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Unseating a dominant rival
Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Kenya is replete with examples from Safaricom, EABL, KDN, Access, Scangroup, Kenol, Bamburi, Nation Media, Serena etc etc.
I've come to believe it's very difficult to unseat a dominant rival. I think it may be fruitful to realign portfolio to one of these guys. It cuts down the hustle to just checking the state of the country / economy....then
Come to think of it, you always make money at the end with a dominant rival. Appreciate thoughts...
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Allow me to further advance my case. Looking at some monopolies in US from around 1997 [when I first looked at shares] and approximate rates of return:
Microsoft x10
Monsanto x7
WallMart x10
And now looking at local examples of monopolies from around 2001 and estimated rates of return:
EABL x4
Bamburi X3
Nation x7
Serena x4
KPLC x15
KQ x9
Heey, it's not perfect and maybe there are 1/2 exceptions. So, does it make a compelling argument?
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Rank: Veteran Joined: 6/8/2007 Posts: 675
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I think dominant players also have the cash and muscle to buy off or scare off upcoming rivals. Look at what microsoft did, with all the antitrust stuff. Look at EABL and Castle. Well,Nation tried to shake off Nairobi Star with the Daily Metro, but failed. However as an upcoming guys you need shock absorbers (or deep pockets) to survive the onslaught once they start getting @ you. As an invetsor, though, you just put your money on the dominant player! Form is temporary, class is permanent
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Hmmn interesting. In my opinion a dominant player will often try [perhaps urged on by hubris] to conquer all near spaces, often with unforseen results:
-Safaricom goes into data
-Nation goes into radio, daily metro
-Microsoft goes into search
Nevertheless, despite the outcome in these new spaces, they remain secure in their dominant space, and this is where the money comes from anyway. So making the case for return in longer term and hence a buy proposition
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Rank: Elder Joined: 2/7/2007 Posts: 11,935 Location: Nairobi
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@Muganda, Kenol...??....Total maybe....CMC (Mukiha must be smiling)..and BAT too. Nothing great was ever achieved without enthusiasm.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@Njung'e agreed; infact CMC x4 and BAT x6 since 2001
Kenol maybe one of those exceptions that go againt any supposition. However, a quick check shows that considering there was the 10:1 split in 2004, investment in 2001 would still x6 return - or perhaps I'm mistaken.
I tell you these dominant guys may be a gold mine.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@Njung'e...now who dropped your apostrophe? Have you ever read "I Know It When I See It" by John Guaspari? Look for it, you will see what I mean....recommended reading for Wazua.... Back to CMC...I am quite pleased...I sold off half my holding in Mar 2008 at between 14.20 and 14.25. Put some of the cash in CFC (ouch!! that has been painful)... However, my CMC paid back a looooooong time ago....my average purchase price is below 5cents!!!! May be I should get some more at the current level of 11.... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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From a marketing point of view; if you want to unseat a dominant rival, you have to do it quietly and attack from the most unlikely side...."Guerrilla Marketing" as described by Al Ries and Jack Trout... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@mukiha, well read. Hmmn must pick up at least 1 of the 2 tomes then share notes. So I take it you ascribe to my preposition - a dominant buy is almost a sure buy!
As regards guerilla marketing, any successful examples you would like to share...
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Rank: Elder Joined: 2/7/2007 Posts: 11,935 Location: Nairobi
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@Muganda, They are....but patience here is very important.This is not stuff for speculators.Maybe we should ask Mukiha when he bought his first lot of CMC and you surely will get the picture.....and you sound like someone i know.One of your name starts with a T?Sorry if i have made a silly guess...  @Mukiha, I'll try and get those books.....Hope Al and Jack do not teach how to bomb your competitors....lol. Nothing great was ever achieved without enthusiasm.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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I hear you @Njung'e, and I also believe the secret to success is (T)iming. I wait to hear what @Mukiha says, it may just be the answer to Safaricom's dominance for example... And now for a riddle - though one of my names once started with a (T), not even my middle name has a (T) in it now...?!#
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Rank: Elder Joined: 2/7/2007 Posts: 11,935 Location: Nairobi
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@Muganda, Very poetic....i get you though....There are some serious competitors in the Telecom sector.You cannot bet for dead that Safcom will be alive tommorrow,can your? Nothing great was ever achieved without enthusiasm.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@Njunge it's been amazing to see what has happened after Orange, YU etc. came on ground. In fact, the only thing that makes Safaricom's future uncertain is government [regulation] which is last resort when it comes to true monopolies.
But nothing is for certain, but a dominant player for 6 years may often times be better than a non-dominant one for the same period.
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Rank: Elder Joined: 2/7/2007 Posts: 11,935 Location: Nairobi
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I agree but then 6 years can be undone by Mukiha's "guerillas".In reality,if we were to list dominants,Safcom would certainly be at the bottom. Nothing great was ever achieved without enthusiasm.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@Muganda; Equity bank jumps to mind.....at a time when the lower income group was deemed "un-bankable" by the major banks, EB went to that segment deliberately and in 10 years, they are looking at the possibility of being the largest bank in the country on all counts [Assets, customers, branches, total profits] When EB started making major in-roads, the "Big Five" looked down at the strategy...actually laughed at it in the golf clubs! Then EB announced that they have signed up the one-millionth customer..... ==== Another example would be Kapa Oil with their Kasuku brand. When they started packaging it in plastic containers, Unilever directors laughed so hard...they could be heard all the way to Mlolongo!!! "Who, in their right mind would buy cooking fat in a plastic container?" They wondered Ten years later, Unilever had to sell off the previous market leader [KIMBO] in a bid to cut losses..... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Ugh!!!!! I hale this auto correct function that changes any ""L-O-L" into a smilie. I wrote: "heard all the way to M-l-o-l-o-n-g-o!!! @WAZUA: Please remove that function!!!!!!! Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Well said sir, guerilla marketing works, and 'those whom the gods would destroy, they first make proud'...
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Rank: Veteran Joined: 6/8/2007 Posts: 675
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I think a big blow for Safcom would be number portability. IMHO, it is the only thing that makes people stick to one network, for fear of going mteja. If/ when number portability becomes a reality, then things would get thick very fast for them. However MPESA would still keep some good numbers for them. As for the other interesting examples by mukiha, I must say.. truly.. it is the paranoid that survive. Form is temporary, class is permanent
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Rank: Administration Joined: 11/19/2009 Posts: 679
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Dear Mukihia, Quote:Ugh!!!!!
I hale this auto correct function that changes any ""L-O-L" into a smilie. Issue resolved. To indicate lol members will now have to use ": - D" without spaces  Thank you for being a part of Wazua.
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Rank: Veteran Joined: 7/8/2008 Posts: 947
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How did they become dominant in the first place????
As Muhika says you need a market above everything else. To unseat the dominant rival look for a niche market and grow from there or become innovative, market and provide a better cheaper service/product to his market!
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