Godrej Appliances faced several problems after liberalization allowed foreign competitors to enter the Indian market, including losing customer loyalty and market share. To overcome this challenge, Godrej realized it needed to address two major issues - the misconception that its technology was inferior and its lack of connection with youth. The company took measures like differentiating its products for different customer segments, focusing on better technology like its "cool shower" refrigerators, and increasing research and development spending. These actions helped Godrej regain customer trust and loyalty, achieving a 35% annual growth rate and rising to a top five market position in appliances.

1. PUNE INSTITUTE OF BUSINESS
MANAGEMENT
ASSIGNMENT CASE STUDY
“GODREJ APPLIANCES: BACK TO DOMINATING THE MARKET”
SUBMITTED BY:- AKSHAT CHAUHAN

2. Q1.What was the problem faced by the company?
Ans. The problem faced by the company were-
∞ PRIVATE PLAYERS
The first problem that was faced by the company was entering of aggressive
foreign players, especially Korean brands like LG and Samsung, and the
Japanese like Akai and Aiwa because of the liberalisation policy which result in
increasing market competition.
∞ LACK OF CONNECTION WITH YOUTH
After a tough competition from aggressive foreign players market share of
Godrej was decreasing. And to know about the reasons of decreasing market
share it conducted a survey which shows that The average age of its customers
was 35 to 45 years a serious impediment in a country with 45 per cent of its
population below 25. The survey claimed it was not even perceived as a
technology brand by youth.
∞ LACK OF CUSTOMER LOYALTY DUE TO MISCONCEPTION
Because of entering of new private players with new product designs and new
technology the company starting lacking its customer loyalty due to a
misconception that the technology which is used by foreign players is more
advanced.
∞ LOSINING CUSTOMER TRUST ON NEW PRODUCTS
In order to increase the market share Godrej introduce Air Conditioners and
Microwaves in 2204 and 2005. But neither of the two new products made any
impact and still Godrej refrained from cutting prices to match those of its
foreign competitors.
∞ ATTRACTIVE POLICIES BY FOREIGN PLAYERS
In order to capture large market size and to match Godrej in quality of product
foreign players start using advertising blitzkriegs, attractive packaging and
aggressive pricing strategies to push sales.
These were problems that were faced by Godrej after the liberalisation policy all these
entering of private players, misconception among customers, losing trust for new
products, gap with young generation and policies by foreign players result in losing
customer loyalty and trust and losing of market share of Godrej.

3. Q2. What was the challenge involved in overcoming the problem?
Ans. Challenges involved in overcoming the problem-
∞ REGAINING CUSTOMER LOYALTY
The biggest challenge that was faced by the company was regaining its
customer loyalty, connection with youth and removing misconception.
Because of new players and improved product designs and policies of new
players, Godrej start losing its customer loyalty and losing its market share.
∞ LATE REALIZATION
It was also a major challenge for the company, for its policies that after a long
time the company overcome the two drawbacks that were pointed in the
survey. This is the biggest drawback and the major challenge the company
focused on launching the new products in order to get back on track instead of
overcoming the problem because of which Godrej lose its customer loyalty.
∞ POLICIES OF FOREIGN PLAYERS
The challenge faced by the company for overcoming the problem was the
policies that were used by foreign players in order to attract new customers.
The foreign players along with new product design also using advertising
blitzkriegs, attractive packaging and aggressive pricing strategies to push
sales.
∞ MISCONCEPTIONS FOR NEW PRODUCTS
Because of the misconception for the technology used by Godrej there was
misconception among customer for new products- Air Conditioner and
Microwave that were launched in 2004 and 2005 with a motive to increase
market share of Godrej but neither of the two new products made any impact
and still Godrej refrained from cutting prices to match those of its foreign
competitors.
These were the challenges that were faced by the company in overcoming the problem
and because of which the company start losing its customers and its market share.

4. Q3. What measures did the company take to overcome the problem?
Ans. Measures taken by company to overcome the problem were-
∞ FOCUSE ON THE TWO MAJOR DRAWBACKS AND ON BETTER TECHNOLOGY
The company realize that in order to increase the market it had to work on its
two major drawbacks that was misconception for technology and connection
with youth for example-
o From 'Penta Cool' it moved on to introduce the 'cool shower technology'
in its high-end refrigerators that took into account the Indian habit of
overstuffing them. While most rivals provided five to 10 cooling vents,
depending upon the refrigerator's size, Godrej added several more,
providing extra cooling which prolonged the shelf life of perishable food
items.
∞ DIFFERENTIATING ITS PRODUCT
To address the market better, Godrej Appliances began differentiating its
product offering, providing different models for different socio economic
groups. The high-end 'cool shower technology' refrigerators were given the
label Eon. For the mid-market segment Godrej launched the brands Edge and
Axis, while for the cost conscious mass market, it had Neo. And done same with
ACs and Microwaves. The Eon brand has been particularly successful, even
though it costs five to 30 per cent more than similar products of rival brands,
and contributes roughly 30 per cent of the company's total revenues.
∞ FOCUSED ON RESEARCH AND PRODUCT DEVELOPMENT
Godrej start focusing on research and product development to know about the
demands of different customer segments and start are spending close to five per
cent of their annual turnover on research and product development activities.
In order to target each customer segment.
Because of these measures, In ACs, Godrej's share is the fastest growing, having risen
from 3.5 per cent in 2005 to seven per cent. Overall, in the past five years, Godrej
Appliances has posted a compound annual growth rate of 35 per cent, much higher than
the 17 per cent growth rate of consumer durables industry This puts it in fifth position in
the sector behind market leader LG, with 30 per cent share, followed by Samsung,
Videocon and Whirlpool.

5. Q4. How did company achieve the success?
Ans. Major success factor that made Godrej a great success were-
∞ CONTINUOUS IMPROVEMENT
The major success factor was using of Modern technology and improved
management practices without losing the uniqueness of Godrej.
∞ FOCUS ON MAJOR DRAWBACKS
The ability of the company to work on the major drawbacks- conception and
connection with youth was also a major factor that help the company to achieve
its success.
∞ SEGMENTATION
Also the policies of company of dividing its product according to different
demographics, which help them in targeting every segment.
∞ RESEARCH AND PRODUCT DEVELOPMENT
Continuous improvement and research and product development and work
according to dynamic environment also help the company in achieving the
success.
∞ SWOT ANALYSIS
Analysing the Strengths, Weakness, Future Opportunities and Threats from
competitors helps the company on focusing of new product design, new
technology and new policies.
These were the factors that led to growth of Godrej and because of it attain its market
share back and help it to compete with foreign players and start dominating the market.