Dissolving Three Tap Water Paradoxes

Through my review of tap water marketing, I have stumbled on three paradoxes: statements that apparently contradict themselves and yet might be true. They keyword is apparent as most paradoxes can be resolved. Can we also dissolve the tap water paradoxes?

The Water-Diamond Paradox

Tap Water Paradoxes: The water value paradoxThe oldest known water paradox is the paradox of value. Ancient Greek philosopher Plato wrote more than two millennia ago that water, which is the most essential of things, only commands a low price. This paradox was formalised by Adam Smith, the father of modern economics. Smith compared water with diamonds and observed that although nothing is more useful than water and nothing more useless than diamonds, however, water is cheap and diamonds are expensive.1

Is this a paradox? Economists will tell you that this is because Plato nor Smith knew about marginal value. The marketing solution is to point out the difference between value and price. The price we are willing to pay is related to the relative value we attach to the purchase. Water comes out of our tap, without effort and without having to think about it—it has a low level of involvement. People are, however, highly involved with diamonds. Owning a diamond provides social status, owning tap water doesn’t. The reason water demand a low price is because as an essential product it does not give us social benefits. But, when water is sparse, this paradox dissolves completely. In the words of Benjamin Franklin—”When the well is dry, we know the worth of water”.

The Involvement Paradox

Consumer involvement is defined as “a person’s perceived relevance of the object based on inherent needs, values, and interests”.2 The fact that water is essential to life suggests that consumers of tap water have a high level of involvement with the service. Contrary to this common-sense intuition, practitioner experience and literature states that tap water is a low-involvement service.3

This paradox can be resolved by looking at involvement from two different angles. Tap water as an essential product will logically attract a very high level of cognitive involvement because life in the developed world without it is unthinkable. However, as a non-branded, undifferentiated, monopolistic service, the level of affective involvement it attracts will be significantly lower.4

The Water Quality Paradox

Tap Water Paradoxes: Water quality paradoxAlthough in well-managed systems, the chances that somebody does not receive an excellent service through their tap are extremely small, consumer perception of these services is often not as good as engineers would hope for. There seems to be a paradox in the provision of water services.

Operators of drinking water systems are required to comply with regulations. Meeting these legal requirements can, however, lead to a reduction in service quality. For example, adding chlorine is essential to ensure public health in that it destroys micro-organisms. In some communities, however, chlorine is perceived as an unwanted chemical, leading to a reduction in service quality.5

This tension between safe water and good water is only a paradox when we believe that one or the other side view of water quality dominates the other. The sometimes contradictory views are both equally valid and cannot be resolved easily—just like light can be viewed as a wave and a particle at the same time, so are both safe water and good water equally valid views.


  1. Levy, D. (1982). Diamonds, water, and Z goods: An account of the paradox of value. History of Political Economy, 14(3), 312–322. 

  2. Zaichkowsky, J. L. (1985). Measuring the involvement construct. Journal of Consumer Research, 12(3), 341–352. 

  3. Babakus, E. (1993). Measuring service quality in the public utilities. Journal of Nonprofit & Public Sector Marketing, 1(1), 33–49; Watson, A., Viney, H., & Schomaker, P. (2002). Consumer attitudes to utility products: A consumer behaviour perspective. Marketing Intelligence & Planning, 20(7), 394–404. 

  4. Prevos, P. (2014). ‘We Care About Water, Even If You Don’t’: Water as a Low Involvement Service. Presented at the World Water Congress, Lisbon: International Water Association. 

  5. Kot, M., Castleden, H., & Gagnon, G. A. (2011). Unintended consequences of regulating drinking water in rural Canadian communities: Examples from Atlantic Canada. Health & Place, 17(5), 1030–1037. doi:10.1016/j.healthplace.2011.06.012. 

Water Utilities in Society: Water Sustainability and Social Responsibility

I was asked to provide a guest lecture on water utilities for the La Trobe University MBA subject Business in Society. From the syllabus: “This subject explores the evolving role of the organisation in society introducing concepts of Corporate Responsibility and Stakeholders”.

Since utilities are as businesses deeply integrated with society, so much so that they are invisible to water users, it was a perfect match to speak about water utilities within the context of this subject.

The guest lecture covered three topics:

What is a water utility?

Water utilities are very tightly integrated with their natural environment. Their essential function is to extract water from the environment. They add value to this water by pressurising and purifying it to make it fit for purpose for the end users.

Water Sustainability

The sustainability of water sources is not only a matter of ethical responsibility and intergenerational equity, but it is also a simple matter of customer service. Sustainability in water utilities

Social corporate responsibility for water utilities

The last section shows how water utilities are a public service, irrespective of the ownership structure. Water is a public good that is temporarily improved by water utilities. All water does, however, always flow back to the environment. The most important social responsibility for water utilities it to keep the water safe and maintain public health in the community.

 

Weasel words in water utilities: Sanitising public language

Weasel words are often used by demagogues, politicians and marketers to disguise what they are saying. A tax becomes a levy, we no longer just live, we have a lifestyle and sacking people becomes downsizing. They are weasel words because they suck the meaning out of language, just like a weasel sucks eggs.1

This type of language is, unfortunately also familiar with water utilities. What used to be a sewage treatment plant is now a water reclamation facility, removing any reference to its origins. Sewerage Sludge is magically transformed to a ‘biosolid’, ensuring that the average person has no idea what its provenance is. These new terms suck all meaning from the original words.

Sanitising public language

In a recent article in Water21, the magazine for the International Water Association, John Baten proposed to take ‘evolve’ the language used by water professionals to even deeper levels of befuddlement, as evidenced by the table below.

Weasel words in the water utility sector

Weasel words in the water utility sector.2

Some of these suggestions are even sucking the life out of the existing weasel words. To call a sewage treatment plant a ‘renew enterprise’ is confusing and deceptive. The regeneration—excuse me for using one of these terms—of treated effluent to Star-rated water is a total obfuscation of reality and removes water users even further away from the problems in our water supply chain.

Having said this, a careful choice of words is important. Empirical research demonstrated that framing ‘treated wastewater’ as ‘recycled water’ changed perceptions of the product by consumers and increased their willingness to use and to pay for the service.3

The removal of any reference to poo in the case of treated sewage circumvents the Yuck Factor—the psychological mechanism that prevents people from accepting treated sewage as drinking water. But this is nothing more than a cheap magic trick that will not be able to deceive water users into accepting what they know to be the truth. An example of direct communication about sewerage is the Twitter feed of Daniel Gerling, who is preparing a book on the cultural history of excrement. His language is clear and straightforward, and the impact of his word choice forces people to face the issue.

This type of language will be more harmful than helpful in our industry. Only by calling things by their proper name can we educate consumers about the water cycle and move forward in securing water for the future.


  1. Don Watson, Watson’s Dictionary of Weasel Words (Knopf, 2004). 

  2. Baten III, J. (2014). One Water: Uniting around a new water language. Water 21, (February), 12–16. 

  3. Menegaki, A. N., Mellon, R. C., Vrentzou, A., Koumakis, G., & Tsagarakis, K. P. (2009). What’s in a name: Framing treated wastewater as recycled water increases willingness to use and willingness to pay. Journal of Economic Psychology, 30(3), 285–292. doi:10.1016/j.joep.2008.08.007

The Seven Ps of Tap Water Marketing

My research area is tap water marketing. When I explain my dissertation topic to other professionals and academics, it usually raises some question marks. Tap water is, after all, an undifferentiated essential service provided by monopolists. Water utility professionals don’t understand my drive to research this area because they are focused on the technological aspects of tap water. Marketing scholars struggle with the concept because it is a monopolistic service—there is no need for customer retention. There are distinct differences between the way water professionals—mostly engineers like myself—and marketing scholars and practitioners view water utilities.

In marketing several frameworks exist to analyse organisations, with the marketing mix (the famous 4 Ps) as the most well known.1 To allow for the complexity of services, some scholars have added three more aspects. The Marketing Mix is the marketer’s lens to view at water utilities is: “Product, Place, Price, Promotion, People, Process and Physical Evidence”.2

The engineer’ s version of the seven Ps of water supply are: “Pressure and Purity through Plants, Pumps and Pipes, for People”. Yes, there are only six here, but my inspiration did not reach any further than that.

Marketers and engineers come from very different thought worlds. In my work, I aim to build a bridge—I am an engineer after all—between the physical sciences that dominate the decision-making processes in water utilities and marketing theories based upon the social sciences.

An example of how this difference is expressed is that water utility professionals often focus on the tangible aspects of the service, while marketers would look more broadly at the intangible aspects and make them tangible. Many water utilities show pumps, pipes and plants on their website. It would be much better, however, to communicate the intangible aspects of the service as it will increase your customers’ perception of the value they receive from their water utility. These four images below were created to demonstrate this point of view.


  1. Borden, Neil H., (1964). The Concept of the Marketing Mix. Journal of Advertising Research

  2. Booms, Bernard H.; Bitner, Mary Jo (1981). Marketing Strategies and Organization Structures for Service Firms. Marketing of Services. American Marketing Association: 47–51. 

Water Industry Discourse Analysis: What do the journals say about marketing?

As part of my dissertation, I am preparing an extensive review of the literature on marketing related topics in water industry publications. To create this overview, I am analysing a sample abstracts of peer-reviewed journal articles published by the International Water Association. So far more than 100 articles have been examined, and it seems that the analysis is reaching saturation, i.e. adding more data will not change the conclusion materially.1

To analyse this vast amount of information a grounded theory approach was employed by coding all abstracts with relevant keywords.2 Each abstract was viewed through a marketing lens and relevant keywords assigned. Next step of the analysis was to develop an algorithm to build a network of keywords.3 Each identified keyword is represented by a node in the network and a link between two nodes implies both keywords were used in the same abstract. By adding the networks for all abstracts together, a larger network can be constructed. This network can be viewed as a representation of marketing related topic in the water industry.

The network was further analysed using a community detection algorithm to illustrate which keywords are most closely related.4 A community is a series of nodes that are more related to each other than they are related to nodes outside the community. In other words, it is more likely see a paper that discusses water quality and sensory perception than it is to see a per on water quality and willingness to pay (WTP).

Discourse analysis: network of journal articles topics.

Discourse analysis of journal articles topics.

Discourse Analysis

From this diagram, we can see that there are widely four discourses in the sample of water industry journals. Different colours indicate each discourse. The thickness of the lines shows the number of times the keywords were used in the same abstract. Community analysis is not a precise science, and there will be overlaps between communities, especially between keywords on the borders.

In the red nodes, we recognise a series of articles that discuss the use of social marketing as a way to influence attitudes towards the use of recycled water. A small section of the sampled literature discusses the active engagement of customers with utility activities and how to communicate these.

Second largest community of research addresses aspects of service quality, including the perception of taste & odour issues, complaints, reputation issues and so on.

The largest group of keywords relates to issues on the internal management of water utilities. Topics such as privatisation, regulation, benchmarking and organisational culture (here coded as market orientation) are commonly discussed.

More interesting is, however, what the graph does not show. This methodology can be used to create a research agenda for marketing in water utilities by combining areas of interest that are currently in different discourse areas. Further analysis could lead to a genuine research agenda to infuse marketing theory into the utility management discourse.

My research combines the conceptualisations of service quality (the green community) with discussions on utility management (the dark blue community). While this relationship has often been discussed in the marketing literature, in the water industry, this combination of topics is much less an area of interest.


  1. Journals were chosen by searching for those with either ‘customer’ or ‘marketing’ in the title or abstract. 

  2. Abstracts were coded using the RQDA software package, which forms part of the R computing language

  3. The annotated R code is available on R-pubs. The algorithm retrieves all keywords from each abstract and creates connections between them. 

  4. The network was analysed using the Louvain method in Gephi, an open source graph visualization and manipulation software. 

Water Quality Index: Communicating System Performance

Water quality indexReporting water quality performance to senior management or customers can be problematic as it requires a myriad of numbers and difficult to pronounce parameters—impossible words such as clostridium perfringens, polydiallyldimethylam-monium or bromochloroacetonitrile are not part of the vocabulary of most people.1 Directors and customers of utilities are generally not water quality specialists and that need to be provided with easy to digest information for them to be able to assess how drinking water supply systems perform. To achieve this goal, a water quality index is currently in development.

The index is aimed at reducing complex data matrices to a single number, combining information from various sources. The index provides an overview of water quality performance, without mentioning technical details. The overall index consists of five parameters: treatment effectiveness, network protection, regulatory compliance and customer perception.

Given the broad nature of these parameters—from subjective assessments by customers to objective laboratory data—a certain level of subjectivity is unavoidable. The different aspects of the index will not contribute equally to the overall performance of water supply: How should we view customer complaints in relation to laboratory data?

Methodology

A crowd-sourcing tactic was employed in the form of a survey to seek the collective opinion of water quality experts.2

Respondents were asked about their involvement in water quality (such as level of education and amount of experience in the field). The main survey consisted of two question banks regarding the relative importance of each of the proposed index factors and network sub-factors. Data was analysed using the using statistical package R.3 Responses can be considered reliable as the average standard error is less than 5%. The complete survey results and detailed analysis can be viewed on Rpubs. The raw scores on the main questions are presented in the diagrams below. The levels on the Y-axis are the relative importance (0–100) given to each of the parameters by respondents.

Water Quality Index survey results (n=36). Click on diagram for high resolution image.Analysis

The individual results regarding the relative importance of the individual factors and sub-factors are self explanatory. The final index scores will be weighted in accordance with these survey results. Additionally some meta-analysis has been undertaken to obtain insight into the complexities of assessing water quality performance. Factor analysis with varimax rotation revealed that a one-factor solution is capable of explaining 49% of the variance. This is an indication that questions were answered consistently among respondents and that item scores can be interpreted as originating from one latent variable, i.e. water quality performance.

Ten respondents also provided additional comments regarding the water quality index. Some respondents mentioned that the questions were “simplistic”, “ambiguous“ and “inaccurate”. This problem is, however, inherent to the data reduction and simplicity objectives of the water quality index. The index’s ambiguity and inaccuracy are a reflection of the fact that information is sourced from paradigmatically different sources such as customer feedback and laboratory results.

Due to the reduction in data complexity, the index, its factors and sub-factors cannot be used for quantitative analysis. The index is in essence a qualitative expression of water quality performance only suitable for communication and not for analysis.

One respondent also commented on the relationship between physical and biological water quality parameters and customer’s perception of these:

Focus on water safety sometimes gets clouded by issues associated with customer aesthetic opinion.

This is an expression of the water quality paradox. Even if the quality of water is in accordance with regulations, customers might still not be satisfied. Providing safe water is a necessary condition, but not a sufficient condition to achieve customer satisfaction.

Conclusion

The survey has been successful and will aid in completing a water quality index that reflects the relative importance of the different aspects of water quality.

The comments made by water quality experts are a common expression of the difference in thought worlds between scientists and customer service professionals and aid in further developing a theoretical model for organisational culture in water utilities.

Notes


  1. These terms appear in the Australian Drinking Water Guidelines (2011)—Updated December 2013. 

  2. A total of 36 responses were received from Australia, New Zealand, the USA and Europe. The survey was closed on 31 January 2014. Questions can be viewed as a pdf file

  3. R Core Team. (2013). R: A Language and Environment for Statistical Computing. Vienna, Austria. Retrieved from www.R-project.org

Business Essentials for Utility Engineers: Marketing and engineering

Surfing the web to find new material for literature review can sometimes reveal unexpected surprises. When looking for “tap water marketing” related references I found a book titled Business Essentials for Utility Engineers by Richard Brown. I immediately proceeded to purchase a copy and am impressed with the comprehensive nature of the book, and I highly recommend it to all engineers working in the utility industry.

The author does, however, suffer from the type of marketing myopia seen in utilities and most commonly in engineers.1 In the preface Richard Brown writes:

This book does not address a variety of topics that are typically covered in a business curriculum. Examples include strategy, marketing, organizational design, human resources, and business ethics. These topics are important in a general sense, but tend to be peripheral to most issues facing utility engineers.

With this statement, Brown moves marketing to the periphery of utility engineering, while moving economics and accounting in the spotlight through his book. The content of the book does, however, tell a different story. It contains over five hundred mentions of customers — more than one per page on average. While Brown thinks he excluded marketing; he made it a central element of the book.

The issue at hand here is a misunderstanding regarding the scope of marketing. Marketing is not selling or advertising. In essence, marketing is: “customer satisfaction engineering”,2 the process of providing value to customers. Marketing cannot be moved to the periphery of utility engineering. It is central to any organisation that seeks to add value to the lives of their customers. To move utility engineering to that space, we need to move from asset performance to customer experience.


  1. I am not against engineers, after all; I am one myself  

  2. Kotler, P., & Levy, S. J. (1969). Broadening the concept of marketing. Journal of Marketing, 33, 10–15. 

Customer perception in water utilities

Smart Utilities 2013I have been asked to facilitate a roundtable discussion on customer perception of water utilities at the Smart Utilities Conference in Melbourne. These are some thoughts I gathered to help facilitating this discussion.

Water utilities don’t need to be customer focused

Engineers and scientists in water companies often believe that the level of service quality experienced by customers is only governed by legislation and technical standards. They  are subject matter experts and there is thus no need to ask the customer what they want. One engineer expressed this view succinctly on a LinkedIn forum (used with permission):

You have to deliver good quality services, but I don’t get the concept that the customer is best placed to decide what those services are. They know they need pressure and they know if they don’t have water out of their tap, but beyond that, they have only a small understanding of the what is required to run a safe and efficient water supply system.

Political correctness aside, are these professionals perhaps correct? Will customers be happy as long as clean water runs from their tap every single time they open the tap?

Water Utilities are like amusement parks

Water utilities are like amusement parks

Water Utilities are like amusement parks.

Water utilities are a low contact service provider with most services delivered at ‘arm’s length’ by technical staff. Water utilities are in some ways just like an amusement park: technical staff work in the background to ensure that the services can be delivered flawlessly while customer service teams meet face to face with customers. The actual service delivery occurs ‘backstage’ with supplementary service done ‘front stage’. The relationship between the technical and customer service staff—the engineering-marketing nexus. is very important to make it work. Preliminary results of my research shows that there are tension points between the two groups.

Another good reason to compare water utilities with amusement parks (Wet ‘n’ Wild) comes to mind) is that water utilities don’t sell products, they sell experiences. The experience of bathing your child, growing an abundant garden, cooking a great meal goes far beyond water as a physical product in as much the experience of an amusement park is not about the technical specifications of the water.

The water quality paradox

Even though customers are provided with perfectly safe water that meets all requirements, this does not guarantee satisfaction. More formally, water quality is not a sufficient condition for customer satisfaction. For example, chlorine is added to water to make it safe, but many customers complain about the gustatory properties of the water.

My own research shows that perception of water quality is influenced by the level of financial hardship they experience. This is in line with the Grönroos model for service quality which states that service quality is influenced by company image. Other research, for example shows that the taste of water is influenced by the material the cup it is consumed from. There are thus influences, outside of the chemical composition of tap water that influence customer experience.

Customers don’t care much about tap water

Enjoying tap water

Using water can be an emotional experience.

Tap water services are provided in a natural monopoly and customers don’t have any choice on service provider. In many publications water is considered to be a low involvement service. Involvement is a person’s perceived relevance of a service based on inherent needs, values and interests.

Following this definition, it should make tap water a high involvement product. Practical experience shows that customers don’t care much about tap water, as long as it is available without restrictions.

My own research shows a clear distinction between the level of cognitive (rational) and affective (emotional) involvement.

Trust is the major currency in tap water services

Perceptions of quality in tap water are related to more than just the chemical parameters of the water itself. It is influenced by many confounding variables. Most importantly, customers want to be able to enjoy they service without having to spend to much time dealing with issues.

As utilities are generally non-profit (or may be better non-loss) organisations, trust is the major currency to measure success.

Perception is Reality: Water Quality is more than chemical analysis

perception of water quality is not only a scientific question - it has a strong psychological dimensionManaging water quality is dominated by chemistry. Customers’ perception of water quality is, however, mostly a psychological dimension.

Water utilities spend a considerable amount of energy in ensuring that drinking water is safe to drink. Armies of scientists and engineers undertake sophisticated analysis to ensure that customers can safely enjoy their water.

In my research, I am collecting data from customers of water utilities in Australia and hopefully also from other countries. The question is related to customers’ perception of the quality of the supply, including aesthetics and taste. The questionnaire also contains an item associated with the difficulty people have paying their regular water bills as an indicator of the level of financial hardship experienced by customers.

The research is not yet complete, but the data is showing an interesting trend. All quality variables strongly negatively correlate with the level of financial hardship experienced by customers. In other words, the higher the level of hardship, the lower the customer will evaluate the quality of the supply of the water. It might be argued that this is caused by people with lower incomes mainly living in areas with a lower level of quality. The correlation does, however, also hold for quality perceptions that are not location-specific, such as promptness of service requests.

Financial hardship was found to be a significant predictor of grades. It appears that the level of financial hardship experienced by customers is related to their perception of the physical parameters of the water. Further research is required to confirm this relationship.

Relationship between financial hardship and perceived technical service quality (F(1, 107) = 8.948, p<.005).

The relationship between financial hardship and perceived technical service quality (F(1, 107) = 8.948, p<.005).

Taste experience has been researched in depth in perception psychology. One of my favourite pieces of work is a study that shows that the taste of water is influenced by the material of the cup it is consumed from.1 This research emphasises a thought I expressed in a previous idea: safe water is a necessary condition, but not a sufficient condition for good water.

Delivering water that meets every known technical specification and health regulation will not guarantee customer satisfaction. Supplying tap water can be viewed from a perspective of experiential marketing. This philosophy of marketing heavily relies on perception psychology to inform how a service is provided.

Follow this blog or my Twitter feed if you like to find out more about the results of my research as it unfolds.


  1. Krishna, A., & Morrin, M. (2008). Does touch affect the taste? The perceptual transfer of product container haptic cues. Journal of Consumer Research, 34(6), 807–818. 

Communicating the Value Proposition: Tap Water Advertising

We all have those moments where you have an excellent idea while having a shower. This morning it dawned on me that water utilities don’t sell water; they sell experiences.

Water is a service with a high level of tangibility. The consumer can see, feel, taste, hear, but hopefully not smell the water. Tap water is, what marketers call, high in experience qualities.1 These are the aspects of a service that consumers experience while consuming the service. The value of water is, however, not located in the physical qualities of the water—the value of water is located in the need the water, as expressed in these mock advertisements.

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Tap Water Advertising

Marketing wisdom dictates that communication for services that are highly tangible, like water, should focus on the intangible aspects.2 So instead of focusing on technology or emphasising on the physical qualities of the water, tell customers what intangible benefits they get from their tap water. Most discussions about water focus on its life-sustaining properties, but tap water is so much more. Using tap water is an essential part of modern life and is used to maintain the lifestyle we have come accustomed to.

Having a shower is a perfect place for generating inspiring ideas; water is an essential ingredient in virtually every single recipe; water performs a crucial role in some of the most intimate moments in our lives.

These ads are designed to communicate the intangible aspects of water and show that using water is not about the water itself, but about the value that water adds to our life.


  1. Rushton, A. M., & Carson, D. J. (1985). The marketing of services: Managing the intangibles. European Journal of Marketing, 19(3), 19–40. doi:10.1108/EUM0000000004748

  2. Shostack, G. L. (1982). How to design a service. European Journal of Marketing, 16(1), 49–63. doi:10.1108/EUM0000000004799