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Chotukool Case

Godrej & Boyce, an Indian consumer goods manufacturer, was facing lackluster performance in its household appliance business despite overall growth. To reignite growth, EVP Gopalan Sunderraman decided to disrupt the market through innovation. Field research in rural India revealed that most households earned $125-200/month and lacked refrigeration, resulting in food waste. Godrej developed ChotuKool, a small, affordable cooler priced at $69 to meet rural needs. However, financing purchases and distributing ChotuKool remained challenges to address for a successful go-to-market strategy.

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217 views6 pages

Chotukool Case

Godrej & Boyce, an Indian consumer goods manufacturer, was facing lackluster performance in its household appliance business despite overall growth. To reignite growth, EVP Gopalan Sunderraman decided to disrupt the market through innovation. Field research in rural India revealed that most households earned $125-200/month and lacked refrigeration, resulting in food waste. Godrej developed ChotuKool, a small, affordable cooler priced at $69 to meet rural needs. However, financing purchases and distributing ChotuKool remained challenges to address for a successful go-to-market strategy.

Uploaded by

Thunder Bolt
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ChotuKool (A):

Consumer-centric Disruption at the Bottom of the


Pyramid

“Only when you jump into the fishbowl can you learn how the fish live.”

Gopalan Sunderraman,
Executive Vice President, Godrej & Boyce
Manufacturing

Background
Godrej & Boyce (G&B), a 100 year-old Mumbai-based consumer goods manufacturer (see
Exhibit 1) was facing a challenge. Despite significant growth in its overall portfolio, it had
seen lackluster performance in its household appliance business. Given the size of the
market, G&B’s senior leadership agreed that it had to find a way to reignite growth.

EVP Gopalan Sunderraman, a company veteran of 26 years, sat at his desk pondering the
options. The choice was simple: either ‘business as usual’ – meaning improve the existing
product portfolio – or do something different. Sunderraman decided that business as usual
would not deliver growth. External input would be needed to come up with something
unexpected. He enlisted the help of leading authorities on innovation: first, Professor
Clayton Christensen from Harvard Business School, given his research and writing on
disruptive innovation (e.g., The Innovator’s Dilemma, The Innovator’s Solution); second,
Innosight, an innovation consultancy, that had helped leading organisations (e.g., P&G, Citi
Bank) re-ignite growth through innovation.

Living in Rural India

Despite India’s economic development since the early 2000s, more than 65% of the
population lived in rural areas, and 25% of the rural population lived in poverty. More than
50% of the rural population were involved in agriculture, predominantly subsistence.

The benefits of economic growth in India had largely accrued to the urban population.
Access to electricity, tarred roads and modern retail outlets was largely limited to towns and
cities. A vast majority (92%) of Indians without proper electricity lived in rural areas – 380
million people (76 million households). Without refrigeration they were obliged to make
frequent purchases of perishables and wastage was high.

Identifying and Refining the Need through Field Research and Co-creation

The combined G&B and Innosight team decided that the best way to find out what
households needed – 80% had no access to conventional refrigerators – was through field
research. Their initial trips to rural India focused on understanding how rural consumers
purchased, prepared and stored food and drinks. This could be achieved through
observation, interviews and video ethnography.

From their field research, the following observations emerged about typical households in
rural India and their problems. First, most households earned Rs 5,000 to 8,000 per month
(US$125 to 200), lived in single-room dwellings with four or five family members, and
frequently moved from one dwelling to another. Second, they purchased food frequently to
avoid wastage – a third of food was lost to spoilage – and because cooling options such as a
communal second-hand conventional refrigerator took up too much space and was
expensive to use.

After aggregating their findings, the team defined the main need of the market: a way to
keep milk, water (6 bottles max), vegetables (3-4 kgs) and left-overs cool for a day or two –
at home and away from home. This gave them insight into the type of solution needed.
Cheap conventional refrigerators would not suffice – a new product was needed.

Having worked with G&B’s product development team on developing prototypes that they
could take back to consumers, their return trips to rural areas focused on getting feedback
and consumer buy-in on the solution through “co-creation” events. At one of these held in a
village in Maharashtra state where 600 women participated, the colour was chosen: red.

Godrej and Boyce’s Initial Solution

The target market was defined as rural households with poor access to electricity, which
earned around US$5 per day. The solution for their identified need was ChotuKool (Hindi
for “little cool”), a small cooler made of plastic, with a 45-litre capacity, weighing 7.8 kg
(see Exhibit 2). As it consisted of only 20 parts (conventional refrigerators had 200),
production costs and the likelihood of breakdown were much lower. To reduce energy costs
without sacrificing cooling capacity, it ran on a thermoelectric chip powered by a 12-volt
DC current or an external battery.

Key Questions for the Go-to-Market Strategy

Thanks to these design features, the cooler could be priced at Rs 3,250 (US$ 69) – half the
price of a conventional refrigerator yet fit for the target market’s purpose. However, two
main problems remained. First, though it was affordable compared to existing offerings, the
issue of how to finance the purchase of a ChotuKool remained. Second, even if the
financing could be worked out, how would the market learn about, order, and take delivery
of the ChotuKool?

Consider the following questions:


 Financing model
 How should financing be structured so that rural Indian households can afford
ChotuKool?
 Should the finance agreements be kept in-house or involve third parties?
 Distribution model
 How many regions should ChotuKool be launched in and how quickly should this
happen?
 What partners are required (and why) to meet the distribution targets?
Godrej & Boyce Product Portfolio OVERVIEW

Exhibit
2ChotuKool
Exhibit 2

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