Managing Technology Assignment

GODREJ CHOTUKOOL Case Analysis

Submitted by
Rohit Aru B-03
Seema Patil B-34
Bidyut Patowary B-35
Hardik Shah B-44

PTMBA 3rd Year

(2011-2014)
Question 1: Review the characteristics of innovations.
Answer:
For something to function as an innovation, the consumer must perceive the newness
or novelty of the proposed trend.
Characteristics of innovations are
1. Relative Advantage
2. Compatibility
3. Complexity
4. Triability
5. Observability

Relative Advantage
The perception that the innovation is more satisfactory than items that already exist in
the same class of products.
Compatibility
Is an estimate of harmony between the innovation and the values and norms of of
potential adopters.
Complexity
Is a gauge of the difficulty faced by a consumer in understanding and using the
innovation.
Triability
The relative ease of testing out the innovation before making a decision
Observability
The degree of visibility afforded by the innovation

Question 2: What are the challenges (in general) of producing something for a
mass market?
Answer:
The challenges in general of producing something for the mass market area as
follows.
1. Heavy advertising cost, to establish brands & keep them in public eye.
2. High development cost of products.
3. Competition is often fierce.
4. Companies must be market – this brings high innovation & market research
cost.
The advantages & challenges of mass marketing can be accessed from the following
diagram.

Question 3: Discuss whether Chotukool is a sustaining or a disruptive innovation

Answer:
The innovation in the case of Chotukool is an example of disruptive innovation
because the project was targeted for the bottom of pyramid people who were mostly
non user of refrigerator & with the help of this innovation those section of the people
got an opportunity to be upgraded to the next level of simple user.
The idea of Chotukool was conceptualized based on the principles of
Disruptive Innovation developed by Prof Clayton Christensen. Typically technology
continues to improve to cater to the needs of the segment of most demanding
customers by a series of incremental and radical innovations. Though the satisfaction
of the customers on the average increases this pursuit of ‘sustaining innovations’
leaves several consumers at the level of basic needs overshot. For example a person
who only wants to read emails hardly needs several GHz of processing capacity in the
computer. Disruptive Innovations address the basic needs of the simple customers with
easy, simple and affordable solutions. Disruptive innovations open up the untapped
market of the non-users.
Question 4: Discuss the technological capabilities required to run such a
service.
Answer:
A high level of technical capabilities are required to run such a service. The
product development team has to be thoroughly dedicated for this new product &
there should have the facility to firstly produce the prototype & the necessary testing
facility for this prototype.
Again since majority of the parts for this product are outsourced therefore it
should have a very close network of suppliers.
Finally facility for the manufacturing of the tools & lastly the production facility
are required for the final product.

Question 5: Discuss how you would price this service to customers, how would
you manage costs.
Answer:
Pricing a disruptive innovative product like Chotukool is quite a critical factor &
we thing the current price that Godrej were asking for was quite competitive because
It was providing the customers a value for money product.
For managing cost the design & development team of this product were very
much alert right from the product design stage to the production phase. In this way
the customers can be provided a value for money product which they actually need
by curbing out the other non essential portions.
 Here in the case of Chotukool the entire compressor part was replaced with a
thermoelectric or peltier cooling technique & thereby the cost of the product was
drastically reduced.
As the prospective market of Chotukool are mainly on the rural areas so
aesthetic part of the product is not so important & thereby we can search for cheaper
graded plastic granules which will reduce the cost of injection moulding of the casings
& finally it will reduce the variable cost of the product.

Question 6: Assess the technology risk to the Chotukool model.

Answer:
Chotukool had the advantage of simplicity due to its technology as well as
design structure. The entire assembly of 20 odd key parts was carried out with about
10 to 12 persons in a very small space. In a conventional refrigerator, the compressor
used for cooling has more than 60 parts machined & matched to very close
tolerances & for the final assembly operation more than 100 odd persons are needed.
Though the entire manufacturing process was fairly simple in comparison to the
manufacture of traditional refrigerator yet there always lies high technical risk for this
type of product.
The cost of an individual product depends upon many factors like cost of
material, labour cost, and overheads like transportation cost, assembly cost & the
other fixed cost like tooling cost, initial setting of assembly line cost etc.
It may so happen in the near future that due to change in technology &
availability of cheaper & effective material the variable cost of production may
drastically come down & thereby the overall product cost may come down.
Taking into consideration these factors there always lies a technological risk for
an innovation like Chotukool.

Question 7: Discuss the risks to the Chotukool model from newer innovations.
Answer:
As per the case till the time Chotukool was launched there was no direct
competition to it but there was a high risk that traditional refrigerator manufactures
might bring out low cost model in the near future reducing the existing price gap to a
considerable extent. Chotukool’s current price was just about 50% of the lowest cost
refrigerator, unlike other classic disruptive innovations. Mitticool is one of such low cost
alternatives which had a different functionality, customer value proposition & market
segment, posing less of a direct immediate threat to chotukool. However such
innovations, along with prospective low-cost versions in the category of traditional
refrigerators, posed the threat of potential substitutes eventually appearing in the
market for cooling solutions.
Being a player of Indian origin in the home appliances market that has global
giants like LG and Samsung Godrej management thinks that it had an edge over
others in decoding the rural folk. While all the major appliance makers in the country
are taking the Indian consumer very seriously, finding alternate channels to expand
distribution reach, and investing heavily on research and development to bring out
India-specific innovations, not many are as yet looking at the hinterland.

Another home grown name, Mirc Electronics, which sells the Onida brand of
products across electronics and appliances though, has created rural-specific brand
Igo, which sells LED and solar-based torches and lanterns in villages across states like
Maharashtra, Gujarat, Madhya Pradesh, Uttar Pradesh and others.
Lastly to mitigate the risk from other new innovations Godrej has to concentrate
on continuous improvement.

Question 8: Explore the long term viability of such a service in India.

Answer:
Despite all the challenges Godrej management was optimistic that Chotukool
would serve as an Indian benchmark from the developing world as the right
combination of technology, product & business model. ChotuKool started off as a
pilot to provide refrigeration solutions to rural India. Three years later, the approach
taken to conceive the small refrigerator became a full-fledged business strategy at
Godrej Appliances.

The division of Godrej & Boyce Ltd now plans to add a few more low-cost
innovations to its 'Chotu' family. On the cards are: a low-cost washing machine
ChotuWash and a low-cost water-purifier. Godrej is now taking ChotuKool, priced at
Rs3, 700 — half the price of the normal refrigerator made by the company — to newer
states. While the washing machine will be adapted to needs to rural homes and will
cost cheaper than an entry-level counterpart, the water purifier will look at addressing
the challenge of clean drinking water by removing arsenic, fluoride, excessive iron
along with bacteria and viruses, which will make it the first of its kind in the country.

Taking into consideration the success of Chotukool & simultaneously the need
of the current Indian market its can be said that the long term viability of such service
in India is quite appropriate & it is beneficial for both the society & the service
provider.