Challenges faced by godrej chotukoolDocument Transcript
Changes faced by chotukoolExternalHousehold income in rural India grew 11% per annum in 5 years. But this growth is widelyscattered among different segments in different states. Despite rising affordability, the patternof penetration of consumer durables varies distinctly in rural India. A lot of demand is lost dueto poor access to electricity, roads, infrastructure etc. Purchasing power remains low asexpenses are yearlong but income is limited for a certain period of time only. Thus, keeping theprice at around Rs. 3,500, would be relatively expensive for many segments of the TG. Godrejpilot tested chotukool in 4 districts of Maharashtra. But they were able to sell only 15000chotukools there. This is because of the cultural barriers within the same state itself andbecause a few districts of Maharashtra are more prosperous than others.The consumers wanted value for the money spent. Small retailers accepted the product withopen arms because it helped them sell other products also but the problem was to convincehousehold users who wanted value for their money. Rural consumers were unaware about thebenefits of refrigeration of food items. Marketing of a product in rural markets is alwaysdifficult because of diversity and different media. Godrej did not invest anything on ATLmarketing. It focused only on BTL which is discussed later.Chotukool also had a big threat of substitutes. One was the locally available ice boxes. Andsecond was a similar product called Mitticool. This was a refrigerator made from clay with dualcompartments. It was priced at around Rs. 2,000, worked on the principle of evaporation, didn’tconsume electricity and hence zero maintenance cost.InternalA big challenge Godrej faced was How to reach consumers?- this needed business modelinnovation. Building the distribution channel was the biggest challenge for Godrej according toG. Sundderraman, VP, Godrej Appliances. Training was required to be given to intermediariesso that they can educate the end users. It was because this product was new to the market andit required demonstration. Thus Godrej was reluctant to use traditional trade channels. Pricedat just around Rs. 3,500, Godrej had to market its product in such a way that it doesn’t affect itsprofit margin No EMI facility was given by Godrej to its consumers and the price of Rs. 3,500had to be paid up front. Godrej had delayed the launch of the product to many months to makethe product just right. But it has not been able to make the desired sales it should have. ThoughGodrej have not disclosed the investment it has made in this disruptive innovative product, it isassumed that being such a high technical product, Godrej have made a huge upfrontinvestment.