The ‘kadogo’ revolution begins shaping Kenya’s retail market

By Macharia KamauIgnore the ‘kadogo’ economy at your won peril. This is the ominous warning market research experts are giving businesses as firms begin repackaging their products into smaller single serve packages to capture a larger market in Kenya.Commonly referred to as the ‘kadogo economy’, manufacturers that have embraced the smaller packs have seen the products moving quickly off retail shelves. This is because the people targeted by such products make up the largest population segment in the country.A shopkeeper at her shop. Kenyan manufacturers have been urged to embrace the ‘kadogo economy’. Photo: Courtesy"The idea is to sell commodities at their lowest divisible level and it has already caught root in the country. We are seeing multinational corporations adopting the small packaging," said Naftali Waburi, Kenya country manager at Research and Marketing Services (RMS) East Africa.Companies that have adopted this strategy include Equity Bank, whose idea of banking the low income market segment has left a mark on the banking industry and compelled other players to pay attention to this market segment. Safaricom has also introduced airtime for as little as Sh5. In the initial stages, mobile phone users had the option of buying Sh250 scratch card as the least airtime unit.Waburi says companies that have not yet formalised the ‘kadogo economy’ are losing out, as their products are often repackaged by shopkeepers at the retail level so that they can suit the needs of their shoppers."This comes with many challenges for both the buyer and manufacturer. The buyer is exposed to counterfeits. For instance, you cannot differentiate one brand of white cooking fat from another, or even a fake one once it is repackaged in a unbranded pack," he said."The unbranded packs also see the manufacturer’s brand getting lost and brand loyalty erased."Moreover, he says the benefits of economies of large-scale production are never passed on to the consumer, since the extra cost of packaging in smaller units (breaking bulk) is usually passed onto them.Consider womenWaburi spoke during a one-day market researcher’s conference organised by the Marketing and Social Research Association (MSRA) titled ‘Facing the African Consumer’.Other than the repackaging of products to capture the low-end market, businesses should also consider women in their marketing campaigns as well as packaging products to attract women."Women are more economically empowered today than at any other time in history. Women also control more than they earn and have an upper hand in making household decisions," said Reuben Gathemia, director of SBO research."Women are a quiet economic revolution taking place and they are having an increasingly larger role in the house hold, the society and workplace."a

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