Scaling in last mile markets: Distribution and consumer financing strategy for water purifiers

Client: Unilever

To sustainably provide in-home water purifiers at affordable prices to low-income consumers in Kenya

● Development of a Sales and Distribution strategy focused on informed customer targeting, low-cost marketing and innovative last mile distribution channels
● Creation of a County Lucrativeness Index to identify high potential clusters for Unilever within Kenya

Despite the fast pace of growth of the Kenyan consumer market with household consumption expenditure growing at a CAGR of 12.35% in the past 13 years and low-income households comprising 86% of total consumption, servicing this market is difficult. Challenges include sparse populations, limited market data on spending, nascent last-mile infrastructure, predominantly informal retail networks, low awareness and limited ability to pay up-front.

Unilever commissioned Intellecap to develop a sales and distribution strategy to enable their Pureit filters to reach this low income-consumer market. As part of the strategy, Intellecap identified key partners and priority cluster areas for Unilever to focus on. In addition, Intellecap analysed various alternate channels for Unilever to service these low-income consumers. These included financing channels such as MFIs and SACCOs as well as non-financing channels such as VLE aggregators, corporates, NGOs.

Intellecap conducted an extensive diagnostic focused on understanding the consumer financing landscape for formal and informal financing institutions that serve low income consumers. This effort helped determine the mix of channel partners required by Unilever to reach the consumer. Intellecap then developed a partner selection framework, identifying groups of high potential channel partners and creating operating models for each. The final piece of the strategy included developing a County Lucrativeness Index to identify high potential markets for Pureit within Kenya based on ease of service, ability to pay and need for clean water. Key data points used in developing the index included; county size, population density, penetration of financing partners, household expenditure, access to free water, diarrhoea prevalence.