Hindustan Unilever’s “Pureit” Water Purifier Case

Analysis

Final Submission by :

Ragini Mahapatra B19096

Shaurya Sharma B19107
Sajal Garg B19102
Vineet Singh Rawat B19117
Revuluri Dilip Chandra Santhosh B19098
Eshan Tyagi B19077
Abhishek Rathour B19062
Kashish Gupta B19063
Diptisikha Dash B19076
Rohan Coelho B19099
 Executive Summary

As part of their global water initiative, HUL launched a water purification and storage system
meant for Consumer use at the point of usage. The product was aimed at people in rural and
semi urban areas so that they could have access to clean water. In this regard they developed
a low-cost countertop water purifier to provide clean potable drinking water to
underprivileged and rural households. This was a significant challenge for the FMCG
conglomerate which was entering the consumer durable markets for the first time.
The technology being developed faced stiff competition from companies already well versed
in durables and also new entrants like Tata and P&G which were contending in the same
space. Solving for basic problems like lack of running water and electricity, HUL went ahead
and designed its product which was unlike any other alternative worldwide. The device so
created was a miniature water treatment plant being deployed in customers’ houses. Having
taken 4 years and more than 200 design changes, the purifier was one of the most intensive
product development initiatives at HUL.
Studying the market for the consumer, HUL realized that consumers, even though in the lower
economic strata, were not interested in buying a product which was a public health product
and marketed it as something which was a part of moving up in life (confidence of safe
drinking water bought by owning the product). Using its FMCG based backbone of Rural
distribution, in addition to building a massive force of demonstrators using external agencies,
HUL deployed its Classic, Auto Fill and Compact Models penetrating 1500 towns and
protecting near 15 Million people. The DTH force generated also doubled up as customer
service agents and reps to lobby the general public and doctors. Keeping a static face helped
build a very humane relation between customer and brand.
HUL also used doctors and other Key Opinion makers as influencers to try and influence public
discourse in its target audience.
Launched with much fanfare with Tata Swatch a competing brands like Tata Swatch close on
their heels , Pureit hasen’t been able to penetrate the market it initially set out to conquer
with its cheaper models. More than a decade after it was launched Pure It is not big on market
share, either in the premium segment or the normal segment. We analyse their strategy,
positioning and strategies to asses where Pure It lies in today’s market.
II. Company Description

In 2000, the United Nations established eight Millennium Development Goals (MDGs), one of
which was to reduce the number of people not having access to potable water by half. A 2002
study found that 7.5% of all deaths in India that year were caused by diseases related to
unclean water. Hence, HUL launched a water purifier that catered to areas facing
infrastructural constraints that achieved international standards at affordable prices.

The purifier targeted people at lower income levels who had no access to electricity and
pressurised tap water and was marketed as a consumer durable.

The core competency of HUL was its dedicated R&D department which helped develop Pureit,
the first countertop water purifier in the market. Pureit was the first to have an end-of-life
indicator for the consumable refill component with a safety auto-shutoff mechanism. It
adhered to international standards for water quality. HUL was working closely with BIS to
develop a regulatory framework for water purifiers in India as there was no standardization
for quality of drinking water. It was priced based on the consumer’s affordability. The Direct-
to-Home Demonstration System gave it a competitive advantage through which the Water
Experts built a relationship with the consumer.

The company’s mission is “To add vitality to life and meet everyday needs for nutrition,
hygiene and personal care with brands that help people feel good, look good and get more
out of life." HUL’s vision is “To earn the love and respect of India by making a real difference
to every Indian...Doing Well By Doing Good” The company’s Core Values are to work with
integrity, have a positive impact and improve continuously, set out aspirations and working
with others.

III. Product Description

The company launched the purifier in 4 variants: Classic, Marvella, Compact and Autofill.
These purifiers are capable of removing three types of harmful germs. The company had a
very strong R&D focus and they made over 200 design changes over 4 years to arrive at the
final product. They had an edge over other purifiers because they did not need electricity or
pressurised water to run. With competitive prices and a strong DTH network, these products
penetrated the markets. The products image was carefully crafted such that it was seen as a
consumer durable and not as a public health product. They marketed it by employing their
sales-men direct-to-door rather than advertising through commercials. The campaign focused
upon educating customers, expanding DTH network, raising awareness among doctors,
opening retail channels and targeted all income groups through their products. They also
developed a system of generating feedback from customers by visiting them after one month
of sales and understanding the issues faced by them and incorporating the changes in the
product.
During 2009, HUL was the leading seller in the Indian market in terms of units, serving 51% of
the consumers. But the price of Pureit being the lowest in the market, their market share in
terms of revenue was only 18.62%, with Eureka Forbes leading the market.
IV. A. Understanding The Consumer

To conduct primary research on Pureit and other market-based solutions for water purification
we interviewed 10 rural households out of which 6 were in Saldih, Jharkhand while the
remaining 4 belonged to Durgadaspur, Odisha.

For households in Saldih, piped water supply was installed only 18 months’ back. Water is
collected from the nearby river and stored in Gamarhia, a water storage facility. The water is
then transported to the houses through pipes. The water is available for use only 3 days/week
and that too for an hour or two at most. Once the water gets exhausted, people rely on the
tube wells. The same water has to be used to meet the daily water needs of the households.
To make water fit for drinking, a few households use sieving (with cloth) for purifying.

A few other households were found to use the more orthodox method of boiling the water to
kill germs and make the water potable. This too was done only as a precaution during the
rainy season. They then use earthen pots to store drinking water. Most Households didn’t
purify the water and used the water available as is. All Households acknowledged that they
knew of water purifiers. Despite being aware of the water purifiers and their benefits, they were
reluctant to use them as they never felt the need of it. According to them since no one in their
family fell sick due to water consumption, they did not find it economical to spend money on
the ‘expensive’ purifiers. Moreover, the showrooms selling water purifiers were located far
from their households and no purifier representative had ever visited their houses. It was clear
from the interaction that Pureit and other water purifiers had been unable to reach these
households and spread awareness about their economical solutions of purifying water.

The scenario in Durgadaspur was no different. People collect water from tube wells for their
regular needs. Some of the households use candle filters to purify water was the rest do not
use any means to clean water before consumption. The people are not aware of Pureit
although they have heard about the Aquaguard and Kent purifiers, which they believe are too
expensive. This is due to lack of awareness regarding economical solutions available in
market for purifying water and no interaction of Pureit representatives with the local people.
IV.B Competitor Analysis

SWOT ANALYSIS FOR PUREIT:

Strengths Weaknesses
 Well-known name and resources of a  Low consumer awareness
giant like HUL  Ineffective marketing strategy
 Unlike other purifiers, it has a Germ-kill kit  Inefficient distribution network
which removes the need for manual  Increased cost of maintenance
intervention during servicing  Poor credit policies- requires the retailers
 Reasonably priced product makes it easier to make payment within 3-5 days
to target bottom of the pyramid
Opportunities Threats
 Large rural population which does not use  New entrants in the market with cheaper
any kind of filtration techniques provides products
opportunities for increasing market share  Availability of substitutes like municipal
 Rising income levels in rural areas that can supplies
be leveraged to increase consumer base  Buyers switching preferences due to value
added

70
AVERAGE QUARTERLY SALES (JAMSHEDPUR)

60
NUMBER OF UNITS SOLD

50

40

30

20

10

0
Utkarsh Bijli Ghar Sirohiwal Sourabh Steel Sales Shree Sharda Bhindeswari Ramesh Surya Gopal Sales
Enterprises Trading Co Enterprises Corporation Prasad Anant Kitchenware Enterprises
Prasad

RETAILERS
Kent Aquaguard
IV.B CONSUMER LANDSCAPE:
Online Reviews :
Pureit Classic: Rating of 3.7 with 25% 1-star reviews
Compact: Rating of 3.9 with 10% 1-star reviews
Autofill: Rating of 3.3 with 21% 1-star reviews
Marvella: Rating of 3.3 with 37% 1-star reviews

After analysing the online reviews, we observed that the high price models have attracted
more negative reviews than the lower cost models. We were able to list some of the major
negative reviews that most customers have written on e-commerce websites.
 The germ kill kit expires has a very low lifespan, sometimes only 2.5 months.
 The water leaks from the lower compartment or leaks into the germ-kill kit.
 The built of the product is perceived to be very delicate and customers often receive
damaged product.
 The maintenance cost is very high. The germ kill kit is expensive and hence the cost
of ownership increases for the product.
Poor after sales service by the customer executives of the company. Customers feel cheated
because of that.
V. ACTION PLAN:

As per our analysis of the major problems faced by Pureit, this must be the action plan for the
company to penetrate the market:

 Spread awareness about the product: One of the major issues with the product is
the lack of awareness among the consumers.

 Product Differentiation: The product was designed keeping in mind certain technical
objectives. However, basis our survey we found that the product was not perceived to
be customer friendly. The company needs to focus on differentiating its products
against the competitors.

 Better margins to retailers/ dealers: Another major complaint by the retailers in the
water purifier business was the low margin offered by Pureit. This, coupled with the
poor response from customers has forced them to take the product off the shelf.

 Better and low-cost service to customers: In a water purifier, the running costs i.e.
the servicing costs incurred every year turns out to be greater than the upfront cost of
buying the product. So, the service parts need to be readily available at a competitive
price point to enable customers to make the buying decision.

VI. RECOMMENDATIONS AND RATIONALE:

 Pureit can establish a stronger distribution network with the distributors located close
to the retailers, so that the time elapsed between placement of order and delivery of
product is considerably reduced. This would lead to a marked rise in efficiency of the
process of purchase.

 Pureit can employ more effective marketing strategies, specifically targeting the rural
market, which presents huge untapped potential. They can use more engaging forms
of promotion, which would resonate with the rural population, leading to rise in interest
surrounding the brand.

 Pureit can reorganise its financial reimbursement structure in order to increase

satisfaction among retailers, which would prove to be extremely helpful in re-
establishing trust among the retailers. This would aid the increase in placement of the
product in the shops, increasing visibility.

 Pureit can conduct awareness and educational programmes regarding the Germkill kit.
This would emphasise the product differentiation that it lends to the product and dispel
the confusion regarding the kit. It would prove to be a competitive advantage as it
eliminates the need for manual intervention for maintenance of the purifiers.

 Pureit can allocate specific teams for maintenance of purifiers, which can be
segregated according to proximity to the retailer outlets. This would eliminate the major
bottleneck in the maintenance and follow-up process, which is unavailability of spare
parts. Easing the process would speed up the process and increase customer
satisfaction.
VII. Critical Issues

Pureit is becoming non-existent in the Jamshedpur market. The retailers mainly sell three
brands: Kent, Aquaguard and Pureit. There are some other small players in the market that
are also giving tough competition to Pureit which has a market share of only 2%. The key
issues faced by the company includes lack of consumer awareness, poor credit policy of the
supplier, lower margins, non-availability of spare parts and poor placement of distributors.

The marketing strategy, in terms of advertisements, of Kent has proved to be more fruitful
and have created better consumer awareness. Consumers actively ask for the Kent or
Aquaguard and most of them haven’t even heard of Pureit.

The credit policy of Pureit in terms of credit period allowed is also unfavourable for the
retailers. Kent offers a much longer credit period than Pureit where retailers have to pass the
sale amount within 3-4 days which is not feasible for them.

The margin that a retailer gets on selling one unit of Pureit is lower than what he earns on
other brands. This also discourages the retailers to actively promote the sale of Pureit.
The distributors of Pureit are far away from the retailers which increases the delivery time of
the product which can drag on for more than 10 days. Also, this reduces the interaction
between retailers and supplier which leads to a lack of awareness about any changes among
the retailers.

The spare parts of Pureit are not easily available, maintenance cost is higher and
introduction of Germ Kill Kit also caused dissatisfaction among the consumers as they thought
this was a “new technology that they can never understand”.
These are some of the issues that Pureit is facing and it needs to make necessary changes
in its marketing and distribution strategies.
 APPENDIX

BUYING BEHAVIOUR ANALYSIS

Retailer interactions (Sonari):

1. Utkarsh Enterprises - The main line of revenue for this retailer is not sales of purifiers
but their servicing. A major chunk of the revenue is coming from the competitors of Pureit.
He had initially tried selling Pureit, but due to poor customer response, had to discontinue it
also, the germ-kill kit, which was supposed to be a competitive advantage, was leading to
confusion and unwillingness

2. When asked about the Pureit Water Purifiers, the shopkeeper responded that he did not
stock it, further stating that Pureit was an unheard brand. This goes on to show the lack of
penetration of Pureit in this region of Jamshedpur. We also observed that the competitors
were extremely active in creating market visibility. The various evaluation criteria that
customers use for the purchase decision making process are:

 Transparency in the purifying process.

 Look and feel of the purifiers
 Association of a famous personality with the Pureit purifiers

After interacting with the retailer, it can be summed up that Pureit is lagging far behind its
competitors in capturing the market share of water purifiers.

Retailer interactions (Sakchi)

1. M/s. Bijli Ghar - Gets maximum revenue from Eureka Forbes products i.e. Aquaguard
and Aquasure. Offline Pureit discontinued, the cartridge still available in the market as
cartridge needs to be changed after filtering 1500 litres. Pureit marketing not strong on a
grass-roots level.
2. M/s Sirohiwal Trading Co - Deals only in Kent products. Kent is easily available. Kent
pushes to keep their product. No such measure was taken by Pureit. Havells only
launched an online product. Not much in demand. Kent executive visits each shop
periodically.
3. M/s. Sourabh Enterprises - Pureit sales are very good. The margin on Kent is high while
Pureit gives minimal margin (10%). Kent requires maintenance every two days (requires
syringe cleaning of membrane part to extract the impurities). Pureit starts leaking water
when its life has ended, no such thing happens in Kent, so people never come to know
when the product became outdated. There is no sale of Eureka Forbes products.
4. M/s Steel Sales Corporation - Classic model’s price was low at launch, which caused
high demand from customers. Kent sales are high in both offline and online product
segments. Quality of products of the different company is somewhat on the same level.
Distributors of Kent are mostly active in the region.
5. M/s Shree Sharda - One of the retailers said the market share of Pureit has significantly
decreased. These purifiers are replaced by Eureka Forbes’ Aquaguard and Aquasure
and Kent RO. When asked, he said the reason for the decline in the market share of
Pureit is lack of availability of spare parts. Another reason he clearly mentioned was the
higher maintenance cost in case of Pureit.
 6. Another retailer said they have stopped selling offline Pureit purifiers. In fact, according
to him the market share offline water purifiers is fast declining. He also mentioned the
distributor network of Pureit in the nearby areas is very poor. Further he added the
margins in case Pureit are very poor. When asked, he clearly stated Aquaguard and
Kent RO are clear leaders in case of water purifiers. He further added several new
competitors entered the market - TATA, Hawells, LG etc.
7. One retailer that we talked to said that the customers ask for Kent purifier and are not
aware of Pureit. Havells has also entered the market and he is selling that as well. He
mentioned that the services of Pureit are good enough but the main problem is
advertising. When asked, he stated that he does not promote Pureit because he won’t
get any extra benefits out of it and it’s better to sell what customers ask for as it will create
more consumer satisfaction.

Consumer Interactions

No of Households interviewed: 10
6 in Saldih, Jharkhand
4 in Durgadaspur, Odisha

Saldih:
 Piped water supply installed 1.5 years ago
 From a nearby river, water is stored in a facility in Gamarhia
 Available 3 days a week for 1-1.5 hours a day
 When water gets over, they take from wells/ tube wells
 The same water is used for all purposes
 2 households use sieving (with cloth) for purifying
 2 households boil it during rains
 2 households don’t purify
 Most of them have heard of purifiers.
 Do not use it because
 No one has fallen sick because of the water so no need of purifiers
 Showrooms are far
 Perceive it as costly
 No representative has visited
 Drinking water stored in earthen pots

Durgadaspur:
 Water from tube wells
 Some households do not boil or filter, some use candle filters
 Haven’t heard of Pureit; only of Aquaguard & Kent
 Not much awareness, representatives have not visited the village, perceived as costly
Online reviews:

Kent grand 8 litre : Priced at 15k

Even though the product has a very good rating of 4.1, it has been observed that most of the
recent reviews are negative in nature. May be this indicates that customers’ expectations
have increased over the years.

What I've noticed in short time is that taste of filter water is good BUT wastage is quite high,
I mean... approx 35 Ltr is wastage water for 8 Ltr tank. – excerpt from one of the reviews.
This is a common theme among the recent reviews which indicates that customers are
becoming more and more environmentally conscious about the products they are using and
companies have to come up with more sustainable products to meet those demands.

Livpure Glo 7-Litre RO + UV + Mineralizer Water Purifier: Priced at 8,800.

Originally priced at 15k, this product is being sold under huge discounts in all the major
online portals like flipkart and amazon. One quick look at the reviews conveys the story why
it is so.

Within 10days 3 times done installation for water leakage.

Product was faulty UV lamp was fused which was not notice by technician at the time of installation

And by the way it is wasting a hell lot of water for filling a 7 letter water it is wasting more than 50
Liters water. – Some of the excerpts from the reviews.

The product is not well designed and the overall manufacturing quality is inferior to the
competitors’ products. To add to its manufacturing woes, Livpure’s customer care is also not
up to the mark which is a bare necessity in today’s market.

Blue Star Aristo RO+UV+UF 7-Liter Water Purifier: Priced at 11,500

Blue Star is the newest entrant in the Water purifier market. Its products face the same
problems which are common for new entrants in any industry. Its design quality is poor
which can be improved iteratively over the years. But their main problem is, instead of
building trust among consumers about the product, they are trying to extract money from
consumers through various hidden charges and the reduce marked price of the product.
Thiswill only lead to problems during the long run. Its customer care service is also not up to
the mark. All these problems can be seen in the following excerpts from the online reviews.

With in a one month of purchase filter has got changed they charge me 2500 for new filter .
Sine we have purchased it we have to just keep calling customer care for complaint n keep
waiting for their visit to resolve the issue.