Institute of Management Technology, Ghaziabad

Case write-up For Godrej Chotukool: A Cooling Solution for Mass Markets

Submitted to: Date of Submission: 31-August-2013 Submitted By: Mayank Rawat

Roll No.: 1301-540

Section- E

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 Indian conglomerate headquartered in Mumbai, Maharashtra, India, managed and largely owned by the Godrej 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 20 C to 81.5 F. 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 rural person 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 the refrigerator, 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 the requirement of rural area was of nearly 30 litre. 4) Space Requirement: Regular refrigerator takes up a lot of space, so the rural people required a refrigerator which takes less space. 5) Electricity Supply: There is a problem of electricity in rural area, so a refrigerator not working most 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:

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Values Cost Space Size Weight Battery Backup Number of Parts Electricity Consumption

Chotukool Rs 3000 30 litre 1.5 ft x 2 ft 7.8 Kg 12 V 20 Low

Regular refrigerator Rs 7000 180 litre 2 ft x 3 ft 37 Kg Not available 200 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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