Upload
ravikant-sharma
View
224
Download
0
Embed Size (px)
Citation preview
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
8/4/2019 TS Supply Demand Hwts India
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
8/4/2019 TS Supply Demand Hwts India
3/12
352-(&7%5,() -$18$5
8/4/2019 TS Supply Demand Hwts India
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
8/4/2019 TS Supply Demand Hwts India
5/12
352-(&7%5,() -$18$5
8/4/2019 TS Supply Demand Hwts India
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
8/4/2019 TS Supply Demand Hwts India
7/12
352-(&7%5,() -$18$5
8/4/2019 TS Supply Demand Hwts India
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
8/4/2019 TS Supply Demand Hwts India
9/12
352-(&7%5,() -$18$5
8/4/2019 TS Supply Demand Hwts India
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.
8/4/2019 TS Supply Demand Hwts India
11/12
352-(&7%5,() -$18$5
8/4/2019 TS Supply Demand Hwts India
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