ts supply demand hwts india

8/4/2019 TS Supply Demand Hwts India

1/12

Supply andDemand orHousehold WaterTreatment Productsin Andhra Pradesh,Karnataka, andMaharashtra, India

Background

Te Sae Water Project launched

by PAH in 2006 is exploring how

the private sector can help meetthe need or sae drinking water in

developing countries by piloting

distribution methods, developing

marketing strategies, and infuencing

product design or aordable

household water treatment and

storage (HWS) products. In

India, which is the projects initial

country o ocus, a rapidly growing

economy is beginning to raise

both the standard o living and the

expectations o low-income amilies.

At the same time, commercial

businesses have developed successul,

sustainable models or selling a widevariety o goods and services to

low-income households, especially

in rural areas. Tese developments

have expanded the distribution and

sales opportunities or commercial

manuacturers in the HWS sector.

o better understand the

current market dynamics, PAH

commissioned research on the

demand or HWS products

A boy sells ast-moving consumer goods

at a village kiosk.

!!3

52-(&7%

5,()

PATH/GregZwisler

This is part o a series o

project bries discussing theactivities, research fndings,

and feld experiences o

PATHs Sae Water Project.

JANUARY 2009


2/12

3$7+6$)(:$7(5352-(&7

and on supply chains serving

low-income consumers in three

states: Andhra Pradesh, Karnataka,

and Maharashtra. Te 2008 study

was conducted by an India-based

consulting rm, Intellecap, which

ocuses on institutional capacity

building and investment in thedevelopment sector. Te Sae Water

Project team will use the research

ndings to identiy promising supply

chain models, develop innovative

distribution and marketing strategies,

and inorm product design

Research Methods

Investigating potentialcustomers

Researchers conducted ten ocus

group discussions (FGDs) with

low-income consumers and potential

consumers o HWS products. All

six FGDs in Andhra Pradesh and

both FGDs in Maharashtra took

place in rural areas; the two FGDs in

Karnataka were conducted in peri-

urban locations. Each FGD involved15 to 25 participants, or a total o

210 in all. Participants in nine o

the FGDs were women; one FGD

in Andhra Pradesh consisted solely

o men. Most participants were

seasonally employed as marginal

armers and agricultural laborers.

Teir average monthly household

income ranged rom Rs 1,100 in

Latur, Maharashtra, to Rs 8,300 in

Manickapuram, Andhra Pradesh.

Te FGDs explored participantsaccess to and sources o clean water,

their awareness o the health hazards

o drinking contaminated water, and

their knowledge and likelihood o

using various HWS products.

Analyzing the supply chain

Researchers examined the

production, distribution, and

marketing o HWS products by:

1. Conducting individual interviews

with a diverse set o industry

players based in India, includingone academic expert, six corporate

manuacturers, two wholesalers,

our retailer/distributors, and

seven representatives rom

government, non-governmental

organizations (NGOs), and

development-sector agencies.

2. Mapping the supply chains

o six products marketed to

low-income consumers, including

ast-moving consumer goods(FMCGs), household durables,

and consumable replacement

parts (able 1). All o the

products selected were priced

aordably, could meet the needs o

low-income consumers, displayed

innovation either in the product

or the distribution system, and

had a large-scale presence in the

Indian market or the potential to

be scaled up nationwide.

3. Conducting observations at tenurban, peri-urban, and rural

retailers in Andhra Pradesh that

sell HWS products, including

general household goods stores,

electronics stores, and specialty

outlets.

4. Conducting three FGDs and

six individual interviews with

experienced rural micro-

entrepreneurs who demonstratea high potential or introducing

new products to consumers.

Entrepreneurs were selected

because they participate in

successul rural marketing

ventures, have experience with

micronance, recognize the

value o diversiying the products

and services they oer, and

are interested in addressing

consumers needs or ollow-up

services as well as making

initial sales.

Findings on the demandfor HWTS products

Access to sae drinking water

Borewells are the primary source owater at the FGD sites. None o the

sites is connected to a surace water

Table 1. Products included in the supply chain mapping exercise

Product typeFast-movingconsumer goods(FMCGs)

Household durablesConsumablereplacementproducts

HWTS

Mediclor-M chlorinedisinectantmanuactured byCristal Pharma

Private Limited

Pureit tabletopwater purifersmanuactured byHindustan Unilever

Limited (HUL)

Stainless steel candlereplacement fltersmanuactured by the

Rama Group

Non-HWTS

Pepsodenttoothpastemanuactured byHUL and distributedby the Shakti Ammanetwork o ruralmicro-entrepreneurs

Biomass pelletstoves manuacturedby British PetroleumEnergy Ltd anddistributed bythe NGO SwayamShikshan Prayog

Kerosenereplacement burnersmanuactured byServals Automation


3/12

352-(&7%5,() -$18$5


4/12

3$7+6$)(:$7(5352-(&7

NaveenaAmbatipudiandA.

Mahen

der

NGOs, microfnance institutions (MFIs), and

corporate manuacturers o HWTS products can

play an important role in creating awareness o the

link between sae water and good health and in

promoting community or household water treatment.

Inuential community members, including the

Panchayat health workers, and leaders o sel-help

groups, can help disseminate the message and

catalyze household decision-making regarding HWTS.

Health educationoten linked with a specifc

interventionis the most common approach.

For example:

The microfnance institution, Ujjivan, is working

with other oundations to oer health education

on a range o issues, including hygiene and

sanitation, as part o its health care and health

insurance program or the urban poor.

Raising awareness o sae water helps the Byrraju

Foundation persuade local ocials and villagers

to support the construction o community water

treatment plants.

HUL and partner NGOs make presentations on

waterborne disease and traditional treatment

methods to large gatherings o women, usually

leaders o sel-help groups, beore demonstrating

the Pureit water purifer.

HUL also sets up display boards at doctors clinics

that alert patients to the dangers o waterborne

disease and encourage them to inquire about

Pureit.

Other companies are using water testing to raise

public awareness o the dangers o untreatedwater. For example, Eureka Forbes has established

a network o Aquachek water laboratories and

testing acilities in India. Consumers using any brand

o water purifer can request a ree test or total

dissolved solids (primarily salt) rom Aquachek. For an

additional Rs 300500, they can also order bacterial

tests and urther chemical tests. Another company,

Ion Exchange, markets easy-to-use test kits that

let consumers test their water or a wide variety o

contaminants, including E. coli, uoride, and nitrates.

Activities to Raise Awareness

Sel-help groups can provide women with health inormation as

well as alternative fnancing or household products.

PATH/Glenn

Austin


5/12

352-(&7%5,() -$18$5


6/12

3$7+6$)(:$7(5352-(&7

maintenance costs add to concerns

over the initial price. In the top

ve FGDs by income, the price o a

durable HWS product equaled:

10% to 13% o average monthly

household income or the cheapest

products on the market, such as

on-tap water puriers and ceramiccandle lters, which retail or

about Rs 800.

24% to 32% o monthly income or

moderately priced products, such

as tabletop water puriers, which

retail or about Rs 2,000.

72% to 96% o monthly income or

the most expensive products, such

as reverse osmosis systems, which

sell or Rs 6,000.

Participants in the other ve

FGDs had ar lower monthly

incomes, making durable HWS

products an even greater nancial

burden. In the poorest location

(Latur, Maharashtra) the price o

even the least expensive HWS

products is almost three-quarters

o average monthly household

income. Moderately priced HWS

products cost almost twice as

much as monthly earnings, and themost expensive products cost ve

times more than monthly earnings.

Chlorine disinectants are much

more reasonably pricedselling or

as little as Rs 20 or a 30-ml bottle

o Mediclor-M at pharmacies in

Maharashtra. Tis makes them ar

more aordable or low-income

amilies, even though it is an

ongoing rather than a one-time cost.

Recognizing that many ruralhouseholds cannot aord to make

a lump-sum payment or a HWS

product, some leading HWS

manuacturers have partnered with

MFIs to permit households to spread

payments over time. HUL is working

with Access Development Services to

oer a loan-backed purchase option

or Pureit puriers.

Product design issuesand preerences

Te FGDs revealed severalchallenges in the design o HWS

products or rural, low-income

households. First, products need

to be customized in response

to the local situation. Oen this

means no electricity and no direct

water connections. Specialized

technology may also be required to

remove specic contaminants. For

example, 90% o FGD participants

in Nalgonda, Andhra Pradesh, have

experienced or are aware o healthproblems associated with fuoride

contamination. However, there are

no aordable HWS products on

the market that can remove fuoride

and do not require electricity.

Second, a home-based system may

not be a convenient or eective

way to supply the entire amily

with sae drinking water. It is

impractical or arm workers and

schoolchildren to carry enoughdrinking water with them to meet

their needs away rom homea

problem highlighted in one o the

FGDs conducted in Maharashtra.

About hal o the participants in this

FGD reacted positively to the idea

o a convenient, portable, on-tap

purier that could be used by arm

workers, schoolchildren, and women

collecting water rom community

taps.

Finally, some FGDs in Andhra

Pradesh ound a preerence or

community-based water treatment.

Participants were not interested in

HWS products, mainly because

o the recurring costs and regular

maintenance required.

Findings on the supply,distribution, andmarketing of HWTSproducts

The HWTS supply chain

Figure 1 illustrates current andpotential supply chains or HWS

products identied by the supply

chain mapping exercise. Each o the

six manuacturers analyzedall

o whom market their products to

low-income Indian householdshas

developed a distinctive marketing

and distribution strategy based on

the nature o the product and the

consumers targeted. Several o the

manuacturers employ multiple

distribution models in order to reach

dierent segments o the market.

For example, a company may use

conventional wholesalers and

distributors to supply retail stores in

cities and towns, while partnering

with local NGOs or rural micro-

entrepreneurs to reach rural areas.

Corporate manuacturers are

the rst link in the chain. Tey

are responsible or research and

development, either conductedin-house or in collaboration with

academia and government. All o

the companies included in this study

manuacture HWS products at

their own actories in India, but it is

possible to contract out production.

Corporate manuacturers also

decide on marketing strategies and

advertising campaigns to promote

the products.

At the wholesale level, manuacturersgenerally appoint super-stockists

to service a ew districts within

a state. Super-stockists supply

distributors who, in turn, supply

retailers. Super-stockists (and their

distributors) may carry HWS


7/12

352-(&7%5,() -$18$5


8/12

3$7+6$)(:$7(5352-(&7

o reach more customers, HWS

manuacturers also use door-to-door

sales, stalls at consumer airs, and

village kiosks.

Observations at HWS points

o sale ound that both ceramic

candle lters and tabletop

puriers are consistently stocked.However, ceramic candle lters

are the only HWS products with

good distribution channels and

strong penetration in low-income

rural markets. Expensive and

technologically advanced reverse

osmosis and ultraviolet systems

are limited to urban areas. Stores

generally stock replacement parts or

the products they carry.

Many dierent stakeholders play arole in the HWS supply chain

some directly and others indirectly.

For example, demand or HWS

products is highly elastic; in other

words, sales are very sensitive to

pricing. Because tax rates aect

the nal cost o HWS products,

the government thus indirectly

infuences the demand or these

products. able 3 describes each

stakeholder who has an impact on all

or part o the supply chain. Linkagesbetween stakeholdersor example,

between manuacturers and NGOs,

or between manuacturers and

governmenthave the potential

to strengthen the supply chain and

increase sales.

Promotional strategies

According to the supply chain

analysis, manuacturers direct

some o their promotional activities

to members o the supply chain.

Initially manuacturers may need

to market their products to super-

stockists and distributors in order to

build a strong distribution network.

Wholesalers may need convincing

about the extent o demand or a

specic product or brand and its

prot potential. Once the supply

chain is established, manuacturers

may use discounts and incentives

to drive sales. Oering volume

discounts to super-stockists,

distributors, and dealers permits

them to earn a higher margin or to

pass the discount along to customers.

In a competitive marketplace,

seasonal or other discounts on retailprices can attract more customers.

Finally, paying micro-entrepreneurs

on commission is a strong incentive

or them to sell more.

Other marketing activities are

directed toward end consumers.

Te manuacturers studied

here advertise on national and

regional television stations and

in newspapers, distribute product

leafets to potential customers,

operate telephone help lines to

answer consumers questions, erect

promotional and sales kiosks, and

have sales people make cold calls or

go door to door. In rural areas, word

o mouth and local promotions, such

as painting advertisements on wallsor organizing village processions,

may be more eective than mass

media advertising. Partner NGOs,

MFIs, and micro-entrepreneurs also

play a major role in driving sales o

products in rural areas; they work

Table 3. Roles o stakeholders in HWTS supply chain

Stakeholder Role in supply chain

Academic researchers

Inuence research and development o HWTS products

Create innovative and customized solutions in response to

consumer preerences

Corporatemanuacturers

Conduct research and development

Determine design o products

Decide on marketing strategies, including product rollouts

and niche marketing or selective product types

Wholesalers

Link manuacturers and retailers

Maintain stocks o HWTS products based on expected deman

Contribute to sales by increasing number and diversity o

retailers

Retailers Drive product sales

Relay consumer eedback to manuacturers

Government

Sets tax rates that directly and indirectly aect the fnal cost o

HWTS products

Establishes the regulatory environment

May support educational outreach eorts to rural areas that

raise awareness o the importance o sae drinking water

NGOs and MFIs

Create awareness o the need or sae drinking water and the

benefts o HWTS products Distribute HWTS products to lowincome rural households

Sponsor loans and installment plans or lowincome consume

Rural micro-entrepreneurs

Raise awareness o the need or sae drinking water

Introduce innovative HWTS technologies

Distribute HWTS products to lowincome rural households

Communities

Increase awareness o health, hygiene, and sanitation issues

Inuence the decisionmaking process o households

considering the purchase o HWTS products

ConsumersDetermine demand or HWTS productsInuence product design and marketing strategiesOer eedback on value o products


9/12

352-(&7%5,() -$18$5


10/12

3$7+6$)(:$7(5352-(&7

with the goods that they typically sell.

Rural micro-entrepreneurs also

can oer corporate manuacturers

the benet o their knowledge

regarding local tastes, preerences,

perceptions, and expectations. Teir

understanding o consumer needs

and preerences can help designerscustomize HWS products so that

they appeal to rural consumers.

Micro-entrepreneurs can also help

devise eective marketing strategies

or low-income consumers.

Implications formarketing HWTSproducts

Corporate manuacturers ace

signicant risks in entering the

market or HWS products targeted

to low-income rural households.

Tey must bear the extra costs

o creating demand where little

currently exists and o reaching

out to geographically dispersed

and dicult-to-reach populations.

However, this research suggests

many eective strategies that

manuacturers can use to create

demand or HWS, design more

appealing products, make HWS

products more aordable, create a

strong and sustainable supply chain,

and build a viable support and

maintenance system.

Demand creation andmarketing

Lack o awareness that contaminated

drinking water causes common

illnesses, including diarrhea and

joint pains, limits the demand or

HWS products in rural areas. o

create awareness o waterborne

disease and promote HWS

products, corporate manuacturers

should consider the ollowing

strategies:

Conduct awareness campaigns.

General education about the

harmul eects o contaminated

drinking water can pave the way

or specic product promotions.

Oer water testing. People are

more likely to consider HWS

products i they realize just how

contaminated their drinking wateris.

Involve community leaders

Tought leaders such as the

Panchayat and sel-help groups

can act as a catalyst in the

decision-making process or

HWS products.

Partner with development

agencies and NGOs. Tese

organizations have credibility and

connections at the grassroots level,as well as a proven track record

in educating people about heath,

hygiene, and sanitation issues.

Partner with rural micro-

entrepreneurs. Tese agents are

ideally placed to raise awareness

o water issues, introduce new

technologies, and infuence

household decision-making.

Partner with the health system.

Health proessionals are a credible

source o inormation on water

issues, while patients are a

receptive audience. Te network

o government primary health

centers provides a way to reach

people at the village level.

Encourage positive word o mouthLocal opinionespecially rom

people who have used HWS

productscan have a big impact

on demand in rural areas.

Employ local media channels.

Manuacturers can tailor

advertising on local television,

radio, billboards, and other

channels to the language, needs,

and preerences o the community.

Go beyond the health benetso HWS. Some people are

motivated to buy HWS products

or their potential social benets

or or their ability to improve the

taste and turbidity o water.

Families oten dont use HWTS products because they perceive their water to be sae.


11/12

352-(&7%5,() -$18$5


12/12

customers and cuts distribution

costs or manuacturers.

Minimize the technical complexity

o products. Simple products

are less likely to break down or

require outside maintenance. Teyshould be designed so that users

can easily and cheaply maintain

them.

Maintain high standards o quality.

Durable, well-designed, and

well-made products require less

requent repairs and servicing.

Issue product warranties.

Warranties reassure consumers

about the lie o the product and

uture costs, but they are uselessunless repair services are readily

accessible.

Encourage retailers, including

rural micro-entrepreneurs, to oer

aer-sales services. Retailers can

be trained to make simple repairs

or replace damaged parts. Tis is

convenient or customers.

Conclusion

While challenges remain, this

research reveals great opportunities

or businesses making and

marketing HWS products or

low-income households in India.Commercial rms, oen acting in

partnership with NGOs and MFIs,

have demonstrated that they can

generate demand or HWS by

raising awareness o the dangers

o unsae water and promoting the

health and social benets o their

products. Aordable pricing is key,

however, since the cost o buying

and operating a HWS product is

a major concern or low-income

amilies. Manuacturers shouldalso consider taking aim at markets

outside the home, including children

attending school and agricultural

laborers working in the elds.

Te news rom the supply side

is equally promising. Indian

companies have developed and

tested many innovative approaches

to distribute and market products

to hard-to-reach rural households.

Some have already been adapted

to HWS sales, while others

such as networks o rural micro-

entrepreneursshow great promiseor the HWS sector. It is becoming

clear that commercial manuacturers

with an appropriate, aordable

HWS product have the potential

to eectively reach low-income

households living in rural areas and

that it may be necessary to build a

separate, specialized supply chain to

do so.

This issue was written by Adrienne Kols and

designed by Dave Simpson and

Scott Brown.

Copyright 2009, Program or Appropriate

Technology in Health (PATH). All rights

reserved. The material in this document

may be reely used or educational or

noncommercial purposes, provided

that the material is accompanied by an

acknowledgment line.

www.path.orgPrinted on recycled paper

MAILING ADDRESS

PO Box 900922

Seattle, WA 98109 USA

STREET ADDRESS

2201 Westlake Ave. Suite 200

Seattle, WA 98121 USA

ts supply demand hwts india

Documents