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Hinterhunt 3 - Godrej Corporate Casestudy - PPI Winning

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This solution was presented to management team of Godrej consumer goods. This solution came first and presenters were offered PPIs.

This solution was presented to management team of Godrej consumer goods. This solution came first and presenters were offered PPIs.

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  • 1. Hinterhunt ‘2012Rural Marketing Event for Godrej Godrej Appliances -- Product Launch & Marketing Strategies -- Team: 3 Blind Mice NITIE, Mumbai Ritom Das, das.ritom@gmail.com, +91-8652722520 Shanu Chaudhary, shanuchadhery@gmail.com, 9702018520 Syed Waheeduddin, sharfarfais@gmail.com , 9769657707
  • 2. The Flow….. Research & Insights  Secondary Research  Consumer Durable Market  Competitor Analysis  Strategic Group Analysis  Rural Scenario  Primary Research  Primary Market Survey  Socio-Economic Classification  Research Insight Mapping  Detailed Insights – Rural Connect, Psychographic Profiling etc. Product Launch & Disruptive Innovations  Market Penetration Strategy  Product Level Launch Strategy  Product Profiling - NPD & Innovation Marketing & Distribution  Marketing Strategy – 4A Approach  Marketing Campaigns  Distribution Channel & Logistics Detailed Forecasting & Financials Windup Strategy
  • 3. Consumer Durable MarketA change in the lifestyle, higher disposable income coupled with greater affordability and a great surge in advertisinghas seen the demand for consumer durable products escalate in recent years.Financing schemes and lower EMIs have led to exponential increase in turnover over the years. Both International & Indian Players Market SharePorter’s 5-Force Analysis
  • 4. Competitor Analysis  White goods characterized by High-priced & heavy Slow-moving electronic goods like fridge, AC etc.  Brown goods characterized by  Light electronic consumer  Low-priced and fast-moving goods including gadgets of various natures. Finding 1: Godrej is not present in many of the consumer durable product space & is thus losing out on the opportunity of being a complete consumer durable product provider. Finding 2: From the primary research we found that Godrej has a very good brand recall, it should target to enter into other segments and be a household name in the consumer durable product space.
  • 5. Strategic Group Analysis (SGA) Product Diversity Vs Promotion & Dist.  LG & Samsung are clear industry leaders – well established in terms of diversity as well as distribution  Companies in SG2 (Sony & Videocon) are lacking in terms of wide product line  SG3 companies like Philips, Godrej & Bajaj have fair product lines but they lack last mile reach – Need to increase the distribution Technology Capability Vs Price Range  LG & Samsung are leading – they have presence in wide spectrum of business segments which make them the mass reaching company  Godrej has fair product price range but lack in technology capability , though recent development (Chotu kool) are steps in right direction
  • 6. Rural Segment/ Market Space•Rural literacy level •Percentage of BPL Rural vs. Urban Segment improved from families declined 36% to 59% from 46% to 27% •Pucca houses•90% villages are doubled from 22% electrified SOCIAL to 41% ECONOMIC•41 m Kisan Credit FINANCIAL CONSUMER •The rural Cards have been consumer market issued is expected to•42 m rural HHs reach US$ 425 avail banking billion in 2010-11 services • Largely Untapped
  • 7. Primary Market SurveySurvey Region Specification  Target Site: 3 Villages in Maharashtra around MumbaiVillage Gram Panchayat Khadavali, Nadgaon and  Target Age Group: Between 20 to 45 yrs. Padghe  Occupation: Farming, Other works & Total Sample Size: 160 (Households & Retailers)Tehsil PanvelDistrict Raigarh Survey VideoState MaharashtraMandi 1 Kalyan, 20 kmMandi 2 Shahpur, 8 kmTarget Farmers, Shop Owners, Rickshaw Drivers etc.Selection Random selection
  • 8. SEC Rural Segment Classification  The Green coloured socio-economic segment are the targeted group, it include segment B1, B2, C1 and C2  The RED coloured socio- economic segment are excluded from TG are not considered (Segment A is rare while segment D do not have disposable income)The income levels of the different segments are found out through our survey as: Segment A: Above Rs. 15000 per month Segment B: Rs. 10000 – Rs. 15000 per month Segment C: Rs. 4000 – Rs. 10000 per month Segment D: Rs. 2000 – Rs. 4000 per month
  • 9. Primary Research & Insights vis-à-vis Strategies After Sales Service After sales service? Brand Preference? On what basis do you buy different brands for retailing? Average lead time for branded Service and and local products? Credit Credit FacilityReverse Logistics Product Psychographic Low Cost Offerings Availability AnalysisLast Mile Delivery Primary Research Problems being faced with the current Interest? Opinion? Attitude? appliance? What price are you willing to pay? Product Product Names and Taglines Modular Design Rural Innovation & Attractiveness Connect Buying Decision? Brand awareness check (Generic and Godrej specific)! Value Based Innovation Demonstrations
  • 10. Rural Connect Insights Brand AwarenessAlmost 100% of the Features that customer associaterespondents know about with Godrej in the rural segment:Godrej through their  Secure & DurableGodrej Locks & Godrej  High PerformanceWardrobes  Premium Segment Marketing Communication Response Effect on Buying Decision for Consumer Durables As far as the buying decision of the rural 25% customers is concerned, word of mouth is the TV Advertisements most important of the rest Print Media 70% 5% Word of Mouth  Product Demonstrations/ Exhibitions during Bazaar Day would actually help in generating trials of the product and interest among the perspective customers  People in the rural areas would be far more comfortable in associating with a product that has a Local Product Name  Campaigning around themes that can be locally understood and that can be related to the feature of the product in local language would help capture the market more efficiently & effectively
  • 11. Psychographic Profiling & InsightsThe Psychographic Profiling is done on the basis of their personality, values, attitudes, opinions, interests or lifestyles IAO Parameters Influencers CultureThere are many reference groups in village. These includeteacher, panchayat members, health workers, bank Majority of rural consumers are traditional in outlook.manager and co-operative board members – must be They associate faster with messages that match theirkept in mind while developing marketing strategy cultural behaviour such as traditional values. Attitude & Values Parameter Product Durability is still valued and don’t believe in ‘use &through’ urban mentality Product Product Usability helps in making decision to buy a product. DurabilityAdded feature always helps in Decision Making. Brand Loyalty Look for brand in all the products they buys (more prevalent in Product UsabilityFMCG) and even ready to pay little premium for the same Price Sensitivity is still there but value for money is also astronger force. Word of Mouth Believe in Word of Mouth Publicity of product from a neighbor Publicity Price Sensitivityor relative. This customer segment is not much aware of Experiential CustomerMarketing where they can use and feel product before buying Engagement Engaging customer in the buying process also helps ingenerating the sales of the product
  • 12. Other Insights  Brands like HUL, Prestige give credit of 1-  Retailers stock brands which are known for 2 months to retailers good after sales service  No formal mechanism for loan/credit  Retailers make earnings by having used by retailers. Customers are given credit provision for small maintenance on the basis of two factors personal and repairs at their own shops relationship & customer loyalty  Rural conditions (e.g. voltage fluctuation)  Use age old saving mechanism to result in product failures. This requires collect money for buying CG – modular products with easily replaceable opportunity to provide ‘Advanced Service parts. E.g. detachable wires and plug points Credit Payment’ mechanism as channel for saving Customers also select products Innovation Availability  Though the trend is customersbased on the product features. Hence becoming more brand consciousit is important to have innovative features , product unavailability and Product demonstration is equally inconvenience are still reasons for several brands failing to gain market share important and hence it needs a platform for the retailer to demonstrate the  Multi brand distributors are preferred by product the retailers Cost is still a concern. Hence new  Long Guarantee period is desired by features cannot be added at the cost of several customers and almost all the brands increasing the price drastically provide some kind of guarantee
  • 13. Market Penetration Strategy  Per-capita income level of different states can be utilized to identify the buying power of majority (rural)Income living in the region Level  HDI and GDI help in identifying regions which are upcoming and where people want to have better living standards HDI & GDI  Such regions would be right for the market entry as there exists high chances of product acceptance  Launch Strategy would focus on initial launches in At the developed districts in the selected regions (on District basis of point 1 & 2), leaving the undeveloped ones in Level initial phases of launch At  Village coverage in the district should be done on theVillage basis of its size such that bigger villages will targeted Level first and also their respective distances from these high density locations:  Villages near Urban Centres  Developed District Head Quarter  Taluka/Tehseel  Mandi
  • 14. Product Level Launch StrategyAll the launches will have phased approach such that starting with the initial pilot phase and moving to later phaseson basis of its success in the regionThe timeline for the launch should be aligned with the harvesting time which happens at three different timesdepending on region – Kharif, Rabi & Zaid. Air Cooler Initial focus should be to launch the product in Hot Dry & Composite regions indecreasing order of priority; Formation of different clusters for the phased launchof the product --- Roadmap -- Phase 1 - Pilot(away from coast): Parts of Maharashtra, Gujarat Phase 2 – Rajasthan, Uttar Pradesh, Madhya Pradesh, Haryana, Punjab Phase 3 - Chhattisgarh, Jharkhand, Bihar and parts of Andhra Pradesh Induction Cooker, Washing Machine & Water PurifierNo dependence on climate – therefore launch area will be selected purely onbasis of income level, HDI and GDI of the region; Cluster formation will be donesince helps in synergising the logistics in a region --- Roadmap -- Phase 1 – Pilot: Maharashtra & Gujarat (West cluster) Phase 2 – Kerala, Karnataka and Tamil Nadu (South cluster) Phase 3 – Rajasthan, Uttar Pradesh, Haryana, Punjab Later Phases – Add other states by expanding different cluster on the basis of response
  • 15. Product Profiling – NPD & Innovation Induction Cooker Product Profiling Runs on Electricity Priced at around ~ Rs. 3000 Cooks faster than conventional gasstoves Timer Delay option, VariableTemperature option & Preset Cookingoptions New Product Design Disruptive Innovations Cooker operating on Battery/ Any other form of fuel likekerosene (Load shedding of upto 4 hours in some areas) Special design to prevent any new purchase of utensils (offlat bottom)  New Induction Plate Design Can let go the features of “Timer Delay option, VariableTemperature option & Preset Cooking options”  Ideally notmuch of importance to the rural customers Pricing at around ~ Rs. 2500 & Modular Design
  • 16. Product Profiling – NPD & Innovation Chotu Wash – Economical Washing Machine Product Profiling Runs on Electricity Different range of products in this category Washing capacity varies from 4.5 kg to as large as 10 Kgs Pricing: Lowest price point at Rs. 5000  Koryo (Future Group’s Private Label Brand) 5Kg Washing M/C Godrej’s lowest range of Washing M/C comes at KORYO WMc around Rs. 8000 Disruptive Innovations New Product Design 3 Kg Wash Capacity M/C keeping a price point of Rs.3000 to target the rural segment Multi Use Washing M/C with an option of Mixer/Grinder Optional/ Additional Mixer Grinder to be priced at Rs.500 Use of the motor beneath for providing the additionaloption  3 Kg size would be optimal for such an option Heavy duty motor and design – expectation to washquite dirty/soiled clothes Only one washing compartment & Modular Design
  • 17. Product Profiling – NPD & Innovation Water Cooler & PurifierInnovation & New Product Development helped TATA Swach capture a significant market share in rural markets. Tillnow it has sold over 30 lakh units in the rural parts of India. Product Profiling TATA Swach purifies the water but doesn’t provide any coolingof the water TATA Swach priced at around Rs. 1000 to Rs. 1500 Locally available water coolers doesn’t have any facility forpurification of water Pricing of branded Water Cooler starts at Rs. 10000 Disruptive Innovations New Product Design An Integrated Water Purifier Cum Water Cooler for targetingthe rural households – One stop solution Innovative technology of ChotuKool to be used for cooling ofthe water Feature to run on Battery & Insulation for the Storage Tank Fibre body as research shows that steel body develops crack No kidney filter; they are a failure – because of dirt depositsand cant be cleaned thereafter Two Variety – One with Cooler; Second without Cooler Priced at Rs. 2500 & Rs. 1000 – With Cooler & Without Cooler
  • 18. Product Profiling – NPD & Innovation Air Cooler Product Profiling Runs on electricity Branded Air Coolers has fiber body whereas locally manufactured Ones have iron/steel / aluminum bodies 3 to 5 Level Blower Speed Controller Water Level Indicator & Air Swing Features Price Points: Branded Air Cooler lowest price point at Rs. 4000 (Symphony, Bajaj, Kenstar) Locally Manufactured Coolers starts at Rs. 1000 Disruptive Innovations New Product Design Possibility of use of the ChotuKool Innovation in the Air Coolerfor cooling the air/ water More cooling than other available products in the market Use of fibre body with insulation to keep the air/ water cold fora long time Can we use the technology of wingless fans/ similartechnology and come up with a new, innovative, easy to use andsimple product?? Battery support for the product & Modular Design Pricing at Rs. 2500 Wingless Fan 
  • 19. Marketing Strategy – 4A Approach Low per capita disposable incomes that is Large number of daily wage earners, acute half the urban disposable income dependence on the vagaries of the monsoon Rural Marketing Poor Roads; Power Problems; & Seasonal consumption linked to harvests Challenges Inaccessibility to conventional advertising and festivals and special occasions media The 4A approach deals with the challenges of marketing in rural segment by providing affordable solutions being readily available from any of the village stores and widely accepted among the customers by creating awareness AvailabilityEnsuring availability of the product to the innermost part of the country is a huge challenge considering Indias 627,000villages spread over 3.2 million sq km & 700 million Indians living in rural areas For a Pan-India presence, we have to target at least 13,113 villages with a population ofmore than 5,000 We need to trade-off the distribution cost with incremental market penetration Use of SHGs/ Village Women as distributors – good margins and self employment Area Offices (AOs) & Rural/Remote Area Offices (RAOs) to tap unexplored markets Empowerment of the RAOs with decision making authority, billing & collectionsIncrease in dealers over the years in a phased manner
  • 20. Marketing Strategy – 4A Approach Affordability Awareness Acceptability With low disposable  Different promotional events  One of the strategies that can beincomes, products need to be organised by stockists and other used for gaining Acceptability is theaffordable to the rural consumer – stakeholders of the product Product Localization – coming uppricing in the range of Rs. 1000 to  Optimal use of a combination ofRs. 3000 with Regional Language Product TV media, cinema and radio should Manuals & Product Menus Product innovation is most be used to reach more than 50 perimportant – success of “ChotuKool”  Introduction of low cost products cent of rural households for the massesfurther highlights the demand ofaffordable products in the rural areas Availability •Wide Network Affordability •Remove unwanted features •Tell about value for Awareness money •Product localization and low Acceptability pricing
  • 21. Marketing Campaigns  Small portable size Focus on some critical parameters when we are targeting the rural segments  Multi-purpose use  Value for money  Standard of living Air Cooler Water Cooler/ Purifier Product Name: SHEETLAK ( )  Product Name: OSS ( ) Campaign: GARMI KI CHUTTI ( )  Campaign: ŚUDDHA AURA TĀJĀ..... ŌSA KĒ JAISĀ  Campaign to connect with Cooling ( )  Campaign to connect with Purity, Freshness & Close to Nature Product Name: MUKTI ( )  Product Name: SAKTI ( ) Campaign: MUKTI DHUĀ, LPG AUR GARMĪ SĒ  Campaign: NAĪ ŚAKTI... ABA NĀ KARĒ KUŚTĪ( ) ( )  Campaign to connect with  Campaign to connect with Features (Smoke Free , LPG Free Technology Breakthrough, & Heat Free) Saving Energy & New Feature Induction Cooker Washing Machine
  • 22. Distribution Channel & LogisticsThe sparsely populated villages with poor infrastructure call for distribution channels which are versatile and economicat the same time; also challenges the number of nodes the distribution network can afford Godrej Ghar An innovative idea to answer the problems of adistribution network in rural India A Godrej Ghar is a multipurpose, multi role unit whichwill help Godrej reach the rural consumers, connect withthem, sell their products & gain market share in theprocess A Godrej Ghar would be allotted to each village with apopulation more than 10000 people Local entrepreneurs will sponsor the land andemployment too will be for the locals Capacitated Facility Location Model will be used toselect the location of Godrej Ghars in different states andDistribution Network will be a “Distributor Storage withCustomer Pickup” model to bring down the final cost The location will be chosen in such a way that it isaccessible to all parts of the village and the connectivityand awareness of the place is good
  • 23. Distribution Channel & Logistics Godrej GharOwnership and Profit Sharing: Godrej Ghar will be to create an effectivedistribution channel along with creating brandawareness for Godrej Will be an empowering mechanism forsocial and institutional entrepreneurs and aninvestment for the village community Tie-up with Indian Postal Services Public-private partnership withIndian Postal Service for the delivery ofits product Products are made available at postalcentres and then distributed (on needbasis) through Indian Postal Services Once the pilot (phase 1) of the launchis complete & successful – further expandby leveraging same model especially forthe villages which are far flung from the‘Godrej Ghar’ concept stores
  • 24. Demand Forecasting – Pilot Phase Forecast of Sales/Revenue for Phase 1 Induction Cooker Maharashtra Gujarat Washing Machine Maharashtra Gujarat No. of Villages targeted 192 325 No. of Villages targeted 192 325 Average Population Size 10000 5000 Average Population Size 10000 5000 Market Size(Total Population in target villages 3940350 3527901 Market Size(Total Population in target villages 3940350 3527901 Average number of people per family 5 5 Average number of people per family 5 5 Number of Families 788070 705580 Number of Families 788070 705580 Penetration of Product (Category) 20% 20% Penetration of Product (Category) 10% 10% Market Penetration 157614 141116 Market Penetration 78807 70558 Market Share desired in Phase 1 20% 20% Market Share desired in Phase 1 15% 15% Targeted Market Size (number of Units) 31523 28223 Targeted Market Size (number of Units) 11821 10584Water Purifier Maharashtra Gujarat Air Cooler Maharashtra Gujarat No. of Villages targeted 192 325 No. of Villages targeted 150 250 Average Population Size 10000 5000 Average Population Size 10000 5000 Market Size(Total Population in target villages 3940350 3527901 Market Size(Total Population in target villages 3940350 3527901 Average number of people per family 5 5 Average number of people per family 5 5 Number of Families 788070 705580 Number of Families 788070 705580 Penetration of Product (Category) 20% 20% Penetration of Product (Category) 20% 20% Market Penetration 157614 141116 Market Penetration 157614 141116 Market Share desired in Phase 1 20% 20% Market Share desired in Phase 1 20% 20% Targeted Market Size (number of Units) 31523 28223 Targeted Market Size (number of Units) 31523 28223 Data and Assumptions:  Number of Villages with population of more than 10000 targeted  Market Penetration is 20% (Penetration here implies penetration of category & substitutes of equal/similar price)  Market Share targeted for phase 1 is 20%
  • 25. Financial AnalysisP 1 Revenues and Induction Washing Water Purifier Profits* Cooker Machine (W/O cooler) Air CoolerSales - Number of Units 59746 22405 59746 59746Average Revenue per unit 2500 3000 1000 2500 Revenue from Sales 149365000 67215000 59746000 149365000 Profit Margin 10% 10% 10% 10% Total Profit 1,49,36,500 67,21,500 59,74,600 1,49,36,500 Total Revenues from phase 1 Rs. 42,56,91,000 Total Profits from Phase 1 Rs. 4,25,69,100 Annual Profit after sales for Godrej Ghar Rs. 4,88,350 Annual Costs Rs. 2,30,000.00 Annual Operating Profits Rs. 2,58,350.00 Monthly Operating Profits Rs. 21,529.17 Godrej Ghar will sell at 10% margin to a customer and at 5% margin to an Entrepreneur, who can get his 5% margin on selling to locations not accessible by Godrej Ghar Air Cooler (Unit Price INR 2500) Sankrantri/Lohri (Holi) Vaisakhi Month Sep-Oct Feb-Mar Apr-May Month Jan Feb Mar Apr Average Sales per month (No. of Units) 0 20 50 50 Harvest Average Sales INR 0 50000 125000 125000 Kharif Rabi Zaid Profit Margin - Category 10% 10% 10% 10% Season Profit from Repairs and after sales service 0 300 750 750 Profits (INR) for Godrej 0 5000 12500 12500 Profits (INR) for Partner 0 5300 13250 13250
  • 26. Product Wind-Up StrategiesAs we are proposing a phased manner to launch the product, winding up the product in the pilot phase itself, in casethe targets are not meet, will be very effective on part of the company looking to restrict further losses. Price Reduction & Product placement in Product Bundling Dumping of Product Discounts Tier-2 & 3 cities • Combination of Air • Selling the products as Reduce the price & use Cooler & ChotuKool unbranded productsthe harvesting season to • To use up excess inventory • Kitchen ware - (dump), since once a sell the old inventory product is discontinued • In case such a product is Induction cooker +Special discounts in case Washing/mixer by the company, the successful in Tier-2 company doesn’t have gifts are bought for cities, we can further machinespecial occasions such as any liability to provide the explore the option of • Combine with products service for the same marriage purposes marketing the product like wardrobe etc 1 2 3 4 • Product bundling helps • Recovery of Cost - to bundle two or more Products that are already products together and sell being manufactured & them at a lower price those in the inventory • It can be very effective • Company’s brand value during festive season and is not diluted as we are can also help in generating selling them as unbranded sales product
  • 27. Thank You!