A case of ‘disruptive innovation’ that is transforming Rural India

GODREJ CHOTUKOOL

Ardeshir Godrej17 Billion MumbaiMore than 60 countries

Consumer electronics segment in India (‘000 units)

2005 2006 2007 2008 2009 20100

2000

4000

6000

8000

10000

12000

TV setsPCsRefrigerators

Indian Refrigerator Industry

Market Value - Rs. 40 billion in 2010

Unsaturated market (18% in urban and 2% in rural)

Market growth Urban : 7-10% Rural :25%

Trends affecting Refrigeration Industry

According to UN Commission on Sustainable Development, one third of all food in India is lost to spoilage

According to CEAMA, refrigerator penetration in India is only 18%

70% of India still lives in rural areas where electricity supply is limited and power cuts are frequent

No options available for lower income groups

Space is a constraint in rural households

Trends Implications Opportunities for ChotuKool

Food Spoilage Need for refrigeration Demand can be created

Low Penetration Limited access to refrigeration Huge market available for growth

Rural Population Power supply issues

Low purchasing Power

Alternate power options

Create a low cost model

Space Constraint Lesser space available for a refrigerator

Create a small sized product, easy to transport

What am I?

Who am I?

My Family

For whom am I?

Why me?

Cheapest fridge

available

Portable and light

Occupies less space

Runs on battery

Environment friendly

Challenges

Lower the price to increase affordability ?

How should they segment market ?

Right business model?

How should they scale up operations?

Suggestions

Establish Manufacturing Plants

Low cost distribution

Avoid marketing myopia

Clear segmentation

Strengths

Simple design

Less space for manufacturing

Less manpower required

Less components used

Distribution: Community-based model

NGO

Self-help groups

India Post

Micro-finance institutions

Distribution

Structure of the Indian consumer market

Consumer class (Using annual income)

1996 (in mn) 2001 (in mn) 2007 (in mn)

The rich (Rs.215,000 and more)

1.2 2.0 6.2

The consuming class(Rs.45-215,000)

32.5 54.6 90.9

The climbers(Rs.22-45000)

54.1 71.6 74.1

The applicants(Rs. 16-22000)

44.0 28.1 15.3

The destitute(Below Rs.16000)

33.2 3.4 12.8

:

Arthi Divyant Singh

JayasriKanwaljit kaur Gosal

ManimegalaiOmna Jain

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