Harvard Case - Project Maji: Pricing Water in Sub-Saharan Africa
"Project Maji: Pricing Water in Sub-Saharan Africa" Harvard business case study is written by Elie Ofek, Marco Bertini, Dilyana Karadzhova Botha, Esel Cekin. It deals with the challenges in the field of Marketing. The case study is 26 page(s) long and it was first published on : Oct 6, 2021
At Fern Fort University, we recommend Project Maji adopt a tiered pricing strategy with variable pricing based on usage and income for its water purification and distribution system in Sub-Saharan Africa. This strategy will ensure financial sustainability while prioritizing accessibility for low-income communities. Additionally, we recommend a robust marketing strategy focused on building brand trust and educating consumers about the benefits of clean water, leveraging digital marketing channels and community partnerships.
2. Background
Project Maji, a social enterprise, aims to provide clean and affordable water to underserved communities in Sub-Saharan Africa. The case study highlights the challenges of balancing financial sustainability with social impact, particularly in a region plagued by poverty and limited access to clean water. The main protagonists are the founders of Project Maji, grappling with the optimal pricing strategy for their innovative water purification and distribution system.
3. Analysis of the Case Study
Marketing & Social Impact:
- Market Segmentation: Project Maji needs to identify distinct customer segments based on income levels, access to water sources, and willingness to pay. This will allow for tailored pricing and marketing strategies.
- Brand Positioning: Project Maji needs to position itself as a trusted and reliable provider of clean water, emphasizing its commitment to social impact and community development.
- Consumer Behavior Analysis: Understanding the factors influencing consumer behavior, such as cultural norms, affordability, and perceived value of clean water, is crucial for effective marketing.
- Competitive Analysis: Analyzing existing water providers, including traditional sources and competitors, will help Project Maji understand the market dynamics and develop a competitive advantage.
Financial Sustainability:
- Pricing Strategy: Project Maji needs to develop a pricing strategy that balances affordability with cost recovery. A tiered pricing model, with variable pricing based on usage and income, can ensure sustainability while promoting access for low-income communities.
- Business Model Innovation: Project Maji should explore innovative business models, such as partnerships with local businesses, microfinance institutions, or government agencies, to expand reach and access to funding.
Operational & Technological Considerations:
- Product Lifecycle Management: Project Maji needs to manage the lifecycle of its water purification and distribution system, ensuring efficient maintenance, repair, and upgrades.
- Technology and Analytics: Utilizing technology and analytics to optimize distribution routes, monitor water quality, and track customer usage can enhance efficiency and improve decision-making.
SWOT Analysis:
- Strengths: Innovative technology, social impact mission, potential for scalability.
- Weaknesses: Limited financial resources, dependence on external funding, potential for operational challenges in remote areas.
- Opportunities: Growing demand for clean water, potential for partnerships with NGOs and governments, increasing adoption of digital technologies.
- Threats: Competition from existing water providers, political instability, climate change impacting water resources.
PESTEL Analysis:
- Political: Government policies and regulations related to water access and sanitation.
- Economic: Poverty levels, income distribution, and economic growth in target markets.
- Social: Cultural norms, beliefs, and attitudes towards clean water.
- Technological: Availability and adoption of water purification technologies, communication infrastructure.
- Environmental: Water scarcity, climate change, and environmental pollution.
- Legal: Regulations related to water quality, sanitation, and business operations.
4. Recommendations
Pricing Strategy:
- Tiered Pricing: Implement a tiered pricing system with different rates for different income levels. This ensures affordability for low-income households while generating revenue from higher-income users.
- Variable Pricing Based on Usage: Charge based on actual water consumption, encouraging water conservation and promoting fair pricing.
- Income-Based Pricing: Offer subsidized rates for low-income households, potentially through partnerships with NGOs or government programs.
Marketing Strategy:
- Brand Building: Develop a strong brand identity focused on trust, reliability, and social impact.
- Education and Awareness: Launch educational campaigns to raise awareness about the importance of clean water and the benefits of Project Maji's services.
- Digital Marketing: Utilize social media platforms, websites, and mobile apps to reach target audiences and engage with communities.
- Community Partnerships: Collaborate with local NGOs, community leaders, and health organizations to build trust and facilitate distribution.
- Product Launches: Organize events and workshops to showcase Project Maji's technology and demonstrate its benefits.
Operational & Technological Considerations:
- Product Development: Continuously improve water purification technology, exploring cost-effective solutions and innovative designs.
- Manufacturing Processes: Optimize manufacturing processes to ensure cost-efficiency and scalability.
- Distribution Channels: Explore alternative distribution channels, such as mobile water kiosks, community water points, and partnerships with local businesses.
- Information Systems: Implement robust information systems to track water usage, monitor water quality, and manage customer data.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Project Maji's context, including its social mission, financial constraints, market dynamics, and technological capabilities. They prioritize:
- Core competencies and consistency with mission: The recommendations align with Project Maji's core competency in water purification and its mission to provide clean water to underserved communities.
- External customers and internal clients: The tiered pricing strategy and marketing initiatives cater to the needs and preferences of diverse customer segments.
- Competitors: The recommendations address the competitive landscape by offering a unique value proposition focused on social impact and affordability.
- Attractiveness ' quantitative measures if applicable: While specific financial metrics are not provided in the case study, the recommendations aim to ensure long-term financial sustainability through a balanced pricing strategy and efficient operations.
6. Conclusion
Project Maji has the potential to significantly impact the lives of millions in Sub-Saharan Africa by providing access to clean water. By implementing a tiered pricing strategy with variable pricing based on usage and income, and by adopting a comprehensive marketing strategy focused on building brand trust and educating consumers, Project Maji can achieve both social impact and financial sustainability.
7. Discussion
Alternatives:
- Uniform pricing: While simpler to implement, this approach may not be sustainable in the long run and could limit access for low-income communities.
- Cost-plus pricing: This approach may not be feasible in a market with limited purchasing power.
Risks:
- Political instability: Political unrest could disrupt operations and hinder access to communities.
- Water scarcity: Climate change and drought could impact water availability and increase operating costs.
- Competition: Existing water providers could offer lower prices or more convenient access.
Key Assumptions:
- The technology used by Project Maji is reliable and cost-effective.
- The target markets are receptive to new water purification solutions.
- Project Maji can secure sufficient funding to implement its strategy.
8. Next Steps
- Conduct thorough market research: Identify target customer segments, understand their needs, and assess their willingness to pay.
- Develop a detailed pricing model: Define tiers, usage-based rates, and income-based subsidies.
- Implement a robust marketing strategy: Develop brand identity, educational campaigns, and digital marketing initiatives.
- Establish partnerships: Collaborate with NGOs, government agencies, and local businesses to expand reach and access funding.
- Monitor performance and adjust strategies: Continuously track key metrics, such as customer acquisition, water usage, and financial performance, to optimize operations and adapt to changing market conditions.
By taking these steps, Project Maji can successfully navigate the challenges of providing clean water in Sub-Saharan Africa and create a lasting positive impact on the lives of millions.
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Case Description
In July 2021, Sunil Lalvani, founder and CEO of Project Maji, a non-profit social enterprise headquartered in Dubai that had already provided sustainable, clean water solutions to 80,000 people living in rural communities across Ghana and Kenya, was facing an important decision. Traditionally, fees collected from community members covered the operating and maintenance costs of the solar-powered water kiosks, while donations paid the initial capital expenditure and setup costs. Yet Lalvani needed a more scalable financing solution to reach a hefty goal: impacting 1 million lives by 2025. Serving larger, more affluent peri-urban communities was a viable alternative, as the additional revenue could be channeled to rural projects. Thus, Lalvani and his team worked on a pilot for three peri-urban sites and looked to Danone Communities, a venture capital fund that invested in social businesses, to provide a loan. The team mapped out a feasible system, but debated what fees to charge residents. A low price meant that Project Maji would pay off the loan for the first four years, and only then start accumulating funds to support its activities in rural areas. This would delay scaling. Alternatively, a high price, coupled with an offer to establish direct connections in more well-off households, would allow Project Maji to generate excess earned revenue from the get-go, but it would also raise questions of equitability. All of this weighed on Lalvani as he pondered what price point to include in the investment proposal.
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