Determinants of Success

There are a number of reasons for the average 20% growth of Sodigaz sales per year. One reason is their increased storage space, which was purchased with the help of the AREED loan. Without sufficient stock, they would not be able to expand their client base. Clients will choose their LPG brand based on the convenience of the purchase location and the constant availability of the product. Without a large supply, Sodigaz would not be able to cover as wide of geographic area or provide as consistent a service.

Another feature that helps Sodigaz succeed is that they transport their own goods. They own both the trucks to pick up the gas at the ports and to deliver the bottles to the distributors. This means that they are not reliant on the availability of the transportation company. It also allows them to make efficient decisions on which to port to buy gas from and which distributors to supply bottles. This results in a more consistent supply for the end-users which, in turn, makes them more likely to buy Sodigaz.

Sodigaz has a very large network of distributors throughout the country. There are 600 separate distributors. Most of them have a stock of about 35 bottles, although some of the distributors located farthest from Bamako have a stock of about 1,000 bottles. This network allows Sodigaz to expand its reach and break into new geographic markets. At the same time, it is difficult to manage the actions of 600 distributors. There have been some issues with customer service complaints related to the distributor. Also, one staff member mentioned that occasionally distributors try to cheat Sodigaz out of money. There was only one mention of this and it is difficult to assess how widespread these occurrences are.

The support of the government is also a major enabler. The provision of a subsidy on the smaller size bottles makes them more affordable for the end-user and thus expands the possible client base. The government also conducts public awareness campaigns on the impact of deforestation and the importance of LPG, which is directly promoting the products that Sodigaz sells. This government support, however, does also limit Sodigaz's profits as it controls the price of LPG. In addition, the subsidy is paid to Sodigaz, not the end-user, and there is some times a delay in payment, tying up Sodigaz's working capital.