Kenyan Bus Companies Must Change Tact to Beat the Madaraka Express

The Madaraka Express is said to have knelt the last nail to the coffin both for the road cargo transporters and bus companies plying the Nairobi-Mombasa route.

Contrary to popular belief, the story couldn’t be more wrong. Kenyan entrepreneurs are among the most creative and versatile globally; if you think this is not true take a look at Keroche Breweries, Softa, Equity Bank, Safaricom and so forth. All these are just but a few examples of organizations that have not only survived but thrived for years albeit insurmountable odds.

In order to beat the new kid on the block called Madaraka Express the current players composed of Truckers and Bus companies must radically rethinking their business models in order to survive the onslaught.

Merger; Since one key competitive advantage that Madarak Express has is affordable cost to travelling Kenyans, the current industry players holding other factors constant can merge to form one bigger company in which they can enjoy economies of scale in their input cost hence charge competitively. They can also take heart that given the cost of investment of the entire Madaraka Express and the need to make a decent return; the current prices being charged are not sustainable in the long run. They just need to weather the passing storm for a while.

Bus and Truck companies must also focus on business models that allow employees, customers and the community at large to benefit from the company’s operations.

To give them a competitive edge against madarake Express the current bus transporters needs to create new differentiating factors by first shedding the idea of just being another transporter carrying passengers from Nairobi to Mombasa but companies that give its customers a travel experience.

This can be done by developing strategic partnerships with Hotels and Tour companies to ensure that stop over’s not just only in a petrol stations or local Hotels but in decent hotels. For example bundling of services to include a free night out in one of the many hotels in Nairobi or Mombasa priced together with the travel cost.

To create loyalty among its employees, the current industry players can provide stock options to their employees. This will enable allay fears of job security in the sense that even if they lose their jobs they have a buffer in terms of future dividend earnings.

Similar to the retail sector Bus companies can consider introducing Loyalty cards similar to the frequent flier program used by airlines. This can be structured either to help in getting cheaper fares in future or can be redeemed in retails chain, school fees or hospital bills. Such a strategy would be a win win for both customers and Bus companies.

We must be cognizant that while past business models succeeded by extracting value from employees and customers, future business models will succeed by partnering with employees and customers to create new wealth together.

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