In my post a few days ago about the Kibera slums, I mentioned that I spoke with some locals about how they could use our water filters to improve their water quality. I’d like to share the details about this initiative, which I believe will work in other areas of Africa as well.
Like many commercial products, I believe we have the greatest chance of success both in terms of reaching a high number of people and achieving financial sustainability if we leverage multiple sales channels to distribute our product. Three of these channels are selling to organizations like other non-profits and hospitals, selling to stores that will resell them, and selling directly to households. All of these are valid and worthwhile channels that we’ll pursue. However, they all share one major drawback, which is that a household will have to pay for the filter up front. The price hasn’t been determined yet, but this could cost roughly $15 which is a substantial amount to many households in the poorest parts of the world. One potential solution to this problem that we’re evaluating is to establish a credit program, but that may be difficult to administer and may not be feasible for the poorest households. That leads me to the initiative that I’m very excited about.
The water kiosk initiative would allow people to obtain a micro-finance loan of approximately $200 and purchase roughly 10 filters plus other supplies. They would then purchase contaminated water from the public taps at roughly 4 cents per 20 liters, filter the water, and resell the clean water for roughly 10 cents per 20 liters. Water can be easily recontaminated if stored in a dirty container, so they may need to purchase and clean old containers for roughly $1 and then sell them at cost. Ideally they’d slap a label on the containers for improved branding and visibility in the community. These kiosks could also sell filters directly to those households who can afford one.
The concept behind this channel is that many households in low income areas generally manage their revenues and expenses on a day by day basis, spending money primarily on what they need right now. They will often choose to pay a small premium in order to have more manageable payments, much like Americans do with car loans and mortgages. The other piece of inspiration for this idea came from a Harvard Business Review article from 1960 called Marketing Myopia (several of you have likely heard me talk about this article at some point). The article basically urges businesses to broaden the way they define themselves. In our case it would be easy to think we’re selling water filters, but in a broader context we’re selling better health through clean water.
The other thing that’s exciting about this sales channel is that it creates jobs, which are sorely needed. I’m hoping to partner with a Kenyan micro-finance institution to fund a handful of loans as part of a pilot program to verify the economic viability and health improvements of this model.
I look forward to sharing additional details about this program over time. Meanwhile, if you have any suggestions or questions about the initiative, please feel free to post a comment. Thanks.