Kenyan supermarket, Tuskys, has effected about 100,000 transactions through its paying scheme ‘lipa pole pole’ that was launched earlier this year.
The scheme allows consumers to pay for products within two months in instalments at zero interest after an initial deposit of Sh1,000. Failure to complete the payments within the period will see consumers receive a Tuskys gift voucher worth the amount of money already deposited.
The most popular products that consumers have purchased through the scheme include television sets, fridges, microwaves and woofers.
While the strategy is not new in the Kenyan market having been used mostly by foreign firms, local brands understand the consumer trends better.
For instance in Kenya, some consumers are likely to take a loan in order to purchase household goods or appliances. According to a 2016 report on Kenyan citizens and financial inclusion by Twaweza East Africa, an advocacy research group, at least three per cent of consumers are willing to take a loan in order to buy household goods or appliances.
Other instances that consumers take loans include for business (25 per cent) and for daily household expenses (23 per cent). Together, these account for around half of those who have borrowed money.
Loans are also used for training or education (nine per cent), to pay off other debts (seven per cent), housing (seven per cent) or medical costs (six per cent).
Therefore, rather than take a loan and part with an interest, Tuskys is offering consumers a way of buying a product in stages instead of paying for it all at once with a lump sum. This entices consumers (57 per cent of them) who are well aware of the interest rates charged by mobile money lenders.
“The Tuskys program is like a saving scheme in a way. It eliminates the temptation of using the money, a common occurrence, before saving enough in order to buy a large household appliance such as a fridge,” said Stella Kimani, a brand strategist.
“When you make your first deposit with the supermarket, the consumer already knows the end goal thus they will ensure that they meet it. It is a concept that a brand would implement in a market because they know it would work.”
Indeed, local brands are likely to tailor their sales plans and products in order to match the preference of the consumers as they have more experience and understand the market better. On the other hand, international brands are likely to introduce a new product or scheme that will not resonate with the target market or will not adapt to the needs of the local market.
For instance, in 2005, US fast food restaurant, Mc Donald’s launched rice burgers in two flavours — chicken and beef— in a bid to increase its market share.
Rice is a popular dish in the country but rice burgers were not a new concept in the country as they were already offered by a local restaurant, MOS Burger.
The offering only lasted six months in its menu as consumers did not want to try the product.
According to marketing research platform, Brand2Global, Taiwan consumers who visited the restaurant wanted to try American fast food - hamburgers, chips and chicken - and not Taiwanese rice dishes that they were already getting in local restaurants.
“McDonald’s correctly identified Taiwanese consumer’ taste for rice. However, in deciding to add the rice dishes to its Taiwanese menus, McDonald’s undermined the force of its brand. Consumers associated it with American food style as a result, customers had an extremely hard time connecting rice dishes with typical American fast food, dining style, and even McDonald’s brand image,” reported Brand2Global.
- African Laughter