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MGT 325 Access to a Refrigerator in Saudi Arabia’s Rural Population
Innovation Types and Patterns
The chotuKool Project is an example of Indian innovation.
Godrej & Boyce was established in 1897 in India and supplied a variety of products to the Indian market, including household appliances, office furniture, and industrial process equipment. International competitors such as Haier and Samsung had been eating into Godrej’s market share for home appliances like refrigerators, washing machines, and air conditioners in recent years, and management realized that keeping the firm afloat would necessitate creative solutions.
The chotuKool, a compact, portable refrigerator, was one such option. Despite the fact that refrigeration is a mature technology around the world, in rural India, up to 90% of families cannot afford household equipment, do not have reliable access to energy, and do not have refrigeration. This severely restricted the kind of meals they could eat and how they could cook them. Finding a way to deliver refrigeration to this group of individuals had the promise of a large market as well
as a significant improvement in people’s quality of life. We believed we’d be producing a shrunken down version of a refrigerator, says Navroze Godrej, Director of Special Projects at Godrej. Make it smaller and less expensive. And we had
preconceived beliefs about how to develop a brand that would resonate with these users through large promotions and flashy advertising.
These assumptions would prove to be incorrect. First, Godrej’s team rapidly realized that there was no way to cut the cost of a traditional compressor-based refrigerator by enough to make a significant difference when they looked at the
possibilities. Second, they discovered that having a lightweight refrigerator was more significant than they had previously realized because many rural Indians had migratory lives, migrating to follow work opportunities. Third, most individuals
were in the habit of cooking only enough for the day due to the lack of refrigerated, and hence had comparatively low refrigeration capacity needs. Fourth, many of the few rural Indians who did have refrigerators did not plug them in for the
majority of the day, fearing that power spikes would harm them. We were astonished by many things, shocked by many things… we discovered our first notion was extremely wrong, Godrej says.
Based on these findings, the business developed a tiny and portable thermoelectric refrigerator (rather than compressor technology). Thermoelectric cooling, which included passing a current between two semiconductors, was the cooling
mechanism used in laptops. On a per-unit-of-cooling basis, it was significantly more expensive, but it required far less power and could be employed on a far smaller scale than compressor cooling. Godrej was able to create a tiny, lightweight
refrigerator at a reasonable cost (3540 percent less than typical refrigerators) as a result of this. It also reduced the cost of running a refrigerator by allowing it to run for several hours on a 12-volt battery, making it far more adaptable to
circumstances where electricity was unavailable.
The refrigerators for the chotuKool were originally supposed to be cherry red and look like coolers, according to Godrej’s proposal. Managers at chotuKool quickly understood, however, that if the refrigerators were simply seen as low-cost alternatives to refrigerators, they may become stigmatizing for customers, who would then refrain from telling their friends about them. This was a major issue because the company had relied on word of mouth to get the word out about the freezers into remote areas. They needed to be aspirationalthey needed to be coolto get people talking about the coolers.
Godrej decided to redesign the coolers, giving them a more sophisticated shape and making them customizable (chotuKool buyers could choose from over 100 decorative skin colors). They also decided to market the refrigerators to the urban
affluent market as well as the rural market, as adoption by the urban affluent market would remove any stigma associated with purchasing them. They positioned the refrigerators as ideal for picnics, parties, offices, dorm rooms, and
automobile use, among other things, to attract this market.
To bring the chotuKool to rural customers, Godrej would have to adopt a whole new distribution system than they had in the past. However, expanding the delivery infrastructure into rural areas will boost the cost of chotuKool to an
unsustainable level, potentially making the product unviable. Initially, the development team was stumped. Then one day, G. Sunderraman, Godrej’s vice president and project leader, occurred to ask a university official where he might receive
college application forms for his youngest son, and the official pointed out that Sunderraman could get the papers at any post office. Sunderraman understood at that point that the post office, which had branches in every rural part of India,
could be an appropriate distribution channel for chotuKool. It was an unusual proposal, but India Post agreed to collaborate, and chotuKools were soon available in all post offices across India’s central region. The India Post network is very
widely dispersed in India and is around three or four times larger than the best logistic suppliers, according to Sunderraman.
In its first years, the chotuKool earned multiple design accolades, and after selling 100,000 units in its second year, Fast Company named Godrej the “Most Innovative Company.” Godrej and Sunderraman were surprised to see that it was not as
quickly adopted by rural impoverished homes as they had thought; the about $50 price tag was still prohibitively expensive for most poor rural Indian families.
The chotuKool, on the other hand, proved to be far more popular than expected among hotels, food stalls, flower shops, and other small businesses because it allowed them to offer higher-value products (such as cold drinks) or keep products
fresher for longer periods of time, thereby increasing their profits. The chotuKool became a popular lifestyle product among the urban rich, who began to use them in their cars in large numbers. Many lessons were learned from Godrej’s
experience designing and launching the chotuKool. They’d discovered that drastically lowering the cost of a product sometimes need completely rethinking the technologysometimes even in ways that appeared to be more expensive at first.
Customers who had adapted their way of life to the absence of a technology (such as refrigeration) were less likely to adopt that technology, even if it was made significantly less expensive. Finally, they learned not to overlook the importance
of designing a product to appeal to a variety of market sectors, including those who aren’t immediately apparent as potential buyers. Though some saw chotuKool as a failure because it fell short of its original goal of widespread adoption by the rural poor, Godrej (and many others) saw it as a success because it increased Godrej’s market share, penetrated new market segments where Godrej had not previously competed, and demonstrated Godrej’s innovative capabilities to the
world.
MGT 325 Access to a Refrigerator in Saudi Arabia’s Rural Population
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Introduction
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MGT 325 Access to a Refrigerator in Saudi Arabia’s Rural Population |
MGT 325 Access to a Refrigerator in Saudi Arabia’s Rural Population