all the fast-moving consumer products that you would need to traverse five major streets . Consequently , they have attracted the ever-elusive middle class who would rather die than struggle through the hustle of wading mud juggling matatus , brokers and travelling from one corner of Luthuli to Nyamakima . Additionally , the location has ample parking for its clients .
Bargaining Power of Suppliers
Another advantage is that China Square is well-resourced and has strong relationships with Chinese exporters when compared with their Kenyan counterparts . This means that they could get sourced goods at a cheaper rate and transfer the pricing advantage to the end customer . With that kind of relationship , they can do inventory planning and enjoy trade credit from their countrymen . Given the tough economic times , customers are price sensitive and always looking for bargain deals . Most of the affected traders are small players who do not have the financial muscle to influence Chinese factories .
Despite what seems like a lost cause , all is not lost for Kenyan businesses . But to stay afloat , they will need to reinvent themselves to remain relevant and profitable . There are four business strategies : cost , quality , distribution , technology , and intellectual property ( IP ). All business strategies are broken down into these five , or combinations of them . As a general principle , focusing your business on one area is the easiest way to execute .
The low-cost strategy
Low-cost results in low prices . This is the easiest way to attain a competitive edge and differentiation . At a low cost , one does not need a superior product . In fact , an inferior product will often outsell a superior one if it is priced reasonably enough . All one needs is a dedicated focus to reduce costs . Considering the sizes and processes involved in sourcing goods and the amended tax regime whereby consolidation terms have been changed , only major players will be able to take the fight to Chinese doors .
Quality strategy
A quality strategy is only more difficult than a cost strategy . That is because it is too internally focused . Like low cost , it is a one-vector issue focused solely on internal
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When you visit China Square , you will notice that in almost all product categories sold , they have introduced new product lines that were previously non-existent in our Kenyan market . By having a physical location , they can provide warranties for the new products , reducing switching barriers .
execution . But quality strategy is more difficult because it requires sophisticated tactical execution in manufacturing , marketing , and supplier partnering . It is extremely difficult to execute at costs .
The distribution strategy
By building a distribution network , businesses build strength . This strategy appears simple on the surface , but it is not as it requires massive investment .
Businesses with clear distribution strategies build nationally through counties by getting to where their customers are . The national spread is pursued instead of competing for customers only in Nairobi . Your business broadens their customer base . Nearly all successful retail companies in Kenya have perfected this tactic .
E-commerce strategy
E-commerce combines being at the cutting edge of technology and distribution . The two can deliver an unstoppable product . It is generally the most profitable strategic move because it prevents margin stacking .
Currently , e-commerce is the main disruptor in this space , with Jumia leading in that space . Alternative distribution mechanisms are the fastest-growing growth frontier . With technology , a business can customize their relationship with their customers , and extend credit services such as buy now pay later .
Geoffrey Sirumba is a seasoned Brand and Marketing Practitioner with interest in Sustainability Projects . You can commune with him vide email at : Geoffsirumba @ gmail . com .