GODREJ CHOTUKOOL: A COOLING SOLUTION FOR MASS
Charles Dhanaraj, Balasubrahmanyan Suram and Prasad Vemuri wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail firstname.lastname@example.org. Copyright © 2011, Richard Ivey School of Business Foundation
G. Sunderraman, vice-president of corporate development at Godrej & Boyce (G&B), and his team were putting the final touches on a presentation to the company’s board concerning the launch of the company’s latest innovation targeted for rural India. Chotukool1 was an unconventional cooling solution for the mass markets that could operate on 12-volt battery power, priced at ₹23500, which was slightly above 50 per cent of the price of the lowest cost refrigerator available in the market. Test marketing in select areas had generated a lot of consumer interest as well as publicity for the product. The national launch scheduled for March 2010 was just two weeks away. The team was meeting with Jamshyd Godrej, chairman of the board, to brief him on some new developments and some of the difficulties encountered in the distribution channels. They were weighing in on a novel community-based distribution model as well as some operational challenges.
INDIAN REFRIGERATOR INDUSTRY
The Indian refrigerator market was valued3 at ₹40 billion in 2010. Despite the fact that refrigerators had immense utility, the penetration level of the product was below 18 per cent in the urban market and two per cent in the rural markets compared to 40 per cent for TVs4. A refrigerator was perceived as a nonessential product in rural areas; a problem further compounded by affordability constraints as well as irregular availability of electricity subject to voltage fluctuations in these areas. Prices for home refrigerators varied from ₹7,000 rupees to more than ₹70,000. See Exhibit 1 for the market shares of the all the major players in the Indian refrigerator market for the years 2006-2010. Refrigerators were approximately 16 per cent of the consumer durables market in India that was valued at around ₹250 billion, growing at 7-8 per cent annually5 (See Exhibit 2 for select consumer durables market 1
Chotu means “little” in Hindi.
Firstcall Research Report, August 27, 2010.
data over 2005-2010). The urban market was growing at an annual rate of 7- 10 per cent, the rural segment was growing at 25 per cent annually. The National Council for Applied Economic Research (NCAER), a policy think-tank, characterized the Indian consumer market into five classes, ranging from the destitute to the highly affluent (See Exhibit 3). These segments differed considerably in their consumption behavior and ownership patterns across various categories of goods. These classes existed in urban as well as rural households with possibly different patterns of consumption for similar income households in urban and rural areas.
GODREJ & BOYCE
Godrej & Boyce Manufacturing Company Limited was the holding company of the Godrej group, a ₹17 billion conglomerate based in Mumbai, India, which started with the manufacture of high quality locks in 1897. The group’s lawyer-turned-locksmith founder, Ardeshir Godrej, was a...