Dissolve the Three Tap Water Paradoxes or Manage Ambiguity?

The 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 to 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.

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.

Consumer involvement is defined as “a person's perceived relevance of the object based on inherent needs, values, and interests”. 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 sensible intuition, practitioner experience and literature states that tap water is a low-involvement service.

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.

Although in well-managed systems, the chances that somebody does not receive excellent service through their tap are minimal, consumer perception of these services is often not as good as engineers would hope for. The water quality paradox holds that although water might be safe to drink, customers will not necessarily value it.

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.

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.

How are we to deal with these paradoxes, do we need to resolve them or do we need to learn to live with the ambiguity?

If you like to find out more about using marketing theory to manage the experience of water utility customers, then please consider reading Customer Experience Management for Water Utilities by Peter Prevos.