By Ken Conrad
The need for good clean drinking water is universal. It doesn’t matter where you live, your economic class, your political values or your cultural background. This fact has made the worldwide market for residential products very attractive to many companies in the water filtration industry. The prescribed two liters per person per day is still recommended to maintain good health for all people. However, the ability of people to find good, clean water in many countries around the globe is increasingly more difficult. The major trends in increased population and industrial activity, with poor infrastructure of water distribution systems and sanitation facilities have further compounded this problem.
Those populations in industrialized countries at least have a steady source of supply. When one looks at developing countries, the statistics for basic water supply and sanitation are quite alarming. In 1990, it was estimated that more than a billion people in developing countries were still without access to water and 1.7 billion without access to sanitation services.1 Moreover, those that are served face frequent shutdowns and poor quality. It’s no wonder that epidemics of waterborne disease from non-sanitary sources are still prevalent in the world. Many international agencies are trying to address this basic human need; however, the goal of 100 percent service in not likely to be achieved anytime soon.
Your business approach
The marketing of residential water filtration products around the globe still follows the traditional marketing concept: determine the needs and wants of target markets and deliver the desired satisfaction more efficiently and effectively than competitors. The challenge lies in understanding the needs and wants, and delivering on the satisfaction by providing superior water products while crossing physical and cultural boundaries.
The macro-environmental factors in international markets are even more relevant than when companies service domestic markets. The six major forces are demographic, economic, physical, technological, political/legal, and social/cultural.2 Before deciding to launch into a new overseas market, one must consider these when determining the proper product mix.
Companies will first want to understand the underlying statistics of potential markets overseas. Some of the largest countries have tremendous market potential for water filtration products. Countries such as China, India, Indonesia, Brazil and the Russian Federation have the highest population but pose some of the most difficult challenges in terms of penetrating those markets.
What’s the average per capita income of the market of interest? Some of the countries listed above with the highest population also have the lowest income. Yes, these are enormous markets and there’s a basic need, but if your product is the equivalent of five years’ salary for the average consumer, then forget it. Only affordable products will survive regardless of their effectiveness.
Does the country’s infrastructure (airports, roads, and communication) support the distribution and sale of your product? If there are significant barriers to getting your product into the hands of the customer, then the final user cost will favor domestic
Some cultures adapt to new technologies while others refrain from advancements. The Japanese market, for instance, is very sophisticated in terms of electronic gadgets and just expects that consumer products will have advanced features. Other markets will be less receptive to such advanced technologies. If users don’t understand how a particular treatment systems works, then they’re less likely to feel confident in its use.
Political / legal
Some countries are receptive to international goods while others are hostile. A company looking to sell in a particular market should understand this first before making any plans. Political stability is another issue in overseas markets. A volatile situation may cause some companies to limit their exposure even if the market is attractive. Other factors include monetary regulation regarding what currency is deemed acceptable for transactions and also the level of government bureaucracy. If significant regulations are required to distribute the product in market, then this needs to be taken into account when determining the potential of each market. This is becoming increasingly true for water treatment products with in-market testing and labeling compliance issues.
Each market has its own set of values, customs and social norms. Companies must increasingly understand these nuances of each market to be effective and successful in selling their product. User habits of different cultures must be understood to properly design and market products. Again, in Japan, for example, water from a water treatment system is used for many daily activities other than simply drinking such as rinsing rice, cleaning one’s hands and face and, in some cases, for brushing teeth.
The right product
The traditional marketing mix, or so-called four Ps, is also relevant with some additions that are important in choosing the right product or technology for international markets. The four Ps are, of course, product, price, place and promotion. Ones that also apply are patience and practicality. Table 1 lists common “products” or water treatment technologies used around the world.
Shedding light on the topic
In different markets around the globe, each culture has accepted ways to deal with water treatment for their home and to supply drinking water for their families. Contaminants can range from simple taste/odor or particulates issues to more complex industrial compounds and disease-causing microbes. Certain preferences or economic factors may dictate what treatment technique is used. The treatment technique employed still depends on what contaminants are in your water and whether you want to remove them and can afford to do so.
Of course, many people in developed countries also may choose to consume bottled water and it has become very popular in many European countries and in the United States.
Each treatment technique has its limitations and many manufacturers have combined technologies. When selecting technologies to design into a system, each attempts to cover the broadest possible range of contaminants of concern. Many companies have been quite successful in selling single-pressed carbon blocks or dual technologies combining pressed carbon block and ultraviolet (UV) technology. Properly designed technologies, many of which are patented, show capability for reducing a wide range of contaminants.
UV technology has been chosen over other competing technologies for two main reasons: 1) UV addresses viruses and other disease-causing organisms which are a concern in many global markets, particularly in Asia, and 2) UV does not add anything back into the treated water. A properly designed pressed carbon block and UV water treatment system can reduce a wide range of microbiological contaminants as shown in Table 2.
Competition and distribution
Some common water treatment techniques used in various Asian markets include: carbon with hollow fiber, alkaline ion water, carbon/UV, mineral pots, ceramic filters and reverse osmosis with UV, including hot and cold water dispenser type units.
The distribution channel will also affect how successful a particular water treatment product is in any market. The most common channels are retail, water conditioning dealer, plumber/wholesaler, catalog, multi-level marketing (MLM) and the Internet.
Retail channels still struggling in domestic markets to establish a presence will find limitations in various international markets. One widely accepted channel outside the United States for water treatment products is the MLM channel; companies have found success in the past because of its customer-to-customer interaction during the buying process.
With this distribution format, the independent business owner is able to demonstrate the product in front of the customer, allowing for firsthand knowledge and more personal sales, as opposed to sales from a catalog or on the Internet. The relaxed practice of buying from a personal reference or recommendation from a known contact who uses the product(s) themselves has a social aspect that’s strong in countries where personal relations have priority over business relations.
There are many factors to consider when deciding to enter an international market for a water treatment system beyond determining what specific treatment product would best serve the customer. Companies must also realize that economic climate and other uncontrollable forces may adversely affect their entry into new international markets.
However, a fully thought out and executed marketing plan is needed and can make any overseas market a successful venture.
- Okun, Daniel A., Global Water Supply Issues from a Public Health Perspective: Safety of Water Disinfection, ILSI Press, Washington D.C., 1993.
- Kotler, Philip, Marketing Management, Prentice Hall, Englewood Cliffs, N.J., 1988.
- Spellman, Frank R., Microbiology for Water/Wastewater Operators, Technomic Publishing Co., Lancaster, Pa., 1997.
About the author
Ken Conrad is a group leader at Amway Corporation, Ada, Mich., in its water treatment research and development department. He’s involved in the development of products that serve many international markets in Asia and Europe and has been in the residential water treatment industry for over 11 years. Conrad has a bachelor’s degree in chemical engineering from Northeastern University and an MBA from the University of Hartford, Conn. He can be reached at (616) 787-8587; Amway Corp., 7575 Fulton St. East, Ada, Mich., 49355; or email: [email protected]