Godrej Chotukool

Godrej Chotukool Solutions to case study GODREJ CHOTUKOOL: A COOLING SOLUTION FOR MASS MARKETS ANSWER 1.For Chotukool to succeed following factors should be there: (i) Product utility: Channelizing on the ability of product to satisfy the demand of different users like roadside kiosks, wayside grocery stores and flower vendors will help for the success of product in long term. (ii) Pricing: With price about half of an entry level refrigerator, Chotukool creates a new product category, with a targeted value proposition that serves a new segment of customers. So, for the product to succeed the target segment must be convinced to pay the price for the product i.e. customers who are aspirational should find the pricing reasonable. (iii) Promotion of features: The product satisfies the need of rural population due to its affordability, non dependency on electricity and its availability in less than 100l segment, Chotukool is well suited for rural customers. Thus making the target customer aware of these different product aspects will lead to huge demand from the untapped market. (iv) Proper distribution model: Deeper penetration will be achieved by the companies community distribution model incorporating help of NGOs and self help groups. ANSWER 2. Criteria for evaluating strategy of launching Chotukool: a. Income of target group: With the product being very price sensitive Godrej must choose the target market keeping in mind the falling number of consumers in destitute and aspirant class and increasing numbers in the consuming and climbers class (refer exhibit 3) .

b. Pricing for rural masses: With the refrigerator being considered a luxury amongst rural masses proper price tag selection is critical. c. Pace of expanding market area: With the threat of being imitated in the long run, expansion plans should be sketched out in a way to minimize the threat. d. Distribution complexities: With the new sales channel being unorganized, unseen complexities can arise in the distribution and revenue recovery. e. Catering to demands of different customer segments: Apart from domestic purposes test findings showed that Chotukool found commercial utility amongst roadside kiosks, wayside grocery stores and flower vendors. Thus the requirements of all these segments should be kept in mind. Considering the product being aimed at the rural market with minimal penetration at the time of launch (only 2%) and having high annual growth rate (25%) Chotukool is a promising product. It creates a new product category, with a targeted value proposition that serves a new segment of customers. Godrej should certainly invest in this business. ANSWER 3. Yes there is a quick threat of imitation by competitors which should be considered by Godrej. The idea for a low cost cooling solution has been there before with Mitticool. The market being untapped and having high potential for growth will certainly appear to be lucrative to the competitors with the risk of imitation even becoming larger if Chotukool receives a positive response. The risk compounds from the fact that the cooling technology thermoelectric or peltier cooling being known for decades. ANSWER 4. The simultaneous pursuit of two parallel business models by Godrej is a promising and challenging approach. While the traditional refrigerators have the urban customers who can afford 100+ liters of refrigerators for personal and commercial use in the range of 7000-70,000. Chotukool is targeting rural consumer who cannot afford traditional refrigerator and is priced in range Rs 3000 to Rs 3500. The rural market

opens new avenues to Godrej. It does compete with its existing market range and expands its market to untapped segments. The simultaneous pursuit does poses the following threats to Godrej: (i) Godrej has a good brand image among the rural masses, if the product being launched in the cooling solutions category fails to deliver customer value it will tarnish their image for other products also. (ii) Pursuing rural market involves setting up of new sales channels and thus involves the complexity of dealing with unforeseen scenarios. ANSWER 5. Godrej should pursue its strategy for Chotukool in tactful manner since the market being targeted is timid. Innovative advertising and distribution methods are required to attract the customers who are quite different from their existing customer base. The distribution strategy through NGOs and self help groups and making customers part of their sales force by providing them commission for each unit sold will prove to be effective. Promotion at village haats, festival gatherings as well as demonstration drives will attract new customers. The involvement of local bodies in the distribution model as well as the value delivered to different customers types helping them in their business will establish Godrej’s image as a noble brand. ANSWER 6. The major challenges that are likely to be faced by Godrej have been listed below: 1. Rural people have less experience in using cooling solutions, so educating them about the product utility for them will be daunting task. 2. Lack of organized channel for reaching end users will also be an issue. 3. There is a great amount of market diversity in view of the different climatic conditions in which different users like roadside kiosks, wayside grocery stores and flower vendors will use the product. 4. Rural masses are price conscious since prices even 50 percent less than the traditional low cost refrigerator did not seem affordable to some people.

6. Substitute products as well as imitation by competitors seem to be a possibility in the near future.