Since You Asked: Here Are My Tips for Performing a Market Entry Analysis in Tanzania
By John Keig, MBA ‘18
Greetings from Zanzibar! It’s been an adventurous three weeks of MAP in Kenya and Tanzania – so we came to Zanzibar for a little rest before heading back to our project. Life is pretty good when you have a beach scene like this out your window.
Despite the views, traveling for MAP is more than seeing new sites. Right now, I am working on a project that has a real opportunity to both shape the growth of a small business looking to expand and prepare me for success at my upcoming internship.
Our client, Java House, is a coffee house/restaurant chain based in Kenya that has been growing at an impressive pace. Founded in 1999, Java House has grown to more than 50 locations across Kenya, Uganda, and Rwanda and is setting its sights upon Tanzania. My team is doing the research to figure out the entry strategy and define all the details that need to be figured out before they open in a new market.
We spent our first week and a half touring more than 15 Java House locations across Kenya, meeting with staff, and eating our way through the menu. Lots of burgers, lots of local fare, and (of course) lots of coffee.
It’s not a bad way to get introduced to Africa.
But what was really impressive is that Java House can deliver a meal for 300 KeS (~3USD) and not sacrifice quality or great service. Their low prices can reach segments that none of their competitors can. We needed to figure out how they’re able to do this – and how that ability can scale to new markets.
The answer is in their operations – one central commissary preps most of the fresh ingredients, roasts the coffee, and bakes the breads and pastries for all the branches within the nearby geography. That model allows them to take advantage of scale but also ensures that everything is fresh. We toured the commissary to understand the model better, and even got to wear these snappy hairnets.
To enter Tanzania successfully, we need to duplicate that commissary model and achieve scale. That requires having the right customer base and choosing the right locations.
Since the bulk of Java House locations are in or near Nairobi, we must identify the factors that lead to its success in that area and compare those to Tanzania. So, we did a PESTL analysis – identifying the major governmental, social, and economic factors that define both countries – and a regression model – skills we learned in stats class – to define factors that strongly indicate branch success in Kenya.
We need to find that customer who will come to Java House multiple times a week to grab a coffee, a light meal, and maybe use the internet for a couple of hours. So far, no comparable business exists, which suggests that this need is not being met. Our only way to find out is to talk to actual consumers.
So that’s what we’re going to do.
We’ve designed a survey, and this week we took our questions directly to Tanzanian consumers to identify Java House’s space in this market. While we do not have sufficient data points to draw formal conclusions yet, we have had many interesting conversations that will inform the Java House approach in this market. We are looking forward to presenting our final findings at the end of the month.
Right now, I’m heading back to Dar on the Zanzibar ferry and reflecting on my MAP experience at the midpoint.
I’m struck by how much growth our whole team has achieved. I have been able to utilize the learnings in my marketing, statistics, strategy, and operations classes on this project, but more importantly, those skills are much stronger now that I have seen how they all work together to lead to a successful business. I am excited to conclude this project with a strong recommendation that will help Java House grow, and I’m excited to use my learnings on the next project – my summer internship!
John Keig is a first-year MBA student at Michigan Ross.