Water purifier cos tapping the bottom of the pyramid ( June '25,2008, Economic Times)
Early this month, Eureka Forbes, the market leader for water purifiers in the country put popular television actress Smriti Irani (Tulsi of Kyunki Saas Bhi fame) behind its product range - Aquasure. Whether Irani helps counter the buzz that Hindi film actress Hema Malini and her daughters bring to Kent’s water purifier sales is still to be seen.Aquasure talks to the bottom of the pyramid with a purifier costing Rs 1,800. In comparison, Kent is relatively high-brow at Rs 7,000 for an ultraviolet (UV) purifier and Rs 14,000 for a reverse osmosis (RO) variant . At sub-Rs 2,000 price point, Aquasure is not the only one tapping the market. Pureit, consumer goods major Hindustan Unilever’s maiden entry into the consumer durables category, is also talking to consumers from a similar price point. After being around for less than four years, both brands of chemical-based water purifiers have managed to create a market that now accounts for 20 per cent of all water purifier sales. Not just that, Aquasure and Pureit are now estimated to be growing at 100% annually , while the rest of the Rs 700-crore water purification category is pacing ahead at 19%-20 %. What are the key drivers? According to S K Palekar, senior VP marketing, Eureka Forbes the category is largely under-penetrated , even in urban India. “Only 6%-7 % of the urban population use electrical water purifiers, while another 12% boil drinking water,” he says. That leaves a whopping 81 per cent of the urban population who drink water directly from the tap, or purify it using candle water filters, muslin cloth and other unsafe methods . This is where both HUL and Eureka Forbes have spotted an opportunity. Existing segments like ultra violet (UV) purifiers or reverse osmosis (RO) systems, are either not relevant or simply not affordable to a large percentage of urban users. While UV purifiers sell upwards of Rs 4,000, RO-based systems are the costliest with prices going upto Rs 25,000. Vivek Sharma, chief marketing officer, Philips India, estimates that about two-thirds of the Indian market uses UV products and the rest is divided between RO and chemical-based purification systems. Sarosh Shetty, marketing manager - water business, HUL, points out that the opportunity was waiting to be exploited . “Eighty percent of all diseases in India is water related and affects households across income-groups . Our aim is to help provide safe water anytime, anywhere and make it as affordable as possible,” he says.The other reasons why many urban households did not use the existing purifiers , according to Palekar is the requirement of running water at a certain pressure or uninterrupted electricity to perform the purification process. In some areas, including urban centres, access to either of the two was a problem. Water shortage is partly one reason why even tap attachments like Zero B have not taken off, despite a promising start several years back. But company executives are confident about the prospects of Zero B Suraksha — that prides itself as the smallest water purifier in the market. “The Zero B Vision is `One Zero B for every Home’ which is to provide a range of pure water solutions across income segments,” says RS Rajan, senior VP - consumer products , Ion Exchange. But merely developing a product for this segment was not enough. Companies had to ensure that consumers saw a compelling reason to buy the product. Because the triggers to buy a product at the bottom of the pyramid are much different than what it would be for an upmarket urban customer. Sharma of Philips explains: “Although in the urban areas there is awareness, there is no trigger from awareness to actions. Because of the strong belief in traditional methods people still don’t want to invest in a purifier.” Then, upmarket customers need choice to compare and pick the product best suited to their needs. For example, areas which have hard-water will have consumers investing in a RO purifier that can purify and remove any bad taste from the water, rather than UV-based purifiers. That would explain the variety of choice that companies offer. Philips launched its water purifiers in May 2007 and has four models which use UV technology , Kent RO Systems similarly has products based on both UV and RO technologies. The other motivator for the middle-andupper-end customers are aggressive marketing campaigns. As Gupta of Kent puts it, “We wanted our TVCs to be clutter-breaking and the best way to do that was by having a celebrity as that improves customer confidence in the product.” Eureka Forbes on the other hand believes in the power of direct marketing for its upscale product range — Aquaguard. Palekar of Eureka Forbes explains the rationale: “In India people believe only in what they see. They believe what you can’t see, cannot be harmful. Therefore it is important to do concept selling in this category , which can only be done house-tohouse . If people don’t understand the concept , nobody will buy the product even if there is a lot of advertising.” Eureka Forbes has a sales force of 6,000 which is responsible for selling Aquaguard.In comparison, Aquasure is sold through retail channels. Sharma of Philips endorses the view. “Direct marketing is effective as the category has a low penetration . However, now the awareness about water purifiers has gone up considerably and today customers don’t need to be convinced as much as they had to be earlier,” he says. Modern retailing and after-sales service are also critical components for the success of the UV and RO range of purifiers. For example, most distributors of water purifiers like multibrand outlets also double up as service centres. The arrival of consumer durable chains like Croma, Next and others have helped waterpurifiers which also share shelf-space with TVs, refrigerators, washing machine’s , etc. Kent RO for example has even tried unconventional retailing options like tying-up with IOC petrol pumps and LPG outlets which stock the brands. HUL’s Pureit is not available in stores, but have set up Safe Water Zones across the country which are offices where customers can walk-in and make enquires about the product. After-sales service contributes to 60% of Eureka Forbes’s annual revenues. Says Palekar, “In a category like water purifiers, service and sales go hand-in-hand . Service is very important for success in this category.” Eureka Forbes has a service network across 500 top towns in the country, while Ion Exchange has 1,200 service engineers providing 24x7 service. Brands like Philips and HUL are trying to empower the consumer to service the system themselves. Although both brands have a helpline where consumers can reach them, their systems are customer friendly and customers can service their products themselves. In the case lower priced brands like Aquasure, the product design resembles a drum filter, and the purification cartridge is designed like a candle . HUL’s Pureit has a GermKill Battery Kit, which has an indicator that goes red once 1,500 liters of water has been purified, hinting the customer that a change of battery kit is due. While metros are important for the category , the growth is being fuelled by Class 1 and Class 2 towns. Below-the-line (BTL) activities are important for every brand including Ion Exchange’s customer-meets , consumer fairs and interactive programmes with school children and free water tests for consumers through the direct sales, retailers and watermarts. “We follow the inside out strategy by rewarding our customers for their loyalty. Over 50% of our sales comes through customer referrals,” says Rajan of Ion Exchange. The rules are changing and the players growing, but will price-points change equations in this category is what remains to be seen. Pureit’s roll-out just before the monsoon season is an indication of how monsoon’s are critical season for water-purifiers . “About 60% of both our sales and services come between the July - September months,” says Palekar. Rains increase the threat of water-borne diseases and hence the importance of safe drinking water in consumer minds also rises. And though activities are done throughout the year, rainy season cannot be ignored. Whether HUL’s vision of making safe drinking water available to every Indian home is fulfilled or not, this rainy season sales will be critical for Pureit’s future.