WHY PRICE IS THE MAIN TOOL OF COMPETITION; Lessons from China Square's market strategy.

This Month, China Square shopping centre at UniCity Mall significantly claimed a share of the household commodities market. Its entry has been interpretted as a threat to traditional market leaders like Eastleigh malls and wholesale retailers in Gikomba, Githurai, Nyamakima, Muthurwa and Kamukunji in Nairobi.

While all these retailers sale similar commodities from a shared market territory, one thing differenciates them, price. China Square's customers preffer it for low prices limiting room for other factors like quality and customer service to play a role in the tag of competition with rival traders.

In my observation, price is the most powerful tool of competition in modern markets. Conventionally, customer service and quality would play a role in acquiring and retaining cutomers. However, pluralism in the number of sellers, information democracy, e-mobility and e-commerce have changed the rules of the game. In fact, an efficient point of sale system whether manual or digital creates more fulfilment to a buyer than what a smiley receptionist would deliver.

Price therefore remains the tool to use in a competetive market. This does not imply that you downplay the role of quality and customer service. Stay above the bar in delivering memorable customer experiences while selling superior products because your competitors are cabaple of doing the same.

Pricing is a science that involves a series of permutations. Sometimes, like in the model of YouTube and Amazon, it can be a long game with returns only in the long run. In volatile markets, pricing requires guerilla tactics which can only be played by price setters. In this approach, you ambuish the market with a surprise low price to drive traffic yourside and in between price some goods at a premium. You can as well play with your buyer's psychology through attractive packages like Tunukiwa by Safaricom.

In the case of China Square, their success in setting prices low can only be informed by the following possibilities; ability to buy in bulk at quantity discounts and resale at a mark-up, control of distribution infrastructure such as shipping and warehousing, an efficient inventory management and point of sale technology, access to cheap labour and other cheap operating expenses including discounts in renting a large space in the UniCity Mall that had failed to attract uptake of commercial space.

To make profits with a narrow mark-up on commodities, China Square had to rely on a high turnover. This explains why the retailer targeted the lower middle class as opposed to the rich and upper middle class as Carrefour, Shoprite and Game supermarkets would do it. While regulatory measures may axe China Square from the Kenyan market, there is much to learn from their pricing strategy in understanding consumer behaviour, preferrences and trends.