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Brief about the case
The case talks about an innovative product Chotukool tested by
Godrej and Boyce in Maharastra in
2008. Acting on the positive response received the company is
planning to go nationwide in March, 2010.
We need to analyze the situation and suggest the best
option.
Brief about the company: Godrej and Boyce
The Godrej Group is an Indianconglomerate headquartered
inMumbai, Maharashtra,India,managed and
largely owned by theGodrej family.It was founded by Mr.Ardeshir
Godrej and Mr.Pirojsha Godrej in
1897, and operates in sectors as diverse as real estate,
consumer products, industrial engineering,
appliances, furniture, security and agricultural products.
Over the past, Godrej group has invested a lot in researching
markets and creating products accordingly.
Identifying the Needs
In 2010, Indian refrigerator market was valued at Rs.40 billion.
Its penetration level was below 18 percent
in urban market and 2 percent rural market compared to 40
percent of TVs.
Average annual temperature ranges from 20C to 81.5F. The
temperature during the summer season,
April to September, is much higher than the range mentioned. So
getting the cool water and storing the
vegetable and milk is a requirement. Due to the absence of an
affordable refrigerator, people in rural areas
buy the vegetable and milk only for immediate consumption. They
do not make bulk purchases.
In June 2007, Godrej team spent time I peoples village huts and
closely observed their product usage and
lifestyle patterns to figure out the needs of rural consumers.
The requirements of the rural people can be
summarized as follows:-
1) Low Cost: Cost of the regular refrigerator was around
Rs.7000. The average income of a ruralperson was around $2. So the
regular refrigerator was out of reach for the rural person.
2) Low operational Cost: The people were also concerned about
the running cost of therefrigerator, as it runs on electricity and
is operational 24 hours in a day.
3) Size Requirement: The normal refrigerator comes with a
capacity of 180 litre, but therequirement of rural area was of
nearly 30 litre.
4) Space Requirement: Regular refrigerator takes up a lot of
space, so the rural people required arefrigerator which takes less
space.
5) Electricity Supply:There is a problem of electricity in rural
area, so a refrigerator not workingmost of the time will not give
value to the customer.
Product: Chotukool
Chotukool was an innovation as it works on a different
technology than regular refrigerator. The
affordability, design, small size added an advantage to the
Chotukool. The product was delievering the
required values to its targeted customer base. Chotukool is
product targeted for the requirement of the
rural areas:
http://en.wikipedia.org/wiki/Conglomerate_(company)http://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Godrej_familyhttp://en.wikipedia.org/wiki/Ardeshir_Godrejhttp://en.wikipedia.org/wiki/Pirojsha_Godrejhttp://en.wikipedia.org/wiki/Pirojsha_Godrejhttp://en.wikipedia.org/wiki/Ardeshir_Godrejhttp://en.wikipedia.org/wiki/Godrej_familyhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Conglomerate_(company)
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Values Chotukool Regular refrigerator
Cost Rs 3000 Rs 7000
Space 30 litre 180 litre
Size 1.5 ft x 2 ft 2 ft x 3 ft
Weight 7.8 Kg 37 Kg
Battery Backup 12 V Not available
Number of Parts 20 200
Electricity Consumption Low High
Godrej has an option to make its product more affordable as it
is going to scale up its production.
Although the cost of Chotukool includes the cost of research and
innovation, Godrej has a first mover
advantage in this area. So Godrej can reduce the price and make
entry for new entrant impossible. Also,
the volume of customer will increase more significantly for
decrease in price.
Recommendation:Godrej is scaling up, so a cut in cost will
increase the demand significantly.
Distribution Strategy
Chotukool was communicated as refrigerator for people with low
income, a refrigerator designed for the
basic needs of the villages. Godrej used a
community-led-distribution model to make Chotukool, for
better penetration in rural areas and creating an image of
trusted brand. The goal was to communicate
with potential target consumers and get valuable inputs related
to the product, like the color suggested.
This distribution channel created earning opportunities in
villages; the product sell uplifted the living
standards of the villagers and enhanced the lifestyle of
customers and entrepreneurs.
Recommendations: Chotukool must be marketed through the local
community, to increase the
penetration of product in rural areas.
Positioning
Chotukool was positioned as refrigerator for people with low
income. It was perceived by rural people as
a product for their needs. The value preposition of Chotukool
was very high from villagers point of view.
Chotukool should not be commercialized or projected as a brand
of luxury. The image in the customers
mind is an important reason for its selling.
Recommendations: Chotukool should be promoted as a product of
needs for rural people, it should not be
shown as symbol of status or luxury.
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