Task Two

REPORT

TO : Marketing manager

FROM : Marketing Assistant

DATE : June 5, 2009

SUBJECT : IMPROVING SUPPLIER RELATIONSHIPS IN KASAPA TELECOM

1.0 Introduction

Marketing relationships between suppliers and customers have evolved from a purely
transaction-based approach, because of the need to deliver value throughout the supply
chain, ultimately enhancing the value for the end user. Such approach emphasises the
importance of close and strong relationships between the supply chain members. The
underlying premise for collaboration is that both parties commit to adapting their
behaviour to ensure that the relationship lasts. Suppliers are one of the most important
elements of the entire system of an organization. Supplier relationships in Kasapa is key
to the survival of the organisation as the organization relies on third parties for network
support, logistics, and accessories as it outsource most of its operations.

2.0 Summary of Audit Findings

2.1 Kasapa has various suppliers depending on the type of product of service required

2.2 Once Kasapa is satisfied with a particular supplier it is difficult to change and
thereby resort to straight re-buy purchasing situation

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2.3 Major players in Kasapa purchasing decision are its Managing Director, Chief
Commercial Officer, I.T Manager, Marketing Manager, Finance Manager, Admin
Manager and Sales Manager

2.4 In selecting a supplier for Kasapa Top up Scratch cards, quality of finished products,
security and timely delivery are important to the selection criteria

2.5 The Administrative Manager is the major contact for implementing the purchase of
all Top up scratch cards from the suppliers

2.6 External influencers to the selection of Top up Scratch cards includes the
government as it impress on telecommunication companies to engage local suppliers

2.7. Suppliers may be local or foreign companies

3.0 Benefits of long-term supplier relationships and DMU participation

There is the need for organisations like Kasapa to consider harnessing the relationship
between itself and its customers towards a long-term mutually satisfying relationship.
Kasapa’s activites should be geared towards establishing, maintaining and enhancing
long lasting win-win relationship. This is in contrast with transactional marketing which
focus on a single sale with limited or no follow up by the organization. Industry factors,
aligned technological capabilities with buyers, supplier commitment to buyer and buyer
commitment to supplier are important ingredients to ensuring long term suplier
relationships as illustrated in the diagram below.

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Long-term buyer supplier relationship factors

The long-term supplier relationships have much benefit for Kasapa and also for the
suppliers. These benefits are:

Cost: The cost of acquisition occurs only at the beginning of a relationship: the longer
the relationship, the lower the amortized cost. Account maintenance costs decline as a
percentage of total costs (or as a percentage of revenue). Regular suppliers tend to be
less expensive to service because they are familiar with the processes involved, require
less "education," and are consistent in their order placement. Here suppliers are already
familiar with the kasapa branding guidelines and expectations. The DMU in kasapa
readily facilitates this as they resort to straight rebuy to ensure cost savings which is a
major strategic direction for Kasapa operations.

Competition: Long-term relationships with suppliers leads to competitive advantage as

customer, retailers and distributors are ensure regular supplies of top up cards. This is
very important in an era where customers and suppliers switch products and brands
rampantly. Long term suppliers tend to be satisfied with their relationship with the
company and are less likely to switch to competitors, making market entry or
competitors' market share gains difficult. Kasapa DMU support this by regular

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involvement of suppliers in most decisions which will directly or indirectly affect their
business as existing suppliers are the first ones to be considered before going for
another pitch.

Customer Loyalty: Long term supplier relationship creates increased satisfaction,

retention and loyalty which make the employees' jobs easier and more satisfying. In
turn, happy employees feed back into higher customer satisfaction in a virtuous circle.
This is in the part of the suppliers as well as Kasapa DMU as each party is familiar in
dealing with each other.

Sales: Long term suppliers tend to be less inclined to switch and also tend to be less
price sensitive. This can result in stable unit sales volume and increases sales volumes
as well as profitability and market share.

Promotion: Long term suppliers may initiate free word of mouth promotions and other
joint promotions for Kasapa business. This may lead to increase in awareness and
actual sales.

Profits: Long term suppliers are more likely to purchase ancillary products and high-
margin supplemental products, this leads to increase in profits for the organization as in
Kasapa there is a lot of reciprocity in consideration for each supplier selected.

Employees: Increased supplier retention and loyalty makes the employees' jobs easier
and more satisfying. In turn, happy employees feed back into higher customer
satisfaction in a virtuous circle.

4.0 Perceived Risk

This is concerned with the role of risk or uncertainty on buying behaviour. The level of
risk depends upon the characteristics of the buying situation faced. The supplier can
influence the degree of perceived uncertainty by the buyer and cause certain desired
behavioural reactions by the use of information and the implementation of certain

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actions. The risks perceived by the customer can result from a combination of the
characteristics of various factors: the transaction involved the relationship with the
supplier, and his position vis-a-vis the supply market. Mainly perceived risk which
Kasapa might have in dealing with its suppliers are as follows:

Performance/ Functional Risk– This is the risk associated with the expected
functionality of the product purchased from the supplier. For example, Kasapa will be
concerned if the foil for the top up card after it has been scratched will not distort the
serial number.

Financial Risk –The risk associated with Kasapa realizing cost the of new product and
potential for lost of revenue if the product does not perform as anticipated.

Physical risk – This is to ensure the product does not cause harm to users.

Social Risk– The risk that the pruchase will not meet the approval of an important
reference group or other members of the DMU in Kasapa.

Time Risk– The risk associated with Kasapa’s ability to make time for the negotiations
and due process invoved in the selection and purchase from a supplier.

4.1 Impact of Perceived Risk on Two DMU members

THE FINANCIER

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Performance risk - Risk associated with functionality of the service, this may result in
loses for the organization and the financier in charge of disbursement of funds for the
purchase needs to ensure due diligence is assured before purchasing from the supplier.

Financial Risk –The risk associated with Kasapa realizing cost the of new product and
potential for lost of revenue if the product does not perform as anticipated. Financiers
will be concerned with value for money propositions from the customer. This forms
critical bases during negotiations by financiers.

THE PURCHASER/BUYER

Performance/ Functional Risk– This is the risk associated with the expected
functionality of the product purchased from the supplier. For example, the buyer will be
concerned if the foil for the top up card after it has been scratched will not distort the
serial number.

Social Risk– The risk that the pruchase will not meet the approval of an important
reference group or other members of the DMU in Kasapa. Here the purchaser will be
concerned with the acceptance and approval by other key player like marketing, sales
and finance and will make every effort to seek their approval through the samples
before the actual order.

Time Risk– The risk associated with Kasapa’s ability to make time for the negotiations
and due process invoved in the selection and purchase from a supplier.

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5.0 Recommendations for improving relationships

• Regular communication between the Kasapa and Suppliers.

• Build trust, respect and honesty:
• Empathy required from both suppliers and Kasapa
• Encourage reciprocity by giving business to loyal suppliers and vice versa
• Control sales costs : The cost of winning new business can be high—involving
research, prospecting, progress meetings, proposals, and development costs as
well as the administrative costs of opening new accounts and setting up
procedures to handle the work
• Taking a Long-term view : Building long-term relationships with customers is the
basis for improving overall business performance. Key account management
enables you to develop a long-term strategy that is based on a clear
understanding of your customers’ long-term needs
• Regular improvement of quality and innovation by suppliers
• Prompt payments to suppliers
• Applying interactive technology like Electronic Data Interchange (EDI) with
suppliers

5.1 Recommendations for reducing perceived risks

To reduce the perceived risks identified, suppliers must adopt these strategies

Risk Reducing Strategies

• Using Information – issue warranty and guarantees, Brochures,
advertisements, personal selling efforts both at customer’s location and trade
shows. Other non-commercial forms of information usage can be adopted like
Word-of-mouth from colleagues within organisation, professional associates, and
consultants and articles in trade publications particularly editorials

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 • Collecting information – seek help from a number of sources by conducting
surveys to understand perceived risk associated with specific products.

Using Loyalty
• Risk can both help and hinder the development of relationships. Loyalty to a
known supplier can reduce risk so long as the vendor continues to satisfy.
Loyalty implies trust. Trust is defined as the belief in the integrity, honesty and
reliability of the supplier. Marketing organizations try to create trust through
warranties and guarantees. Trust is an important issue for buyers seeking
suppliers particularly through the Web.

• Brand Association – The brand of the product should be well positioned. The
brand should bring to the customers mind such things like durability, functionality,
trustworthiness to mention a few. If the brand of the supplier is well positioned,
Kasapa will associate with that supplier.

Spreading the risk

In contrast to loyalty – purchase from many suppliers to reduce economic risk
• Free Samples – Suppliers should be ready to give free samples each time a new
top up card is being produce to its customers to confirm the functionality of the
product.

6.0 Co-ordinated Communication mix to support recommendations

In communicating a consistent and coherent message to support these

recommendations the following communication tools will be used.

POS Material: There will be point of sale danglers depicting the warranty periods

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Personal selling: Representatives of the Company will meet face–to–face with Kasapa
DMU members to demonstrate the capabilities of the supply company

Exhibitions: Participation in exhibitions and trade shows will further create room for
demonstrations.

Brochures: Brochures on the different services and products offered would be provided

Website Advertisement: This will provide additional information on the product and
service as well as comparative prices reducing physical, financial and time risks

Sales Promotions: Free samples for various supplies will be provided to customers

Radio Advertisement: Selected personalities will be used to endorse the products and
services in radio jingles and live presenter mentions (LPMs)

Word of Mouth: This will be based on high quality and customer delight activities which
will earn recommendations for orders from other firms.

7.0 Evaluating Communication mix

In evaluating the communication mix used to reduce perceived risks, the following
would be considered;

Quantitative

• Number of sales leads converted to actual sales

• Reduction in the level of customer complaints
• Website hits over the period

Qualitative

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 • Customer satisfaction surveys – to evaluate the satisfaction levels based on the
promised services and its delivery
• Recall test to evaluate whether customers recall advertising messages and core
brand propositions

8.0 Conclusion

Organizational buying behaviour is a very complex area, however, an understanding of

the key factors are fundamental to marketing strategy and thus an organization’s ability
to compete effectively in the market place. Understanding the supplier relationship and
harnessing it is important to the survival of organizations.

9.0 References

Stakeholder Marketing Lecture notes 2009

www.wikipedia.org

Harwood, T., Garry, T. and Broderick, A. (2008) Relationship marketing:

perspectives, dimensions and contexts. Maidenhead, McGraw-Hill.

Ford, D. (2003) Managing business relationships. 2nd edition. Chichester, John Wiley.

Gummesson (1999). Total Relationship Marketing, Oxford, UK, Butterworth-Heinemann

as cited in Hultman, C. and Shaw, E. (2003). The interface between transactional and
relational orientation in small service firm’s marketing behaviour: a study of Scottish and
Swedish small firms in the service sector, Journal of Marketing, 11(1), pp. 36-51.

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Task 2 – appendix 1

Background of Kasapa Telecom

Kasapa Telecom Limited a wholly–owned Ghanaian subsidiary of Hutchison Telecom

International Limited is a key player in the fast growing telecommunication industry in
Ghana. Kasapa Telecom Limited currently has staff strength of 215 and has a
subscriber base of over 400,000 which increases on a daily basis.

Kasapa Telecom Limited has gone through varied changes, from being Celltel Limited
in 1995 to re-branding to Kasapa Telecom in January 2003. On the 19th Day of
September 2005 Kasapa switched from AMPS analog to CDMA 2000 1X digital
technology. Kasapa is the only company in Ghana operating with this technology with
other competitors like MTN, Tigo and Vodafone operating GSM technology services.
Kasapa currently has 3.5% of the telecommunication market of over 10 million
subscribers in Ghana. Though the industry is dynamic the pace of decision finalization
experienced in Kasapa is slow and customer complaints are high.

With Kasapa’s numerous outlets, its sales and service personnel are continously under
pressure to meet the varied needs of customers. Kasapa wishes to assess its customer
attitude towards the activities and performance of its service personnels prior to
introducing a new staffing training program. Kasapa provides the state-of-the-art digital
mobile service and still maintain its realistic low pricing strategy - the digital CDMA
technology gives the company an efficient economic value that can be passed on to

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customer through low tariffs, free calls, credit rebates for the high end users - even for
receiving calls, and no expiration on credits or chips.

KASAPA Telecom is one of the six (6) telecommunication companies in Ghana. Five
operates on GSM technology namely, Vodafone, MTN, Tigo, Zane and Globacom.
Kasapa Telecom is the only company operating on CDMA (Code Division Multiple
Access) technology. The CDMA 2000 1X technology enables Kasapa to make enough
cost savings which is passed on to customers in lower tariff for voice, SMS and data.
The CDMA technology is much more efficient with regard to customer capacity per base
station and per Megahertz of spectrum than GSM offering efficient voice and data
transactions. Whereas other networks concentrate on array of value-added features
derived from their use of a GSM Technology, Kasapa’s vision is to provide affordable
and easily accessible telephony services to Ghanaians.

Kasapa provides the state-of-the-art digital mobile service and still maintain its realistic
low pricing strategy - the digital CDMA technology gives the company an efficient
economic value that can be passed on to customer through low tariffs, free calls, credit
rebates for the high end users - even for receiving calls, and no expiration on credits or
chips.

Brand Values:

Honesty - Be sincere in all dealings

Transparency - Deliver what you promise

Fairness - Equal treatment to all

Building Family ties - Foster togetherness with a network that sounds like Ghana.

Corporate Mission:
To provide affordable, efficient telecommunication services to Ghanaians at the prices
Ghanaians can afford.

Corporate Vision:

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Be Kasapa for more people in more places.
(Affordable and reliable communications for all Ghanaians)

Mission Statement:
“To be the leading provider of telecommunication services in Ghana with a brand
synonymous to quality, affordability, uniqueness, value for money, honesty, and be
socially responsive through high customer satisfaction and fostering of mutually
satisfying long-term relationships with all stakeholders”

Appendix 2 -Kasapa Purchasing process

Problem/Need Recognition

Kasapa as a telecommunication company has several problems or needs ranging from,

unavailability of Top up cards, phones, modems, Fuel for BTS, Generator sets, Air
conditioners for offices, Fuel for Vehicles, Utility supplies, stationery suppliers, as well
as service suppliers like plumbing, electricity, sewage, among others. Shortage of any
of the aforementioned materials or service could end up causing customer or employee
complaints and dissatisfaction. The choice for this assignment will be the need of Top
up cards which are identified by AC Nielson retail audit reports, customer complaints to
Kasapa call center, walk in complaints to Kasapa Customer care center and distributor’s
complaints to Kasapa marketing and sales offices.

Product Specification

Kasapa specifies the various denominations which are short on the market which
ranges: Kasa 1, Kasa 3, Kasa 10 and the Gold Card which is Kasa 50.

Kasapa then develop the soft PINs (serial numbers for the top up cards) by their IT
department based on the quantities requested usually coordinated by Marketing, Sales
and Administration departments

Supplier Search

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In the first instance of transaction with any supplier, Kasapa builds a list of eligible
printers of cards considering, quality, security and on-time delivery. Short lists of about
three suppliers are invited to present a proposal based on the brief provided by Kasapa.
This could be international or local printers.

Evaluation of Suppliers

Kasapa DMU making up of representatives from IT, Marketing, Sales, Admin and
Finance departments evaluates each proposal based on clients handled, samples
produces, capacity, delivery times, cost and security assurance as it is a sensitive
product where any leakage of PINs could lead to losses to the company and customer
complaints.

Award of Contract

Based on the recommendation of the parties involved a supplier is chosen and a

contract drafted by the legal department is signed by both parties with witnessed. This
will be based on the satisfaction of the criteria set out previously. Kasapa Telecom
currently uses the services of CheckPoint Limited to provide this service.

Production

The actual top up PINs generated by Kasapa is then sent to supplier (Printer) who then
prints some few as samples for Kasapa to check the design, pantone of colours film
coating among others before the bulk production is done.

Performance Evaluation

The stakeholders who participated in selecting the supplier then evaluates based on the
earlier criteria set. Upon satisfaction Kasapa maintains that supplier for a long-time due
to the sensitive nature of the telecommunication business. In this situation a straight re-
buy decision occurs each time Kasapa wants to purchase electronic PINs. In situations
where there are issues with the implementation of the contract, Kasapa goes through
the process described above once again.

The Decision Making Unit (DMU)

A decision making unit (DMU) is an individual or a group of individuals who are

participants in a decision making process, who share a common goal or goals which the

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decision will hopefully help them to achieve and who share the risk arising from the
decision.

Each participant in the decision making unit (DMU) plays a distinct role in the buying
process. Several individuals may occupy the same role or one individual may occupy
more than one role. In choosing a supplier of Top up scratch cards for Kasapa
Telecom, These roles at the buying centre are recognised:

a. Users - those members of the organization who use the purchase products or
services. In this case Marketing, and Sales who ensures distributors has enough
stock at all times to satisfy retailers and subscribers.

b. Buyers - those with formal responsibility and authority to contract with suppliers.
This is mainly done by the Aministration Manager.

c. Influencers - those who influence the decision making process directly or

indirectly by providing information and criteria for evaluating alternative buying
actions. This can be internal or external. Internally the research team from
Marketing will provide their criteria based on industry practices and criteria.
Consultants are also invited to provide inputs where necessary in the selection of
the best supplier. I some instances the government even plays roles by insisting
on local suppliers.

d. Financiers- those with the responsibility to provide financial support for the
acquisition of the item. This is the Finance Manager who process and sign the
cheques to pay the suppliers.

e. Deciders - those who choose among alternative buying actions, mainly the
responsibilty of the Managing Director and the Chief Finance Officer based on
the recommendation from Marketing, Sales, Admin and Finance Departments.

f. Gatekeepers - those who control the flow of information (and materials) into the
buying centre, this is actually the various personal assistants to the various
heads of department they can hamper information with regards to the
comfirmation of an agreement or otherwise.

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Internal Stakeholders influence on the DMU

Stakeholders are individuals or groups who have a legitimate interest or stake in a given
organisation (SM Lecture Notes 2009). In considering the internal stakeholders who
influence Kasapa’s relationship with its suppliers, the diagram belew by Mendelow
depicts it fully and the kind of attention which is required to ensure their interest is
satisfied.

Low Gatekeepers Users – Distributors,

Retailers, Customers
Personal Assistants (P.A)
(Keep Informed)
(Minimal Effort)

POWER Admin Manager, Marketing

Manager, Sales Manager,
Finance Manager, IT
Managing Director, Chief
Manager, Legal Manager
High Finance Officer
(Keep Satisfied)
(Key Players- Participation)

High INTEREST Low

Stakeholder Mapping Mendelow 1985

- Gatekeepers : The Personal Assistants may keep information which needs to be

passed onto their Managers of decision making may cuase delays in the signing
a supplier contract, payments or negotiations.
- Users : They require avilability at all times and will end up giving shelf space to
competing brands or switch entirely. They need to be informed regularly.
- Financiers : Will like to be assured that the due process has been followed in
the purchase process and there is the need to keep them satisfied at all times.
- Diciders/Buyers : They are the key participants and require regular interactions
to ensure all requirements are satisfied.

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 Key Contacts for the project.
Solomon Adu Atefoe – Marketing Officer, Business Development and Value Added
Service, Kasapa Telecom Limited
Edwin Adai – Administrative Manager, Kasapa Telecom Limited
Benjie Akushie – Sales Manager, Kasapa Telecom Limited

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