GODREJ CHOTUKOOL CASE ANALYSIS

TEAM NAME: THE SPARTANS

TEAM MEMBERS:

MEMBER NAME ROLL NO.

NILESH SAH 110034

RAJAT PRAKASH 110042

RAVI RANJAN 110099

RISHAV KUMAR SINGH 110102

SAURAV SUMAN 110104

Executive Summary

The case “GODREJ CHOTUKOOL” is about India-based Godrej & Boyce (G&B), a holding

company of the Godrej Group, which was incorporated in year 1897. The company has come up

with an innovative product which was considered affordable even for the Bottom of the Pyramid

customers of rural India. With an idea of penetrating the untapped rural market, the company has

come up with a refrigerator called Chotukool, which is the result of disruptive innovation. The

case talks about Godrej’s journey of disruptive innovation beginning from its coming up with the

idea of inventing a low cost refrigerator for the rural market in India to the challenges faced by

the company in manufacturing and distributing the product. It concludes with a discussion on the

future challenges and opportunities for Godrej Chotukool.

Main Report

Situation Analysis

The Godrej & Boyce has come up with an innovative product “Chotukool”, to extend its reach

and penetrate the rural market. G. Sunderraman, vice-president of corporate development at

G&B had to address many emerging challenges such as affordability, scaling-up, distribution,

and an overall business model that will fit well with the technology.
Objectives

To determine how the value proposition, cost structure and the entire supply chain with the help

of a series of commercial pilots, in its attempts to zero in on the right business model and to

determine whether to penetrate rural or urban market first, for the grand success of the product.

Problem Statement

G. Sunderraman has to resolve the four problems which were requiring immediate attention, the

problems were as follows:

1. Should G&B target a lower price to increase affordability?

2. How should G&B scale up operations?

3. How should G&B segment the market for Chotukool effectively?

4. Should G&B focus on penetrating the urban market first?

Decision Making Criteria

 Affordability (per capita income & price of the product)

 Availability (supply chain)

 Value proposition

 Business model
Description of the Decision

G. Sunderraman should recommend that G&B should focus on penetrating the urban markets

first. It should be advertised to middle-class Indians as a high-end, feature-rich portable

refrigerator. It should be positioned as a lifestyle product. With small modifications in size,

functionality and design it would be able to target midlevel buyers (good for bachelors) at a price

range of 5000-6000 (depending upon design, storage capacity, etc.).

Reason and Advantage

The first thing that Godrej and Christensen did was to come up with a solution. Oddly, they first

decided to create a nano refrigerator even without considering the need of potential customer

(rural people). They probably jumped to such conclusion because they were following disruptive

innovation. The assumption that rural people wanted a low-cost refrigerator is not at all sufficient

for the success of the product. One must always consider, “what is pushing and pulling the

customers to make a change?” and also understand the impact of “functional & psychological

value”. If we consider a critical comment which states that “I don’t feel the need for a

refrigerator” and dig deeper into consumer benefit ladder, we shall realize the impact of

functional and psychological value. Discussing about profits, how will the company make

profits, if its target customers are the people who lives on only a few dollars a day? How are they

going to afford a refrigerator worth 60 dollar? Such price point would make sense only when the

target customer is investing on such comparable solutions. Or they start saving for the product as

they feel it would improve their lives dramatically. Neither of it seems to be true, which is why

even if the company manages to create an effective supply chain, the product shall not be

accepted by the rural people.

Implementation Plan:

Total Population of India (then) : 1.2 billion

Rural population (69%) = 828 million

Urban population (31%) = 372 million

Rural market penetration (2%) = 16.56 million

Urban market penetration (<18%) = 63.24 million {considering 17%}