8. Measuring Market Opportunities- Forecasting and Market Research


  1. ^ only one telephone line had been installed per hundred residents
  2. ^ huge waiting time between 7 and 10 years
  3. ^ research have been conducted
  4. ^ credible business plan need to be developed
  5. ^ sales forecast
  6. ^ attractive market for payphones
  7. ^ 500,000 potential subscribers
  8. ^ delays in receiving dial tone
  9. ^ High Rate of Inflation from Tanzania
  10. ^ small private comms companies
  11. ^ no substitutes for classical phones except the cell phones

African Communications Group: Bringing ModernTelecommunications to Tanzania
In Tanzania in the early 1990s, many towns and villages had no access to telecommunicationsservices.
Even in the capital, Dar es Salaam, a city of almost 2 million people, onaverage [1] only one telephone line had been installed per hundred residents.

The waiting time to obtain service from the Tanzania Telecommunications Company Limited(TTCL) was 7 to 10 years.[2]

Monique Maddy and Côme Laguë, two recent MBA graduatesfrom a leading US business school, saw in these and other market and industry data anopportunity not only to bring telecommunications services to Tanzania, but also longterm to bring a variety of telecommunications services – pay phones, paging, voicemail, and other voice and data communications services – to sub-Saharan Africa.

After three months of [3] on-site research in late 1993, Maddy and Laguë decided that buildinga pay phone network in Tanzania was the most promising opportunity for entering thismarket.

They knew that, to obtain financing as well as the necessary licenses to operatein Tanzania, they would haonve to prepare a [4] credible business plan.

They also knew that among the most critical elements of any business plan was the sales forecast.

Not only would the sales number be the starting point from which all the other numbers in theplan would be developed, but it would be a key litmus test for prospective investors.If the [5] sales forecast were well supported and credible, Maddy and Laguë believed therest of the pieces would fall into place. But how could such a forecast be prepared withany confidence for a largely new and underdeveloped market?

Market Analysis
As a result of their research, Maddy and Laguë had concluded that the [6] market forbuilding a pay phone system in Tanzania was extremely attractive.

In addition tothose on the waiting list for phone service, there was huge ‘unofficial’ demand fromindividuals who had not bothered to apply for service.

Maddy and Laguë estimatedthat, by 1996, [7] there would be 500 000 potential subscribers for telephone service, and even with a planned doubling of its capacity, TTCL could satisfy only perhaps half thisdemand.

Issues with the current system :

Also, on most Tanzanian phones, [8] it took several minutes to receive a dial tone. Once a dial tone was received, it could take 40 minutes to connect with citiesde inAfrica or 20 minutes with Europe.

Of the 300 coin-operated pay phones in Tanzania,many were inoperative, and some took only coins that no longer were in circulationand were virtually [9] worthless due to Tanzania’s high rate of inflation.

The market forphone service looked promising.Industry AnalysisTTCL, Tanzania’s central telephone company, was state-owned, though it was expectedthat TTCL would be privatised at some point. TTCL offered neither paging, fax, cellular,nor data services.

There were several [10] small private telecommunications companies,including one radio-calling service with 105 subscribers, and two high-end cellularphone companies.
New licenses were likely to be issued in the next couple of years forcellular services, paging, and pay phones, and Maddy and Laguë hoped to be amongthose who would win these licenses.

Maddy and Laguë’s analysis told them that industry conditions overall were attractive.

The bureaucratic TTCL did not seem likely to be a very vigorous competitor. Thoughnew competitors would likely enter the market, Maddy and Laguë’s head start wouldput them in a good position. Numerous suppliers were eager to expand in the Africanmarket, and buyers currently had few options to obtain phone service of any kind.
There were [11] no substitutes other than cellular service, which was extremely expensive,due to the high cost of building the infrastructure.
Consumer Needs and BehaviourNot only was Tanzania’s telecommunications infrastructure poorly developed, but thesame also was true for its electricity and water services and its roads.
It took three daysto travel from Dar es Salaam to Mwanza, Tanzania’s second-largest city, only 751 milesaway.
Most telephone calls in cities were made by business people, who accounted for 70per cent of telecommunications revenue.
Because most residences had no phones,misuse of business phones was common. Employees were generally required to usepay phones for all types of long-distance calls. Most retail shops – known as dukas,which were makeshift open-air stalls made of wood and tin – had no phones. Maddyand Laguë believed their pay phone network, together with the voice mail and pagingservices they planned to offer, would provide more efficient ways of doing business tothese small merchants who constituted the backbone of the Tanzanian economy.
Thebiggest challenge they would face would probably be to educate Tanzanians on howto use their proposed system.
Since the literacy rate in Tanzania was about 70 per cent,they felt optimistic about their ability to do so.

The Business IdeaThe idea for African Communications Group (ACG), their proposed venture, was innovative,but simple.
Maddy and Laguë would build a network of pay phones based on
wireless radio technology, with a central platform for routing calls and connectingwith the TTCL network.
The phones would accept prepaid cards sold in retail establishments
located near the phone booths.
The retailers would get a margin on the sale of the phone cards and might help watch over the phones to discourage vandalism.
Paging and voice mail would soon be added to the system at low incremental cost.These features would provide quick communication to parties that did not have regularphone service.
Subscribers could receive voice-mail messages and leave messages
for other voice-mail subscribers.
The pagers could be used to signal the subscriber that a message had been received.
Determining Market Potential and Preparing a Sales Forecast
Maddy and Laguë liked the opportunity that lay before them, and they felt their
business skills and contacts made them a good team to pursue it.
But how could they translate all the market and industry data they had gathered into a credible estimate
of market potential and an evidence-based sales forecast? Proving that the marketand industry were attractive and that consumers would see benefits from using theirnetwork was one thing.
Coming up with hard numbers for market potential and sales revenue was quite another.

  1. client contact systems
  2. collector bias
  3. competitive advantage
  4. competitive intelligence
  5. computerised reorder system
  6. consumer behaviour
  7. data sources
  8. evidence based forecast
  9. experienced user
  10. internal records
  11. just in time
  12. logistical alliance
  13. market potential
  14. market segmentation
  15. market segments
  16. marketing program
  17. marketing research
  18. mass market
  19. mass market strategy
  20. michelin; us west;
  21. micro segmentation
  22. middleman
  23. modified rebuy
  24. multi-functional sales teams
  25. multilevel selling
  26. multiple buying
  27. multiple level relationships
  28. mutual trust
  29. narrow market segment
  30. narrow niche
  31. nationalisation of producers
  32. nerve center
  33. new task buy
  34. nine west group
  35. observation;direct observation' tanzania mobile;
  36. on-time delivery
  37. opportunity; research
  38. order handling
  39. organisation market
  40. organization marketing behaviour
  41. organizational behaviour
  42. organizational customers
  43. organizational demand
  44. organizational market
  45. organizational purchasing behaviour
  46. organizational purchasing process
  47. paperless exchange
  48. parity pricing
  49. personal selling
  50. personal use
  51. political risk
  52. potential market; penetrated market
  53. pre-delivery inspection
  54. pre-sale service
  55. prestige buyer
  56. pretender
  57. primary data
  58. procurement costs
  59. purchasing criteria
  60. qualitative data
  61. qualitative research
  62. quality assurance
  63. quality standards
  64. quantitative data
  65. quantitative research
  66. research objectives
  67. retention programme
  68. routine purchase
  69. sales forecast
  70. semantic differentiation scale
  71. sequence of information
  72. shared costs
  73. short term contracts
  74. social construction
  75. status oriented consumers
  76. stock availability
  77. straight rebuy
  78. supplier bargaining power
  79. supplier performance
  80. supplier reputation
  81. survey
  82. tabulation errors
  83. tanzania mobile
  84. target customers
  85. target market
  86. target marketing
  87. technical experts;
  88. test markets
  89. transaction cost
  90. trend forecasting
  91. trusting patron
  92. underlying consumer demand
  93. unethical demands
  94. unstated but implicit assumptions
  95. users
  96. value analysis
  97. value shopper
  98. vertical integration
  99. visceral thing that cannot be trained
  100. wild guess