Safe Water Project

DISTRIBUTION OF PUREIT WATER FILTER

THROUGH A MICROFINANCE INSTITUTIONS

MODEL IN RURAL INDIA Results from an Evaluation of Pilot Projects in Madhya Pradesh

January, 2012

Prepared for:

PATH Prepared by:

Abt Associates Inc.

This report was prepared by Ramakrishnan Ganesan and Samantha Bastian of Abt Associates for

the Safe Water Project implemented by PATH with a grant from the Bill & Melinda Gates Foundation.

Photo: PATH

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TABLE OF CONTENTS

List of Acronyms ........................................................................... 3

Acknowledgements ....................................................................... 5

Executive Summary ...................................................................... 7

1. Background ...................................................................... 12

1.1. Introduction ........................................................................................... 12 1.2. Pilot Partners ......................................................................................... 13 1.3. Product Promoted through the Pilot ............................................... 14 1.4. The Microfinance Institutions Model and Pilot Description ....... 15

1.4.1. Overview .................................................................................. 15

1.4.2. Pilot Geography ...................................................................... 17

1.4.3. Target Group .......................................................................... 17

1.4.4. Partner Roles and Responsibilities ..................................... 18

1.4.5. Marketing Mix Deployed ...................................................... 18

2. Evaluation Approach ....................................................... 20

2.1. Objectives of the Microfinance Institutions Model ....................... 20 2.2. Evaluation Methods .............................................................................. 20

2.2.1. Baseline and Endline Household Research ....................... 21

2.2.2. Qualitative Research Study .................................................. 21

2.2.3. Longitudinal study .................................................................. 22

2.2.4. Collation and Analyses of Project Data, and Interviews

with Project Partners .................................................................... 23

3. Impact on Purchase and Use of PureIt ......................... 25

3.1. Respondent Characteristics ............................................................... 25 3.2. Source of Drinking Water .................................................................. 26 3.3. Water Quality Perceptions ................................................................ 27 3.4. Perceived Need for Water Treatment ........................................... 28 3.5. Potential Market for PureIt ................................................................ 29 3.6. Exposure to Project Activities ........................................................... 31 3.7. Perception of PureIt ............................................................................. 32 3.8. Awareness, Purchase and Use of PureIt ......................................... 34 3.9. Determinants of Purchase of PureIt ................................................. 36 3.10. Determinants of Continued Use of PureIt .............................. 40 3.11. Correct and Consistent Use ....................................................... 43

3.11.1. Correct and Consistent Use in Nagda ........................... 44

3.11.2. Correct and Consistent Use in Neemuch ..................... 47

4. Assessment of Commercial Viability of the Model ...... 50

4.1. Approach to Assessing Commercial Viability ................................ 50 4.2. Market Potential and Impact of Marketing Activities ................... 50

4.2.1. Design Changes During Implementation .......................... 50


4.2.2. Increase in Awareness and Purchase of PureIt ............... 51

4.2.3. Effectiveness of Marketing Activities ................................. 51

4.2.4. Continued Use of PureIt ...................................................... 52

4.3. Analyses of Sales and Revenues ........................................................ 52 4.3.1. Sales Trends ............................................................................. 52

4.3.2. Level of Commercial Viability ............................................. 53

4.4. Partners‟ Willingness to Continue with the Model ...................... 58 4.4.1. HUL‟s interest in continuing the model ............................ 58

4.4.2. Spandana‟s Interest in Continuing with the Model ........ 58

4.5. Model Results and Potential: Summary ........................................... 59

5. Limitations of the Research ........................................... 62

6. Conclusions ...................................................................... 63

7. Recommendations .......................................................... 65


LIST OF ACRONYMS

CA Credit Assistant

CWP Ceramic Water Pot

DHS Demographic and Health Survey

FGD Focus Group Discussion

GKK Germ Kill Kit

HUL Hindustan Unilever Ltd

HWTS Household Water Treatment and Storage

IDI In-depth Interview

LLB Long-life Battery

M&E Monitoring and Evaluation

MFI Microfinance Institution

NGO Non-governmental Organization

NFHS National Family and Health Survey

R&D Research and Development

SEC Socio-economic Class

SWP Safe Water Project

VAT Value Added Tax


ACKNOWLEDGEMENTS

Many individuals contributed to the design and implementation of the study, provided feedback on the

presentation of the study results, or contributed valuable comments on an earlier draft of this report.

The authors would like to acknowledge the contributions of Slavea Chankova, Brad Lucas, Francoise

Armand, Sidhartha Vermani, Tanya Dargan, Lorelei Goodyear, Elizabeth Blanton, Siri Wood, Tim Elliott,

Jody Garcia, and Claudia Harner-Jay.


EXECUTIVE SUMMARY

Introduction

PATH's Safe Water Project (SWP) aims to assess gaps in the household water treatment and safe

storage market and to determine how well private sector companies can successfully and sustainably

reach lower-income consumers with effective household water treatment and safe storage products.

The Microfinance Institution (MFI) model is one of a number of pilot projects that PATH and partners

undertook in India to find ways of overcoming distribution and marketing barriers that make it difficult

for manufacturers of household water treatment and safe storage products to penetrate lower-income

markets. The model was piloted in three Indian states: Tamil Nadu, Andhra Pradesh and Madhya

Pradesh. In this model, durable water filters were sold to rural and peri-urban consumers through the

MFI networks. The model works by using the MFI network to (i) aggregate demand for a durable high-

value product and (ii) by providing the product to low-income customers at affordable installments

payment schemes. In Madhya Pradesh, India, the MFI model was piloted through a partnership with

Hindustan Unilever Ltd (HUL), the marketer of PureIt, a durable water filter, and Spandana

Microfinance, a large microfinance institution in India. PureIt was sold at a subsidized price to MFI clients

who took out Spandana loans for the purchase.

Objectives of the Pilot

The MFI model sought to test whether promoting and distributing PureIt through Spandana‟s loan group

meetings and network to the MFI‟s clients can be sustainable, and the extent to which such a model can

create increases in correct and continued use of PureIt among low- and middle-income consumers.

The key questions for the MFI model are:

1. What is the PureIt uptake rate among target consumers?

2. What is the extent of correct use of PureIt among target consumers?

3. What are the triggers and barriers to the uptake and continued use of PureIt?

4. Can commercial partners earn a profit from sales to target consumers?

5. Will commercial partners continue and/or scale up the SWP pilot business model to reach

target consumers?

6. What other efforts/inputs/incentives are needed to stimulate supply and demand for PureIt to

target consumers?

In addition, the pilots in Madhya Pradesh build on the knowledge gained and lessons learned from the

earlier MFI pilots and seek to inform the following variant-specific questions:

Are the uptake levels achieved in new markets broadly comparable to those achieved in established

markets?

Does product cost-defrayment increase levels of uptake and consistent use?

Can the cost-defrayment be recouped through sales of the replacement germ-kill kit?

Pilot Description

In Madhya Pradesh, the MFI model was implemented in two Spandana branches (Nagda and Neemuch)

with approximately 5,650 clients. In Nagda, the intervention was implemented over five months


(February-July 2010). After the pilot in Nagda, the intervention was rolled out in Neemuch. However,

the intervention was curtailed due to the nationwide MFI crisis that took place at the same time.

Therefore, the intervention was only implemented for a month in Neemuch (September 2010).

The pilot intervention involved the sale of PureIt water filters through the Spandana network. PureIt is a

durable water filter that employs a combination of filtering techniques – a net filter (to remove visible /

coarse impurities), chlorine (automatically released through a cartridge, - microbicide), activated

carbon/charcoal filter (to remove chlorine smell/taste). The replaceable part of PureIt is known as the

Germ Kill Kit (GKK).

The pilots in Neemuch and Nagda differed in the amount of subsidy and the loan installments offered to

the MFI clients. In Neemuch, PureIt was sold at a 50-percent cost defrayment. Customers paid Rs 1,000

in loan installments of Rs 43 over 25 weeks. In Nagda, there was a 100-percent cost defrayment scheme

for PureIt, and customers who received the free filter had to pay Rs 730 for two replacement GKKs

(packaged with the device) with a loan installment of Rs 39 for the first 17 weeks and Rs 37 for the last

three weeks.

The promotion and distribution of PureIt involved the HUL representative using the platform of the

Spandana group meeting to make presentations of the need and methods to treat water, highlighting

PureIt as a promoted water treatment method. Following the meeting, if the MFI client decided to

purchase PureIt, the loan was sanctioned by the Spandana loan officer and the PureIt water filter was

distributed by the HUL representative.

The resupply of the GKK was done by Spandana while the after sales services were provided by HUL.

Evaluation Approach

The key research questions and additional related topics considered in evaluating this pilot were

addressed through a mix of primary and secondary data sources.

These sources included:

Baseline and endline household research: The baseline and endline household surveys were designed to

assess the extent of increases in uptake and regular use (reported) of PureIt, as well as changes in

other proximal indicators of interest to the project. To answer these questions, we carried out a

pre-post study in the intervention area, using data from a population-based survey of households.

The baseline survey for both Neemuch and Nagda was conducted in December 2009 (before the

start of the intervention) and the endline survey for Nagda was conducted in November 2010 and

for Neemuch in January 2011. A sample of 440 and 414 households were drawn at baseline and

endline respectively in Neemuch. In Nagda, a sample of 440 and 402 households were drawn.

Qualitative research study: The purpose of the qualitative research study was to understand motives

and barriers to trial and continued use of PureIt (research question no. 3). This study was

conducted in June 2011. A total of two focus group discussions and six in-depth interviews were

conducted among women (and their spouses) in the intervention area who was a MFI client.

Longitudinal research: After the endline household survey, a longitudinal survey was conducted with

follow-up visits for six months among those respondents who purchased PureIt and were using it at

endline. The longitudinal study aimed to measure the rates of correct and consistent use of PureIt

over time, and provide data on the reasons for discontinuing use of the filter.

Collation and analyses of project data, and interviews with project partners: We utilized project cost,

sales, and revenue data. We interviewed the project partners to understand how the project was

implemented, whether it met their expectations, the challenges encountered and the lessons


learned. These, along with survey research data, were used to answer research questions related to

commercial viability.

Findings

The results from the household surveys and the qualitative research study clearly show that:

Felt need was high; however this was mainly due to visible impurities in the water and did not arise

from the need for microbial safety. Respondents therefore engaged in filtering with cloth/plastic

sieve and using alum to treat their water.

At baseline, the intention to buy PureIt was low for the 50-percent cost defrayment scheme. The

key segment identified as potential purchasers was those who were placed in the upper wealth

quintile and boiled their water. However, even within this segment, the intention to buy at 50

percent cost defrayment was below experiential norms developed in the SWP project. The potential

market for the 100-percent cost defrayment scheme was not evaluated at baseline.

Findings from the household surveys and the qualitative research study show that:

o Awareness of PureIt increased significantly from 4 percent and 7 percent to 56 percent and

74 percent in Neemuch and Nagda respectively.

o There was a significant increase in purchase of PureIt in both pilots. In Nagda where the 100

percent cost-defrayment model was implemented the uptake was an impressive 44 percent.

However, the purchase level was much lower in Neemuch (7 percent).

o 72 percent of those who purchased were from the SWP target group (middle three wealth

quintiles).

o The high uptake rate reported in Nagda is offset by qualitative research findings that

profiting from resale may have been a strong reason for purchase. As many as 35 percent

did reported having given away the PureIt they purchased. The quantitative and qualitative

surveys indicated a high level of re-sale of PureIt. Further, the qualitative research also

indicated that some Spandana clients may have purchased PureIt for other non-member

households belonging to higher wealth quintiles.

The research findings suggest five important reasons for not purchasing PureIt:

o Low exposure to promotional activities and scheme curtailing, particularly in Neemuch.

o Low of perceived need for water treatment (microbial safety)

o Poor perceptions of PureIt in terms of value for money and product efficacy

o Lower perceived self-efficacy and family support

o Lower affordability, even with cost-defrayment

In Neemuch activities were curtailed due to the MFI crisis. Due to this, the levels of recall of

activities (both coverage and intensity/frequency of interactions) in Neemuch were substantially

lower than in Nagda. Consequently, we cannot assess the effectiveness of the Neemuch pilot where

the 50-percent cost defrayment model was implemented.

Impact of intervention on uptake suggests that Spandana meetings alone significantly increase the

chances of purchase. Additional media exposure increase possibility of purchase but between

Spandana meetings and both mass media and Spandana meetings there is no significant increase

These studies report important reasons for the high lapse rates, in particular:


o The reasons for lapsing were similar to the reasons for not purchasing PureIt in the first

place. The low value perception of PureIt, along with the lack of irreplaceable benefits of the

product, translated to gifting and reselling PureIt.

o Replacement of GKK was not a reason for lapsing; however, price and availability of GKK

could lead to further increase in lapse rate in the future.

o From the longitudinal study, we found that in both pilot areas current use dropped over the

six to seven months of follow-up. Correct use was irregular due to intermittent

maintenance by the respondents, resulting in negligible rates of consistent correct use by the

last track of the longitudinal.

Assessment of the effectiveness of marketing activities leads to the hypothesis that the cost-

defrayment may have resulted in a negative externality – dis-incentivizing HUL product

representatives in consumer education and motivation.

Without the cost-defrayment, HUL‟s gross margins are likely to partially or fully cover all costs

directly attributable to this model. Thus, without cost defrayment, the model would be at a cost

recovery level 4 or 5. However, with cost-defrayment, we classify the level of commercial

sustainability (or cost recovery) as level 3 – it recovers product and distribution costs, but does not

fully recover marketing costs deployed towards cost-defrayment.

The net loss to HUL from sale of a PureIt in Neemuch is Rs 630, and the net loss in Nagda where

PureIt was bundled with two additional GKKs for Rs 730 is Rs 1,322. To recover these losses from

sales of GKK, the average number of additional GKKs purchased by those who purchased PureIt in

Neemuch needs to be 4.5 or more. Similarly, the average number of additional GKKs purchased by

those who purchased PureIt in Nagda needs to be 9.5 or more. The continuation rates observed in

the longitudinal survey show that such levels of GKK re-purchase are unlikely.

Thus, the commercial viability for the different partners in this model are summarized as:

o High level of commercial viability for Spandana, with product, distribution and marketing

costs, and overheads and profit components nearly fully recovered.

o Full commercial viability for HUL‟s distributor who recovered completely all of these cost

components.

o Incomplete cost-recovery for HUL, with production and distribution costs recovered

but not marketing costs (cost-defrayment), overheads and profits.

In the Neemuch pilot, total cost recovery was 93%. HUL achieved 72% cost recovery, while

Spandana achieved a 122% cost recovery.

In the Nagda pilot, total cost recovery was 85%. Cost recovery rates were 62% for HUL, and 130%

for Spandana.

Interviews with HUL indicate that HUL will not be willing to continue with the cost-defrayment

model. However, HUL reported that it was keen to continue and scale-up the MFI partnership

approach without cost defrayment. Spandana‟s interest in continuing the model could not be

assessed since Spandana representatives were unavailable for interviews.

Recommendations

The findings point to the following recommendations on changes to the model design and

implementation that partners should consider to improve the health impact and commercial viability of


this model. Some of these recommendations are known to be feasible and effective on the basis of

HUL‟s experiences with this and similar pilots.

Increased intensity of coverage: The findings suggest that there is a need for increased intensity of

activity both in terms of quality and quantity of group meetings conducted. There is a need to

involve the entire family especially the spouse and elders in the decision making process in order to

ensure uptake and continued use. HUL has seen benefit in greater involvement of the MFI CAs and

NGO staff in conducting repeat visits to households.

o Spandana meetings alone provide a significant positive impact toward uptake rates.

Resources could be focused on MFI group meetings to increase uptake of PureIt. This is

essential in converting latent need for water treatment to demand for PureIt.

Cost defrayment is an ineffective route: those who did not intend to use PureIt also purchased

leading to a mis-targeted subsidy. The model was therefore successful in generating high purchase

rates; however, it also saw a high incidence of lapse and resale. Uptake and continued use is likely to

be impacted positively if the cost defrayment resources are used towards increasing intensity of

activities and frequency of interaction rather than to substitute product price.

Price and availability of GKK may come up as a barrier to continued use in the future. There is

therefore a need for a feasible GKK supply chain and product bundle. HUL has had positive

experiences with the sale of two LLBs for Rs 1,000 repaid over 50 weeks.

Some product related functional barriers are heightened and may take a more central position as a

cause for lapse once the other concerns are resolved. These include the problems faced by large

families that require larger volume of water - frequent refilling and replacement of GKK may be

cumbersome – and the delicate appearance of PureIt and difficulties in finding a suitable place for it

make it less desirable in smaller houses. Resolving these issues may be challenging as it likely needs

to involve creating different versions (in terms of size and sturdiness) of the device to address the

needs of these user segments.


1. BACKGROUND

1.1. INTRODUCTION

The Safe Water Project (SWP), implemented by PATH with a grant from the Bill and Melinda Gates

Foundation, aims to develop sustainable distribution models for ensuring access to Household Water

Treatment and Safe Storage (HWTS) products, together with promoting sustained use of those

products over time by low-income populations. Commercial model pilots are being implemented in a

phased manner to assess and refine various HWTS products and business approaches. The primary

objective of the pilots is to assess various distribution models for reaching lower-income populations

with products that are already commercially available and effective. Distribution models and HWTS

products piloted by the SWP include:

Bicycle entrepreneur sales model for chlorine tablets (Aquatabs) in rural Uttar Pradesh, India

Microfinance institutions (MFI) model for table-top combination filters in Tamil Nadu, Madhya

Pradesh and Andhra Pradesh, India

MFI model for ceramic water pot filters in Kampong Speu, Cambodia

Direct (door-to-door) sales model for ceramic water pot filters in Kampong Speu, Cambodia

Unorganized retail distribution model for ceramic water pot filters in Kampong Spam, Cambodia

Basket-of-goods model for ceramic water pot filters in Nyanza province, Kenya

Promotion and distribution of Aquatabs by community health workers in Kan Tho province,

Vietnam

The MFI model seeks to test whether an MFI network can be leveraged - as a demand aggregator and

financier - to promote and distribute a durable water filter to lower-income households sustainably; and

the extent to which such a model can increase uptake and correct and consistent use of the water filter.

Variants of the MFI model were piloted in Tamil Nadu, Madhya Pradesh and Andhra Pradesh. In Tamil

Nadu and Madhya Pradesh the pilots were implemented in partnership with Hindustan Unilever Ltd

(HUL), the manufacturer and marketer of PureIt and Spandana Sphoorty Financial Limited (Spandana),

one of the largest MFIs in India. A key factor in the MFI model variants that were tested in Madhya

Pradesh was the effect of cost-defrayment (i.e. sale of the water filter at lower than retail price) on

uptake and continued use of the product.

Abt Associates lead the monitoring and evaluation (M&E) of these pilots. The M&E approach included

household surveys to assess increases in uptake and continued use of PureIt, identifying motives and

barriers to purchase and continued use through exploratory research studies, longitudinal surveys to

measure correct and continued use, and assessment of the commercial viability of the model using sales

and cost data and information from pilot project partners.

This report presents the evaluation findings for the MFI model in Madhya Pradesh. Separate evaluation

reports were produced by Abt Associates for each of the other SWP pilots.


1.2. PILOT PARTNERS

PATH‟s partners for this pilot – HUL and Spandana – are described below.

Hindustan Unilever Limited (HUL) is a subsidiary of Unilever, one of the world‟s leading suppliers

of fast moving consumer goods with strong local roots in more than 100 countries across the globe and

annual sales of about €44 billion in 2011. In India, HUL has over 35 brands spanning 20 distinct

categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea,

coffee, packaged foods, ice cream, and water purifiers. HUL is renowned for its marketing expertise and

extensive distribution network. Six HUL brands were listed among the top 10 most trusted brands in a

survey in 2010 (Brand Equity's „India‟s Most Trusted Brands Survey‟ rankings for 2010). HUL directly

reaches over one million retail outlets and its products reach over 6.3 million retail outlets.

HUL entered the water purification business in 2004 with the introduction of PureIt - a combination

gravity water filter. Research and development for PureIt was driven primarily from HUL‟s R&D center

in Bangalore – one of Unilever‟s six principal R&D centers globally. The product is now slated for

introduction in other countries too. 1 PureIt was initially introduced in Tamil Nadu through a retail

distribution model, and the bulk of HUL‟s activities including intensive multi-media brand promotion

campaigns were focused in this state until 2008-09.

HUL gradually expanded its coverage of PureIt to other states, and coverage in Madhya Pradesh began in

2009. Another key aspect of HUL‟s strategy for PureIt from 2008-09 onwards was the emphasis placed

on „direct sales‟, whereby HUL began developing and strengthening internal resources and personnel

towards this model. Parallel to this, HUL entered into partnerships with NGOs where PureIt was jointly

marketed as a means to increase use of water treatment solutions in the community. HUL characterizes

its partnerships with NGOs prior to the SWP project as „individual-driven‟ and „very few significant

partnerships‟ (i.e. partnerships with MFIs and NGOs were not a part of its core business strategy for

PureIt).

HUL‟s water purification product business had not achieved break-even in 2009; it is now expected by

HUL to break-even by 2012. With increased emphasis on direct sales, HUL was interested in exploring

direct sales models based on social partnerships with an aim to expand its target market from socio-

economic class (SEC) A initially to include SEC B, C and D households.2

Spandana Sphoorty Financial Limited is the second largest microfinance institution in India. It was

started as an NGO in India in 1998. By 2010 Spandana was present in 10 states, and had 4.2 million

clients. Initially supported by Friends of Women World Bank (FWWB), Spandana later also received

funds from development financial institutions, public and private sector banks, including foreign banks,

and other non-bank financial corporations.

The MFI lends to low and lower-middle income households typically borrowing for investments in

agriculture, dairy and micro-enterprises. It also provides services to improve the livelihoods of its low-

income clients. These include initiatives for safe drinking water, renewable energy and insurance. The

microfinance institutions lend to groups of women at group level and individually using the Grameen-

style Joint Liability Group (JLGs) model.

1 HUL has invested in other product line extensions (new HWTS products using the Pureit brand name). PureIt

Compact, for example, is a Rs. 1,000 HWTS product developed by HUL. There are also more expensive products. 2 SEC is a classification of consumers developed by India‟s Market Research Users Council. In urban areas, A is the highest

SEC, followed by B, C, D, and E. Box 1 later in the report provides a more detailed explanation of how SEC segments are

defined.


Spandana had prior experience in selling products that improve health or quality of life to its customers.

However, most of its interactions with manufacturers or marketers were limited to „bulk purchase‟ -

purchasing from manufacturers or marketers at wholesale prices and distributing the product to their

clients via loan installment payments.

In October 2010, all microfinance institutions in India were placed under scrutiny due to tensions

between the government-sponsored self-help group model, and the privately-funded microfinance

institutions (MFIs) with JLGs3. While this crisis was precipitated by adverse media coverage of the initial

public offering of one of the largest MFIs (SKS microfinance), it affected operations of all MFIs based in

Andhra Pradesh, including Spandana, and brought most of the MFI‟s operations to a stand-still.

1.3. PRODUCT PROMOTED THROUGH THE PILOT

PureIt, the product marketed in this pilot is a durable combination gravity filter. It does not require

electricity or continuous tap water connection. The total capacity of the filter is 23 liters, of which the

purified water storage capacity is 9 liters.

It purifies water using a four stage filtration mechanism (Figure 1) that consists of: (i) Microfibre Mesh™

- removes visible dirt; (ii) Compact Carbon Trap™ - removes harmful parasites and pesticides; (iii)

Germkill Processor™ - uses 'programmed chlorine release technology' to target and remove invisible

harmful viruses and bacteria; and (iv) Polisher™ - removes chlorine and ot her contaminants to make

water clear, odorless and improves taste.

The Compact Carbon Trap™, Germkill Processor™ and Polisher™ need to be replaced every 3 to 6

months, based on usage (i.e. liters of water purified). This

consumable is sold by HUL as a Germkill Kit™ (GKK).

PureIt has an indicator, which alerts the customer a few days in

advance (based on average use) when the GKK needs to be

replaced. If the GKK is not replaced on time, PureIt has an „Auto

Shut Off‟ mechanism that automatically stops the water flow until

the GKK is replaced.

3 Intellecap, White Paper, „Indian Microfinance Crisis of 2010: Turf War or a Battle of Intentions?‟ -

http://beyondprofit.com/Intellecap%20Microfinance%20White%20Paper%20%28Oct%202010%29.pdf

Figure 1: PureIt’s Four Stage

Filtration Mechanism

http://beyondprofit.com/Intellecap%20Microfinance%20White%20Paper%20%28Oct%202010%29.pdf


1.4. THE MICROFINANCE INSTITUTIONS MODEL AND PILOT DESCRIPTION

1.4.1. OVERVIEW

The MFI model was conceived to leverage four principal advantages that an MFI could bring to a

partnership with a marketer of durable water filters:

- MFI clients belong to lower-income households and are often those with the higher need for a

health intervention. A partnership with an MFI thus allows for targeting those at higher need / risk.

- The MFI network offers a platform through which the rapport and trust established between the

MFI and the community can be leveraged to establish credibility of the promoted product (in this

case durable water filters) and need for water treatment.

- One of the anticipated challenges in marketing durable filters is the lower density of demand in

urban slums and rural areas due to lower perceived need for water treatment in these areas. This is

compounded in consumer durables due to high cost of transportation of goods where the quantity

transported is low. The MFI network, by acting as a demand aggregator, has the potential to reduce

the cost of sales. Additionally, since MFI members meet periodically in groups, they present a

„congregation point‟ for sensitizing potential consumers on the benefits of the product, resulting in

increased communications efficiency.

- Another anticipated barrier in marketing durable filters to lower income households is their ability

to pay for the product – an expensive purchase in the context of the household‟s disposable

income. By providing loan financing for the durable filter, the MFI model could greatly reduce this

ability-to-pay barrier.

If successful, the MFI model offers significant potential to the product manufacturer. The MFI industry is

estimated to cater to more than 16 million households (Nabard, CRISIL estimates, 2009). Though the

MFI industry is fragmented – there are reported to be more than 3,000 MFIs in India – the ten largest

MFIs cover three quarters of total MFI clients.

The SWP pilots at Tamil Nadu, Andhra Pradesh and Madhya Pradesh aim to test the feasibility,

effectiveness and commercial viability of promoting and distributing durable water filters in partnership

with two MFI networks. Table 1 below summarizes the MFI pilot variants.

In Madhya Pradesh and Tamil Nadu, the Spandana network was used to promote and distribute PureIt

with loan installments. However, the Madhya Pradesh pilot variants differ from the Tamil Nadu pilot

variants in the following aspects:

Unlike in Tamil Nadu where both Spandana and HUL‟s PureIt have had a longstanding presence,

Madhya Pradesh is a relatively new market. So, the pilot seeks to understand if the uptake levels

achieved in new markets is broadly comparable to those achieved in established markets.

Findings from the Tamil Nadu pilots showed that one of the reasons for not purchasing PureIt

was affordability. Accordingly, the Madhya Pradesh pilot (implemented later) sought to

determine whether uptake of PureIt is higher with cost defrayment. Towards this, two levels of

cost defrayment were tested. In Neemuch, PureIt was sold for Rs 1,000 (excluding loan

charges). In Nagda, PureIt along with two GKK were sold for Rs 730 (i.e. PureIt was given for

free and the two GKKs were sold at full retail price). An additional question that arises in the

cost-defrayment strategy is whether the cost defrayment can be recouped through sales of the

GKK. This is examined through commercial viability analyses


Table 1: Summary of MFI Pilot Variants in India

Parameter Tamil Nadu Madhya Pradesh Andhra Pradesh

Product Partner HUL, PureIt Classic HUL, PureIt Classic EFL, Aquasure Xtra

Channel Partner Spandana Sphoorty

Financial Limited

Spandana Sphoorty

Financial Limited

Pragathi Sewa Sanstha, a

second-tier MFI, through

the umbrella organization

ACCESS

Partners’ market

presence

Tamil Nadu is an

established market for HUL

and Spandana (2004 or

earlier)

Madhya Pradesh is a new

market for HUL and

Spandana. Operations

started in 2008-09

Warangal, Andhra Pradesh

is an established market for

EFL and PSS

Product Price Rs 2,000 ($45) Two price points tested

Rs 1,000 ($22)

Rs 730 for PureIt and

two extra GKK

Rs 1,740 ($ 39) for

Aquasure Xtra and one

cartridge

Loan Scheme Two repayment plans

tested (in different areas)

Rs 80 ($1.8) per week

for 25 weeks


for 50 weeks

Weekly repayment amount

similar in both areas


for 25 weeks


for 17 weeks

Monthly repayment plan

Rs 250 ($5.60) per

month for 6 months, plus

upfront payment of Rs

250

Population Strata Urban and rural areas Rural areas Rural areas

Pilot-specific Questions Which loan scheme

generates higher uptake

levels?

Is the level of uptake

similar in urban and rural

areas?

Are the uptake levels

achieved in new markets

broadly comparable to

those achieved in

established markets?

Does product cost-

defrayment increase

levels of uptake and

consistent use?

Can the cost-defrayment

be recouped through

sales of the GKK?

Are the uptake levels

achieved through a

monthly repayment plan

broadly comparable to

those achieved through a

weekly repayment plan?

o Are the uptake levels

achieved through the

EFL-ACCESS-PSS

partnership broadly

comparable to those

achieved through the

HUL-Spandana

partnership?

While some of the questions framed here are comparative in nature and require rigorous pilot designs

such as randomized control trials, such pilot designs could not be implemented due to the “real-life”

nature of these pilots. The implementing partners prioritized testing implementation feasibility and

commercial viability of the models, and therefore had limited ability and willingness to alter pilot design

to allow for randomization of individual pilot elements across locations/clusters or

households/individuals. Hence, broad comparisons will be made from the results of these pilots, using

data from independent cross-sectional studies and qualitative research studies.


1.4.2. PILOT GEOGRAPHY

The pilots in Madhya Pradesh were implemented in two Spandana branches, Neemuch and Nagda.

Neemuch town is the district headquarters of Neemuch district, situated in west Madhya Pradesh

bordering the state of Rajasthan. It is a major recruitment and training center for the Central Reserve

Police Force.

Nagda is an industrial town in the

district of Ujjain in Madhya Pradesh,

with manufacturing industry units. It is

also a major railway junction on the

Delhi-Mumbai railway line. It is

situated on the banks of the Chambal

River.

The intervention periods differed for

the two pilots. In Nagda, the rollout

period was two months (February

and March 2010) and sales continued

until July 2010, whereas in Neemuch

the intervention ran only for a month

(September 2010). The Neemuch

pilot was curtailed due to

implementation difficulties arising

from the MFI crisis that took place in

India in October 2010. HUL has had

market presence in these pilot areas

since 2008-09.

1.4.3. TARGET GROUP

The intervention‟s core target group was Spandana‟s clients in its Neemuch and Nagda branches.

Spandana had 2, 647 clients in Neemuch and 3,010 clients in Nagda at the time when the pilot started.

While the pilots were designed to cover all current clients of Spandana in these two branches, the focus

of the pilots were clients from households that belong to the middle three relative wealth quintiles (the

core target group for the SWP in each country where the project has implemented its pilots).

Additionally, the pilot in Nagda (where consumers received PureIt for free) intended to give priority of

the product loan offer to households with children under five so that the cost defrayment benefited

households with greater vulnerability to water-borne diseases. However, such a targeting was

operationally challenging and could not be implemented.

For the purposes of the pilot, PATH funded the cost defrayment (consumer subsidy) and a ceiling on the

number of PureIt devices to be sold at the branches was arrived at based on funds allotted for cost

defrayment in each of the pilots. Therefore, some MFI clients in Nagda were not able to avail of the

scheme after the ceiling on sales was reached. In Neemuch many MFI clients could not avail of the

scheme due to the MFI crisis that took place a month after the initiation of the Neemuch pilot and the

intervention curtailed.


1.4.4. PARTNER ROLES AND RESPONSIBILITIES

In this pilot, the partnership was between Spandana and HUL. PATH played a central role in facilitating

this partnership. Specific roles of the partners are summarized in Table 2.

Table 2: Partner Roles and Responsibilities

Model Design Partnership and test parameters initiated by PATH

Negotiated and finalized through consensus among PATH, HUL and Spandana

Sales Pitch By HUL appointed Product Executives;

Channel access (MFI client group meetings) provided by Spandana for a fee (Rs 200 / PureIt)

Demand

Aggregation

Orders collected by Spandana (CAs)

Aggregated and invoiced to distributor (Water Associate*)

Financing Loan assessment, approval, disbursement and collection by Spandana

Filter Supply Distributor to customer / Spandana branch

GKK Supply Initially direct through helpline, later through Spandana/ local retail points *Funded by PATH

1.4.5. MARKETING MIX DEPLOYED

This section describes the key aspects of the model and marketing mix employed in the pilot: product

pricing, promotion strategy, and distribution.

Price

The retail price of PureIt across India is Rs 2,000. The replaceable GKK comes in two sizes: (i) a Rs 350

version for purifying 1,500 liters of water that generally lasts for about 3 months; and (ii) a Rs 550

version for purifying 2,500 liters that generally lasts for about 6 month, and known as a Long-Life Battery

(LLB).

The pilot variations in Madhya Pradesh had a substantial cost defrayment component (subsidy to

consumers). In Neemuch, PureIt was offered to Spandana clients at Rs 1,000 with a 50-percent cost

defrayment to the customer. In Nagda, PureIt was offered at 100-percent cost defrayment, but

customers were charged Rs 730 for a set of two replacement GKKs that came with this offer.

Spandana provided a loan installment scheme for its clients who chose to purchase PureIt through the

pilot. In Neemuch, customers had to pay Rs 43 for 25 weeks. In Nagda, customers had to pay Rs 39 for

the first 17 weeks and Rs 37 for the next three weeks.

For continued use, customers would have to purchase additional replacement GKKs at market price.

Promotion and Distribution

Spandana‟s network was used as the channel for promotion and distribution of PureIt through the pilot.

The operational model was as depicted in Figure 2.

Spandana‟s credit assistants (CAs) – loan officers working in the field - organized and invited group

members to participate in a special meeting where PureIt would be discussed. In these meetings, HUL

sales representatives sensitized group members to the need for water treatment, conducted a

demonstration of the product, described the product‟s features and benefits and explained the loan

offer.

Households interested in purchasing PureIt would apply for a loan with Spandana, and the CAs

scrutinized the loan documents and approved the loan. Spandana played the role of both a financier and


a demand aggregator: the MFI collected orders from interested clients, processed and approved loans,

and then placed an aggregated order to HUL‟s local distributor for the number of PureIt filters required.

Ordering was done on a periodic basis, usually fortnightly. Spandana invoiced HUL / HUL‟s local

distributor based on the total number of loan applications sanctioned.

Invoiced products were delivered to the customers or to the Spandana branch by the local HUL

distributor. The distributor charged an additional Rs 30 for delivery of each filter, and the delivery

charge was reimbursed by HUL. In addition, HUL paid Spandana Rs 200 for each filter sold as a channel

access or facilitation fee. HUL was responsible for after sales service.

Figure 2: Distribution Model

The model for resupply of GKK went through a number of iterations. Initially the „normal‟ delivery

channel for GKKs was envisaged. Here, customers call the helpline to place orders for replacement

GKKs and the order is routed to the local distributor. The distributor then delivers the GKK to the

customer‟s residence for a nominal delivery charge. However, this delivery route was challenging in the

urban settings and was reportedly unviable for peri-urban and rural areas where there would be low

density of demand and low familiarity with helplines4. Therefore, HUL was in discussion with Spandana

to resupply GKK (either with or without loans on GKK) through Spandana‟s network. However, this

was not finalized due to the MFI crisis. Thus, an alternate delivery channel was developed for the

purposes of these pilots wherein customers could purchase replacement GKK from retail outlets near

their residence which stocked GKKs.

4 As reported by HUL representatives in an interview conducted by Abt Associates in July 2011

HUL Sales Representative Spandana CA

HH Decide to Buy

Spandana Loan

HUL Product Supply

HUL after sales service

Resupply of GKK*

Product Presentation in Group Meeting

* GKK Resupply through:

- Helpline & direct supply

- Spandana

- Stocking in local retail


2. EVALUATION APPROACH

2.1. OBJECTIVES OF THE MICROFINANCE INSTITUTIONS MODEL

As mentioned earlier, the MFI model seeks to test whether MFI networks can be leveraged as a demand

aggregator to promote and distribute durable water purification solutions to rural and peri-urban

consumers sustainably, and the extent to which such a model can increase uptake and correct and

consistent use of a durable water filter among low- and middle-income consumers. Specifically, the pilots

in Tamil Nadu and Madhya Pradesh aimed to test whether the Spandana network can be leveraged to

promote and distribute PureIt. Therefore the key questions for this pilot (that are aligned with the SWP

overarching key research questions) are:


2. What are the motives and barriers to purchase and use of PureIt?

3. What is the extent of correct and consistent use of PureIt among target consumers?

4. Can the commercial partners earn a profit from sales to target consumers?


target consumers?


target consumers?

In addition, the pilot in Madhya Pradesh seeks to inform the following variant-specific questions:

Are the uptake levels achieved in markets new for pilot partners broadly comparable to those

achieved in established markets?

Does product cost-defrayment increase levels of uptake and consistent use (compared to models

without cost defrayment)?

Can the cost-defrayment be recouped through sales of the GKK?

2.2. EVALUATION METHODS

The research questions summarized above were addressed through a mix of data sources, described

below. As explained earlier, while some of the questions framed above are comparative in nature and

require study designs such as randomized control trials to provide rigorous answers on effect

attribution, such study designs were not feasible given the nature of the pilots. Hence, broad

comparisons will be made from these pilots using data from independents cross-sectional studies and

qualitative research studies.


2.2.1. BASELINE AND ENDLINE HOUSEHOLD RESEARCH

The baseline and endline household surveys were designed to assess the extent of increases in uptake

and regular use of PureIt (as reported by consumers), as well as changes in proximal indicators of use

that are of interest to the project.

We carried out a pre-post study in the intervention area, using data on Spandana‟s clients in the two

pilot areas. The baseline survey for both Neemuch and Nagda was conducted in December 2009

(before the start of the intervention). The endline survey was conducted in November 2010 (Nagda)

and January 2011 (Neemuch). Data were collected through at-home, personal interviews using a

structured questionnaire. The target respondent for the surveys was the woman who was in charge of

water in the household within Spandana‟s client base. A sample of 440 and 414 households were drawn

at baseline and endline respectively in Neemuch. In Nagda, a sample of 440 and 402 households were

drawn. The sample size at baseline was determined based on the following assumptions:

Regular use of PureIt at baseline and endline to be 0 percent and 7 percent respectively

Acceptable margin of error (at endline) to be 3 percent at a 95 percent confidence interval

A design effect of 1.5 is appropriate for the sampling design

Response rate would be 95%

A two-stage sample selection design was used to select 56 Spandana JLGs in each pilot area. First, the

list of JLGs in each pilot area (branch) was stratified by CA; then an equal number of JLGs were selected

from the groups covered by each CA, using random sampling. All consenting members from the

selected groups were interviewed for the baseline. The same individuals were interviewed at endline,

except for those that were lost to follow-up (most due to change in residence): 6% of the baseline

sample in Neemuch and 8.6% in Nagda.

The filled-in questionnaires were checked for completeness and logical consistency by field supervisors

and by the data processors. Responses to open-ended questions were translated and coded

appropriately and the data were entered in SPSS for analysis.

Sampling weights were applied to each observation prior to analyses to reflect probability of selection

into the sample according to the sampling design. The analyses carried out to answer the research

questions included univariate and bi-variate frequencies and mean scores. Multi-variate techniques

(binary logistic regression) were used to control for differences in socio-demographic characteristics of

the respondents. In particular, changes in levels of key indicators from baseline to endline were

controlled for socio-demographic parameters, and adjusted proportions and adjusted means are

reported in the data tables in this report, along with statistical significance of differences.

2.2.2. QUALITATIVE RESEARCH STUDY

The purpose of the qualitative research study was to understand the motives and barriers to purchase

and continued use of PureIt (research question # 2) and to provide deeper understanding of the key

determinants of purchase that were identified in the endline survey. This study was conducted in June

2011, about a year after the start of the pilot; the results are presented in a separate report5 from which

the key results are summarized here.

5 Bastian, S. “Exploration of Determinants of Purchase and Use of PureIt Water Filter among Clients of a Microfinance

Organization: Results from a qualitative research study in Madhya Pradesh, India”. 2011. Abt Associates Inc.


Consumer segments included in the study represented three key groups of interest to pilot

implementers:

(1) Aware non-triers, defined as target consumers (Spandana members in pilot branches) who were

aware of PureIt but had not purchased or used the product. In this segment, there was a focus

on households with children under the age of five years

(2) PureIt continued users, defined as those who reported use of the product at the time of the

study

(3) Lapsed (discontinued) users, defined as those who had purchased and used PureIt in the past,

but were not doing so at the time of the study

The data collection methods included focus group discussions (FGD) with five to six respondents per

group and couple in-depth interviews (IDIs) conducted with Spandana clients and their husbands at their

homes. Table 3 summarizes the study sample.

Table 3: Qualitative Study Sample

Segment Neemuch

Nagda

Aware, not triers 1 FGD (women with children

under five)

1FGD

Lapsed users 3 couple IDIs 3 couple IDIs

Continued users 3 couple IDIs 3 couple IDIs

Respondents were recruited using a short screening questionnaire to ascertain their eligibility for the

study (e.g. to check that they had heard of PureIt) and to allocate them to the relevant respondent

segment (e.g. lapsed users or continued users).Participants in the FGDs with non-users were women

who were Spandana members. For users, Spandana members and their husbands were jointly

interviewed.

2.2.3. LONGITUDINAL STUDY

Following the endline survey, a longitudinal study was conducted with the objective of understanding

continued, correct and consistent use. A brief questionnaire was administered every month for two

quarters. Correct use was based on observational data from a checklist6 (Table 4). Respondents

correctly using PureIt every month were defined as correct and consistent users.

In Neemuch, the endline survey was conducted in January 2011, and the longitudinal study started

shortly thereafter (before the household survey data had been entered). Therefore, 200 respondents

who had purchased PureIt though Spandana were randomly selected from sales records for participation

in the longitudinal study. The follow-up visits in Neemuch were conducted from February - July 2011.

In both sites, all current users identified for inclusion in the study in the first round of follow-up were

visited regularly afterwards through the end of the study, even if they discontinued use during the six-

month period of the study.

6 The checklist was developed by the SWP based on user instructions for PureIt and similar observation checklists of

correct use of water filters developed by other research projects in the area of HWTS.


While the monthly observation visits were kept brief, a more detailed questionnaire on reasons for use

or non-use of PureIt was administered in the last track of the longitudinal study in both pilot areas with

the objective of understanding user experience and reasons for lapse and discontinuation of use.

Table 4: Checklist for Correct Use of PureIt

Treatment

Items

1. Lid for PureIt in place, unless water is being poured into device

2. There is water in the transparent chamber

3. Microfiber mesh is installed and damp to touch

Physical

Inspection

4. PureIt has no visible leaks or cracks

5. 3 chambers rest evenly on each other and base

6. PureIt is on level surface

7. PureIt on raised surface so tap easily accessed

Storage

Items

8. PureIt kept out of direct sunlight

9. Water from PureIt is served directly from device

Maintenance

Items

10. Battery life indicator currently registers as “Safe”

11. Battery life indicator currently registers as “Buy”

12. Battery life indicator currently registers as “Replace”

13. Transparent chamber is free of visible scum or scaling on inside

14. Tap is free of visible scum or scaling

2.2.4. COLLATION AND ANALYSES OF PROJECT DATA,

AND INTERVIEWS WITH PROJECT PARTNERS

We used project cost and sales data and information from interviews with project partners to assess the

implementation and commercial viability of the pilots. Along with survey research data, this information

was used to answer the key research questions related to commercial viability of the model. Specifically,

we examined:

Channel Effectiveness: Examined market potential and achievements during the pilot including levels of

and increases in awareness, uptake and continued use of PureIt, the potential market size, and

effectiveness of marketing activities.

Channel Sustainability: We utilized project cost, sales, and revenue data collated by PATH in the form

of a profit and loss statement. The data were used to analyze operating costs and projected sales

revenue to identify the level of commercial viability of the pilot for the partners and supply chain

actors, using the framework shown in Table 5.


Table 5: Levels of Commercial Viability

Sustainability

Level

Component Cost Recovered

Product Distribution Marketing Overheads

& Profit

Level 1 No No No No

Level 2 Yes No No No

Level 3 Yes Yes No No

Level 4 Yes Yes Yes No

Level 5 Yes Yes Yes Yes

The levels of commercial viability depend on the cost components recovered. Level 1 indicates that

none of the cost components – production, distribution, marketing or overheads and profit have been

recovered. At level 2 only production costs are recovered, at level 3 production and distribution costs

and at level 4 production, distribution and marketing are recovered. Level 5 indicates that all the cost

components are recovered by the project and that it is completely commercially viable.

We interviewed HUL representatives to understand how the project was implemented, whether it met

their expectations, the challenges encountered, and the lessons learned. 7 Through these interviews, we

examined if the current design could be adopted by HUL and Spandana as is, and changes (if any) that

the partners would recommend based on the pilot project‟s learning. Post-pilot interviews with

Spandana management and field representatives were not possible as initially planned due to operational

overhauls taking place after the MFI crisis.

Based on the „levels of commercial viability‟ framework and information from interviews with partners

and supply chain actors about their experience with the pilot and intentions to continue and/or scale-up

the pilot, we assessed the overall commercial viability and potential of the pilot.

7 The HUL staff interviewed included managers from the partnership development unit and those involved in the pilot

design and its operations


3. IMPACT ON PURCHASE AND USE OF PUREIT

This section describes the findings from the household surveys, the qualitative research and the

longitudinal study with a focus on the following research questions:


2. What are the motives and barriers to purchase and use of PureIt?

3. What is the extent of correct and consistent use of PureIt among target consumers?

The section summarizes the results on respondent/target population characteristics, sources of drinking

water, perception of water quality and need for water treatment, and the levels and key determinants of

awareness, uptake and use of PureIt.

3.1. RESPONDENT CHARACTERISTICS

Table 6 describes the profile of respondents in the baseline and endline survey (all were Spandana

members in pilot areas). Most respondents were above 34 years of age, married, and had up to primary

or no education. Approximately 80 percent of respondents watched TV and 5 percent listened to a

radio at least once a week.

Table 6: Key Respondent Characteristics

(percent of respondents)

Neemuch Nagda

Baseline Endline Sig.1 Baseline Endline Sig.1

N=440 N=414 N=440 N=402

Respondent Age

Up to 24 years 14.4 8.7 * 10.7 8.1

25 - 34 years 37.4 40.9 34.7 32.6

More than 34 years 48.2 50.4 54.6 59.3

Respondent Education

None 54.4 52.9 46.2 30.1 *

Up to primary 35.0 38.2 43.5 55.1 *

Secondary/high school or more completed 10.6 8.9 10.3 14.7

Read newspaper or magazine at least once in a

week

15.4 6.0 * 20.1 12.7 *

Listen to radio at least once in a week 5.0 4.7 5.0 4.1

Watch TV at least once in a week 78.7 77.1 83.4 86.0

Been to cinema in last 30 days 0.9 1.1 2.1 3.5

Been to a bazaar in last 30 days 76.5 86.7 * 79.3 88.1 *

Been to a town in last 30 days 72.0 76.9 63.4 78.0 *

Currently married 93.7 93.4 90.5 94.4 *

Note: 1Significance of difference between baseline and endline marked with * refers to p<0.05


There were minor variations in the profile of the respondents surveyed at baseline and endline, likely

due to the respondents lost to follow up and secular trends between the time of the baseline and

endline survey (one full year). Because such differences in the profile of respondents may influence

changes in outcomes (e.g., changes in awareness of PureIt), all results on outcomes are from analyses

that control (or adjust) for differences in socio-demographic parameters between the baseline and

endline samples. Thus, all results based on the household survey data that are reported throughout this

report are adjusted proportions and adjusted means.

In our household surveys, we collected information on a number of housing quality and asset ownership

variables that were also part of most recent India National Family Health Survey (NFHS), conducted in

2005-2006 (IIPS, 2007).8 We used principal components analysis of this data to construct a wealth index

for each household, ranked households by their wealth index score, and assigned each household to a

wealth index quintile based on this ranking. By standardizing the wealth variables with the data from the

NFHS, we were able to compare the wealth status distribution of the SWP survey population with the

wealth status distribution for all of India, as well as selected sub-groups (Table 7).

As shown in Table 7, approximately 80 percent of Spandana‟s clients (the target group for this SWP

pilot) belong to India‟s middle three wealth quintiles, while a negligible number belong to the poorest

quintile, and approximately 20 percent belong to the riches quintile. In comparison, rural areas in all-

India and Madhya Pradesh larger share of the population were in the poorest wealth quintile and smaller

share in the richest quintile.

Table 7: Wealth Quintile Distribution of SWP Study Population and Other Groups

(percent of households)

India1 MP1 Neemuch2 Nagda2

Wealth Quintile All Urban Rural Rural Baseline Endline Baseline Endline

Poorest (Q1) 20.0 3.0 27.7 47.6 2.0 0.2 0.3 0.0

Middle-poor (Q2) 20.0 6.6 26.0 29.4 14.6 8.5 8.4 0.7

Middle (Q3) 20.0 14.7 22.4 12.5 25.3 27.3 19.5 16.8

Middle-rich (Q4) 20.0 29.6 15.7 7.8 42.9 52.1 44.2 64.0

Richest (Q5) 20.0 46.1 8.3 2.7 15.2 11.9 27.6 18.5

Notes:

1 Source of data is NFHS. 2 Source of data is the SWP survey.

3.2. SOURCE OF DRINKING WATER

The surveys showed that the main source of drinking water in the pilot areas was piped water, primarily

from public taps/stand pipes (Table 8). As per the baseline study, there were no significant differences in

the sources of drinking water accessed in the dry and rainy season. However, there were significant

changes from baseline to endline9 in the types of source of water used by the study population– in

8 The NFHS is the India equivalent of the more widely known Demographic and Health Survey (DHS). 9 The baseline and endline surveys were conducted about a year apart in both pilot areas (so in the same season).


particular an increase in piped water into yard/plot as the main source of drinking water in Neemuch

and an increase in public tap/standpipes as the main source of drinking water in Nagda.

Table 8: Drinking Water Source (dry season)


Neemuch Nagda


N=440 N=414 N=440 N=402

Piped into dwelling 10.2 8.1 14.1 13.7

Piped into yard/plot 11.2 33.6 * 5.9 6.0

Public tap/standpipe 64.7 28.9 * 61.0 69.2 *

Tube well/borehole 1.1 18.0 * 10.0 6.2 *

Other 12.8 11.5 9.0 4.9 * Notes:

1Significance of difference between baseline and endline marked with * refers to p<0.05

Proportions reported are adjusted for socio-demographic variables.

The qualitative research carried out in June 2011 provided an understanding of the changes observed in

drinking water sources between the baseline and endline quantitative surveys. In both areas, qualitative

research respondents reported recent improvements in water supply infrastructure and in the quality of

water from these sources. The qualitative research study also found that in Neemuch the ground water

was supplied by the government through pipelines; and in Nagda, water from the Chambal River was

piped by the government, as well as through an initiative of Birla Gram (the main industry in Nagda).

3.3. WATER QUALITY PERCEPTIONS

Perceived quality of drinking water from the main source was measured in the surveys using a 3-point

semantic differential scale (excellent, average, bad). Table 9 shows that most of the respondents

perceived the quality of their drinking water to be average or bad. The changes in perception of water

quality can likely be explained by the changes in water sources available in the area, as well as potential

increase in awareness regarding water quality that may have been generated through the pilot.

Table 9: Water Quality Perception


Neemuch Nagda


N=440 N=414 N=440 N=402

Opinion for the source of drinking water in dry season

Excellent 21.8 5.8 * 12.6 8.4

Average / so-so 61.7 90.5 * 52.4 91.8 *

Bad 16.5 3.7 * 35.1 0.0 *

Notes: 1Significance of difference between baseline and endline marked with * refers to p<0.05.



The qualitative study showed that water was considered to be safe if it had no smell, no discoloration, no

visible impurities and tasted good or better than in the past. There was an absence of true knowledge of

germs. This suggests that perceived quality of water seemed to be driven by turbidity rather than microbial

aspects.

3.4. PERCEIVED NEED FOR WATER TREATMENT

The survey captured a direct measure of the extent of perceived need for water treatment in the

intervention areas. Respondents were asked how important they thought it was to treat the water they

get before drinking and responses were coded on a 4-point semantic differential scale. This scale rated a

perceived need based on: absolutely necessary, good to do when possible, not important, and not at all

required. Table 10 shows the importance of water treatment. Most reported that water treatment was

„absolutely necessary, no matter what the situation‟ or „good to do whenever possible‟. The felt need for

treating water was also very high. Felt need is defined as those who reported that their source of water

was average or bad and also reported that it was absolutely necessary / good to treat drinking water

collected from that source.

Table 10: Importance for Water Treatment


Neemuch Nagda


N=440 N=414 N=440 N=402

Importance of the water treatment in dry season

Absolutely necessary, no matter what

the situation

60.4 77.6 * 32.3 87.8 *

Good to do whenever possible 34.0 21.6 * 51.5 10.7 *

Not so important – does not matter if

you do not

4.4 0.2 * 14.2 1.3 *

Not at all required - it would be a

waste

1.2 0.6 1.9 0.2

Feel need to treat water in dry season 73.1 94.2 * 75.2 90.9 *

Notes: 1Significance of difference between baseline and endline marked with * refers to p<0.05.


Results from the qualitative research study showed that, although there was a high felt need to treat

drinking water, the perceived need for treatment stemmed from removing visible impurities which was

typically addressed by filtering with a cloth/plastic sieve or by settling and decanting (often using alum as

a coagulant). Microbial treatment of water was generally not thought to be necessary. Boiling was

practiced as a curative measure at times of illness (as it is often recommended by doctors), rather than

as a preventive method.


3.5. POTENTIAL MARKET FOR PUREIT

Information from the baseline survey was used to assess the potential market for PureIt in the pilot

areas. Specifically, three factors were considered: i) methods used currently to treat drinking water, ii)

awareness and use of PureIt for drinking water treatment, and iii) intention to buy PureIt as a method to

treat drinking water.

Table 11 shows the reported main method used regularly (every day or almost every day) by

households in the intervention area. Over 80 percent of the respondents filtered through a cloth/sieve

or decanted their water to remove visible impurities; 6 percent reported using boiling, and another 6

percent used chlorine, iodine or alum (among these most used alum). Use of advanced durable filters at

baseline was negligible.

Table 11: Method Used Everyday / Almost Everyday to Treat Water at Baseline


Neemuch Nagda

N=440 N=440

Do nothing 3.3 3.2

Use cloth/net/sieve filter or settle & decant 85.4 80.6

Use boiling 6.0 6.5

Use chlorine/iodine/alum based products 4.5 8.4

Use durable filters 0.8 1.3 Note: All proportions are adjusted for variations in socio-demographic variables.

The baseline survey showed that total awareness of PureIt was very low: 7 percent in Neemuch and 9

percent in Nagda. Further, considering those reporting boiling their water regularly as the likely early

adopters suggested that the potential market for PureIt at baseline was very small – approximately 6

percent.

All respondents in the baseline survey were shown a concept card describing PureIt (product features,

benefits, how to use and price). They were then asked their intention to buy PureIt if the product was

introduced in their community at four variations of loan installments: (i) Rs 80*25 weeks (ii) Rs 60*35

weeks (iii) Rs 43*50 weeks or (iv) Rs 43*25 weeks (a 50-percent cost defrayment scheme). Figure 3

shows the reported intention to try PureIt at baseline in Neemuch and Nagda at each scheme.

Overall, reported intention to buy PureIt at full price with repayment over 25 weeks, 35 weeks and 50

weeks was low in both branches - only about 30 percent reported an intention to buy at full price with

any repayment plan. Reported intention to buy PureIt was (expectedly) highest at 50-percent cost

defrayment (Rs 43 x 25 weeks). However, it should be noted that the reported intention to buy at

baseline did not meet or exceed experiential norms of 80 percent even with 50 percent cost-

defrayment indicating likelihood of low uptake.


Figure 3: Intention to Try PureIt at Baseline

We examined the reported intention to buy PureIt at 50-percent cost defrayment among different

consumer segments to identify sub-groups where the intention to buy meets or exceeds the experiential

norms set for this study (Figure 4). These analyses showed that the reported intention to buy was

highest among those who reported boiling their drinking water currently and belonged to upper wealth

quintiles. We interpret the findings as reinforcing the hypothesis that the potential market for PureIt

among the target population at baseline was small. Further, we interpret these findings to indicate that

felt need and ability to pay are likely to be key barriers to uptake and use of PureIt.

Figure 4: Intention to Try PureIt at 50-percent Cost-Defrayment at Baseline,

by Respondent Category

6 9 6

20

22 21

21

22

0

20

40

60

80

80x25 60x35 43x50 43x25

% r

esp

on

den

ts (

wei

ghte

d)

Neemuch

Somewhat likely to buy Very likely to buy

4 4 6

29 20 26

20

29

0

20

40

60

80

80x25 60x35 43x50 43x25%

res

po

nd

ents

(w

eigh

ted

)

Nagda

Somewhat likely to buy Very likely to buy

50 46

57 58

71

0

20

40

60

80

All Use boilingregularly

Useproduct/durable

regularly

Belong to upperwealth stratum

Boil and inupper wealth

stratum

%re

spendents


From the analyses of the market potential for PureIt at baseline, there was strong evidence that

extensive demand-generation activities aimed at stimulating the need for water treatment beyond using

cloth/plastic filter and alum would be required to promote uptake of PureIt under the 50-percent cost

defrayment scheme. Another limiting factor for the market potential that emerged was ability to pay. It

was unclear, at the time of the baseline, how the 100-percent cost defrayment scheme would be rolled

out. Therefore the intention to buy and the potential market under the 100-percent cost defrayment

scheme was not determined at baseline.

An additional challenge confronting the pilot was the low awareness and use of any durable filter and the

low awareness of PureIt in particular. This implied that the target audience was not familiar with the

durable water filter category and brands of durable water filters. Thus, along with addressing the low

level of felt need and low ability to pay, the pilot needed to improve the target audience‟s awareness and

perceptions of durable water filters (in particular PureIt) as a needed and cost-effective solution to

water treatment.

3.6. EXPOSURE TO PROJECT ACTIVITIES

Overall, 56% in Neemuch and 74% in Nagda were aware of PureIt at endline, which was a substantial

increase from baseline in both areas.

At endline, respondents were asked whether they had seen or heard any messages on PureIt in the

previous six months. The main source of messages on PureIt reported by the respondents was TV

followed by HUL /Spandana representatives (Table 12). In Neemuch, the level of recall of messages on

PureIt from HUL/Spandana representatives was lower than in Nagda. As mentioned earlier, the pilot in

Neemuch was curtailed at one month, whereas the pilot in Nagda continued for six months. This

difference in pilot duration is likely reflected in the differences in the levels of recall of messages on

PureIt between Neemuch and Nagda.

Table 12: Sources of Messages on PureIt at Endline

(percent of respondents who recalled hearing/seeing a message on PureIt)

Main Message sources Neemuch Nagda

TV 87 82

HUL/Spandana rep 43 81

Other PureIt users 10 1

Doctor 5 9

Friends/neighbors 31 17

Table 13 summarizes the level of exposure to different types of messages and promotion activities on

PureIt, as recalled by those who had seen or heard about PureIt in the six months prior to the endline

survey. Exposure to each of the five key activities conducted during the Spandana group meetings in

relation to the pilot was substantially higher in Nagda than in Neemuch.


Table 13: Type of Message on PureIt Recalled at Endline

(percent of respondents who recalled hearing/seeing a message on PureIt)

Indicators of Exposure to Intervention Neemuch Nagda

Heard a PureIt / HUL representative describing the importance of treating water at

home

47.7 64.5

Seen a demonstration of how PureIt works 39.2 63.3

Heard about the features and benefits of PureIt 44.3 64.5

Heard about the cost and repayment scheme 37.5 64.3

Heard about parts of the PureIt water filter that may need replacement 29.7 63.3

In addition, the pattern of intervention activities from Spandana group meetings recalled in Neemuch and

Nagda differed, reflecting different intensity of promotion activities in the two areas. In Nagda, nearly all the

respondents who recalled any activity recalled all five key activities conducted during the group meetings.

However, in Neemuch there were variations in the level of recall of individual activities conducted in the

group meetings; specifically, the recall of PureIt demonstrations and discussion on parts of PureIt that may

need replacement was much lower than in Nagda.

The qualitative research study suggests that many MFI clients in both branches had been exposed to PureIt

advertisements on TV. The qualitative research further highlighted differences in the nature of recall of PureIt

promotional activities conducted in Neemuch and Nagda. In Nagda, all respondents interviewed in the

qualitative research phase recalled 3 - 4 meetings and demonstrations. These respondents did not recall any

focus on the marketing efforts towards households with children under the age of 5 years. In Neemuch, there

was a difference in the number of activities recalled by those who had purchased PureIt vis-à-vis those who

were aware of PureIt but had not purchased it: those who purchased PureIt recalled 3 - 4 group meetings

where PureIt was discussed and demonstrated, while those who were aware of but had not purchased PureIt

recalled only one meeting where PureIt was discussed and reported that they were not shown the product

demonstration.

Thus, in addition to the shorter pilot duration, Neemuch appears to have received less coverage and likely

lower quality/intensity of promotional activities as compared to Nagda.

3.7. PERCEPTION OF PUREIT

A key insight gained from the qualitative research was respondents‟ understanding and perception of

PureIt. In both Neemuch and Nagda, respondents referred to PureIt as a „filter machine‟ that was a

coarse filtration device (channi). Interestingly, respondents did not refer to PureIt by its brand name.

The qualitative study showed that the spontaneous association to PureIt was that of a modern looking

device that removes visible impurities and makes water look clean. However PureIt had some negative

perceived attributes, including; (i) small storage capacity rendering it inappropriate for large families, (ii)

it looks fragile and delicate and may break if not kept safely (which is challenging in a small house), and

(iii) it keeps water warm and is therefore not desirable in the summer.

In both the pilot areas, very few respondents recalled explanations of germs and the role and

importance of PureIt as a „germ kill‟ water treatment method. Thus, the brand (PureIt) and its advantage

over other filtration techniques of ensuring microbiological safety were not clearly established in either

of the pilot areas, and PureIt was perceived primarily as a modern and attractive coarse filtration device.


The baseline and endline survey findings reflect the findings from the qualitative research regarding the

perception of PureIt. The surveys captured respondents‟ perceptions of PureIt on a number of

attributes using a 3-point semantic differential scale anchored by “completely agree” and “strongly

disagree” with each statement. Table 14 shows the mean scores at baseline and endline among

respondents who were aware of PureIt. The table highlights three important factors regarding changes

in perception of PureIt among the target audience in Neemuch and Nagda:

In Neemuch, the perception of PureIt is worse-off at endline as compared to baseline (though the

difference is not significant for all items). This is an expected result where people who have heard of

the product/brand recently have not internalized its specific features and benefits. Thus, though the

level of awareness of PureIt has increased, there is a more diluted perception of the product.

In Nagda, the perception of PureIt at endline has improved over baseline. However, the

improvement is on „Overall a good brand of water filter‟ and „Comes with an attractive

loan/installment‟. Other important product attribute perceptions such as efficacy, value for money

and company reputation have either remained the same or declined. Thus, the pilot has not

succeeded in establishing the perception that PureIt is an effective water treatment solution that

offers good value for money.

Thirdly, as is evident from the factors mentioned earlier, the target audience in Nagda had a more

positive perception of PureIt at endline than in Neemuch.

Table 14: Perceptions of PureIt

(mean score on a 3-point semantic differential scale)2

Neemuch Nagda


Overall, a good brand of water filter 2.88 2.68 * 2.68 2.85 *

Makes water safe 2.84 2.51 * 2.81 2.72

Is good value for money 2.60 2.43 2.63 2.63

Is from a reputed company 2.72 2.27 * 2.85 2.39 *

Has good after sales service 2.37 2.49 2.54 2.47

Is easy to use 2.70 2.53 2.85 2.75

Comes at an attractive price 2.52 2.38 2.29 2.50

Comes with an attractive loan/installment 2.16 2.32 2.22 2.62 *

Improves the quality of drinking water 2.81 2.53 * 2.71 2.82

Is a product in fashion 2.71 2.55 2.66 2.46

It offers better water quality than other

methods

2.78 2.47 * 2.65 2.71

Notes: 1Significance of difference between baseline and endline marked with * refers to p<0.05. 2 Attitudinal scale anchored by “Completely agree” (3) and “Disagree” (1)

These findings, interpreted in conjunction with the qualitative and quantitative research findings

regarding the target audience‟s recall of intervention activities suggests that:

In Nagda (the 100 percent cost-defrayment model), the pilot activities were not able to build

positive perceptions of the promoted solution (PureIt) in spite of a full run-time for the pilot. We

hypothesize that this could be because of two factors:

o Among the potential customers, the attractiveness of the cost-defrayment overshadowed

other messages (need for water treatment, effective methods), and

o Among the PureIt sales representatives, the ease of making a sale with cost-defrayment

could have led to lower emphasis on the core messages on need for water treatment and


effective methods of water treatment, i.e. the sales representatives may not have needed to

persuade potential customers on the need for PureIt in order to make a sale.

Contrasting the findings on PureIt perceptions between Nagda and Neemuch could have provided

valuable insights into the effect of cost defrayment strategies on consumers and sales

representatives. For example, in Neemuch we expect the negative externality from cost-defrayment

to be less since a 50 percent cost-defrayment strategy was implemented here. However, due to the

short run-time for the pilot in Neemuch, we are unable to draw such inferences.

3.8. AWARENESS, PURCHASE AND USE OF PUREIT

There was a significant increase in spontaneous awareness, total awareness, purchase and current use

from baseline to endline in both pilot areas (Table 15). Awareness of PureIt had increased substantially

in both areas, reaching 56 percent in Neemuch and 74 percent in Nagda. At endline, the PureIt purchase

rate in Nagda (44 percent) was six times as high as in Neemuch, and current use (21 percent) was three

times as high. However, correct use remained low in both pilot areas, at less than 5 percent.

Table 15: Awareness, Purchase and Use of PureIt: Baseline-Endline Comparison


Neemuch Nagda


Total Awareness 5.9 55.7 * 9.4 74.4 *

Spontaneous Awareness 4.0 27.4 * 5.0 52.4 *

Purchase 0.5 7.2 * 0.0 43.6 *

Current Use 0.4 3.7 * 0.0 21.2 *

Correct Use 0.0 1.8 0.0 4.3 * Note: 1Significance of difference between baseline and endline marked with * refers to p<0.05.

As shown in Figure 5, in both pilot areas there was approximately a 50 percent lapse rate (ratio of

current use to purchase). A comparison of the ratio of spontaneous awareness to total awareness in

Neemuch and Nagda is consistent with the findings from the surveys and qualitative research regarding

differences in the coverage and quality of product promotional activities. This ratio is lower in Neemuch

(48 percent) than in Nagda (70 percent), suggesting lower intensity of activity in Neemuch.

Furthermore, a comparison of the rate of conversion from awareness to purchase shows that the

conversion rate is much higher in Nagda (59 percent) than in Neemuch (13 percent).


Figure 5: Awareness, Purchase and Curent Use of PureIt

(% of respondents)

Notes: SA = Spontaneous awareness; TA = Total awareness (including spontaneous and prompted awareness);

PU=purchased; CU= currently used

One of the reasons for this difference in conversion rates could be the difference in quality of promotional

activities. Other potential reasons for this difference are explored further in Figure 6 below. Since the

intervention was curtailed in Neemuch very early, we expected to find many respondents reporting that they

intended to buy but could not since the scheme was curtailed. However, only 8 percent of respondents in

Neemuch reported that they „intended to buy‟. Similarly in Nagda, 4 percent of respondents reported that

they „intended to buy‟, possibly because the scheme was stopped after six months when the ceiling on the

funds available for cost-defrayment was reached. Thus, the differences in uptake levels seen appear to be a

combination of the differences in the cost defrayment scheme (50 percent vs. 100 percent cost-defrayment)

and the quality and quantity of promotional activities in these pilots.

Figure 6: Potential market for Neemuch

27

5256

74

7

44

4

21

0

20

40

60

80

100

Neemuch Nagda

Spont Awareness

Total Awareness

Purchased

Currently used

SA/TA 48% PU/TA

13%

CU/PU 57%

SA/TA 70%

PU/TA 59%

CU/PU 48%

7

44

44

268

4

0

15

30

45

60

75

Neemuch Nagda

% r

esp

on

de

nts

(we

igh

ted

)

Purchased Not Aware Intend to Buy

59%

74%


3.9. DETERMINANTS OF PURCHASE OF PUREIT

Those who were aware of PureIt but had not purchased it were asked why they did not do so. The

main reason reported for not purchasing PureIt was affordability (mentioned by about a third of

respondents who had not purchased the product), followed by the lack of availability of scheme (Table

16). Some reported an intention to buy in the near future and this was higher in Neemuch as mentioned

earlier.

Table 16: Reasons for Not Purchasing PureIt

(percent of respondents who knew of PureIt but did not buy it)

Reason for not buying Neemuch Nagda

No need for water treatment 1 1

Don‟t know where to get one 1 0

Cannot afford 39 33

Waiting for feedback on the product

Not sure about product/product quality 15 18

Scheme not available 19 21

Intend to buy 14 8

Affordability as the main reason for not purchasing PureIt is a surprising finding since the product was

being sold below the retail price. So, we examined the consistency of this finding through the association

between wealth status and purchase of PureIt (Figures 7a and 7b). If affordability is a barrier, we expect

to see a positive association between purchase and wealth status. The findings show that the uptake rate

is notably higher in higher wealth quintiles (particularly in Nagda where the pilot had a reasonable run

time) indicating affordability could be a barrier in spite of cost defrayment. Uptake (purchase rate) in the

SWP target group (middle three wealth quintiles) was 8 percent in Neemuch and 38 percent in Nagda;

while uptake in the richest quintile was 12 and 73 percent respectively. There was only one respondent

among the MFI clients who belonged to the poorest wealth quintile.

However, since very few of the MFI clients are from the highest wealth quintile, the distribution of

purchasers by wealth index shows that most of those who purchased PureIt (86 percent in Neemuch

and 67 percent in Nagda) were from the SWP target group. In Nagda, the units purchased by the SWP

target group were nearly all by households in the fourth quintile, with only 3 percent of units purchased

by the middle quintile and none in the second quintile. In Neemuch, out of 29 units that were sold in

total, seven were bought by households in the middle quintile, 18 were bought by households in the

fourth quintile, and the remaining four units were bought by households in the richest quintile.


Figure 7a: Distribution of Purchasers by Wealth Status and Purchase Rates within Wealth Index

Quintiles at Endline, Neemuch10

Figure 7b: Distribution of Purchasers by Wealth Status and Purchase Rates within Wealth Index

Quintiles at Endline, Nagda11

10 There was only one respondent in the poorest wealth quintile in the total sample (in Neemuch). 11 There were no respondents in the sample in Nagda who belonged to the poorest wealth quintile.


Additionally, we compared those who were aware of PureIt but had not purchased it with those who

purchased PureIt to identify the main psycho-social determinants of purchase and to describe the profile

of those who purchased PureIt. This was done through a segmentation analysis. It is the process of

dividing a heterogeneous population into homogenous groups based on the behavior of interest

(purchase of PureIt), and then identifying behavioral determinants and population characteristics that are

significantly different for those who purchased PureIt versus those who were aware of PureIt but did

not purchase it.

Table 17: Determinants of Purchase12

Determinants LOR Sign.

Brand Attitude:

PureIt is overall, a good brand of water filter 2.10 *

PureIt is good value for money 1.67 *

PureIt comes with an attractive loan/installment scheme 1.62 *

PureIt offers better water quality than other products and methods used to

treat water 1.97 *

Self-Efficacy: 2.61 *

I can take the required time to treat my water every time

I think it is easy to use filter to make water safe to drink

I am confident that I will be able to use filters to make water safe to drink

Wealth index: Low (ref)

Medium 1.76

High 3.22 *

Source of drinking water: Piped water to dwelling / plot

Public stand pipe 0.89

Tube well/bore well 4.56 *

Other sources 0.40

District: Neemuch (ref)

Nagda 6.77 *

HH with children under 5 years 0.51 *

Notes:

Significance: * refers to p<0.05.

LOR: Logistic odds ratios, derived through binary logistic regression.

ref = reference category

Backward stepwise procedure was used to develop a parsimonious model

Social norms, knowledge and attitudes are multi-item scales were individual items were measured on a semantic differential

scale anchored by “Completely Agree” (3) and “Disagree” (1)

12 This table compares the levels of determinants and population characteristics of those who purchased PureIt (N=212)

with those who were aware of PureIt but did not purchase it (N=334) at endline in project areas


Logistic regression is used to find determinants of purchase. The results are presented as logistic odds

ratio (LOR) after controlling for population characteristics. Asterisks sign (*) indicates that the indicator

is significant at p<0.05 and is a determinant of purchase of PureIt. Table 17 presents those determinants

and population characteristics which are significantly associated with purchase and their LORs. The LOR

indicates the strength of relationship between the determinant and the desired behavior (purchase of

PureIt). An LOR of greater than one indicates that a particular determinant is likely to have a positive

effect on purchase of PureIt. Similarly, an LOR of less than one indicates that a determinant is likely to

have a negative effect on purchase of PureIt.

Table 17 indicates that those who thought that „PureIt is overall, a good brand of water filter‟, „PureIt is

good value for money‟, „PureIt comes with an attractive loan/installment scheme‟ and „PureIt offers

better water quality than other products and methods used to treat water‟ are more likely to purchase

PureIt than those who did not believe so. Those who had higher perceived self-efficacy (perceived ability

of treating water) were more likely to purchase. Therefore, positive brand attitude and perceived self-

efficacy are significant determinants to purchase of PureIt. Likelihood of purchase increased with wealth,

and households with tube/bore well were more likely to purchase PureIt than those who had their

water piped directly to their homes.

In summary, the segmentation analyses indicate that there were four factors that influenced purchase of

PureIt: wealth status, need for water treatment, perceptions of PureIt (efficacy and value for money) and

perceived self-efficacy regarding treating drinking water.

The qualitative study findings provide a nuanced understanding of the factors influencing purchase of

PureIt. The aspects that emerged from the qualitative research are:

Convenience: Many respondents perceived PureIt to be difficult to operate and reported that there

was not a convenient place to keep the filter in their small homes. They thought it was cumbersome

to refill and not suitable for large families where greater quantity of water was required. Further,

they felt that PureIt was delicate and could easily be accidently broken in the smaller houses and

therefore placement of PureIt was a concern.

Perceived benefit was aspirational but not drinking water safety: The motive to purchase that emerged

from the qualitative research was primarily aspirational – they had purchased PureIt as it would look

good when neighbors / others visit their house. This was reinforced by feedback from peers and

family members. Few perceived betterment of health from PureIt. Additionally, it appeared that the

financial barrier was not a reflection of affordability per se but that of low need to treat water for

microbial reasons, which translates to a low value perception for the product. Some respondents

perceived PureIt to be wasteful (faltu).

Profiting from resale: The attractive cost defrayment scheme may have provided an incentive to

purchase, even when there was no intention to use. Indeed, it may have provided a business

opportunity to some Spandana members in terms of profits through resale.

Households with children under 5 years were less likely to purchase PureIt: The study findings suggest that

the additional barrier for this segment was that younger women (which are more likely to have

young children) were not the decision makers in the house. They deferred towards the mother-in-

law‟s and elder‟s decisions.

The segmentation analysis was also used to determine the impact of the intervention on purchase. Here

those who purchased PureIt were compared with those who did not purchase PureIt, exploring the

association between purchase and different types of recalled promotional activities: no recall, recall of

mass media only, recall of Spandana meetings only, and recall of both mass media and Spandana meetings

(Table 18). The table shows that, compared to those who recalled having heard messages about PureIt


in the previous six months from mass media only, those who recalled having heard of PureIt from

Spandana meetings only, or both mass media and Spandana meetings were much more likely to buy

PureIt. However, the increase in likelihood of purchase between being exposed to Spandana meetings

alone and being exposed to mass media and Spandana meetings was not significant. From this, we infer

that exposure to Spandana meetings is a necessary and likely sufficient factor associated with purchase.

Table 18: Association between exposure to PureIt promotion and purchase13

Exposure (recall of activities in past six months) LOR Sig.

Mass media only (ref)

No exposure .00

Spandana meeting(s) only 3.01 *

Both mass media and Spandana meeting(s) 4.13 *

3.10. DETERMINANTS OF CONTINUED USE OF PUREIT

The endline survey showed that 50 percent of those who purchased PureIt had lapsed (discontinued

use) or never used the product. Table 19 provides the reasons reported for lapsing or non-use among

purchasers: 60 percent reported that they did not have PureIt in their house, 6 percent reported gifting

and 19 percent had kept PureIt aside and were not using it. The qualitative study suggests that MFI

clients may have purchased PureIt for other non-member households and that there may have been a

high level of re-sale among those who were not currently using PureIt.

Table 19: Reasons for Lapsing/Non-use of PureIt

(percent of respondents who purchased PureIt but were not using it at endline)

Reasons for Lapse N=110

(%)

Not in house 60

Gifted 6

Kept in safe side 19

Sub Total (not using) 85

Just bought/not assembled 2

Filter not working properly/leaking/damaged 5

GKK exhausted 2

Others 7

13 This table levels of exposure to the intervention of those who purchased PureIt (N=212) with those who did not

purchase it (N=604) at endline in project areas

Notes:





We note that GKK being exhausted was not a significant reason for lapsing reported. However, the

qualitative study brought up cost of replacing the GKK as a major financial concern for continued use. A

few purchasers had already lapsed due to this, but others foresaw affordability of GKK to be a problem.

None of the respondents had purchased a replacement GKK at end-line.

Aside from the direct measure of lapsing discussed above, we contrasted continuing users and lapsers

using bivariate and multivariate techniques to examine reasons for lapsing further.

Figure 8 explores the association between the main method used prior to purchase of PureIt and

lapsing. While 61 percent of lapsers did not treat their water before purchasing PureIt, this was the case

for only 1 percent of continued users (nearly all of them had practiced some forms of treatment, largely

use of alum). Since those who perceived a need for water treatment would have been using some

method of water treatment prior to purchasing PureIt, we infer from this that lapsers had a lower level

of felt need for water treatment.

Figure 8: Previous Water Treatment Methods Used by Lapsers and Continued Users

(percent of respondents who purchased PureIt)

We also examined the association between wealth status and continued use (Figure 9). Rates of

continued use increase with wealth quintile, while the proportion of purchasers who lapsed decreases

from 86 percent in the poorest three quintiles (which have been combined due to the small samples in

these groups) to 33 percent in the richest quintile. This indicates that wealth status is positively

associated with both the likelihood to purchase PureIt and to continue using it once purchased.

Did not treat1% Filter with

cloth / settle & decant

11%

Boil16%

Alum67%

Chlorine/ Iodine

4%

Used Durable Filter

1%

Did not treat61%

Filter with cloth / settle &

decant10%

Boil11%

Alum17%

Chlorine/Iodine

0%

Used Durable Filter

1%

Lapsers

(N=110)

Continued Users

(N=102)


Figure 9: Use of PureIt by Wealth Quintiles at Endline

(percent of respondents, N=212)

Thirdly, we compared those who continued to use PureIt with those who lapsed, to identify the main

psycho-social determinants of continued use and to describe the profile of those who continued to use

PureIt. This was done through a segmentation analysis, as described earlier. The findings from this

analysis are shown in Table 20. Those who used chlorine, iodine or alum - largely alum - before

purchasing PureIt were significantly more likely to continue use. Further, continued users were more

likely to think that „PureIt is good value for money‟ and „Water can be contaminated by substances that

are too small‟. Those who stated that „I decide whether my family's drinking water needs to be treated

or not‟ were less likely to continue use. This suggests that family support could be an important

required factor for continued use. This analysis confirms the earlier observation that the likelihood of

continued PureIt use among purchasers increase with wealth status.

Table 20: Determinants of Continued Use14

Determinants LOR Sig.

Previous Use: Durables (ref)

None 0.09

Filter/Settle and Decant 4.49

Boil 11.87

Chlorine, Iodine and Alum 46.96 *

Brand Attitude:

PureIt is good value for money 3.89 *

Water can be contaminated by substances that are too small 2.28 *

I decide whether my family's drinking water needs to be treated or not 0.36 *

Wealth index: Low (ref)

Medium 8.19 *

High 21.84 *

14 This table compares the levels of determinants and population characteristics of those who continued to use PureIt

(N=102) with those who purchased but did not continue use (N=110) at endline in project areas.

1

14

34

6

17

16.8

0

15

30

45

60

75

Poorest, Second and Middle Fourth Richest

% r

esp

on

de

nts

(we

igh

ted

)

Continued User Lapsed User


Source of drinking water: Piped water to dwelling / plot (ref)

Public stand pipe 0.13 *

Tube well/bore well 1.02

Other sources 0.87

Notes:




Backward stepwise procedure was used to develop a parsimonious model

Barnd attitudes are multi-item scales were individual items were measured on a semantic differential scale anchored by

“Completely Agree” (5) and “Disagree” (1)

The qualitative study also explored the motives and barriers of continued PureIt use. This study

indicated two main factors influencing continued use:

Family support: The study indicated that among continuing users, other members of the family were

involved in refilling and maintaining PureIt (replacing the GKK or fixing minor problems), which was

not the case with lapsed users.

Benefits from using PureIt: The study revealed a similar level of perceived benefits from using PureIt

among continuing users and lapsers. Both continuing users and lapsers had the sentiment that PureIt

was „good to have‟ but not a „must‟ which made it easier for them to consider giving it away or re-

selling.

Therefore the motives and barriers to continued use of PureIt are similar to the motives and barriers to

purchase. The motives for continued use include need for treatment of water and the availability of the

entire family‟s support in using and maintaining PureIt (thus improving perceived self-efficacy). Whereas

the barriers to continued use are low, the low perceived value for PureIt resulted in giving up or gifting

of PureIt, particularly when functional barriers arose.

We note that price and availability of GKKs was not a major reason for lapsing at the current moment,

but could become a more prominent reason for lapse in use in the future when a higher proportion of

users face exhausted GKKs.

3.11. CORRECT AND CONSISTENT USE

Along with increase in awareness, uptake and continued use of PureIt, the MFI model also aimed to

increase correct and consistent use of the product. Consistent use over time, along with correct use,

was measured through the longitudinal follow-up study of consumers who had purchased the product.

A brief questionnaire was administered every month for six months in both pilot areas. Correct use was

based on the observational data from a checklist (see Table 5). Respondents correctly using PureIt every

month were defined as correct and consistent users.


3.11.1. CORRECT AND CONSISTENT USE IN NAGDA

In Nagda, the longitudinal study was conducted from January to June 2011 among respondents who had

purchased PureIt and had it in their house at endline (approximately 30 percent of the endline

respondents). A total of 95 households were included in this longitudinal follow-up. The levels of

current use, correct use and correct and consistent use over the six-month period are shown in Table

21. The longitudinal study found that current use declined steadily over time from the first month of the

follow-up (November 2010) to the last month (June 2011). In the last round, 38 percent of households

reported using PureIt currently. This translates to 11.4 percent of the total endline sample, implying that

nearly 75 percent of those who purchased PureIt through the pilot had discontinued using it or never

used it by June 2011.

Correct use among those surveyed in the longitudinal follow-up fluctuated over the six months. These

fluctuations were mainly due to irregular maintenance and cases of leakage. Irregular correct use reflects

in the fact that there was no household that had demonstrated consistent correct use of PureIt by the

last month of the longitudinal follow-up.

Therefore, we find that the high purchase rate seen in Nagda at endline did not translate to even

modest correct and consistent use of PureIt over a six-month period.

Table 21: Current use, correct use and continued use from longitudinal follow-up in Nagda

(percent of respondents who purchased PureIt and had it at their home at endline)

Current Use

(reported)

Correctly used

(observed)

Correct and consistent

use

(observed)

N=95 N=95 N=95

November '10 (Endline) 69.5 12.6 12.6

January '11 69.5 18.9 1.1

February '11 65.3 36.8 1.1

March '11 54.7 17.9 0.0

April '11 40.0 2.1 0.0

May '11 35.8 8.4 0.0

June '11 37.9 15.8 0.0

The original cohort of study participants enrolled in the longitudinal study at endline were followed until

June 2011, including those who were found to have discontinued use in any of the visits. In each of the

monthly visits, we asked respondents who reported not using PureIt currently why they discontinued

using it. The reported reasons for discontinuing are shown in Table 22. The main reason for

discontinuing among participants in the longitudinal survey (i.e. those who were using PureIt in their

home at endline) is having given PureIt as a gift. Not using PureIt due to change in seasons when water

treatment was deemed less or not necessary (i.e. seasonality) showed a steady increase throughout the

summer among those who discontinued use.


Table 22: Reasons for discontinuing use from longitudinal follow-up in Nagda

(percent of respondents who discontinued use of PureIt)

Reasons for not currently using Jan-11 Feb-11 Mar-11 Apr-11 May-11

N=29 N=33 N=43 N=57 N=61

Gifted 79.3 69.7 60.5 47.4 44.3

Not in Use/Never Used 17.2 21.2 18.6 19.3 18.0

Seasonality 3.4 9.1 11.6 19.3 31.1

Leakage 3.4 3.0 7.0 5.3 4.9

GKK exhausted 0.0 0.0 2.3 10.5 3.3

Other reasons 0.0 0.0 2.3 1.8 1.6

While the monthly observation visits were kept brief, a more detailed questionnaire on reasons for use

or non-use of PureIt was administered in the last track of the longitudinal study with the objective of

understanding user experience and reasons for discontinuation of use. Figure 10 shows the main user

segments identified in the last track of the longitudinal survey.

Figure 10: User segments in the last track of longitudinal follow-up survey in Nagda

(percent of respondents, N=95)

About 62 percent of the respondents in the longitudinal survey had discontinued using PureIt by the last

track (June 2011). Nearly half of those who had discontinued using PureIt had given the device away,

mostly without having ever used it.

Further, the most frequently reported reason for discontinuing use among those who had given away

the PureIt device was lack of perceived need, with 75 percent of respondents citing this reason; 25

percent cited negative use experience (primarily inconvenience of operating/maintain the device and not

liking the taste of the treated water) as the reason to discontinue use (Table 23).

Longitudinal

100%

Continued Users

38%

Lapsers

62%

Device given away

29%

Never used the device: 20%

Ever used the device: 9%

Device available in residence

33%

Never used the device 2%



Table 23: Reasons for discontinuing use among those who gave away PureIt, Nagda

(percent of respondents who did not have PureIt in their home at last track of follow-up)

Reasons Yes (%)

Need: Do not find need for PureIt 75.0

Gifting 57.1

Given to a person in need 35.7

Given in dowry 21.4

Use Experience 25

Find PureIt inconvenient 17.9

Do not like the taste of water from PureIt 7.1

Cost of PureIt 7.1

Found it difficult to repay the filter loan 3.6

Needed money so sold PureIt 3.6

In contrast, the most frequently cited reason for discontinuing use among those who had not given away

the PureIt device was season-related, i.e. that treating with PureIt was not needed in the summer season

(Table 24). A few reported problems with the device (such as leakages) and exhausted GKK as reasons

for discontinuation.

Table 24: Reasons for discontinuing use among those who had not given away PureIt, Nagda

(percent of respondents who discontinued use and had PureIt at home at last track of follow-up)

Reasons Yes (%)

Seasonality 77.4

PureIt is not required in this season 71

Water became hot 10

Device 48.4

Device is leaking / broken / damaged 6

Water filters very slowly / water does not filter at all 45

GKK 22.6

Battery is exhausted - will get a new one in some time 10

Replacement of filter cartridge/GKK is too expensive 6

Filter cartridge / GKK is not easily available 13

Need 16.1

Get clean water from the tap 13

People who drink the filtered water are away 3

Use Experience: Find PureIt inconvenient to use 9.7

Gifting: Kept for gifting 3.2

Others 13

We also found that those who had PureIt in their homes but were not using it, were not using any

effective HWTS method at that time: they all treated their water but used either alum (26 percent) or

filtering through a cloth/sieve (74 percent). Since those who perceive need for water treatment that is

as safe as PureIt are in general more likely to use an effective method of water treatment (such as

boiling), we infer that those who lapsed in use of PureIt probably had relatively low felt need for

effective water treatment. It may thus be unlikely that many of them will resume use of PureIt in a

different season, repair the device or repurchase the GKK.

Therefore, lapsing of PureIt use in Nagda appears to have been mainly driven by low felt need for water

treatment or low perceived relevance of PureIt in meeting the need for treating water.


3.11.2. CORRECT AND CONSISTENT USE IN NEEMUCH

In Neemuch, the endline survey was conducted in January 2011, and the longitudinal study was

conducted from February to July 2011. Here, 158 respondents who had purchased PureIt through

Spandana were randomly selected from sales records for participation in the longitudinal study.

The levels of reported current use, correct use, and consistent correct use over the six month period

are shown in Table 25. The longitudinal study shows that current use, correct use and consistent

correct use declined from the first round (February 2010) to the last month of the longitudinal follow-

up (July 2011). Self-reported current use declined steadily over time, from 67 percent to 32 percent in

the last month of the longitudinal follow-up. Observed correct use fluctuated over the course of the

longitudinal study between 47 and 16 percent, with the lowest value in the last track. The irregular

cleaning and maintenance of PureIt was the main reason for this fluctuation. Only 2 percent of the

respondents followed-up were using PureIt correctly and consistently through the last month of the

longitudinal follow-up.

Table 25: Current use, correct use and continued use from longitudinal follow-up in Neemuch

(percent of respondents who purchased PureIt)

Current Use

(reported)

Correct Use

(observed)

Correct and consistent use

(observed)

N 158 158 158

February ‟11 (Round 1) 67.1 38.0 38.0

March „11 63.3 47.5 28.5

April „11 46.8 30.4 13.3

May „11 46.8 21.5 11.4

June „11 43.7 38.6 10.8

July ‟11 (Round 6) 31.6 15.8 1.9

The reported reasons for discontinuing among respondents who reported not currently using PureIt in

each of the monthly visit are shown in Table 26. Similarly to Nagda, we found that in Neemuch the main

reason for discontinuing was giving the device away as a gift and keeping it aside (never used). Over

time, there was an increase in the proportion of non-users who had discontinued use due to season-

related perceived need to treat water. There was a marginal increase over time in discontinued use due

to the GKK being exhausted and not replaced, but this was a reason reported by relatively few of the

discontinued users.

Table 26: Reasons for discontinuing use from longitudinal follow-up in Neemuch

(percent of respondents who discontinued use)

Reasons for not currently using Mar ‘11 Apr ‘11 May ‘11 Jun ‘11

N 58 84 84 89

Gifted 56.9 39.3 39.3 37.1

Not in use/never used 29.3 46.4 46.4 48.3

Seasonality 10.3 21.4 21.4 20.2

Exhausted GKK 3.4 5.9 5.9 6.7


Figure 11 shows the main user segments identified in the last track of the longitudinal survey in

Neemuch. About 68 percent of respondents in the longitudinal survey had discontinued using PureIt by

the last track (July 2011). Nearly a third of those who had discontinued using PureIt had given the device

away without having ever used it, while about a quarter of non-users in the last track who still had the

device in their home had never used it (possibly keeping it aside for future give away).

Figure 11: User segments in the last track of longitudinal follow-up survey in Neemuch


Table 27 shows the most frequently cited reasons for discontinuing use among those who had given

away the device. More than 90 percent reported that the reason for discontinuing use was that they did

not find need for PureIt use in their household, while 11 percent mentioned inconvenience of use as one

of the reasons to discontinue use.

Table 27: Reasons for discontinuing use among those who gave away PureIt, Neemuch

(percent of respondents who did not have PureIt in their home at last track of follow-up)

Reasons Yes (%)

Do not find the need for PureIt 91.4

Find PureIt inconvenient to use 11.4

Gifted 14.3

Given to a needy person 2.9

Given in dowry 2.9

Given as gift 8.6

Needed money so sold PureIt 5.7

Filter cartridge (GKK) not easily available 2.9

Among those who had not given the device away, the most often cited reason for discontinuing use was

season-related (i.e. that treating water with PureIt is not needed in the summer season), with 73 percent

of respondents mentioning this reason. About a third of respondents mentioned that an exhausted GKK

was the reason why they stopped use of the device, while 14 percent were keeping it aside for future

Longitudinal

100%

Continued Users

32%

Lapsers

68%

Device given away

22%

Never used the device: 22%


Device available in residence

46%

Never Used

11%

Used

35%


gifting (Table 28). Those who discontinued use because they found PureIt inconvenient to use or

maintain were relatively few (5.5 percent).

Table 28: Reasons for discontinuing use among those who had not given away PureIt, Neemuch

(percent of respondents who had it in their home at last track of follow-up)

Reasons Yes (%)

Seasonality 72.6

PureIt is not required in this season 72.6

Water becomes hot 2.7

GKK 35.6

Battery is exhausted - will get a new one in some

time

30.1

Replacement of filter cartridge/GKK is too expensive 1.4

Filter cartridge/GKK is not easily available 4.1

Gifting: Kept for gifting 13.7

Use Experience: Find PureIt inconvenient to use 5.5

Device 2.7

Device is leaking/broken/damaged 1.4

Water filters very slowly/ water does not filter at all 1.4

Need: Get clean water from the tap 1.4

As in Nagda, we found that in Neemuch those who had PureIt in their homes but were not using it

were not using any effective HWTS methods at the time, with nearly all (99 percent) using settling and

decanting or filtration through cloth/sieve, and about one percent using alum. Since those who perceived

need for water treatment would likely use some effective method of water treatment (such as boiling)

after discontinuing use of PureIt, we infer that those who stopped using the device likely had an overall

low felt need for effective water treatment. Thus, it may be unlikely that many of them would resume

use of PureIt in the future/different season.

In summary, the longitudinal study found a drop in current use over time in both Neemuch and Nagda.

Correct use was irregular, suggesting intermittent rather than regular maintenance and resulting in

negligible consistent correct use by the last track of the longitudinal follow-up.

The reasons for lapse or discontinuation in PureIt use were similar in the two pilot areas. Both of the

cost defrayment models had a large proportion of purchasers giving PureIt away, largely rationalized by

the lack of felt need for water treatment by man of those who purchased the device. The fact that those

who discontinued using PureIt and had it in their house did not use any effective HWTS at the last track

of follow-up suggests that they too likely felt low need for water treatment or low relevance of the

product in meeting their need for treating water, which was largely driven by turbidity in the water

rather than microbial safety.


4. ASSESSMENT OF COMMERCIAL VIABILITY OF THE MODEL

In this section, we describe the findings from the assessment of commercial viability of the MFI model,

and answer the following research questions:

1. Can the commercial partners earn a profit from sales to target consumers?


target consumers?


target consumers?

In addition, we examine the potential of the cost-defrayment strategy to be commercially viable, i.e.

whether the cost-defrayment be recouped through sales of the GKK.

4.1. APPROACH TO ASSESSING COMMERCIAL VIABILITY

In order to determine commercial viability, we ask the question: can the MFI model be self-sustained and

is it likely to be adopted by all actors the MFI and the manufacturer? How can continued use be

increased? And what is the sustainable distribution channel for resupply of GKK? This question in turn

means examining:

Channel Effectiveness: Examined market potential and achievements during the pilot including levels of

and increases in awareness, uptake and continued use of PureIt, the potential market size, and

effectiveness of marketing activities.

Channel Sustainability: Analyzed operating costs and projected sales revenue to identify the level of

commercial viability of the pilot for the partners and supply chain actors‟. Based on the „levels of

commercial viability‟ framework and from interviews with partners and supply chain actors‟ to

continue and/or scale-up the pilot the commercial viability of the pilot was assessed.

4.2. MARKET POTENTIAL AND IMPACT OF MARKETING ACTIVITIES

4.2.1. DESIGN CHANGES DURING IMPLEMENTATION

As mentioned earlier, in late 2010 disturbances in the MFI environment that originated in Andhra

Pradesh resulting from clients defaulting on payments followed by extensive political and media scrutiny

on all MFI led to Spandana operations being affected. As a result the partnership between HUL and

Spandana was put „on-hold‟.

For the pilot in Neemuch with the 50 percent cost defrayment model, this resulted in the pilot period

being curtailed to one month. The uptake level achieved by the pilot was affected by these disturbances

and hence a comparison of the uptake levels and commercial viability of the two cost-defrayment

models was not possible. The partnership for resupply of GKKs was also affected due to the MFI crisis.

Thus the new GKK resupply model via Spandana network was not tested in MP, and continued use may

also have been impacted.


4.2.2. INCREASE IN AWARENESS AND PURCHASE OF PUREIT


Awareness of PureIt increased significantly from 4 percent and 7 percent to 56 percent and 74

percent in Neemuch and Nagda respectively.

There was a significant increase in purchase of PureIt in both pilots. In Nagda where the 100 percent

cost-defrayment model was implemented the uptake was an impressive 44 percent. However, the

purchase level was much lower in Neemuch (7 percent).

72 percent of those who purchased were from the SWP target group (the middle three wealth

quintiles).

The high uptake rate reported in Nagda is offset by qualitative research findings that profiting from

resale may have been a strong reason for purchase. As many as 35 percent reported having given

away the PureIt they purchased. The quantitative and qualitative surveys indicated a high level of re-

sale of PureIt. Further, the qualitative research also indicated that some Spandana clients may have

purchased PureIt for other non-member households belonging to higher wealth quintiles.


Low exposure to promotional activities and scheme curtailing, particularly in Neemuch.

Low of perceived need for water treatment (microbial safety)

Poor perceptions of PureIt in terms of value for money and product efficacy

Lower perceived self-efficacy and family support

Lower affordability, even with cost-defrayment

4.2.3. EFFECTIVENESS OF MARKETING ACTIVITIES

The analyses of recall of messages on PureIt show that exposure to PureIt messages in group meetings is

a significant factor in purchase. However, as discussed in the previous section (4.2.2), it appears that

some of the purchase has not been with intent to use. Hence we assess the effectiveness of marketing

activities in establishing felt need for water treatment and positive perceptions of PureIt. This

assessment is hypothetical and is summarized qualitatively in Table 29 below.

The surveys and the qualitative research study show that that respondents from both Neemuch and

Nagda had: low recall of microbial contamination in drinking water (a key aspect of HUL‟s

communication on PureIt), low recall of brand name and low perceived value for PureIt. Thus the need

for microbial safety in drinking water and the effectiveness of PureIt in addressing this problem was not

established in either pilot even though this is an important element of HUL‟s promotional strategy.

The endline survey and the qualitative research findings indicate that the levels of exposure to the

marketing activities was reasonably high in Nagda, and that people recalled having seen a variety of

activities 3 – 4 times during group meetings. These surveys also show that Neemuch received less

coverage and lower quality of promotional activities as compared to Nagda. Thus, the reason for

perceived need for water treatment and effectiveness of PureIt as a solution not having been established

in Neemuch could be the level of exposure. However, this does not appear to be the reason in Nagda.

Therefore, we infer that the reason could be the cost-defrayment strategy. Since, with a cost-

defrayment strategy sales are easier to achieve, HUL product representatives may have not had the

need to persuade potential customers on the need for water treatment and the benefits of PureIt. Thus,


the cost-defrayment may have resulted in a negative externality – dis-incentivizing HUL product


Table 29: Effect of Marketing Activities on Perceived value of PureIt

Neemuch Nagda

Perceived Value of PureIt - - -

Intervention Coverage - +

Intervention Intensity and Frequency - - +

Cost Defrayment - - -

Note: In this assessment of overall effectiveness of marketing activities, a „+‟sign indicates positive effect,

while „-‟ refers to a negative effect.

4.2.4. CONTINUED USE OF PUREIT

The longitudinal survey in Nagda and Neemuch showed that current use (at time of survey) had declined

to 11.4 percent in Nagda and 2.2 percent in Neemuch among those who had purchased the device at

least six to seven months earlier. Correct use fluctuated over the six to seven months of the

longitudinal follow-up, resulting in negligible consistent correct use by the last track of the longitudinal.

We found no households in Nagda who had consistently and correctly used PureIt by the last track of

the longitudinal. In Neemuch, consistent correct use by the last track of follow-up was also close to

zero.

The main reasons for not continuing to use PureIt after purchase were similar in Neemuch and Nagda.

Both cost defrayment models resulted in low rates of continued use due to low felt need for water

treatment, resulting in gifting the device or switching back to previous ineffective water treatment

methods.

Therefore, we infer that the cost defrayment model led to purchase among many who had low felt need

for water treatment, and thus either i) never used PureIt or ii) discontinued use at times when treating

water with PureIt required attention.

4.3. ANALYSES OF SALES AND REVENUES

4.3.1. SALES TRENDS

The Nagda pilot project resulted in total sales of 1,628 PureIt devices over the 6-month period, or a

monthly average of approximately 271 devices (Figure 12). There was a ceiling on sales in this pilot. In

Neemuch the total sales was 261 in the one month of the intervention. The sales were restricted due to

the curtailment of the intervention. No GKKs were sold during the period of the study (besides those

that were pre-packaged with the filter).


Figure 12: Pilot Sales Trends (number of PureIt devices)

4.3.2. LEVEL OF COMMERCIAL VIABILITY

Figure 13 below illustrates the break-up of the costs and margins on the sale of the PureIt device.

Figure 13: Level of Commercial Viability for HUL: PureIt device

The retail price of PureIt is Rs 2,000 and the ex-factory price of a PureIt is estimated to be Rs 1,037

after accounting for distributor margin, distributor costs, taxes and levies, and other transportation

545

990 1032

1628 1628 1628 1628 1628 1628

261 261 261

0

400

800

1200

1600

2000

Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

Nagda Neemch

Ceiling on Sales

Curtailment of Intervention

2,000

1,698

1,037

445

Retail priceWholesale priceEx-factory priceManufacturing Cost

HUL Margin Supports: - Cost defrayment - BTL Communication (Spandana fee, delivery charge reimbursement, Product Executive) - Profit

Towards: - Freight - Insurance - Damages - Excise duty - Sales tax & levies

Towards: - VAT - DS costs - DS Margin


costs. Thus, after deducting the manufacturing cost from the ex-factory price, HUL has a gross profit of

Rs 592 per PureIt. The cost elements in these calculations were provided by PATH. The sources of

information and assumptions made in the cost-structure for PureIt are described in Table 30.

Table 30. Cost Assumption for Analyses of Commercial Viability for the PureIt Device

Cost element Cost Source / assumption

Retail price Rs. 2,000 Maximum retail price listed on the product

during the pilot period

Value Added Tax (VAT) 13% of pre-VAT price Country norm

Distributor gross margins Rs. 72 HUL

Distributor indirect selling costs Rs. 18 HUL Estimate

Distributor net margins Rs. 54 HUL Estimate

Sales tax and other levies 12.5% of pre-tax price Country norm

Secondary freight Rs. 25 Assumed as 25% of primary freight (industry

norms)

Excise duty 16% of warehouse landing

cost

Country norm

Transit damages 0.5% Assumed, industry norms

Insurance 12% Assumed, industry norms

Primary freight Rs 100 Assuming freight cost of a truck load to be Rs

45,000 and loading factor to be 450

Manufacturing cost Rs 445 HUL

This gross profit needs to cover the cost-defrayment, below the line (BTL) communication costs and

expected profit. We have not included recovery of above the line (ATL) communication such as mass

media advertisements or overheads in our commercial viability assessment assuming that this is an

„extension model‟ for HUL. Thus all ATL expenses and overheads would be attributed to HUL‟s main

marketing model – the retail sales model – and this extension model of partnering with an MFI would be

deemed viable if it generates direct costs attributable to this model and generates expected levels of

profit.

The BTL costs for this model include channel access fee (or facilitation fee) paid to Spandana of Rs 200

per PureIt sold, delivery charge reimbursement to distributor of Rs 20 per PureIt sold and product

executive costs of Rs 44 (average cost per PureIt sold, estimated from reported sales and costs towards

salary and travel expenditure of Product Executives and their supervisor). Thus the margin available for

covering cost-defrayment after deducting BTL expenses is Rs 328 per PureIt. Since the cost-defrayment

in Neemuch and Nagda were Rs 1,000 and Rs 2,000 respectively, neither cost-defrayment strategy is

covered through gross profit margins earned by HUL through sale of PureIt. Hence, we classify the level

of commercial sustainability (or cost recovery) as Level 3 – it recovers product and distribution costs,

but does not fully recover marketing costs.

In the Neemuch pilot, total cost recovery was 93%. In the Nagda pilot, total cost recovery was 85%.

In this model HUL‟s revenues from sales of the device were 72% of the costs incurred in Neemuch and

62% of the cost incurred in Nagda. However, we note that without the cost-defrayment, HUL‟s gross

margins are likely to partially or fully cover all costs directly attributable to this model. Thus, without

cost defrayment, the model would be at a cost recovery level 4 or 5.


The model was designed to examine whether the future sales of GKKs would recover the cost

defrayment on the device, making the model commercially viable. Figure 14 illustrates the break-up of

the costs and margins on the sale of a GKK.

Figure 14: Level of Commercial Viability for HUL: GKK

The cost elements in these calculations were also provided by PATH. The sources of information and

assumptions made in the cost-structure for PureIt are described in Table 31.

Table 31. Cost Assumption for Analyses of Commercial Viability for the PureIt GKK

Cost element Cost Source / assumption

Retail price Rs. 350 Maximum retail price listed on the product

during the pilot period

Value Added Tax (VAT) 13% of pre-VAT price Country norm

Distributor gross margins Rs. 12 Calculated, see items below

Distributor indirect selling costs Rs. 0 Additional costs (over costs attributed to PureIt

device) of selling GKK assumed to be negligible

Distributor net margins Rs. 12 Assuming same % margin as in PureIt device

Sales tax and other levies 12.5% of pre-tax price Country norm

Secondary freight Rs. 25 Assumed as 25% of primary freight (industry

norms)

Excise duty 16% of warehouse landing

cost

Country norm

Transit damages 0.5% Assumed, industry norms

Insurance 12% Assumed, industry norms

Primary freight Rs 100 Assuming freight cost of a truck load to be Rs

45,000 and loading factor to be 11,250

Manufacturing cost Rs 59 Assumed that gross margin is 80% of wholesale

price

350

297

198

59

Retail priceWholesale priceEx-factory priceManufacturing Cost

HUL Margin Supports: - BTL Communication (Spandana fee, delivery charge reimbursement, Product Executive) - Profit

Towards: - Freight - Insurance - Damages - Excise duty - Sales tax & levies

Towards: - VAT - DS costs - DS Margin


The retail price of a GKK is Rs 350 and the ex-factory price of a GKK is estimated to be Rs 198. This

difference of the GKK from the ex-factory price covers the HUL distributor‟s costs and costs towards

transportation and taxes. Thus, given an estimated manufacturing cost of Rs. 59 per GKK, HUL‟s gross

margins are Rs 139 for each GKK sold. We note that in these estimations, the HUL distributor‟s costs

(overheads) attributable to GKKs are assumed to be negligible. Similarly, for the purposes of this

assessment, BTL costs attributable to the GKK are assumed to be negligible. However, these

assumptions may not hold true particularly where Spandana is enlisted to take an active role in re-supply

of GKKs.

Figure 31 indicates that this model is commercially viable for HUL as is, i.e. without an expectation of

recovering the cost-defrayment on the filter through sales of GKK. HUL‟s gross margin of Rs 139 from

sale of a GKK is likely to cover additional costs that Spandana and/or the distributor may charge for

taking a more active role in re-supply of GKKs. Thus the level of cost-recovery in GKK sales is Level 4/5

in this scenario.

Now, we examine the level of repeat purchase required to recover the cost-defrayment in each of the

models with a gross margin of Rs 139 from sales of additional GKKs. The net loss to HUL from sale of a

PureIt in Neemuch is Rs 630, and the net loss in Nagda where a PureIt was bundled with 2 additional

GKKs for Rs 730 is Rs. 1,322. To recover these losses from sales of GKK, the average number of

additional GKKs purchased by those who purchased PureIt in Neemuch needs to be 4.5 or more, i.e.

the average duration of use of PureIt in Neemuch should be 22 months or more15. Similarly, the average

number of additional GKKs purchased by those who purchased PureIt in Nagda needs to be 9.5 or

more, i.e. the average duration of use of PureIt in Nagda should be 50 months or more. Clearly, the

continuation rates observed in the longitudinal survey show that such levels of GKK re-purchase are

unlikely.

Figure 15a and 15b provide the break-up of the costs and margins for Spandana in Neemuch and Nagda

respectively. Here we have assumed that Spandana‟s costs incurred in this partnership at the same rate

as the overall cost structure of their operations.

As shown in Figure 15a and 15b, Spandana incurrs a small proportion of the retail price after cost-

defrayment (the loan value) towards cost of funds, insurance and other operating costs. Spandana thus

has a large margin over its costs in this model, and in comparison to the model implemented in Tamil

Nadu. Thus, if the loan recovery rate is 98 percent or more, the model is commercially viable for

Spandana; and for Spandana this partnership is at Level 4/5 sustainability. In terms of cost recovery, the

model provides a 130% and 122% cost recovery to Spandana in Nagda and Neemuch respectively.

In Neemuch and Nagda, Spandana remained at level 4/5 sustainability, and HUL‟s distributor was at level

5 sustainability. However, HUL itself was at sustainability level 3 because their margin from sale of PureIt

and GKKs was not sufficient to recover all marketing costs including the cost defrayment costs.

15 Assuming each GKK last an average of 4 months.


Figure 15a: Level of Commercial Viability: Spandana in Neemuch

Figure 15b: Level of Commercial Viability: Spandana in Nagda

Notes:

NPA=non-performing assets (write-offs).

Crossed-out items refer to costs that were not included in the amounts shown here (i.e. were not incurred by this

partner) but would be relevant in such a partnership.

1,000 1,039 1,058

1,295

0

300

600

900

1200

1500

Retail Price Cost of funds, NPA,Insurance

Operating Costs Total cash inflow

Towards:- Water Associate- Re-supply of GKB

730 754 765

996

0

200

400

600

800

1000

Retail Price Cost of funds, NPA,Insurance

Operating Costs Total cash inflow

Towards:- Water Associate- Re-supply of GKB


4.4. PARTNERS’ WILLINGNESS TO CONTINUE WITH THE MODEL

4.4.1. HUL’S INTEREST IN CONTINUING THE MODEL

HUL interest in these pilots was motivated by the objective of extending PureIt to new markets; urban

lower-income and rural households. However, the challenge was that their distribution structure was

designed to serve urban, high density areas.

From experience they found that direct-selling was a more effective strategy in selling PureIt. They saw

potential partnerships to be found with MFIs. The regular group meetings organized by MFIs offered

structure for direct selling. They also provided „congregation points‟ and thereby the network to

address the low density of demand. MFIs were needed as „demand aggregators‟ in these low density-of-

demand areas. MFIs also had the ability of addressing the financial barrier of purchasing the PureIt device

through loan installment schemes.

Interviews with HUL representatives, conducted after the pilot, indicated that HUL took away

important learning from these pilots. Key learning reported by HUL from the cost-defrayment models

are:

Social partnerships were a credible route to increase penetration of PureIt. The pilots provided the

knowledge base necessary for working with MFIs/NGOs. They demonstrated proof of concept both

internally and to potential partners. HUL found a “good partner” in Spandana with who they were in

dialogue for re-start and scale-up. They also intend to form a number of other social partnerships

with both business-driven and mission-driven partners.

Intensity of coverage both in terms of quality and quantity of interactions was essential for turning

latent need for water treatment to demand for PureIt. There was also a need to involve

spouses/other family members in the decision making process. Engaging women and their spouses

regularly could give uptake results similar to the cost defrayment scheme. HUL reported that it has

incorporated this learning into their processes and has fine-tuned the model to increase efficiency by

decreasing the span of control of HUL field representatives and increasing the intensity of coverage

through training and involvement of MFI CAs and/or NGO staff.

Cost-defrayment was an ineffective route. Increasing affordability through lowering the price of the

products was deemed both ineffective and unviable.

GKK pricing and availability concerns tackled through the development of a feasible GKK product

bundle for loan purchase (2 LLBs for Rs 1000, repaid over 50 weeks) and distribution through the

MFI/NGO network. According to HUL, the refined model is reportedly effective in rejuvenating use

among lapsed customers.

4.4.2. SPANDANA’S INTEREST IN CONTINUING WITH THE MODEL

Spandana was interested in these pilots with the motive of generating a competitive advantage in the MFI

sector by providing increased value to customers. The MFI industry is very competitive and the loyalty

of customers was important. Through these pilots Spandana hoped to be able to help customers in

saving more by decreasing health care spends. The main challenge was the risk of these activities

influencing core business either directly through additional load on staff or indirectly through a transfer

of product image on Spandana.

Post-pilot interviews with Spandana were not possible due to operational changes taking place after the

MFI crisis. However during earlier variations of the model, without cost defrayment, conducted in Tamil


Nadu HUL reported that Spandana was eager to scale up. Future interest in in continuing/scaling up such

partnerships after changes in the microfinance sector post the crisis and the ordinance issued in

October is difficult to establish.

4.5. MODEL RESULTS AND POTENTIAL: SUMMARY

Table 32 presents a summary of the effectiveness of the MFI model tested in MP to attain uptake and

continued use of the product (particularly among the SWP target group), the model‟s commercial

viability, and partners‟ intention to scale-up the model. For effectiveness and commercial viability, we

assessed the „as-is‟ scenario of each pilot variant and a „could be‟ scenario (the potential of the pilot

variant with certain modifications based on learning from the pilots).

Effectiveness

The „as-is‟ assessment of effectiveness shows that:

The 100 percent cost-defrayment variant achieved substantially higher uptake (purchase) than

the 50 percent cost-defrayment variant.

The principal challenge in this model was identified to be high discontinuation rates resulting

from purchases by many who had no intention to use the filter and proceeded to resell or give

it away as a gift. Thus, while the MP pilots were successful in generating uptake of PureIt they

were not able to increase continued use.

In assessing the „could-be‟ effectiveness of these pilot variants, we considered the following:

The pilot in Neemuch (50 percent cost defrayment model) was curtailed within one month due

to disturbances in the MFI industry. Hence, we rate the „could-be‟ effectiveness of the pilot

higher if implemented for a similar duration as other pilots.

We rate the „could-be‟ effectiveness of the 100 percent cost defrayment variant in Nagda lower

than the „as-is‟ effectiveness for two reasons:

o The qualitative research and household surveys indicated a high level of resale of the

filters i.e. many households which purchased the filter device resold it to others,

possibly outside of the geographical area and SWP target group. Hence, the real rate of

uptake, accounting for this resale, is likely to be considerably lower.

o In both cost-defrayment models, the qualitative research found that the pilot activities

had not succeeded in persuading the MFI members of the perceived value for the filter

device. The MFI members appeared to consider PureIt to be similar to other traditional

treatment methods such as filtering with a cloth, net or sieve. Further, while the

continued use rates after six months of follow-up were still reasonable in Nagda, we

note that most purchasers had not had a need to replace the GKK (in the 100% cost

defrayment model, customers received two GKKs along with the filter device). Hence

there is likely to be higher levels of discontinuation of use in this pilot.

Considering these results, along with the results from the TN pilot (where PureIt was sold at full price),

we conclude that the MFI partnership model has the potential to be effective in a variety of urban, peri-

urban and rural settings, i.e. generate reasonable levels of uptake in a 6-12 month period. This model

can also achieve high levels of continued use over time if availability of financing for purchase of GKKs is


ensured. Further, we conclude that marketing the product at full price with a soft repayment plan (Rs 43

over 50 weeks) is more effective in generating “true” uptake than defraying the cost of the filter device.

Commercial Viability

The „as-is‟ commercial viability analysis shows that this model, with the product being sold at partially or

fully cost-defrayed price, is not commercially viable. In none of the two variations of the cost-defrayed

model, both partners have more than 100% cost recovery, so the model will require financial support

towards distribution and marketing costs, as well as overheads, to be able to continue. By comparison,

the model variant in TN where the product was sold at full market price can be a commercially viable

model – up to Level 4 or 5. In this model, partners are likely to recover all direct product, distribution

and marketing costs; although in areas with lower density of demand, the partners may not recover

expected levels of profits and coverage of overheads.

Likelihood to continue and scale-up

The partners in this model intend to continue and scale-up the model with a few modifications.

Specifically, HUL is very keen to continue the model with Spandana. However, due to disturbances in

the MFI industry, the HUL-Spandana has been „on-hold‟. HUL anticipates that once these issues are

settled, Spandana will continue with the model. In the meanwhile, HUL has been working towards

scaling-up this model with other MFI partners.

HUL‟s key considerations for successful scale-up are:

Full-price sale of PureIt with a soft loan scheme (Rs 43 x 50 weeks), i.e. without cost-defrayment

More intensive communication on need for water treatment, led by the MFI‟s credit / loan

officers.

Negotiating with the MFI partner to ensure that GKKs too are financed by the MFI and that

they are distributed through the MFI partner


Table 32. Summary of Pilot Results

Location Neemuch Nagda

Key Pilot Feature 50% cost defrayment 100% cost defrayment

Pilot Duration 1 month 6 months

Uptake (%)1 7.2 43.6

Current use (%)2,5 3.7 21.2

Correct use (%)2,5 1.8 4.3

Consistent use (%)3 2.3 11.4

Uptake within SWP target group defined by wealth

index (%)4 8 38

Sales to SWP target group defined by wealth index (%

of total units sold)4 86 67

„As Is‟ Effectiveness6 + + + +

Considerations in assessment of effectiveness - Very short pilot duration (Neemuch)

- Perceived value for PureIt not established

- High resale of filters (Nagda)

- Repurchase of GKKs not known

„Could Be‟ „Effectiveness6 + + +

„As-is‟ Level of commercial viability (% cost recovery) 3 3

HUL 3 (72%) 3 (62%)

Spandana 5 (122%) 5 (130%)

Considerations in assessment of commercial viability Continued use rates are not expected to reach levels required for

recovering device cost-defrayment

„Could-be‟ Level of commercial viability 3

Intention to continue7

HUL No

Spandana No

Implementing partners‟ intention to scale-up No

Notes:

1. Uptake refers to purchase of PureIt filter device.

2. Current use refers to self-reported use in 24 hours preceding the survey. Correct use refers to observed correct use at

time of the endline survey.

3. Consistent use refers to the proportion of purchasers observed to be using the product correctly in each round of the

longitudinal follow-up

4. SWP target group is households in the middle three wealth quintiles of the country.

5. Figures underlined indicate significant increase from baseline values.

6. In the assessment of overall effectiveness, a higher number of „+‟signs indicates greater effectiveness.

7. Spandana‟s interest in continuing and scaling-up is as reported by HUL. Spandana representatives were not available for

interview due to the on-going MFI disturbances in India


5. LIMITATIONS OF THE RESEARCH

Our results and analyses have several limitations that should be noted:

The comparison between the pilot schemes implemented in Neemuch and Nagda on impact of the

schemes (or individual elements) on some indicators cannot be made accurately due to differences

in the implementation period and level of involvement in the two branches.

It is difficult to isolate the impact of the intensity of intervention in terms of both quality and

quantity of group meetings and the cost defrayment schemes on the perceived value of PureIt.

There was a high incidence of lapsing in the pilots, with a major reason being gifting or re-selling. It is

difficult to assess the true incidence of resale/gifting based on respondents response (it is likely that

many were reluctant to admit they had sold the product that they received free/at a discount).

The commercial viability analysis does not include inputs from Spandana‟s senior management and

field representatives post-pilot (they could not be interviewed).


6. CONCLUSIONS

The results from the household surveys and the qualitative research study clearly show that:

Felt need was high; however this was mainly due to visible impurities in the water and did not arise

from the need for microbial safety. Respondents therefore engaged in filtering with cloth/plastic and

using alum to treat their water.

At baseline, the intention to buy PureIt was low for the 50 percent cost defrayment scheme. The

key segment identified as potential purchasers was those who were placed in the upper wealth

quintile and boiled their water. However, even within this segment, the intention to buy at 50

percent cost-defrayment was below experiential norms developed in the SWP project. The

potential market for the 100 percent cost defrayment scheme was not evaluated at baseline.


o Awareness of PureIt increased significantly from 4 percent and 7 percent to 56 percent and

74 percent in Neemuch and Nagda respectively.

o There was a significant increase in purchase of PureIt in both pilots. In Nagda where the 100

percent cost-defrayment model was implemented the uptake was an impressive 44 percent.

However, the purchase level was much lower in Neemuch (7 percent).

o 72 percent of those who purchased were from the SWP target group (middle three wealth

quintiles).

o The high uptake rate reported in Nagda is offset by qualitative research findings that

profiting from resale may have been a strong reason for purchase. As many as 35 percent

did reported having given away the PureIt they purchased. The quantitative and qualitative

surveys indicated a high level of re-sale of PureIt. Further, the qualitative research also

indicated that some Spandana clients may have purchased PureIt for other non-member

households belonging to higher wealth quintiles.


o Low exposure to promotional activities and scheme curtailing, particularly in Neemuch.

o Low of perceived need for water treatment (microbial safety)

o Poor perceptions of PureIt in terms of value for money and product efficacy

o Lower perceived self-efficacy and family support

o Lower affordability, even with cost-defrayment

In Neemuch activities were curtailed due to the MFI crisis. Due to this, the levels of recall of

activities (both coverage and intensity/frequency of interactions) in Neemuch were substantially

lower than in Nagda. Consequently, we cannot assess the effectiveness of the Neemuch pilot where

the 50 percent cost-defrayment model was implemented.

Impact of intervention on uptake suggests that Spandana meetings alone significantly increase the

chances of purchase. Additional media exposure increase possibility of purchase but between

Spandana meetings and both mass media and Spandana meetings there is no significant increase

These studies report important reasons for the high lapse rates, In particular:


o The reasons for lapsing were similar to that of not purchasing PureIt. The low value

perception of PureIt along with the lack of irreplaceable benefit translated to gifting and

reselling PureIt.

o Replacement of GKK was not a reason for lapsing; however, price and availability of GKK

could lead to further increase in lapse rate in the future.

o From the longitudinal study, we found that in both pilot areas current use dropped over the

six to seven months of the longitudinal follow-up. Correct use was irregular due to

intermittent maintenance by users, resulting in negligible rates of consistent correct use by

the last track of the longitudinal.

Assessment of the effectiveness of marketing activities leads to the hypothesis that the cost-

defrayment may have resulted in a negative externality – dis-incentivizing HUL product


Without the cost-defrayment, HUL‟s gross margins are likely to partially or fully cover all costs

directly attributable to this model. Thus, without cost defrayment, the model would be at a cost

recovery level 4 or 5. However, with cost-defrayment, we classify the level of commercial

sustainability (or cost recovery) as level 3 – it recovers product and distribution costs, but does not

fully recover marketing costs deployed towards cost-defrayment.

The net loss to HUL from sale of a PureIt in Neemuch is Rs 630, and the net loss in Nagda where a

PureIt was bundled with 2 additional GKKs for Rs 730 is Rs 1,322. To recover these losses from

sales of GKK, the average number of additional GKKs purchased by those who purchased PureIt in

Neemuch needs to be 4.5 or more. Similarly, the average number of additional GKKs purchased by

those who purchased PureIt in Nagda needs to be 9.5 or more. The continuation rates observed in

the longitudinal survey show that such levels of GKK re-purchase are unlikely.

Thus, the commercial viability for the different partners in this model are summarized as:

o Level 4/5 cost-recovery for Spandana

o Level 5 cost-recovery for HUL distributor

o Level 3 cost-recovery for HUL

In this model, total cost recovery was 93% in Neemuch and 85% in Nagda.

HUL‟s revenues from sales of the PureIt device were 72% of the costs incurred in Neemuch and

62% in Nagda. Spandana achieved a 122% and 130% cost recovery in Neemuch and Nagda

respectively.

Interviews with HUL indicate that HUL will not be willing to continue with the cost-defrayment

model. However, HUL reported that it was keen to continue and scale-up the MFI partnership

approach without cost defrayment. Spandana‟s interest in continuing the model could not be

assessed since Spandana representatives were unavailable for interviews.


7. RECOMMENDATIONS

The findings point to the following recommendations on changes to the model design and

implementation that partners should consider to improve the health impact and commercial viability of

this model. Some of these recommendations are known to be feasible and effective on the basis of

HUL‟s experiences with this and similar pilots.

Increased intensity of coverage: The findings suggest that there is a need for increased intensity of

activity both in terms of quality and quantity of group meetings conducted. There is a need to

involve the entire family especially the spouse and elders in the decision making process in order to

ensure uptake and continued use. HUL has seen benefit in greater involvement of the MFI CAs and

NGO staff in conducting repeat visits to households.

o Spandana meetings alone provide a significant positive impact toward uptake rates.

Resources could be focused on MFI group meetings to increase uptake of PureIt. This is

essential in converting latent need for water treatment to demand for PureIt.

Cost defrayment is an ineffective route: those who did not intend to use PureIt also purchased

leading to a mis-targeted subsidy. The model was therefore successful in generating high purchase

rates; however, it also saw a high incidence of lapse and resale. Uptake and continued use is likely to

be impacted positively if the cost defrayment resources are used towards increasing intensity of

activities and frequency of interaction rather than to substitute product price.

Price and availability of GKK may come up as a barrier to continued use in the future. There is

therefore a need for a feasible GKK supply chain and product bundle. HUL has had positive

experiences with the sale of two LLBs for Rs 1,000 repaid over 50 weeks.

Some product related functional barriers are heightened and may take a more central position as a

cause for lapse once the other concerns are resolved. These include the problems faced by large

families that require larger volume of water - frequent refilling and replacement of GKK may be

cumbersome – and the delicate appearance of PureIt and difficulties in finding a suitable place for it

make it less desirable in smaller houses. Resolving these issues may be challenging as it likely needs

to involve creating different versions (in terms of size and sturdiness) of the device to address the

needs of these user segments.

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