clashes and led to a virtual shutdown of roads and markets. The two months conflict had a negative impact on distribution channels, restricted movements, encouraged mass looting of retail outlets and led to a large decline in expenditure and in consumption of necessary items like food. With a looming 2017 presidential election, political uncertainty is an investor’s worst nightmare.

GIS has just made it easy!

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As George Davis clearly put it, “Setting a shop in the wrong place is like tying hands behind one’s own back”, Site potentiality (economic potential of a site) is an important factor that influences the success of a business as it determines the number of customer visits. The success of businesses such as service station, laundry, fast food restaurants, retail store and so forth depend on the economic potential of a site in order to maximize their profits through controlling outlets location.

Geography Information Systems (GIS) is a digital mapping system that links data to it geographic location; it organizes geographic data so that a person reading a map can select data necessary for a specific project or a task, for example, a social analyst can use base map of Nairobi, Kenya and select data from KNBS to add data layers to a map that shows resident’s level of income, ages and employment status.

Organizations are increasingly using GIS for planning and analysis, asset and data management, operational awareness and for tracking their workforce. Using ESRI GIS software, a business is able to maximize the ROI, as the tool is able to go beyond the standard data analysis.

How GIS can help to maximize the economic potential of a site

The quality of a site is associated with type and volume of traffic flow passing through a given site, road direction, road intersections and visibility from the road. By using GIS to capture traffic counts data, it becomes easier for a business to:

  1. Identify the best location site of business based on traffic pattern.
  2. Analyze how traffic may impact store construction.
  3. Schedule staff hours according to peak periods of traffic.
  4. Identify traffic growth and decline might impact a potential site.

Population density is the number of people living in a unit area or volume, a larger population density implies a larger market size. It has been proven that a large market stimulates potential entrepreneurship and provide workers with a strong incentive to start a business. Through GIS, a business can cluster areas according to their population density, also, it can determine the population distribution according to social-economic variables. For example, if a children’s store business is considering to open an outlet store, it can map the population of people with children being its target age group.

GIS is also used to analyze the level of competition in an area, by mapping the number and the location of similar businesses in an area. Moreover, a business can know where exactly the relevant distribution channels are located, so that it can then start to build a relationship.

In marketing, GIS can be used for sales territory planning, implying that a business will know how to deploy sales staff such that they don’t overlap each others’ territory.

 

 

 

 

 

A great leap forward of the digital farmer in Kenya

Kenya is categorized as an agricultural based economy, and this implies that agriculture is the backbone of the economy.  This cannot be further from the truth as there are over 75% of Kenyans  who make some part of their living from agriculture, and the sector alone accounts nearly 25% of the Kenya GDP: Small-scale farmers are more than 7 million out of which, more than 5 million have an access to a mobile phone.

Over the years, the overarching challenge that has plagued the small-scale farmers is low productivity that stem from lack of access to markets, credit and technology. In recent years, the challenge has been compounded by the volatility of food and energy prices.

The development of globalization has led to proliferation of modern information and communication technologies; consequently, this has led to Kenya being dubbed as Africa’s “Silicon Savannah” as it currently leads the region in digital technology innovation, key among them being the growth of mobile money transfer: This can be traced from the increase in the number of mobile phone users. For the small-scale farmers, access to mobile phones has also enhanced communication, lowered marketing cost, enabled technology for other innovations and enhanced agricultural extension outreach. Here are some ways in which digital technology is transforming agriculture in Kenya.

Rural financing:  Kenya, is a global leader in mobile money with over two thirds (60%) of mobile owners using their mobile phones to send or receive money. Access to mobile money financing has allowed small-scale farmers to access different sources of credit.

Access to market prices: Mobile phones have allowed farmers access information about prices of crops even before they  travel to the markets. This has been enabled by the SMS text messaging service provided by the Mobile Service Organizations (MNOs). Through this service, farmers are now able to get accurate wholesale and retail prices of their crops and thus enhancing negotiations with traders. SokoniSMS64 is one of the popular platforms.

Micro-insurance. Kilimo Salama is an insurance product that is designed for Kenyan farmers to insure their farm inputs against drought and excess rain. Insurance can be purchased by individual farmers from registered vendors who have been equipped with special camera phone loaded with a special software. At the time of sale, the salesperson takes a picture of a special bar code on the products that is sent to the farmer’s phone confirming their insurance policy.

Extension services: Farmers are accessing information about crop diseases, land management and pest control through mobile technology.

iCow: Is a mobile phone app that is designed to support farmers get agricultural information, advise on how to grow crops more effectively, how to manage livestock and how to get better market price.

Why nudging is here to stay!

Behavioural economics is a discipline that applies behavioural science and psychology in assessing consumer behaviour. It emerged as a reaction to the assumption made by traditional economist that individuals were always rational. However, through integrating behavioural science and psychology to study how different individuals make decisions, researchers found out that people are not rational and that they tend to make biased choices: Also, emotions have a high impact on how people make their decisions. For example, most people know that smoking is harmful to their health but won’t stop it, people are concerned with their health but won’t stop eating junk foods, they are concerned about the environment but won’t utilize dustbins.

A nudge is an aspect of choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. It steers people in a certain direction but also allows them to go in their own way: A message that reminds people when to go for a clinic checkup is a nudge, an app that benchmark the household usage of electricity is a nudge, an automatic payment system is a nudge. Research has found out that small alteration in choice architecture can produce a large behavioural change. For example, using a simple message to reinforce a social norm was found to influence electricity consumption.

Even though it is a new concept, governments around the world are incorporating nudging as a tool for influencing behaviour change alongside traditional methods such as restrictions, incentives, disincentives and persuasion. In the year 2010, the government of the U.K. set up the cabinet office’s behavioral team  that would help try improve public services and save money. One of their breakthrough was a project that cut the high drop rate on government-subsidized adult literacy by 36% simply by sending students a personalized text message every Sunday night that read: “I hope you had a good break, we look forward to seeing you next week. Remember to plan how you will get to your class. Manchester College.”

Different such nudging techniques can help in policy implementation.

Biases in decision making and how to nudge your audience

  • The power of defaults: Default options heavily influence individual’s behaviour. It refers to the outcome of what is more likely to happen if an individual was to make a choice. In Australia, it is assumed that everybody will donate organs and those wishing to opt out follow a procedure to get de-registered. In Denmark, citizens wishing to donate their organs must follow a procedure to get registered. Organ donation rate in  Australia is more than  90% while in Denmark, organ donation rate is less than 5%.
  • Hyperbolic discounting: People would rather get less today than more in the future. For example, get KES 1,000 today rather KES 2,000 at the end of the month. This is either because of difficulties in projecting the future or is a result of the human tendency in undervaluing the future. To mitigate the bad consequence of this behaviour, people need to be encouraged to focus on short term goals rather than long term goals. For example, save KES 50 every day rather than KES 50,000 in a year.
  • Loss and risk aversion: An outcome that is presented as a loss is more likely to have a great psychological impact than when it is presented as a gain. If you need to change people’s behaviour, you need to explain to your audience the benefit and gains of the choice that they will make, and contrast it with the losses so that there is a fair assessment.
  • Social norms Individuals have a perception that the society expect them to behave in standard way; consequently, they usually conform with this expectation. To influence their behaviour, use of peer pressure becomes very effective. Example: In UK, households were sent letters to encourage them pay taxes on time with a statement, “9 out of 10 people in UK pay their taxes on time”. The outcome was impressive.
  • Feedback of perceived progress: Providing feedback on how an individual performs is more likely to influence his performance. The driving force behind the motivation is perception. Example: People who are queuing in a line that is moving are more patient than those who just take number and wait.
  • Compromise effect: When an individual is presented with three choices that vary in dimension like quantity, price and quality, they tend to choose the one in the middle.  Example: When selling three coffee beverages of different sizes, the medium size will become most popular.
  • Automatic enrollment: Automatic enrollment of people in a benefit program but allowing the option of withdrawal increases the likelihood of participation.
  • Reminders: People have a lot on their mind and may fail to engage in certain obligations e.g. paying bills, taking medicines, the reason may be because of competing obligations. A short reminder can have a significant impact.
  • Goal visibility: When people are in the middle of a goal-oriented task, they work hard to it. Moreover, making the goal visible increases motivation. Example: When parents put their children’s photographs on saving envelopes, they will increase the saving rate for their children’s education.
  • Framing: Shillings a day: Presenting a large amount of money as an equivalent of amount in shillings per day will increase the acceptability of the expense. Example: If instead of telling individuals to contribute KES 350 and instead framing it as “less than one shilling a day”. Chances are that donations will increase.
  • Eliciting implementation intentions: “Do you plan to save?’. Are the kind of questions that elicit implementation. Also, emphasizing on people’s identity can be effective. “You are about to retire, as your age suggests…”.

 The nudging process

For an effective nudging strategy, one need to incorporate the following steps.

  1. Audit the current behaviour: Map the current reality and take into consideration the behaviour itself and factors like that influence the behaviour.
  2. Target a behaviour: A target behaviour is identified and defined, insights are generated that will determine what motivators or levers will guide a target audience towards a particular behaviour.
  3. Intervention design: In this phase, insights gained from current and target phases are matched with nudging techniques that will guide the target audience to exhibit the intended behaviour.
  4. Pilot and monitor: Interventions selected are piloted and monitored with a sample population alongside randomized control groups.
  5. Evaluate: The pilot is evaluated to measure success of the nudge against previous baseline.
  6. Feedback: Lessons learned in pilot and evaluations inform on whether a reassessment of current reality is necessary.
  7. Scale-up: If the nudge intervention is successful, it can now be scaled up to have a wider reach impacts.

 

Microtargeting: A catalyst for transforming Kenya’s business and political landscape

In Africa, Kenya is second behind South Africa in terms of the size of population that has access to the Internet. Accordingly, four out of ten Kenyan adults use internet on a daily basis which is slightly behind South Africa which stands at 42% of the adult population. This is according to the most recent Pew Research which was conducted in 40 countries across the globe.

The estimated number of internet users stands at 26.1 million, making Kenya the 21st most connected population in the world. Of those internet users, almost all can access the internet through their mobile phones. This meteoric growth of internet usage can be attributed to the affordability of the internet service, growth in the number of social media users and the increasing uptake of online shopping.

Currently, there are over 5.3 million active Facebook users, almost 2 million active Twitter users and slightly above 1 million active LinkedIn users. Interestingly, Kenya came fourth in a ranking of countries whose citizens tweeted most in the year 2015, accounting a total of 76 million tweets.

As internet use continue to be adopted by Kenyans, the business and political landscape is going to change forever; and not to be left behind in the dawn of the information age, businesses and political groups are slowly adapting microtargeting as a tool for identifying and interacting with their customers and their voters.

What is microtargeting?

Microtargeting also referred to as micro-niche targeting is a marketing strategy that utilizes the use of consumer data and demographics to identify the interest of individuals or a small group of like-minded individuals in order to influence their thoughts and actions. It is a new tool for candidates and campaigners that answers the most fundamental question about: Who support my candidature? Where do I find them? How do I persuade others to support my candidature? These types of questions are hardly answered through the traditional ways of marketing.

The most important goal of microtargeting is to create customized winning messages and proof points to individuals while accurately predicting their impacts; It is used for the basis of aligning messages, offers and entire customer experience with individual customers. The insights generated inform communication activities, product development and operational activities e.g. setting up of call centers.

The practice can also be used to identify consumer taste and behaviors: Surfing through the internet leaves a trail of browser history that allows marketing companies to glean insights into personal interest, e.g. which do the sites do you mostly visit? Do you read online articles? Do you subscribe to online articles? Do you do online shopping?

Why is microtargeting important?

Traditional method of advertising more so the mass media is highly inefficient, example is a car advertising which is viewed by those who are not willing to purchase a car. Also, the mass media is declining and is being replaced by a more fragmented and a customer influenced environment; consequently, it is increasingly becoming difficult to saturate consumers with a single offer.

As media fragment, it becomes imperative to move away from one idea or execution to multiple messages that are tailored to individual needs.

Microtargeting and businesses

As a business, you can take advantage of microtargeting by utilizing the following.

  • You can use email marketing software to send personalized message to your audience.
  • You can look at your audience online behavior and use it to predict future behaviour.
  • You can single out consumers in terms of demographics and target them using different messages.

Using the consumer data that you have gathered to identify individuals and specific small groups of people; microtargeting will help a business target people who will certainly purchase a product or a service.

Personalization

Businesses are now using microtargeting to send personalized messages to people they know. As when you have name and contact information, you can send personalized messages to individuals, this will get people to read your messages and going a step further, you may send surveys from the list you have gathered in order to get specific information.

Profiling online customers

You can profile your customers using the following approaches.

  • Psychographic profiling: You can profile your customers based on their interests.
  • Social profiling: This can include fields like; relationship status, favorite activities and occupation which are managed through social profile management. This may help you answer questions like: ‘Are the users who like to spend most of their free time with their families more likely to use their credit cards for shopping than those that don’t?’
  • Behavioral profiling: This is derived from the online behavior of your audience, are they filling online forms? Subscribing for a newsletter? Making online purchase? With the data, retargeting personalized messages can be sent by the marketers. Moreover, websites can incorporate the ability to place cookies in user’s browser for further follow ups, e.g. displaying specific ads at any time users visit their websites.
  • Customer life-cycle data: Customers lifecycle is mostly associated with demographic data, e.g. you can predict the enrollment of university students in Kenya based on the current enrollment of high school students. You can tell whether a customer has children. Depending on the business, demographic information is important when you want to tighten your target audience. Key indicators like address changes, purchase of expensive goods, first purchase of furniture’s can indicate a new customer change in life pattern.

Microtargeting and politics

Political campaign paradigm is shifting and at the heart of this shift can be attributed to the changing face in marketing. By integrating customer relationship, management technologies, advanced marketing techniques and traditional political targeting, microtargeting sequence each individual voter’s unique political background and identify their most likely political attitudes and behaviours. It sharpens, and increases the efficiency of a campaign’s direct contact plans, allowing individually targeted messages delivered by the proper messenger. Microtargeting is a powerful tool because if voters’ issues are identified correctly, campaigns can have a powerful effect on how voters judge candidates in an election; it has been demonstrated that campaigns can leverage personal experience to garner support from voters who would otherwise vote for opposing candidate.

During the USA presidential campaign, microtargeting techniques were successfully used to interact with and appeal voters on individual basis. To achieve this personalization on a massive scale, detailed information on a massive scale is collected about individual voters and predictive analytics used to model voter sentiments. This enabled campaign leaders to go beyond standard political party oriented messages and communicate with voters about specific topics to influence voter’s decision.

Effectiveness of microtargeting in political campaigns

The type of car you own, the marital status, the age, gender and religion may have something to do with how you vote. By using a large pull of data comprising of voter information, life cycle information, lifestyle information, financial data, consumer behavior, geographic data, political attitude and reference. Microtargeting can be used to segment each voter into a number of groups each with a unique combination, and with the current technological development, it is now possible to; 1) digitally store and archive massive amount of raw data, 2) grow the quantity and the quality of multi-sourced consumer information, 3) ability to link multiple datasets such as voter files and geographical data, 4) analyze, search and discover new meaningful patterns and relationships of strategic and tactical value: As technology improves in terms of speed, efficiency and cost effectiveness, microtargeting will improve and become a potent tool

Political strategists are gathering and buying data and then match with voters’ rolls: The data received has detailed information about the behavior of a voter and what do they do when they are surfing online.

Changing land scape in advertising

Broadcasting in mainstream channels is becoming a thing of the past, and is being replaced by hundreds of channels, hundreds of radio stations and thousands of websites and blogs. This fragmentation of media has placed a high premium on one-on-one direct marketing.

Consequently, political strategist need to customize their messages, issues and themes that are tailored to individual voter’s attitudes and preferences.

A growing need for market segmentation in Kenya

In today’s globalized world, businesses are finding it hard to survive for a long period because of competition: As a result, it is increasingly becoming important for businesses to find the best marketing strategy that will ensure a stable ROI and that will help a business achieve a competitive edge over its competitors.

A successful marketing strategy is enhanced through the use of Segmentation, Targeting and Positioning (STP):  STP suggest that a market is made up homogeneous groups that have distinct needs and desires called segments: The purpose of segmentation is to concentrate the marketing energy force into those segments which the marketer believes that he can satisfy better than the competitors; he then position the products to the targeted markets. However, it is worth noting that the segments chosen should:

  1. Differ in ways that allows their size and accessibility to be easily measured.
  2. Be large enough to justify their separate targeting efforts.
  3. Be uniquely reachable through communication media and marketing channels.
  4. Be relatively stable and not diminishing over time.

Steps in STP:

  1. Identify the needs of the segments: Involves answering the questions on what are the needs of the customers.
  2. Develop segment profile: Use different segmentation variables to create segments e.g. age, gender, attitude.
  3. Develop a measure of segment attractiveness. This is done through evaluation of the descriptions of the segments that you have identified e.g. size, growth rates, brand loyalty etc., e.g. scoring.
  4. Select target segments: A business decides on which segments are most appropriate. This is based on firm’s strategy, attractiveness of the segments and competition.
  5. Develop a positioning for target segments: A firm identify how to position their products/brands in the target market. Positioning helps want to provide value to customers.
  6. Develop a marketing mix for each segment: What is the design? suitable price? distribution channel? promotional program?.
  7. Review performance: Revisit the performance of various products in order to reassess their view in the market and look for new opportunities.

Basis of market segmentation

Market segments can be based on:

  • Demographic variables: Demographic variables may include age, gender, education and income.
  • Geographic variables: Mostly based on the region, climate, population density and neighborhood.
  • Psychographic variables: Include attitude, opinion, interest and values.
  • Behavioral variables: Include purchase habits, purchase frequency, brand loyalty and channel usage.

Targeting strategies.

After segmentation, a company need to direct marketing energy to particular consumers: The strategies employed can be in the basis of:

  • Aggregation strategy: Where a company treats its total market as a single segment.
  • Concentration strategy: Where a company focuses on one segment within the total market.
  • Multiple segment strategy: Where a company focuses on two or more segments of potential customers.

Market positioning

A company then decide on how to position itself in the market; this can be in the basis of.

  • Value proposition.
  • Price.
  • Product design.
  • Distribution channels.

References

  1. Segmenting and Targeting Your Market: Strategies and Limitations

http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1238&context=articles

2. The Marketing Process

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwjKrNDc_NfQAhWIcRQKHcGVAQMQFghIMAY&url=http%3A%2F%2Fmqm.aast.edu%2Fstaffcourses%2F231_35305_MD211_2013_1__2_1_The%2520Marketing%2520Process-%2520STP.pdf&usg=AFQjCNEZQmnm2C4qdzz7MsA8iQuzeaCxqA