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 existing of men. Most participants were • Bundle replacement parts with products to better meet consumer seasonally employed as marginal Fast-moving Consumable HWTS products. Th is reduces Support and maintenance farmers and agricultural laborers. Product type consumer goods Household durables replacement needs and preferences. operational costs for consumers. It Consumers worry about operating, Th eir average monthly household (FMCGs) products Mediclor-M chlorine Pureit tabletop • Seek input from consumers. also reduces distribution costs for maintenance, and repair costs for income ranged from Rs 1,100 in Stainless steel candle disinfectant water purifi ers Manufacturers should involve manufacturers. replacement fi lters HWTS products, as well as access to Latur, Maharashtra, to Rs 8,300 in HWTS manufactured by manufactured by manufactured by the consumers in product design supplies and parts. To address these Manickapuram, Andhra Pradesh. Cristal Pharma Hindustan Unilever • Target subsidies to low-income Rama Group and testing and collect customer concerns, manufacturers should Th e FGDs explored participants’ Private Limited Limited (HUL) consumers. Subsidies can be feedback regarding existing consider the following strategies: access to and sources of clean water, Pepsodent Biomass pellet used to eliminate interest on toothpaste stoves manufactured products. their awareness of the health hazards Kerosene consumer loans, cut prices in rural • Bundle supplies and replacement manufactured by by British Petroleum replacement burners of drinking contaminated water, and Non-HWTS HUL and distributed Energy Ltd and areas, or provide free service and parts with HWTS products. Th is manufactured by by the Shakti Amma distributed by maintenance. their knowledge and likelihood of Servals Automation is convenient and inexpensive for using various HWTS products. network of rural the NGO Swayam micro-entrepreneurs Shikshan Prayog 11 PATH SAFE WATER PROJECT 2 PROJECT BRIEF JANUARY 2009 with the goods that they typically sell. supply. At some sites households some locations.1 Each of these Vision, working with Eureka Forbes, collect water from hand pumps contaminants has been linked has established a community water Rural micro-entrepreneurs also connected directly to the borewells, with health problems, but FGD treatment plant at one of the two can off er corporate manufacturers which are generally located one or participants were most likely to be FGD sites in Warangal, Andhra the benefi t of their knowledge two kilometers away from the village. aware of the joint pains and bone Pradesh, and is in the process of regarding local tastes, preferences, Th e water is not treated at the source disorders associated with fl uoride. developing a second plant at the perceptions, and expectations. Th eir and may be further contaminated Other water problems at FGD other site. Th e project has raised understanding of consumer needs during the trip home—either by dust sites include excess turbidity and awareness of high fl uoride levels and preferences can help designers or by contaminated earthen pots contamination with pathogens that in the water and its health impacts. customize HWTS products so that or plastic or steel containers used cause diarrhea and other illnesses. Aft er seeing the health benefi ts of the they appeal to rural consumers. to carry and store the water. Th ese fi rst treatment plant, nearby villages Micro-entrepreneurs can also help Poor sanitation and hygiene containers are not always cleaned have begun requesting similar plants. devise eff ective marketing strategies contribute to further contamination beforehand or used exclusively for for low-income consumers. of water with pathogens during Th e perceived benefi ts of HWTS clean drinking water. storage and consumption. Most are also driving consumer behavior At other sites Panchayats (village FGD participants store drinking at an FGD site in Medak, Andhra assemblies) pump water from water in clay pots, and they may dip Pradesh. HUL conducted safe water PATH/Glenn Austin PATH/Glenn Families often don’t use HWTS products because they perceive their water to be safe. borewells into a community storage unclean utensils and hands into the awareness campaigns in Medak Implications for tank, where it may be treated water when serving it. Only a few when it piloted Pureit, a tabletop marketing HWTS products, corporate manufacturers of water issues, introduce new with chlorine before being piped households have pots fi tted with a water purifi er. Pureit does not products should consider the following technologies, and infl uence to household or community taps. tap to dispense water hygienically. remove fl uoride, which is a leading strategies: household decision-making. Certain villages have benefi ted from problem in Medak and the main Th e problem of safe drinking water Corporate manufacturers face partnerships with NGOs, such as cause of joint pains. However, Pureit • Conduct awareness campaigns. • Partner with the health system. extends beyond the home. As signifi cant risks in entering the the Byrraju and Naandi Foundations, users in the FGD claimed that using General education about the Health professionals are a credible mentioned above, the majority of market for HWTS products targeted to construct community water the purifi er had improved their harmful eff ects of contaminated source of information on water FGD participants work in farming. to low-income rural households. purifi cation systems operated by health, and one-fi ft h said their joint drinking water can pave the way issues, while patients are a Th ey spend most of the day in the Th ey must bear the extra costs local residents. Villages located on pains had diminished or disappeared. for specifi c product promotions. receptive audience. Th e network fi elds, with no access to safe water. of creating demand where little the outskirts of towns may have of government primary health Most FGD participants also have one currently exists and of reaching • Off er water testing. People are access to municipal water supplies, centers provides a way to reach to three children in school, and the Knowledge and use of out to geographically dispersed more likely to consider HWTS which pass through a centralized people at the village level. schools oft en lack a source of safe HWTS products and diffi cult-to-reach populations. products if they realize just how treatment plant. water for students and staff . However, this research suggests contaminated their drinking water • Encourage positive word of mouth. Most FGD participants do not treat Overall, about half of FGD many eff ective strategies that is. Local opinion—especially from their water, but they are widely participants have individual water manufacturers can use to create people who have used HWTS Awareness of aware of two traditional treatment • Involve community leaders connections in their homes, while demand for HWTS, design more products—can have a big impact waterborne disease methods: boiling and fi ltering water appealing products, make HWTS Th ought leaders such as the the rest rely on community taps. through cloth (Table 2). However, on demand in rural areas. Overall, the FGDs revealed little products more aff ordable, create a Panchayat and self-help groups Water is available 24 hours a day they tend to use these methods awareness that contaminated strong and sustainable supply chain, can act as a catalyst in the • Employ local media channels. at six FGD sites, but only 1 to 3 temporarily and only in response drinking water causes common and build a viable support and decision-making process for Manufacturers can tailor hours a day at the other four sites, to a perceived need: they use cloth illnesses, such as diarrhea and maintenance system. HWTS products. advertising on local television, all of which are located in Andhra fi lters when water becomes turbid joint pains. Th ere have been no radio, billboards, and other Pradesh. during the rainy season and boil • Partner with development government-organized educational channels to the language, needs, water in response to the illness of Demand creation and agencies and NGOs. Th ese Even when the water is treated, campaigns on the importance of and preferences of the community. children or other family members. marketing organizations have credibility and the process used may not remove safe water at these sites. However, connections at the grassroots level, • Go beyond the health benefi ts chemical impurities. According to Both methods are considered time Lack of awareness that contaminated where an NGO or corporation has as well as a proven track record of HWTS. Some people are India’s Ministry of Water Resources, consuming, and people also dislike drinking water causes common raised awareness of the link between in educating people about heath, motivated to buy HWTS products fl uoride, nitrates, and arsenic the way boiling changes the taste of illnesses, including diarrhea and drinking water and disease (see box hygiene, and sanitation issues. for their potential social benefi ts contaminate the groundwater water. joint pains, limits the demand for on following page), consumers are or for their ability to improve the in some districts of the three HWTS products in rural areas. To • Partner with rural micro- more likely to explore solutions to Th e vast majority of FGD taste and turbidity of water. states included in the study, and create awareness of waterborne entrepreneurs. Th ese agents are the problem. For example, World participants also know about salinity also poses a problem in disease and promote HWTS ideally placed to raise awareness 1 Central Ground Water Board, Ministry of Water Resources [India]. State profi les: Ground water scenarios for Andrha Pradesh, Karnataka, and Maharashtra. Available at: http://cgwb.gov.in/. Accessed 12/18/08. 3 PATH SAFE WATER PROJECT 10 PROJECT BRIEF JANUARY 2009 to raise awareness of health issues potential customers, and enjoy high Interviews and FGDs with rural Activities to Raise Awareness and frequently conduct product levels of trust. Th eir position in the micro-entrepreneurs found that demonstrations. Sometimes when a community gives them direct access they can: product is long-established and well- to potential consumers. It makes it • Design and conduct innovative known, manufacturers do not make easier for them to create awareness and eff ective promotional Health education—often linked with a specifi c any special marketing eff ort and rely of new products and to overcome activities, such as village intervention—is the most common approach. instead on word of mouth. people’s doubts about unfamiliar processions, to raise awareness of For example: and technologically sophisticated new products. products. Local micro-entrepreneurs • The microfi nance institution, Ujjivan, is working Rural micro-entrepreneurs are also trusted advisors who • Educate potential consumers with other foundations to off er health education Several Indian companies have can exert a major infl uence on about the health and hygiene on a range of issues, including hygiene and harnessed the power of rural micro- consumers’ decision-making process. benefi ts of products. sanitation, as part of its health care and health entrepreneurs to expand sales in Finally, consumers feel more • Market products door to door and insurance program for the urban poor. rural markets. Micro-entrepreneurs comfortable knowing who they can at village fairs. invest their own money (from turn to in case they have service or • Raising awareness of safe water helps the Byrraju savings or small loans from MFIs or maintenance issues. • Help customers arrange for Foundation persuade local offi cials and villagers self-help groups) to become direct installment payments or loans. to support the construction of community water sellers of a manufacturer’s goods Th e research focused on members treatment plants. and services. Th ey receive training of three networks that successfully • Train buyers on how to use an and support from the manufacturer market goods and services unfamiliar product. • HUL and partner NGOs make presentations on specifi cally to low-income rural and earn a profi t or commission on • Provide a reliable source of supply waterborne disease and traditional treatment consumers: SSP Jyotis sells biomass every sale. Manufacturers can recruit for consumables and replacement methods to large gatherings of women, usually pellet cooking stoves and fuel; Scojo micro-entrepreneurs directly or parts. leaders of self-help groups, before demonstrating through alliances with NGOs Vision Entrepreneurs market eye the Pureit water purifi er. and MFIs. care and eyeglasses; and HUL Shakti • Off er aft er-sales servicing, either Ammas sells inexpensive consumer by making repairs themselves or

Naveena Ambatipudi and A. Mahender Naveena • HUL also sets up display boards at doctors’ clinics Th is type of direct sales force goods and household necessities. In sending products away to be fi xed. that alert patients to the dangers of waterborne off ers distinct advantages over each case, linking with rural micro- Th ese same skills could be applied disease and encourage them to inquire about traditional distribution channels. entrepreneurs enabled to marketing HWTS products to Pureit. Rural micro-entrepreneurs are the manufacturer to build a low-income rural consumers. Some Other companies are using water testing to raise respected and familiar members sustainable supply and service chain micro-entrepreneurs, however, are public awareness of the dangers of untreated of the community, have good for rural areas. interpersonal relationships with concerned about the relatively high water. For example, Eureka Forbes has established price of HWTS products compared PATH/Glenn Austin PATH/Glenn a network of Aquachek water laboratories and Self-help groups can provide women with health information as testing facilities in India. Consumers using any brand well as alternative fi nancing for household products. of water purifi er can request a free test for total Public-private partnerships dissolved solids (primarily salt) from Aquachek. For an NGOs, microfi nance institutions (MFIs), and additional Rs 300–500, they can also order bacterial corporate manufacturers of HWTS products can tests and further chemical tests. Another company, Partnerships with NGOs, development agencies, and they help conduct health education and awareness play an important role in creating awareness of the Ion Exchange, markets easy-to-use test kits that microfi nance institutions can help manufacturers raising activities in target communities. Second, they link between safe water and good health and in let consumers test their water for a wide variety of reach out to low-income rural consumers. For act as distributors and retailers; they assess local promoting community or household water treatment. contaminants, including E. coli, fl uoride, and nitrates. example, HUL has entered into a strategic alliance demand, place bulk orders for purifi ers directly with Infl uential community members, including the with Access Development Services to market Pureit HUL, and distribute the stock received to village offi ces Panchayat health workers, and leaders of self-help tabletop water purifi ers in rural India. Access—and the and rural consumers. Third, they provide microfi nance groups, can help disseminate the message and NGOs and microfi nance institutions that are part of its to low-income rural women so that they can aff ord to catalyze household decision-making regarding HWTS. network—play multiple roles in the supply chain. First, buy a Pureit system.

9 PATH SAFE WATER PROJECT 4 PROJECT BRIEF JANUARY 2009 To reach more customers, HWTS Table 3. Roles of stakeholders in HWTS supply chain low-cost ceramic candle fi lters. Table 2. Number of FGD participants who know of and use specifi c HWTS methods, by state manufacturers also use door-to-door However, they are less likely to use Stakeholder Role in supply chain sales, stalls at consumer fairs, and them than traditional methods HWTS Andhra Pradesh (N=125) Karnataka (N=45) Maharashtra (N=40) • Infl uence research and development of HWTS products method Knowledge Use Knowledge Use Knowledge Use village kiosks. Academic researchers • Create innovative and customized solutions in response to because they do not perceive Boiling consumer preferences any benefi ts. Observations at HWTS points or cloth 85 31 45 4 40 20 of sale found that both ceramic • Conduct research and development Awareness of other HWTS methods fi ltration Corporate • Determine design of products Ceramic candle fi lters and tabletop manufacturers • Decide on marketing strategies, including product rollouts varies widely among states. All FGD 105 19 45 10 40 10 candle fi lters purifi ers are consistently stocked. and niche marketing for selective product types participants in Maharashtra were Chemical However, ceramic candle fi lters • Link manufacturers and retailers aware of chemical disinfectants, and 0 0 30 0 40 15 disinfectant are the only HWTS products with • Maintain stocks of HWTS products based on expected demand some have used them, because relief Wholesalers good distribution channels and • Contribute to sales by increasing number and diversity of eff orts following a 1993 earthquake Pureit 20 20 5 3 0 0 strong penetration in low-income retailers distributed liquid chlorine. AquaSure • Drive product sales storage 0 0 25 2 0 0 rural markets. Expensive and Retailers Participants in Karnataka were • Relay consumer feedback to manufacturers purifi er technologically advanced reverse also likely to know about chemical • Sets tax rates that directly and indirectly aff ect the fi nal cost of Note: Use includes current use or use within the past year for all methods except chemical osmosis and ultraviolet systems HWTS products disinfectants because offi cials add disinfectants. Use of chemical disinfectants includes any current or past use. are limited to urban areas. Stores Government • Establishes the regulatory environment bleaching powder to community generally stock replacement parts for • May support educational outreach eff orts to rural areas that water tanks, but none had ever used of the ten FGDs was the potential for Decisions to purchase a HWTS the products they carry. raise awareness of the importance of safe drinking water disinfectants at home. By contrast, health benefi ts. Consumers who are product are made jointly by the • Create awareness of the need for safe drinking water and the none of the FGD participants in aware of the link between drinking family, oft en aft er consulting other Many diff erent stakeholders play a benefi ts of HWTS products NGOs and MFIs Andhra Pradesh knew of chemical water and disease are more likely households that are already using role in the HWTS supply chain— • Distribute HWTS products to lowincome rural households • Sponsor loans and installment plans for lowincome consumers disinfectants. Disinfectants are to consider water treatment. Th is the product. Women frequently are some directly and others indirectly. is supported by HUL’s experience the fi rst ones to learn about HWTS • Raise awareness of the need for safe drinking water perceived as an eff ective preventive For example, demand for HWTS Rural micro- • Introduce innovative HWTS technologies health measure when there is a in marketing Pureit: raising products. Th e FGDs did not fi nd any products is highly elastic; in other entrepreneurs • Distribute HWTS products to lowincome rural households natural calamity, but people worry awareness of the link between water evidence that children are helping words, sales are very sensitive to • Increase awareness of health, hygiene, and sanitation issues that adding chemicals to drinking contamination and disease helps raise awareness of safe water issues. pricing. Because tax rates aff ect Communities • Infl uence the decisionmaking process of households water may be harmful. Th ey also drive sales. the fi nal cost of HWTS products, considering the purchase of HWTS products dislike the way that chlorine alters the government thus indirectly In the remaining four FGDs—all Willingness and ability to pay Determine demand for HWTS products the taste. According to an FGD infl uences the demand for these Consumers Infl uence product design and marketing strategies conducted in rural areas—the main Th e FGDs suggest that low-income Off er feedback on value of products with rural micro-entrepreneurs in products. Table 3 describes each factor driving demand for HWTS rural households may be reluctant to Maharashtra, families tend to use products was the possibility of stakeholder who has an impact on all Wholesalers may need convincing directed toward end consumers. spend money on treating drinking disinfectants only when there is an improving the households’ social or part of the supply chain. Linkages about the extent of demand for a Th e manufacturers studied water. Th ese households generally set illness in the family. status. Participants viewed HWTS between stakeholders—for example, specifi c product or brand and its here advertise on national and aside little or no money for health products as a household asset between manufacturers and NGOs, profi t potential. Once the supply regional television stations and Knowledge and use of two brand- needs. Health-related expenditures and status symbol in the rural or between manufacturers and chain is established, manufacturers in newspapers, distribute product name purifi ers, Pureit and AquaSure, are mostly prompted by medical class system. For example, FGD government—have the potential may use discounts and incentives leafl ets to potential customers, depend on local marketing eff orts emergencies; they are not preventive, participants who owned a Pureit to strengthen the supply chain and to drive sales. Off ering volume operate telephone help lines to by the manufacturer. As a result, as would be the case for HWTS reported that social aspirations increase sales. discounts to super-stockists, answer consumers’ questions, erect none of the FGD participants in products. In addition, households were a primary reason for making distributors, and dealers permits promotional and sales kiosks, and Maharashtra are aware of either are used to spending very little the purchase. Promotional strategies them to earn a higher margin or to have sales people make cold calls or purifi er, while AquaSure is widely money, if any, for water. FGD pass the discount along to customers. go door to door. In rural areas, word known in Karnataka and Pureit Th e FGDs also identifi ed three less participants reported spending as According to the supply chain In a competitive marketplace, of mouth and local promotions, such is widely used in some parts of important factors that may motivate little as Rs 12 and no more than analysis, manufacturers direct seasonal or other discounts on retail as painting advertisements on walls Andhra Pradesh. some people to consider purchasing Rs 50 monthly on water. some of their promotional activities prices can attract more customers. or organizing village processions, HWTS products. Th ese include the to members of the supply chain. Th e sheer cost of durable goods Finally, paying micro-entrepreneurs may be more eff ective than mass Motivations for buying an poor taste of water, visible dirt in Initially manufacturers may need for HWTS, compared with average on commission is a strong incentive media advertising. Partner NGOs, HWTS product the water, and the convenience of to market their products to super- household income, may make them for them to sell more. MFIs, and micro-entrepreneurs also HWTS solutions. stockists and distributors in order to Th e overwhelming factor driving unaff ordable for many low-income play a major role in driving sales of build a strong distribution network. Other marketing activities are demand for HWTS products in six families. High operational and products in rural areas; they work 5 PATH SAFE WATER PROJECT 8 PROJECT BRIEF JANUARY 2009 maintenance costs add to concerns with Access Development Services to Findings on the supply, products, replacement parts, or Figure 1. Options for HWTS supply chains over the initial price. In the top off er a loan-backed purchase option both, depending on the amount distribution, and MANUFACTURER fi ve FGDs by income, the price of a for Pureit purifi ers. marketing of HWTS of investment required and the durable HWTS product equaled: manufacturer’s distribution and sales Responsible for: products strategy. Where there are separate • 10% to 13% of average monthly Product design issues supply chains for a product and its 1. Research and design household income for the cheapest and preferences The HWTS supply chain replacement parts, retailers must products on the market, such as 2. Manufacturing products Th e FGDs revealed several deal with more than one distributor. on-tap water purifi ers and ceramic Figure 1 illustrates current and challenges in the design of HWTS On occasion, manufacturers may 3. Marketing and advertising candle fi lters, which retail for potential supply chains for HWTS products for rural, low-income choose to bypass wholesalers and about Rs 800. products identifi ed by the supply households. First, products need supply stock directly to retailers; chain mapping exercise. Each of the • 24% to 32% of monthly income for to be customized in response some have regional sales depots that six manufacturers analyzed—all moderately priced products, such to the local situation. Oft en this supply both wholesalers and retailers. of whom market their products to as tabletop water purifi ers, which means no electricity and no direct Sometimes the public sector acts as WHOLESALE WHOLESALE & RETAIL low-income Indian households—has retail for about Rs 2,000. water connections. Specialized a distributor as, for example, when • Distribution hubs and spokes developed a distinctive marketing technology may also be required to a state health department or village Super-stockists • 72% to 96% of monthly income for and distribution strategy based on remove specifi c contaminants. For Panchayat places a bulk order for a • Rural micro-entrepreneurs the most expensive products, such the nature of the product and the example, 90% of FGD participants chemical disinfectant and distributes • NGO and MFI partners as reverse osmosis systems, which consumers targeted. Several of the Distributors in Nalgonda, Andhra Pradesh, have it to households at risk. sell for Rs 6,000. experienced or are aware of health manufacturers employ multiple • Government agencies distribution models in order to reach Several HWTS supply chains blur Participants in the other fi ve problems associated with fl uoride diff erent segments of the market. the distinction between wholesalers FGDs had far lower monthly contamination. However, there are For example, a company may use and retailers. For example, HUL incomes, making durable HWTS no aff ordable HWTS products on conventional wholesalers and uses a hub-and-spoke model to products an even greater fi nancial the market that can remove fl uoride RETAIL distributors to supply retail stores in reach rural areas. Th e “hub” both burden. In the poorest location and do not require electricity. cities and towns, while partnering distributes products to the “spokes” • Consumer durable stores (Latur, Maharashtra) the price of Second, a home-based system may with local NGOs or rural micro- and also functions as a retail point- (e.g., shops selling kitchen and household goods or electronics) even the least expensive HWTS not be a convenient or eff ective entrepreneurs to reach rural areas. of-sale. Urban stores selling HWTS products is almost three-quarters • FMCG stores (e.g., pharmacies and supermarkets) way to supply the entire family durables and replacement parts also of average monthly household Corporate manufacturers are with safe drinking water. It is may have dual operations. While • HWTS specialty stores (e.g., HUL’s Safe Water Zones) income. Moderately priced HWTS the fi rst link in the chain. Th ey impractical for farm workers and they are located in municipally products cost almost twice as are responsible for research and • Stalls at consumer fairs schoolchildren to carry enough designated wholesale markets, much as monthly earnings, and the development, either conducted drinking water with them to meet they are easily accessed by the • Village kiosks most expensive products cost fi ve in-house or in collaboration with their needs away from home—a retail public. • Door-to-door sales times more than monthly earnings. problem highlighted in one of the academia and government. All of Chlorine disinfectants are much FGDs conducted in Maharashtra. the companies included in this study Th e distinction between the more reasonably priced—selling for About half of the participants in this manufacture HWTS products at wholesale and retail levels of non-HWTS goods and services durable goods are retailed at stores as little as Rs 20 for a 30-ml bottle FGD reacted positively to the idea their own factories in India, but it is also disappears when HWTS have pioneered yet another approach selling electronic goods, where they of Mediclor-M at pharmacies in of a convenient, portable, on-tap possible to contract out production. manufacturers enlist grassroots that combines wholesale and retail exist, and at steel stores. In urban Maharashtra. Th is makes them far purifi er that could be used by farm Corporate manufacturers also organizations, such as NGOs activities, and it holds great promise areas, HWTS durable goods are more aff ordable for low-income workers, schoolchildren, and women decide on marketing strategies and and MFIs, to increase outreach for marketing HWTS products in sold at general stores that sell basic families, even though it is an collecting water from community advertising campaigns to promote to rural markets. NGO and MFI rural areas. Th ey have built networks kitchen and household items, such ongoing rather than a one-time cost. taps. the products. partners place bulk orders with the of rural micro-entrepreneurs to act as cutlery, light bulbs, and fans, manufacturer, usually at a discount, as the primary distributors for their and also at stores selling electronic Recognizing that many rural At the wholesale level, manufacturers Finally, some FGDs in Andhra and then take responsibility both own and neighboring villages, in goods. In large enough towns and households cannot aff ord to make generally appoint super-stockists Pradesh found a preference for for distributing products to the addition to making direct sales to cities, manufacturers may establish a lump-sum payment for a HWTS to service a few districts within community-based water treatment. village level though their network of customers. specialty retail outlets, such as product, some leading HWTS a state. Super-stockists supply Participants were not interested in offi ces and fi eldworkers and also for HUL’s Safe Water Zones. In contrast, manufacturers have partnered with distributors who, in turn, supply Retailers are the fi nal link in the HWTS products, mainly because selling the products directly to rural chemical disinfectants are sold at MFIs to permit households to spread retailers. Super-stockists (and their supply chain. In rural areas, HWTS of the recurring costs and regular consumers. India-based producers pharmacies and other FMCG outlets. payments over time. HUL is working maintenance required. distributors) may carry HWTS 7 PATH SAFE WATER PROJECT 6 PROJECT BRIEF JANUARY 2009