Pureit Case Analysis

Prepared and submitted by:

Group
4
1. Ashwin Jose (BJ20132)

2. Himaja Suryadevara (BJ20141)

3. Jugal Dave (BJ20135)

4. Karan Dharni (BJ20143)

5. Mohammed Ashhar Mohiuddin (BJ20150)

6. Kunjika Bhasin (BJ20146)

7. Nilina Bag (BJ20153)

8. Rajeev Ranjan (BJ20161)

 Pureit

Executive Summary:

The case provides a detailed insight on the challenges faced in providing safe drinking
water at low costs, which is essential to a country like India, where 7.5% of deaths are
caused due to contaminated water (contributes 40% of the resource). Traditional
techniques (boiling water, bottled water, UV-RO purifiers) failed to solve the purpose of
ease in operations, low costs, non-dependency on electricity, and pressurized water and
preserving taste. Pureit is a product whose objective is to address these key issues.

Pureit faces extreme competition from entrants in a similar product line and wants to enter
the high-end water purifier market to increase revenues. Despite having 52% market
share, revenues of Pureit are limited to a mere 19%.

HUL can leverage on the first-mover advantage by focusing on innovation and differential
price advantage over traditional products. The cost of Pureit compact is 1.2% of the
average rural income as compared to a high of 6-16% in the case of UV-RO technology-
based products. It focuses on a business model combining consumables and durables
through the germ kill kit, targeting a steady revenue using existing channels (about USD
80 million is approx revenue from germ kill kits, which is 2.65 % of revenue). Further, the
market is expected to grow, and globally it is expected to reach 45 billion USD by 2027
from its current market size. A higher growth rate in the GDP of a developing country like
India and a possible shift in government focus on hygiene and sanitation may prove
conducive to revenue growth.

Although there are numerous threats like increased number of competitors, consumer
perception on quality, distribution issues & wide range of products offering, but these can
be addressed, and recommendations and subsequent action plan is provided in the report
ahead. Quality perception was one of the major points and it should be addressed at the
earliest to gain consumer confidence & have customer retention

Data is taken from online platforms as well as via telephonic interviews to gauge the
issues faced, consumer perception about HUL & it’s competitors and how the need for
safe drinking water has evolved over the years.

Company description:

Hindustan Unilever is a part of the Unilever group, which was set up in 1931 as Unilever’s
Indian subsidiary. Water was one of the key areas for new ventures identified by
Unilever’s global project team & India was selected as a lead country to develop a
solution. The target market for Pureit in India was the rural areas as well as urban areas
where typically electricity or running water were infrequent.

HUL has a well-established market in consumables with sales around 3.8 billion USD &
has around 12% net profit margin, it also has a widespread distribution network which
allows it consumable products to reach about 78% of total retail outlets in India, & with
35+ brands across 20 non-durables has helped them reach 700 million consumers in
India. Pureit can leverage on this brand value and distribution network.

HUL’s vision is to grow our business while decoupling our environmental footprint from
our growth and increasing our positive social impact. HUL’s mission is to add Vitality to
life. We meet every day needs for nutrition, hygiene, and personal care with brands that
help people feel good, look good, and get more out of life. HUL’s values define how it
does business and interacts with its colleagues, partners, customers, and consumers. It’s
four core values are integrity, responsibility, respect, and pioneering.

Product description:

HUL’s Pureit has four products: - Compact, Classic, Autofill and Marvella under the Pure
it umbrellas. The differentiation factors of the four products are mentioned in the table
below:

Product type/Features Classic Autofill Compact Marvella

Cost $44 $70 $22 $150

Launch Date 2008 2009 2010 2010

Pressurized water tap No Works either way No Yes

Device (liters) 23 23 15 -

Output water storage (litres) 9 9 5 Built-in 4.5

Filling type Manual filling Manual/Automatic Manual filling Fully Automatic

Installation Countertop Countertop Countertop Wall Mounted

Germ Kill Kit durability (litres) 1500 2250 1500 2250 1000 2250

Germ Kill Kit Cost $8 $11 $8 $11 $6 $14

Market share:
Company Market share % volume Market share % revenue

EFL 40 % 62 %

Pureit 52 % 19 %

Kent 7% 16 %

Phillips 2% 3%

Key Issue:
Problems faced by consumers (A general overview):

A large section of the rural population still does not have access to uncontaminated water,
majority of them still dependent on hand pumps and tap water for their daily needs. A total
of 387 districts in India are facing the issue of contaminated water and the problem is
even more for the rural areas. Less than 50% of the rural population has access to safe
water. Even for those who have this access, it is mostly shared by the community and
there is always shortage of water available for use for the masses. About 40% of the rural
population must travel outside of their community to fetch water, whereas the same
percentage in urban areas gets water at home through pipes. Even if they are able to
fetch water, with each passing day, the amount of contamination is increasing, and it is
becoming unfit for consumption. About 72% of the rural household does not have any
water purification mechanism in place which can cause several health issues. While
nearly 20% of urban households have an electric purifier, only 2.4 % of rural households
have the same. Nearly 20% of rural households use cloth filtering and boiling for water
purification. The share of rural households having access to safe drinking water has
slightly increased from 36% to 42.5% between 2016 and 2020. However, having a
mechanism for purifying water for daily usage is still a huge market in India that is yet to
be penetrated efficiently.

Problems with HUL Pureit:

1. Based on the online data gathered, it is evident that customers have faced quality
and build related issues with a certain range of Pureit products. The consumer
perception regarding durability is also in a bad shape as compared to its
competitors.
2. Pureit is much ahead of its competitors in terms of features like taste and odour
and has the highest average rating for purification. But it lacks a competitive edge
with reference to its design and features.
3. Pureit’s DTH distribution method is hampered by the quality of the salesforce who
do not possess the competency to target the high-end market. Online research
 highlighted that Pureit salesforce was paid less than the competitor salesforce
which made it difficult to attract the required talent.
4. Retail channel sales accounted for a low percentage of sales; low margins and
less trade schemes for distributors made it easier for retailers to switch to other
competing brands.
5. Consumers face issues regarding ease and simplicity of usage as most of them
specify the need for a demo on how to use the product.
6. Based on the analysis of online reviews, it can be inferred that certain products of
HUL Pureit range are not as well recognized as competitor products offering similar
benefits. Despite getting better reviews for such products, the sales of HUL Pureit
are lagging.

Recommendations:

1. To leverage prior experience of penetrating rural markets with brands like Brooke
Bond and Lifebuoy through extensive research on market segments with extremely
low Living standard measure (ranging from 1-4) and applying the knowledge in
creating a LSM consumer base for water purification products.
2. Coming up with new features to attract customers by observing competitor moves
and staying relevant in the market. Culligan connect, an international brand
introduced an app that connects the purifier to the consumers mobile phone and
helps in monitoring the drinking water system and notifies in case of issues.
3. To identify and prioritize on areas like design, features and build quality where they
have scored low as compared to competitors.
4. Pureit should focus on providing competitive discounts and trade margins to boost
sales through retail margins.
5. Pureit should categorize its salespeople into two categories based on the cost of
the product offered. One category of salespeople who target high income groups
to sell high cost products and another category of salespeople who target medium
and low-income groups to sell medium priced products.
6. Pureit can increase the brand awareness amongst consumers and use a social
marketing strategy by highlighting how Hindustan Unilever Foundation works on
CSR projects like Project water conservation and Swachh Aadat Swachh Bharat
thus portraying itself as a hygiene conscious brand.
7. It should be explored why the Pureit product line is facing build quality and
durability issues. Also, specific steps must be taken to better the public perception
about these parameters.
8. 34% of the population still gets water from other premises, so there is a need for a
water purifier with a higher storage capacity which will augment the water storage
capacity of the house and hence provide a better value proposition.
Action Plan:
Improving Design specifications and adding new features:
● Pureit should conduct a market research to understand the product feature
expectations of the consumers in the market. It can come up with a survey
suggesting features that exist in high end purifiers like connectivity or monitoring
through mobile apps and gauge willingness of the consumer to pay for such
products.
● Pureit should also contact its existing customers to get feedback and understand
the post purchase behavior of the buyer to address any concerns they might be
having with their existing products.
● For rural areas, have target communication on how water storage issues could be
addressed by higher volume purifiers.
Improve the quality of the products:
● Pureit should focus on quality control during production. They should address the
durability and build quality concerns surrounding their product line.
● There should be some elements in the marketing strategy that specifically address
such concerns in the minds of customers.
Discounts and Pricing
● Pureit lags in the less than 5000 price segments. This is mostly due to lack of
discounts. So, Pureit must come up with competitive pricing and discounts for the
products falling under this category to bridge the sales gap with its competitors.
Enhancing customer reach
● Pureit can try to leverage the rural network it has built for Project Shakti and use
that to target rural families making them aware of the product. It can use these to
further collaborate with smaller NGOs which are effective in the area and try to
reach to the ground level customers to to know their need better and come up with
the product that appeals most to them
● Pureit should divide its salespersons for its different consumer and product
segments and train them accordingly.
● A marketing strategy should concentrate on making the customers aware of the
new features.
 APPENDIX
SWOT analysis:

Strengths: HUL as a company has prior experience of tapping into the rural market with
its other range of products like Brooke Bond and Lifebuoy. It has carried out extensive
research on different income groups by using the Living Standard Measure in the past
and focusing its effort on market segments with extremely low LSM (ranging from 1-4).
The research was also spread across various geographical regions thus giving the
company the opportunity to use differential strategies. They have made use of
breakthrough technology and directed their efforts towards health and nutrition of
consumers. It has succeeded in its promotion strategies targeted at rural markets through
widely used media like radio and by garnering partnerships with non-government
organisations. Further, the Hindustan Unilever Foundation which was set up as a social
wing for HUL has helped project HUL as a consumer focused brand rooting for hygiene
and sanitation via its social initiatives (primarily the Project water conservation and
Swachh Aadat Swachh Bharat in the year 2019-20). HUF has worked in association with
leading organisations like UNICEF, Save the Children, World Food Programme etc to
extend support in providing clean drinking water and nutrition to people worldwide.

Weakness: The salesforce of Pureit which is majorly involved in direct sales to

consumers does not possess the required qualifications to be able to interact with the
high-end consumers and put across the prestige of the brand. The Pureit DTH salesforce
was paid less than what the competitor force was receiving which made it difficult to attract
the required talent. Retail channel sales accounted for a low percentage; low margins and
less trade schemes for distributors made it easier for retailers to switch to other competing
brands.

Opportunities: The global water purifier market is growing at a tremendous rate and as
per a report dated 30th June 2020, it is “expected to reach USD 45.00 billion by 2027,
exhibiting a CAGR of 7.2% during the forecast period” from a high of USD 25,71 billion
as in 2019. Thus, the market is conducive to the growth of individual firms provided they
continue to innovate and adapt to situations. There is increased consumer awareness
about water borne diseases and need for safe drinking water, increased consumer
knowledge about safety and health standards which has a positive impact on the demand
for water purification products and services.

Threat: Entering both the high and low-end consumer market could act as a double-
edged sword. Whereas on one hand it could help pure it maximizes its revenue and
market share, it could also lead to loss of focus on a segment in the attempt of trying to
conquer completely opposite spectrums. The competition in the water purification space
is intensifying as time passes with entrance and success of domestic and international
brands like Kent, LG, Tata Swachh, Havells, Forbes aquaguard, Livpure, LiquaGen and
Seldon technologies. This requires Pureit to be on its toes and constantly innovate and
develop to acquire and retain its consumer base.

Learn from competitors- eg. Culligan connect- connect device to mobile app, monitor
drinking water system and notify in case of issues.

PESTLE Analysis

Political - The political environment and stability in the country mainly depends on the
changing government, regulatory measures, health and safety laws, employment laws
and concern about the environment and measures. These are some of the factors that
can have an impact on the strategy that HUL adopts and the way it moves forward.

Economic - HUL generally makes items of daily use which cause it significant pressure
when prices of raw materials fluctuate regularly. However, HUL was able to still make
profits in India while its branches around the world were reeling from the effect of the 2009
economic crisis.

Social - HUL has always been a very socially conscious company and that has been one
of the main reasons for how its customer base has expanded. They have often stressed
on nourishment, hygiene, necessities etc. For example, through HUL’s project Shakti,
HUL has helped rural women live a better and more hygienic life. Another similar program
is Shakti Vani.

Technological - HUL has gone the same way of several large companies by developing
its digitization and moving online. They have used Big data Analysis and analyzed
customers and their wants and used it to analyze their sales and how to improve them.
Technological factors have played a key hand in their recent revenue generation.

Legal - The company, being a consumer goods firm, is bound by several laws and
regulations. HUL ensures that it follows the law of the land in all aspects of the business.

Environmental - Initially HUL was in the limelight for the wrong reasons, like for the
dumping of toxic chemicals which endangered the lives of their workers and the people
living nearby. There was an incident in Kodaikanal in which HUL was accused of dumping
material containing Mercury. However, HUL has moved on since then and has ensured
that it follows all laws of the land and takes the necessary precautions.
Analysis Policy response & cultural Issue (Macro & Meso level)

Globally the mindset of water being free resource varies widely depending upon its
availability. Countries in the arid region have actually set up systems where people using
water have to pay the price for the quantity of water they use, while the places which have
it in abundance treat it as a free resource to be consumed as per will. India is the second
most populous country in the world housing 18% of the world population but has only 4%
of global water resources. Its per capita availability of water is only 1100 cubic merwitch
is a far cry from the internationally recognized level of water stress at 1700 cubic meter
and close to the water scarcity level at 1000 cubic meter. Despite this, India remains the
largest virtual exporter of water and the largest user per unit GDP and stricter measures
to regulate the consumption of water are not deployed. People perceive that water is free,
but to make it usable they have to spend money, particularly in the areas where cost of
purification is significant % of their avg income. Despite this, past studies indicate that
people are ready to pay for the water provided it fulfills the promise that it makes about
the quality and life of the product. Also, there is an inequality in the way women/children
see the water resources compared to males. In rural areas, women have to travel distance
and perhaps have to waste time and energy to bring in the water, while the male
counterpart is involved in decision making about the resources that would be spent to
make the life of females easier.

Local govt has become more active about water quality & there is visible improvement.
Still, by and large, consumers are not confident about the drinking water quality and want
to employ some sort of water purification. Also, there is an Environmental movement to
stop RO water purifiers as they are known to waste a large amount of water & increase
awareness as well as the scarcity of water acts against the usage of RO purifiers.

Consumer Market Data Analysis

Market Share

Market share is calculated using customer ratings in Amazon and Flipkart websites.
This is with the assumption that number of ratings to number of products sold ratio
would be equal across brands.
Rating comparison of different consumer requirements

Pureit is much ahead of its competitors in taste and odor. It also has the highest
average rating for purification. But it is very poor in design and features. This is one
department Pureit should focus on. Also, there is scope for improvement in terms of
build quality.
 Market contribution to different price segments

Pureit is more dominant in the Rs 5000 – 10000 price segments. Eureka Forbes is a
major player in the below Rs 5000 market while Kent is the clear leader in the above
Rs 10000 market.

Discounts & Offers

Unlike its competitors Pure It hasn’t given any discounts in the less than Rs 5000
segment. This probably could be the reason for low sales for Pureit in this
department. Pureit can improve their share by giving competitive discounts in this
segment.

Yearly Product Rating

Pureit has shown growth in the ratings of the products launched of that particular
year.But older products which are still in the market gives a bad impression about
the Pureit brand.

Analysing similar products from 3 different brands

 All 3 products selected are flow type UV purifiers without any water storage. All three
are of the same price range and launched in the same year. Pureit despite having
good rating, is way below their competitors in sales.This might be due to lack of
awareness in the customers, so Pureit can spend more on marketing this product.

Brand awareness. Based on number of online reviews:

Problem identified: Based on the analysis of online reviews, it is evident that HUL Pureit
is not as well recognized as the competitors.
Action plan: HUL Pureit needs to increase its market presence and brand awareness.

Pricing w.r.t competitors:

Problem Identified: The pricing across the range of HUL Pureit varies widely, while
competitors such as Eureka Forbes have a pricing policy which targets a very specific
price range.
Recommendation: Instead of introducing products across the price spectrum, HUL
Pureit should specifically target customers within a certain price range.
Build quality and durability issues with Pure it:

Problem identified: Based on the online data gathered, it is evident that customers have
faced Build Quality related issues with the products. The perception related to durability
is also in a bad shape, compared to competitors.
Recommendation: It should be explored why the Pureit product line is facing build
quality and durability issues. Also, specific steps must be taken to better the public
perception about these parameters.
Telephone interviews:

Consumer 1: She does not use any water purifier. She believes that boiled water is the
best for drinking purposes. And she does not want to buy any new water purifiers. When
asked if she knows how many germs are present in boiled water which water filters
could remove, she said that she does not have an idea. She added that even if she did
know she would not buy a purifier cause our immune system would get weak if we are
too sophisticated.

Consumer 2: This customer is using Eureka Forbes Aquasure Amrit, which is a non-
electric water purifier and it uses Positive Charge Technology. He said that they bought
the product recently and chose the product by reading the online reviews for this
product. He also added that it was recommended to him by one of his neighbors. This
product costs around 2500 rupees.

Consumer 3: He is using Kent Grand + water purifier. He believes that RO and mineral
water are the only water types which are fit for consumption. He does not want to
upgrade or change the purifier anytime soon, because he bought the product recently.
One of the major reasons he went for this product is because there is zero water waste
even if its RO purifier. This product costs 20500 rupees

Consumer 4: He told me that he uses a very old metal water purifier with a filter inside it.
He said he did want to buy a new water purifier but could not get to it because of the
accessibility issue, as he lives in a village and is too old to travel for buying a purifier
and its maintenance.

Consumer 5: She told that their family gets a 20 litre mineral water dispenser delivered
every day. They have a yearlong contract with the supplier. The supplier brings in 2 20
litre cans of water every alternative day and takes back the empty cans with him.

Consumer 6: He is a 50-year-old man. He started using water filters when he was

around 27 years old, after his marriage. When he was 32 years, he started using
mineral water cans. He realized that the cost could be cut down if he buys a water
purifier and got a RO water purifier.

Consumer 7: This customer is using Pureit Autofill. Her husband bought this product
because the salesman in the store suggested this product. She said that she is not
satisfied with the durability of the product and had to get the parts repaired multiple
times. She wants to buy a new purifier soon.

Consumer 8: Their family uses boiled water for drinking. Additionally, they store the
water in copper containers as they believe that it helps boost digestion and increase
their immunity.

Consumer 9: This customer has been using Pureit classic for 3.5 years. He thinks that
it's time he upgrades into the latest RO model as he thinks it’s safer and most
importantly, he doesn’t have to refill the purifier.

Consumer 10: She is an old lady born in the 1950s. She said that growing up they did
not ever think of filtering water. They got their water from either wells or lakes and drank
them directly. She said as the times changed, they got access to tap water. When she
started a family, she started using boiled water.