This case study supports and illustrates the theoretic factsheet "Business development: how to grow a safe water business" with practical insights.
Entrepreneurial spirit or how inventing new products facilitates reaching viability in Pakistan
Pakoswiss Technologies Ltd. was established by Saad Khaan as a social enterprise in 2013 to take up the challenge of introducing sodium hypochlorite as HWTS in Pakistan. The objective of the company is to make chlorine readily available and affordable for BoP customers in the cities of Islamabad and Rawalpindi, where options for disinfecting water are limited. The serious energy shortage makes boiling water impractical and costly while chlorine tablets are too expensive for the population in Pakistan, and industrial chlorine granules or powder are not readily available on the market nor adapted to the needs of the household level. There is thus a need and demand for affordable chlorine-based household water treatment solution in Pakistan.
In 2014, the company started producing and selling AquaCleanDrops™ (ACD) (see on your left), a stabilised sodium hypochlorite flasks produced with WATA™ technology. The product is sold in 50 ml flasks with dropper, available in shops and pharmacies and in 2.5 l containers, sold to restaurants and grocery stores. Pakoswiss’s centralized production (picture on your right) is able to produce and stabilize up to 180 litres of sodium hypochlorite per day (good to disinfect 0.72 million litres of water). To increase the availability of the product a partnership with around 600 retail shops has been established to sell AquaCleanDrops™. Even though Pakoswiss was considerably successful in building up these retail partnerships, the sales of AquaCleanDrops™ remained low. It became apparent that beside extensive awareness raising campaigns a diversified business approach must come in, otherwise the chances of becoming a viable social enterprise would be very limited. The business model had to be developed: Product development took place in parallel to social marketing activities.
To respond to the slow increase of AquaCleanDrops™ sales the company developed additional products in-house to diversify its product portfolio. Among these products are SwissPak water filter, water dispensers, micro chlorine injectors and an emergency water treatment kit.
The emergency water treatment kit aims at households that are affected during the rainy season. The kit allows the user to effectively treat contaminated water through coagulation, filtration and disinfection to treat up to 650 litres of water, enough for a monthly consumption of a 4-people household. (See also the rapid sand filtration for a similar technology).
Based on Peshawar pottery culture the terracotta water dispenser “HealthMate” (on your right) for safe storage has been developed. It is a combination of available local knowledge with an innovative design for households. It allows the benefit of drinking from a clay pot inside the living room and makes the storage of water treated with AquaCleanDrops™ very convenient at the household level.
In parallel to the development and introduction of these products, social marketing and commercial marketing activities were intensified in order to enhance awareness about safe water and the newly introduced products respectively. Social marketing activities take place in the surroundings of public water-collection points, in kiosks, clinics, hospitals and schools. Point-of-sale promotion, door-to-door sales and backlighted signboards were introduced in pharmacies and sales points to increase the products visibility. The product development along with intensifying marketing activities has helped Pakoswiss to improve its turnover and come closer to break-even.
Lessons learnt from Pakoswiss’ scaling out process
- Product development allows a company not only to reach more customers, it could also anticipate reaching the break-even point through product diversification. This strategy brought down business development costs incrementally, allowing to reach more and more customers.
- Product bundling is an interesting way of increasing sales by lowering sales costs, as a higher price can be reached for one item sold.
- Marketing safe water solutions to BoP customers is a low-margin and high-volume business, but it is challenging to find a regular and large customer base despite the need to treat the water; the low degree of awareness that the water needs to be treated requires constant efforts of social marketing.
- The leadership and the motivation of the business founder is key for the success of the initiative. Developing a social business in such a challenging environment as Pakistan needs an important amount of entrepreneurial spirit as well as ingenuity.
- There is high demand for water treatment solutions during the rainy season as water is more likely to be contaminated. During the dry season (in winter months), people still believe that water is safe to drink if it is clear. In order to overcome this misperception awareness raising in combination with product availability has to be guaranteed. By offering a broader range of products, people are more likely to be attracted by a product that fits their needs.
Recommendations for scaling out
- Keep identifying new product options in accordance to local needs and customs.
- Incorporate the local available skills and traditions (e.g. Peshawar pottery tradition) in order to develop and deliver a product that is customized and aspirational for the customers in the specific market segment.
- Identify the triggers of change and address them with newly developed product offerings.
- A larger diversification may be necessary to become profitable: selling just safe water solutions may not yield enough margins to break-even and become a profitable enterprise.
This article discusses major issues to reach scale when doing business at the bottom of the economic pyramid. The author advocates among others for local context, partnerships and clever use of technology in order to scaling up inclusive businesses in the developing world.MOULDS, J. (2014): 10 things you need to know about how base of the pyramid businesses scale up. URL [Accessed: 16.04.2018]
This report is a synthesis of fieldwork findings and recommendations developed under the Technical Assistance programme carried out by the World Bank’s Water and Sanitation Program (WSP) in Indonesia. This report describes and assesses the performance of technical assistance rural sanitation market expansion of domestic private sector in Indonesia. The recommendations have been developed through on-going consultations and meetings with the Directorate of Environmental Sanitation and Directorate General of Human Settlements, Ministry of Health, and Government of Indonesia.WORLD BANK (2015): Rural Sanitation Market Expansion of Domestic Private Sector in Indonesia. Washington, DC: URL [Accessed: 16.04.2018]