FSG Designing Effective Sanitation Enterprises September 26, 2018 Presenters : Jesse Shapiro (USAID), Subhash Chennuri, Morris Israel, Jeff Albert (WASHPaLS) Pa Paneli lists: Anddy Omoluabi (WaterAid), Geoff Revell (WaterSHED), Sanjay Singh (PSI), Rishi Agarwal (FSG)
What is WASHPaLS? • Water, Sanitation, & Hygiene Partnerships for Learning and Sustainability. 5-year (2016–2021) research and technical assistance project • Goal: Enhance global learning and adoption of the evidence-based programmatic foundations needed to achieve the SDGs and strengthen USAID’s WASH programming at the country level 2
The WASHPaLS Research Design Summary Ongoing field Ongoing field When and how are CLTS Desk CLTS Desk research with research with sanitation approaches Review Review partners partners effective and sustainable? Achieve Ongoing field This MBS universal research with Desk Review sanitation and partners What does it cost? hygiene Pending field Pending field Play Spaces Play Spaces How to repeat success research with research with Desk Review Desk Review at scale? partners partners Goal Key Questions Outputs 3 MBS: Market-based Sanitation; CLTS: Community Led Total Sanitation
Poll: Attendee connections to MBS 4
The sanitation market can be depicted through this framework, which allows for diagnosis and problem–solving for scale SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 5 5
MBS interventions face barriers to scale across the sanitation market system 6
The sanitation enterprise is at the core of the sanitation market and enables the exchange of goods and services SANITATION MARKET BUSINESS ENVIRONMENT BROADER CONTEXT Target Product Market System ENTERPRISE CUSTOMER ENTREPRENEUR Delivery Sales & Model Marketing Affordability Availability 7 7
Target market selection is important to ensure entrepreneurs can profitably serve customers and sustain their participation in the market Target Market Market segmentation for Mi Baño in Peru Market Solution 60% of total Households Target market Innovation in Product (0.5 million HHs) and Delivery Model Served Innovation in Product Potential / limited (5 million Households) and Delivery Model (1.8 million HHs) + Credit 40% of total households Innovation in Product Subsidized segment and Delivery Model (1 million HHs) + Subsidy 8
Market selection factors include both demand and supply-side considerations in addition to broader contextual factors Target Market Market segmentation for 3Si in Bihar, India 1.55 mn 1.2 mn 0.8 mn Low High Ease of converting a potential customer into an paying customer: Ease of converting a potential customer into an paying customer: Willingness to pay Willingness to pay Affluence i.e., capacity to pay Affluence i.e., capacity to pay Safety from floods (indicator of ease of using current product options) Safety from floods (indicator of ease of using current product options) Note: mn = Million households; Bubble labels (e.g., A, B) are a 3Si internal naming convention for customer segments 9 Source: Adapted from Supporting Sustainable Sanitation Improvements (3Si) in Bihar, India
Appropriate product systems , which are acceptable to both customers and entrepreneurs, are an outcome of iterative product Product System development processes Design and prototypes Customers’ preferred functions and aesthetics Multiple Final product and Contextually appropriate technologies iterations delivery model(s) Local entrepreneurs’ assets and capabilities Field tests 10
Product system design does not imply novelty ― incremental improvements are of value to both customers and entrepreneurs Product System Improvements Options Examples Efficient raw material usage Material or component substitution Re-engineering Pre-cast collection chamber box Economies of scale Quality improvement Upgradeable products Standardization Molds to standardize components Easy to transport products Simplified installation process Delivery & Installation Self-installation guide 11
Flexibility in product range is required for multiple target markets but too many options can be problematic Product System Product range: WaterAid, Nigeria Product range: 3Si, India Offset Pit Direct Pit Dual set (offset + direct pit) The appropriate range of products that balances customer choice, simplicity of the buying The appropriate range of products that balances customer choice, simplicity of the buying process, and viability of sanitation enterprises is contextual and requires learning process, and viability of sanitation enterprises is contextual and requires learning 12
Demand activation is the missing middle that can enhance households’ willingness to purchase toilets Sales & Marketing Customer “I have a toilet in my “Open defecation is “I see some value in “I’ve decided to buy a state of home acceptable in my community getting a toilet and am toilet and have/ am and there is no benefit to thinking about how to ordering one” mind using a toilet” build one” Demand Demand Demand generation activation fulfillment Promote a solution(s) Raise awareness of the problem benefiting entrepreneurs CATS / CLTS MBS 13 CATS: Community Approaches to Total Sanitation; CLTS: Community Led Total Sanitation
Sales & marketing of toilets entails intense one-on-one direct communication with customers to prompt a purchase Sales & Marketing Mass-media Indirect marketing Branding ? Self CUSTOMER ENTREPRENEUR Direct marketing Demand activators 14
Demand activators are distinguished by their primary incentive, which can be financial or otherwise Sales & Marketing Professional sales Community opinion Community agents leaders influencers Archetype Experienced salespersons Village head/ chief Community health workers Examples Fresh graduates/ drop-outs Local government Religious leaders Employed part-time with representative/ official Savings or women’s group primary occupation leaders Monetary Political/ social mandate Social recognition incentives Typical Employment Interest in community Community development development Typical Geographically mobile Persistent Limited mobility/ area of traits Focus on easy prospects Limited mobility/ area of influence Prone to attrition influence 15
Independent demand activators require support initially to market and sell toilets on behalf of enterprises Sales & Marketing MBS program 1 3 ENTREPRENEUR CUSTOMER 5 2 DEMAND ACTIVATOR 4 Training Information Products Money 16
A range of delivery models exist and should be used based on the context to simplify customers’ buying experience Delivery model No Aggregation Full Aggregation Turnkey Solution Provider Mason/DIY Network One-Stop Shop (OSS) (TSP) Concrete products Mason Brick supplier Focal Point manufacturer Cement, sand, Super-structure Pan supplier Customer gravel etc. materials 17 DIY: Do-it-yourself
The choice of model depends on customer’s and entrepreneur’s willingness and capability to aggregate supply chain components Delivery model No Aggregation Full Aggregation Turnkey Solution Provider Mason/DIY Network One-Stop Shop (OSS) (TSP) Model Customers : Lack critical Customers : Seek Customers: Value packaged Customers: Incur high Applicability mass (e.g., remote, sparsely information but prefer self- product but prefer arranging transaction costs and willing populated areas) aggregation inputs from super-structure elsewhere to pay premium for end-to- Entrepreneurs : Limited pre- multiple vendors Entrepreneurs : Unwilling or end solution casting capabilities Entrepreneurs : Prefer lack capacity to stock super- Entrepreneurs : Possess specialization and willing to structure materials or manage assets and capabilities to recommend other suppliers masons manage product and service aspects of delivery 18 Concrete products Super-structure Cement, sand, Focal Point Customer Pan supplier Mason Brick supplier manufacturer materials gravel etc.
The design of a sanitation enterprise is an iterative process and can start with any one element Sanitation enterprise design in TSSM and RWSSP programs in Tanzania 2 1 Identified customer segments whose Identified customer segments whose Target Product Identified SanPlat to retrofit unimproved Identified SanPlat to retrofit unimproved preferences (i.e., low maintenance, child preferences (i.e., low maintenance, child Market System latrines latrines safety, and low-cost) were met by SanPlat safety, and low-cost) were met by SanPlat ENTERPRISE 3 Delivery Sales & Initiated a mason model and evolved to Initiated a mason model and evolved to Developed sanitation marketing campaigns Developed sanitation marketing campaigns Model Marketing turnkey solution provider model turnkey solution provider model and promotion by community members and promotion by community members 19
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