The geography of Kenya is highly diverse. The Western and Central Kenya is categorized by the Kenyan Rift Valley, Mount Elgon and Mount Kenya. Kenya is present across the equator within east-central Africa, on the Indian Ocean coast. It is two times the total size of Nevada (Central Intelligence Agency, 2014). Moreover, Kenya borders Ethiopia in the north, Somalia in the east, Uganda in the west, Tanzania in the south and lastly, Sudan in the northwest. Additionally, in the northern region, the land is barren while the southwest area is within the lush Lake Victoria Basin. The climate in Kenya differs from location to location, from normally cool daily to at all times warm/hot (Central Intelligence Agency, 2014). Along the coast, the climate is tropical. This implies towards the fact that temperature and rainfall remain higher all through the year. In the coastal regions (such as Mombasa) the air transforms from cool to hot, more or less daily. Moving ahead, an arid climate almost lacks rainfall as well as the temperature ranges extensively as per the usual time of the day or night. Further, for several regions of Kenya, the temperature at daytime increases to around 12 C, almost daily (Central Intelligence Agency, 2014).
Population and Demographics
Kenya has a diverse population that involves people belonging to different ethnic groups i.e. Kikuyu (i.e. 22 percent), Luhya (i.e. 14 percent), Luo (i.e. 13 percent), Kalenjin (i.e. 12 percent), Kamba (i.e. 11 percent), Kisii (i.e. 6 percent), Meru (i.e. 6 percent), other African (i.e. 15 percent) and non-African (i.e. Asian, Arab and European around 1 percent) (Central Intelligence Agency, 2014). Each ethnic group of Kenya involves a huge array of material cultural products taking in cooking utensils, architecture, apparels, textiles, hunting tools, farming equipment, baskets, head rests, shields, mats, art works, sculpture, carvings, etc. (Central Intelligence Agency, 2014). The following just mentions some cultural materials. Nevertheless, the majority of art and craft formations are intended towards the lucrative tourist industry.
The official language of Kenya includes English and Kiswahili, while there are several other indigenous languages spoken in Kenya. The religions prevalent within Kenya involve Christians, Muslims, Traditionalists and others unspecified (Central Intelligence Agency, 2014). The population of Kenya is continuously raising with the highest population to be reported in the age group between 0-14 years followed by 25-54 years (Central Intelligence Agency, 2014). As per the latest estimates the population growth has been estimated to the 2.11 percent in first half of the year 2014, and such speedy rise in population is chiefly because of extremely high birth rates (Central Intelligence Agency, 2014). Moreover, the nation has a higher proportion of males as compared to females.
Kenya has been greatly affected by corruption and dependence on various chief products whose costs have continued to be low (Central Intelligence Agency, 2014). Low infrastructure investment puts at risk long-term position of Kenya as the biggest economy of East Africa, even though the Kenyatta administration has laid high priority on infrastructure development (Central Intelligence Agency, 2014). Global financial lenders, as well as donors, are important for the economic development and growth of Kenya. Unemployment has been estimated to be high at about 40 percent (Central Intelligence Agency, 2014). The nation has faced serious budget deficits, high currency depreciation and inflationary pressures, however, has recovered subsequently to low worldwide fuel and food costs. Latest terrorism within Kenya together with surrounding regions threatens important tourism sector in Kenya. Kenya, alongside adjoining South Sudan and Ethiopia, aims to start development on oil pipeline and transport corridor to the Lamu port during the year 2014 (African Studies Center, 2014).
Moreover, the economy of Kenya is highly reliant on agriculture. 75 percent of Kenyans generate their earnings from farming, manufacturing for both local consumption as well as export (African Studies Center, 2014). Moreover, Kenya has been directed by a sequence of different constitutions during the period of past forty years. The foremost constitution of Kenya was developed during a constitutional conference organized within London during 1962, at the time when Kenya was still regarded as a colony directed through a governor general (African Studies Center, 2014). Moving ahead, even though the energy sources, as well as management of Kenya, are superior as compared to that of the neighbouring areas, charcoal and burning wood even now amounts for more than 70 percent of domestic energy (African Studies Center, 2014). Furthermore, Kenya is highly reliant on petroleum products and imported oil for meeting its energy needs.
Kenya surpasses East Africa in industrialization. Noteworthy private-segment practices have made a contribution towards its superiority, as has a reasonably highly developed framework, which includes widespread transport provisions (African Studies Center, 2014). The spread of market proceeded speedily following independence. The policy of the government official had been to motivate import substitution. Thus, Kenya has speedily developed several segments offering customers products such as tobacco and beverages, food items, textiles, petroleum items, electrical tools, printing, paper products and confectionery (African Studies Center, 2014). Export revenues generate chiefly from agricultural crops such as tea, coffee, sisal, sugarcane, pyrethrum and lastly, horticultural products. Several of these items have faced changes in manufacturing and price within the global marketplace. Several Kenyan products are exported to nations of the European Union member, particularly the United Kingdom (African Studies Center, 2014).
Kenyan cuisine takes in ugali, chapatti, pyrethrum, githeri, Nyama Choma, goat, stews, samosas as well as sukuma wiki (African Studies Center, 2014). Kenya’s most valuable natural assets are rich agricultural land and a unique physiography and wildlife. The highly diverse wildlife is a key draw for the tourism industry. The country is not adequately effective with mineral resources (African Studies Center, 2014). In Kenya, the Mineral resources presently exploited include gold, soda ash, limestone, salt, fluorspar, rubies and garnets. The water resources of Kenya are likewise under high pressure. Kenya depends greatly on the level of hydropower (African Studies Center, 2014).
Kenya experiences serious interconnected environmental issues, taking in deforestation, desertification, soil erosion, degraded water quality, water shortage, domestic and industrial pollution and poaching (African Studies Center, 2014). Moreover, water resources are under high stress from agricultural chemicals as well as industrial and urban wastes and utilization for hydroelectric power (African Studies Center, 2014). A deficiency of water is likely to pose an issue during future years. The issues of water-quality in lakes, taking in water hyacinth infestation within Lake Victoria, have made a contribution towards a considerable decrease in fishing outcome and put at danger fish species (African Studies Center, 2014). Forestry output also has decreased due to resource degradation. Moreover, overexploitation during the last three decades has trimmed out the nation’s timber resources by around one-half. Presently just 3% of the land is forested, as well as around 5,000 hectares of forest are destroyed every year (African Studies Center, 2014). Such loss in forest increases the level of erosion, flooding, silting of dams and lastly, biodiversity loss.
Soccer is a highly renowned sport and observer entertainment. Moreover, teams are developed by ethnic groups, like Gor Mahia, the armed forces, a Luo team, the police, and through companies as well as parastatals, like Kenya Posts and Telecommunications and Kenya Breweries (African Studies Center, 2014). Boxing is also a highly known competitive sport. The foreign policy of Kenya is highly observed with respect to its economic and political moderation and also of its incessant dependence on the Western globe (African Studies Center, 2014). Further, its highly considerable global connections are with the East African Community, the Organization of African Unity and the Commonwealth of Nations (African Studies Center, 2014). Uganda, Kenya and lastly, Tanzania have tried twice for uniting in a regional company as they attained autonomy (African Studies Center, 2014). In every situation, the countries desire a loose federation highlighted through an economic common marketplace.
Competitive and Environmental Analysis
The Regal Cinema would be set up in Mombasa area. Here the customers frequently visit cinemas and very much fond of different forms of entertainment. The transportation and communication systems are well organized in this region. Means of communication and transportation are quite well organized in this area. There are several other cinemas also in this area as Kenya cinemas. Based on the parameter of average income of the labour force of a country, reports of McKinsey & Company reflect that, over the past decade, the spending by population of Kenya has increased. But as the wage rates do not match the inflation rate the middle class population of Kenya reduced from 27 percent in 2005 to 18 percent in 2010 (The Norwegian Council for Africa 2011). The wage earning middle class though earns a substantial amount to make both ends meet; they have the disposable income to buy lifestyle products and make lifestyle expenses like spending in theatres..
Transportation and communication infrastructure:
The physical infrastructure of Kenya is not very well developed. Poor investment in infrastructure coupled with corruption lead to the poor condition of roads badly in need of repairs (Country Profile: Kenya, 2007). The funds approved by World Bank in 2004 were mainly spent on building road infrastructure. Railways are mainly narrow gauge. Mombasa sea port in Kenya serves all the landlocked east African countries. The telecommunications infrastructure rapidly grew in the 2000s with the entry and expansion of the mobile phones industry. The internet usage has also increased considerably (Country Profile: Kenya, 2007).
Value chain Analysis
The value chain of the industry is based on the three major aspects which include production, distribution and exhibition. Distribution is the intermediaries between the studio and the exhibitors. They take into consideration different aspects of the value chain which includes marketing, logistics, and administration. The third main part of the value chain of the motion industry are exhibitors who display the movies, these include multiplexes.
With a strong focus on innovation in the production and exhibition end the industry can enhance its value to the consumers.
Distribution and promotional opportunities
The strong market penetration focus can lend greater stability to the company’s operations and provides an opportunity to cross-sell its other businesses, leading to better revenue growth prospects. The company should have a strong focus on connecting with its customers. The company needs to focus on creating a brand that has stood for trust, fun and entertainment which has resonated with children, families and adults with a strong focus on different iconic characters and memories of all time. The company can focus on touching the lives of the customers through various divisions. It can use diverse technology so as to connect the lives of the consumers in the innovative ways including the internet and social media. The company can use regular podcasts of its television shows which are going to release. The company needs to have a strong focus on emotional attachment.
Considering the intensity of rivalry in the motion picture industry, we can say that the industry is a highly competitive industry, with different brands operating in the industry. The companies compete on the basis of the quality of the products, customer service and variety of products. The four main companies which are dominant in the industry are Regal, AMC, Kenya Cinema and Carmike. There is only little differentiation in the offerings by these companies. The competition is based on the distance, service, parking convenience, etc.
Market growth estimates
The African movie industry is booming. The market has the potential to grow to a multi-billion dollar market by the next decade. Presently the revenue earned by the African movie industry is a miniscule when compared to the global revenue in the movie industry (The booming African movie market, 2013). Presently the number of movies released in Africa (Nollywood) is only second to Indian movie industry (Bollywood). This can be represented by a pie chart below.
Globally more than three-fourth of the revenues are generated through movie theatres. The number of movie theatres in Africa is inadequate to exploit the potential. Statistics shows that US has forty thousand theatres to cater to its population making it to 120 theatres for every million of the population. In India, the number of theatres is twenty thousand. But in entire Africa the present number of theatres is less than one thousand (The booming African movie market, 2013). So there is an immense opportunity for Regal Cinemas to capture the untapped market.
Taking into consideration the market as well as product offered by Regal cinemas, the most suitable way of market entry would be through direct investment and joint venturing. The company would associate with other retailers and wholesalers operating in the area.
4Ps Marketing Mix
Most marketing executives would find the practice of marketing complex and intricate as it addresses a diverse range of problems in order to ensure the product that is marketed send the right message to its target market (Doyle, 2006). One of the fundamental objective and task of marketing executives is to promote and market the product in such a way that it stands out or in other words it is preferred over its substitutes. In order to do so, practitioners have been relying on frameworks and tools to streamline their thinking process while catering to the marketing problems and one of many tools available is ‘marketing mix’ (Baker & Hart, 2008). Marketing Mix has four ingredients that can be combined and used in numerous ways to achieve the results desired of the products. These four ingredients are also referred as the 4 ‘Ps’ which are Product, Price, Place (or distribution) and Promotion. Enjoying its wide-acceptance, the concept of 4Ps, devised by American Marketing Association, is extensively taught and applied in today’s world of Marketing (Bennet, 1995). In the following section, we shall describe how the concept of Marketing Mix has been used by Regal Cinema when entering Kenya.
The concept of 4P is often defined as a popular marketing approach that helps to attain the marketer requirements by targeting the desired product in the appropriate segment of the market (Doyle, 2006). According to Baker & Hart (2008), Marketing Mix is one of the various available frameworks to understand and place the product accordingly. It comprises of 4 Ps i.e. Product, Price, Place (distribution) and lastly, Promotion. This theory is now adopted by almost all organizations across the world to achieve long term and sustainable competitive advantage (Bennet, 1995).
Regal Cinemas is today recognized as one of the leading Cinema brand across the globe and the paragraphs below will now detail the marketing mix for Regal Cinemas in terms of 4Ps.
- Variety: Regal cinemas would facilitate its customers with a wide variety of cinemas at different prices to suit diverse needs of the customers and different income groups
- Quality: Regal cinema would put in every possible effort services that are of exceptional quality. The major reason behind the success and market recognition is its unsurpassed ambience and quality.
The ticket rates would be decided keeping in mind the fact that they offer good quality and enhanced featured services at reasonable cost. The main aim would be offered best theatre experience to the customers. The ticket prices would be set as per the additional features and superior cinema experience.
The Regal cinema would be chiefly set in metros and big cities due to the huge population of working class located in these regions. The main focus would be establishing them in shopping malls that are greatly visited by the customers.
In order to bring a wide variety of services and their features to customer notice, the company can adopt a number of promotional techniques. The techniques comprise of television adverts, billboards, symbol boards, newspaper and radio. Moreover, employing methods such as personal selling by appointing competent Distributors can add up to company’s sales. Further, providing customers with offers like discount, etc from time to time can also prove to be quite useful. Lastly, advertising through way of social networking websites would also prove to be highly effective.
Target market for Regal Cinema
The product can be best targeted to the customers especially in the two age groups. Firstly, people between the age of 18-24 as they comprise of college and university students and love watching movies. They visit cinema quite often. Secondly, people above age group of 35 as people in this age group look for leisure activities to get relief from their busy schedules.
Suits best to people belonging to the middle to high income groups as the cinema tickets would be offered at different prices offering different features.
Best to be located in metro and big cities due to a huge population of working class located in these regions.
After segmentation, the next step is to target the product in the selected segments. Targeting can involve just one segment or multiple segments or maybe just one product to one segment or all products to all segments, etc. The target group for Regal cinemas would be 18-24 age group mostly including college students and young adults.
Expected market penetration rate and expected
The sales and profit levels for the first year have been estimated to be low and expected to increase by 10% by every passing year. The first year the focus will be on capturing 8 percent of the market share.
Regal cinemas at every level would require following government regulations and policies governing the industry to ensure long-term sustainability and attain market share. Kenya is a part of several international agreements in the areas of human rights and environment. So regulations in these aspects need to be followed in the movie industry too. Previously movie industry in Africa was much closed, and cartels were active in the industry. But gradually the market is opening up. Increasingly the producers are partnering with the movie theatres to ensure maximum reach of a movie and maximisation of revenue (The booming African movie market, 2013).
Budgets and Profitability Analysis
Distribution of advertising budget spends:
African Studies Center. (2014). Kenya- Foreign relations. Retrieved from http://www.africa.upenn.edu/NEH/kforeignrelation.htm
African Studies Center. (2014). Kenya- Agriculture. Retrieved from http://www.africa.upenn.edu/NEH/kagriculture.htm
African Studies Center. (2014). Kenya- Energy. Retrieved from http://www.africa.upenn.edu/NEH/kenergy.htm
African Studies Center. (2014). Kenya -- Sports, Entertainment and Recreation. Retrieved from http://www.africa.upenn.edu/NEH/ksports.htm
Baker, M. J. & Hart, S. (2008). The Marketing Book (6th Ed.), Butterworth-Heinemann
Bennet, P. D. (1995). Dictionary of Marketing Terms, Chicago: American Marketing Association.
Central Intelligence Agency. (2014). Kenya. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html
Country Profile: Kenya. (2007). Federal research division, Library of congress. Retrieved from http://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdf
Doyle, P. (2006). Marketing Management and Strategy (4th Ed), Phil Stern: books.
The booming African movie market. (2013). Retrieved from http://www.smallstarter.com/browse-ideas/entertainment-and-leisure/african-movie- business