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Supply and Demand for Household Water Treatment Products In customers and cuts distribution Conclusion tested many innovative approaches costs for manufacturers. to distribute and market products While challenges remain, this to hard-to-reach rural households. • Minimize the technical complexity research reveals great opportunities Some have already been adapted of products. Simple products for businesses making and to HWTS sales, while others— This is part of a series of are less likely to break down or marketing HWTS products for such as networks of rural micro- require outside maintenance. Th ey project briefs discussing the low-income households in India. entrepreneurs—show great promise should be designed so that users Commercial fi rms, oft en acting in for the HWTS sector. It is becoming activities, research fi ndings, can easily and cheaply maintain partnership with NGOs and MFIs, clear that commercial manufacturers them. and fi eld experiences of have demonstrated that they can with an appropriate, aff ordable • Maintain high standards of quality. generate demand for HWTS by HWTS product have the potential PATH’s Safe Water Project. Durable, well-designed, and raising awareness of the dangers to eff ectively reach low-income well-made products require less of unsafe water and promoting the households living in rural areas and >> PROJECT BRIEF JANUARY 2009 frequent repairs and servicing. health and social benefi ts of their that it may be necessary to build a products. Aff ordable pricing is key, separate, specialized supply chain to • Issue product warranties. however, since the cost of buying do so. Warranties reassure consumers and operating a HWTS product is about the life of the product and a major concern for low-income future costs, but they are useless families. Manufacturers should unless repair services are readily also consider taking aim at markets Supply and accessible. outside the home, including children Demand for • Encourage retailers, including attending school and agricultural Household Water rural micro-entrepreneurs, to off er laborers working in the fi elds. aft er-sales services. Retailers can Th e news from the supply side Treatment Products be trained to make simple repairs is equally promising. Indian in Andhra Pradesh, or replace damaged parts. Th is is companies have developed and convenient for customers. Karnataka, and Maharashtra, India PATH/Greg Zwisler PATH/Greg Background expectations of low-income families. A boy sells fast-moving consumer goods Th e Safe Water Project launched At the same time, commercial at a village kiosk. by PATH in 2006 is exploring how businesses have developed successful, the private sector can help meet sustainable models for selling a wide the need for safe drinking water in variety of goods and services to developing countries by piloting low-income households, especially distribution methods, developing This issue was written by Adrienne Kols and Copyright © 2009, Program for Appropriate in rural areas. Th ese developments marketing strategies, and infl uencing designed by Dave Simpson and Technology in Health (PATH). All rights have expanded the distribution and product design for aff ordable Scott Brown. reserved. The material in this document sales opportunities for commercial may be freely used for educational or household water treatment and MAILING ADDRESS manufacturers in the HWTS sector. noncommercial purposes, provided PO Box 900922 storage (HWTS) products. In that the material is accompanied by an Seattle, WA 98109 USA India, which is the project’s initial To better understand the acknowledgment line. STREET ADDRESS country of focus, a rapidly growing current market dynamics, PATH 2201 Westlake Ave. Suite 200 Printed on recycled paper www.path.org Seattle, WA 98121 USA economy is beginning to raise commissioned research on the both the standard of living and the demand for HWTS products and on supply chains serving Analyzing the supply chain sell HWTS products, including Product design and Pricing strategies and • Partner with MFIs. Th ese low-income consumers in three general household goods stores, eff ectiveness fi nancing organizations have experience Researchers examined the states: Andhra Pradesh, Karnataka, electronics stores, and specialty off ering small loans, which are production, distribution, and Low-income rural consumers have Low-income consumers in rural and Maharashtra. Th e 2008 study outlets. typically repaid in monthly marketing of HWTS products by: diff erent needs and preferences than areas are not used to spending was conducted by an India-based installments over six months to 4. Conducting three FGDs and other market segments. To ensure much on water or preventive health consulting fi rm, Intellecap, which 1. Conducting individual interviews one year. six individual interviews with that HWTS products are appropriate interventions. Th ey have little focuses on institutional capacity with a diverse set of industry experienced rural micro- for their circumstances, corporate discretionary income, and their building and investment in the players based in India, including entrepreneurs who demonstrate manufacturers should consider the income varies from month to month. Distribution and supply development sector. Th e Safe Water one academic expert, six corporate a high potential for introducing following strategies: To make HWTS products more Project team will use the research manufacturers, two wholesalers, Conventional supply chains cannot new products to consumers. aff ordable, manufacturers should fi ndings to identify promising supply four retailer/distributors, and • Design products that do not serve rural consumers eff ectively. Entrepreneurs were selected consider the following strategies: chain models, develop innovative seven representatives from require a dedicated water supply or To create a strong and sustainable because they participate in distribution and marketing strategies, government, non-governmental electricity. Many rural households • Set prices low. According to NGO supply chain for HWTS products successful rural marketing and inform product design organizations (NGOs), and rely on community taps and lack interviews, HWTS products in rural areas, corporate ventures, have experience with development-sector agencies. electricity. targeted to low-income rural manufacturers should consider microfi nance, recognize the households should cost no more the following strategies: 2. Mapping the supply chains value of diversifying the products • Design products to prevent than Rs 1,500. Off ering FMCGs of six products marketed to and services they off er, and recontamination of stored water. • Create multiple supply chains to in smaller packages, at lower low-income consumers, including are interested in addressing Water should be dispensed serve diff erent market segments. Research Methods prices, may also appeal to fast-moving consumer goods consumers’ needs for follow-up through a tap, and the inlet should Manufacturers can develop and low-income households. (FMCGs), household durables, services as well as making be wide enough to reach in for operate diff erent supply chains for Investigating potential and consumable replacement initial sales. cleaning but too narrow to dip in a • Focus on long-term savings. Over cities, towns, and villages. customers parts (Table 1). All of the serving cup or utensil. time, certain HWTS products are • Build a network of rural micro- products selected were priced much less expensive than others— Researchers conducted ten focus • Customize products to diff erent entrepreneurs. Th is is one of the aff ordably, could meet the needs of and all are cheaper than buying group discussions (FGDs) with niches. A series of products can most eff ective and convenient low-income consumers, displayed purifi ed or packaged water. low-income consumers and potential address specifi c concerns of ways to reach consumers in innovation either in the product Findings on the demand consumers of HWTS products. All diff erent markets, such as local • Off er seasonal discounts. Timing small villages. or the distribution system, and for HWTS products six FGDs in Andhra Pradesh and contaminants in the water or the discounts to coincide with had a large-scale presence in the • Off er NGOs and development both FGDs in Maharashtra took need for safe water at schools or in seasonal earnings can Indian market or the potential to agencies bulk discounts and place in rural areas; the two FGDs in Access to safe drinking water the fi elds. increase sales. Karnataka were conducted in peri- be scaled up nationwide. marketing support. Th ese Borewells are the primary source of • Consult development agencies, • Off er volume discounts to organizations have an established urban locations. Each FGD involved 3. Conducting observations at ten water at the FGD sites. None of the NGOs, and local micro- distributors and retailers. Th is network of offi ces and workers in 15 to 25 participants, for a total of urban, peri-urban, and rural sites is connected to a surface water entrepreneurs. Th eir fi rsthand not only drives down prices, but rural areas and may be interested 210 in all. Participants in nine of retailers in Andhra Pradesh that the FGDs were women; one FGD knowledge of rural consumers also gives retailers an incentive to in distributing HWTS products in Andhra Pradesh consisted solely can help manufacturers design promote sales of a product. because of their health benefi ts. Table 1. Products included in the supply chain mapping exercise new products and refi ne
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