Vodafone’s ‘Fakka’ Innovation In Egypt – Strategy With RS

Opportunities most often come disguised as problems. Many of are so caught up staring at the problem that we allow ‘opportunities’ to slip away.Take the issue of shortage of small change. Many of us have been victim of it – at Toll Naka; when buying vegetables; shopping for grocery at our local ‘kirana’ store. Our fellow country people have come out with an indigenous solution. At Toll Naka they give us Éclair in exchange for small change; vegetable vendor give us an extra tomato; kirana store gives us a small value item as substitute for small change.

Let me take you on a visit to Egypt where small businesses too face the problem of returning small change. ‪#‎Vodafone‬ Egypt decided to convert this problem into an opportunity to increase the number of distribution points for selling re-charge cards to its prepaid users, as well as increasing its revenue.

It decided to launch a ‘Micro Recharge Card in various small denominations & christened them ‘Fakka’ (reference above), which in local language means ‘small change’ & distributed them extensively in ‘mom & pop’ stores, our equivalent of ‘kirana’ stores.When a small shopkeeper had shortage of change she confidently dispensed out Vodafone’s Micro Recharge Card of equivalent denomination. Customers took it happily because it was valuable to them. (referenced below)To make sure that they did not face resistance from small shopkeepers for stocking it, ‘fakkas’ were designed to fit into the compartment of the cash register, which is originally meant for keeping small change. (Referenced below)Vodafone “Fakka” micro re-charge cards has acquired the status of a new currency in Egypt with little shops across the country stocking the “Fakka” cards to use as change, giving Vodafone Egypt the biggest distribution channel possible.

 

fakka-in-acashiers-box

 

Vodafone’s Micro Recharge Card is a win-win for all 3-stake holders:

• Shopkeepers: It made them appear generous.

• Customers: They got what they desired & valued

• Vodafone: It helped them gain goodwill among the low-income group, who were the biggest beneficiary of this program; it also increased the number of distribution points at which Vodafone’s Recharge Cards were available.

 

Business Lesson for us:
1. Be mindful of your environment. Opportunities are plentiful but are camouflaged.
2. View problems as opportunities.
3. I believe that foundation of great business lies in understanding the pain points of customers & then attempting to reducing or eliminating them.
4. The business model should strive to arrive at a solution, which is a win – win for all stake holders.
5. The best solutions are those that dissolve into the lifestyle of its customers, remain invisible but enhance their lifestyle.
6. Whenever you create a property – brand it. In this case, Vodafone has branded this property as ‘Fakka’.

 

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rajesh-srivastava-insideiim

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

16 comments

Rajesh Srivastava

Ramji. Yes the best strategies are those which are win – win for all stakeholders.

LazyMBA

Why are the setbacks that kept Vodafone from implementing the ‘fakka’ model in India?

Rajesh Srivastava

Sandeep I am not sure what they are. Because there are several successful schemes they have run abroad which can ‘fly’ in India – M Pesa being yet another concept.

Rajesh Srivastava

Sandeep I am unable t understand your comment … can you elaborate on it…

LazyMBA

Airtel Money which once had a popularity and could have possibly started a similar fakka type model in India but since, now it has lost its charm due to some unknown reasons and many other easy-pay options (Paytm cash, payUmoney) have already come and became popular, even Airtel can’t do the fakka type model in India now.

Rajesh Srivastava

Sandeep we should always remember the saying of Shakespeare,
‘There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.’
Airtel seems to have ignored this …. & as rightly pointed out by you, it has lost its charm & it will be difficult to regain its charm.

LazyMBA

Wah! What an apt piece by Shakespeare. Maybe we can write an article about “What businesses can learn from Shakespeare”

vamsee

Sir,
Vodafone started this in India in Rajasthan,UP East & Maharashtra a few years ago(2010-11) with a concept called “Chutta Recharge”-they started giving out 1 rupee or two rupee worth recharge coupons to shop keepers to give it as a change. As far as I understand it failed due to following reasons:
1) Unlike Eclairs or any toffee which could be consumed with ease by every person, recharge coupons would require the user to scratch and painfully enter the lengthy code given on the coupon. Many customers started giving back them back to shop keepers and slowly retailers stopped keeping them
2) Even after customer painstakingly scratched coupons and entered the numbers on card, he didn’t like the product as a whole because all it gave to him was just one rupee balance. Vodafone tried to tackle this problem by giving some other goodies on this product like 10 SMS or 10 Night minutes which made product a bit attractive
3) Still, it failed to pick up as a normal toffee because of it’s limited usage. Customer was able to use it only if he is a Vodafone subscriber. Imagine the plight of retailers where the market share of Vodafone is just around 10% and almost everyone visiting shop used to reject this

Please share your views on this & how Vodafone could have made it a successful product

Rajesh Srivastava

Vamsee, thanks for your post & apology for delay in responding.

1. The ‘fakka’ type strategy will work with brands who are deeply penetrated & widely used.
2. A strategy should be drawn by the company to address to either reduce or eliminate a customer’s pain point. It should certainly not be geared to help them achieve there narrow self interest – making more money from its customers. If it does then ‘chutta recharge’ happens.