AURO UNIVERSITY (INDIA)

School of Business Bachelor of Business Administration

(2017-2020)

Submitted To: Rohit Singh

Submitted By: Aditi Agarwal

Semester-6

Section – A
1) In order to understand and apply concepts of blue ocean strategy and disruptive
innovation to new emerging business models, can I take Godrej Chotukool as an example?

Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new
market space and create new demand. It is about creating and capturing uncontested market space,
thereby making the competition irrelevant. It is based on the view that market boundaries and
industry structure are not a given and can be reconstructed by the actions and beliefs of industry
players.

Godrej and Boyce tapped the rural marketplace for refrigerators. They were the primary one to
enter the rural marketplace for this section. Godrej conducted a market survey through that they got
insights regarding the rural individuals not using refrigerators.And then
they consequently innovated the product that suited all the wants of the rural market.

They discovered that the refrigerator wasn't cheap and at the side of that it needs more room
and additionally has stable electricity problems. Additional they also didn't contemplate it as a
necessary product because that they had substitutes like earthen pots that they need been using for
years, which they were glad with. The corporate Godrej thought-about of these problems and
innovated a product which solved of these issues. that they had prevent the value to five
hundredth of the bottom value refrigerator and purchased it all the way down to all the way down
to created affordable worth for purchasers at lower cost (break the worth value trade off) and
no alternative rival of Godrej was providing such a product at this low value with
these options that created the competition impertinent and created associate
degree uncontested market house. the scale issue was additionally looked on and size was
drastically reduced. It additionally didn't have power issues because it ran on a voltage of twelve V
DC associate degreed an electric current of four to 5A. thus it might be operated on
battery, electrical converter and solar power in addition.

The weight of Chotukool was additionally lightweight, such it absolutely was straightforward to
hold. In this means , wherever material pots were utilised by the individuals , Godrej
introduced associate degree innovative cooling product and created demand for itself and captured a
similar. This market was untapped by any of its competitors thus got the first mover's advantage.

As soon as they launched the product, they saw a huge scope for it, they observed that people are
adopting the product and it is not only used for personal use but they are also earning by using this
and to cater the same they aligned the whole system of a firm’s activities in pursuit of
differentiation and low cost.

“ Disruptive innovation is a process by which a product or service takes root initially in simple
application at the bottom of a market or in a new market, and then relentlessly moves ‘up market’
eventually displacing established competitors”

Companies generally take existing products developed for brand new markets and pull
out options so as to cut back prices and re-design the merchandise to be used by customers during
a price adjusted market.
However Godrej observed that such de-featuring tends to over address desires.
Whereas, disruptive innovation provides no advanced options, however meets the unmet desires.
One objective of disruptive innovation is to get rid of the barriers to consumption, that during
this case was the value, house and electricity issue. Which is why Godrej came up with a
low price answer, designed for people living in a one-room house.

Instead of cutting prices out of AN existing cooling answer, Godrej started from the start. They
created a very totally different market. The Chotukool team within the early section of the
project enjoyed time in people’s village huts to achieve client insights and closely discovered their
product usage and life style patterns to work out the requirements of such customers. The team
found that the majority of the folks purchased groceries a day and failed to create any bulk
purchases. For these rural communities, a cooling answer that might hold simply a couple
of things would be AN best style. Such studies with rural and concrete non-consumers of
refrigerators brought out vital inputs for the look of Chotukool.

They need to apprehend that individuals failed to have the requirement to shop
for this overpriced white goods, as they were already exploitation stuff pots
and accustomed purchase vegetables on an everyday basis once consumption had to be done.

All the feedback indicated a cooling solution was an aspirational product but beyond their budget.
A huge market opportunity existed below the 100 litres category at a price point much lower than
₹7000, which was the lowest price of a conventional cooling solution. The insight triggered the
disruptive innovation team at Godrej to take the idea forward.The team undertook several field
studies using interviews, observations, photographs, etc. for key insights to flesh out the new
product idea.

They analysed that rural customers want to store food and milk and chill drinking water. They
don’t need ice that much, so a 180-litre fridge is not required. The ₹3500 Chotukool meets their
needs and also has a low running cost.

Chotukool was formed and created based on several of those inactive wants and invisible insights.

Chotukool had several advantages. It had no moving components, it was almost service free.
Compared to the 200 components of a refrigerator, it only had 20. It is easy to use, easy to clean,
easy to move and importantly can work on an inverter.

After the launch of Chotukool with all the requirements which rural customers had, the research
and development team found that some users who had bought Chotukool were using the product
not only at home but also to make money. The tiny fridge was helping owners of roadside kiosks,
wayside grocery stores and flower vendors to sell additional items like cold water. In the
countryside, villagers who were the potential buyer, would also act as marketers, earning
commission on each unit sold.
Disruptive innovations address the basic needs of simple customers with easy, simple and
affordable products. It opens up the untapped market of the non-users.

Chotukool is not a refrigerator, It is a different category. It is different in technology, size, structure,

performance and value proposition to consumers. They had to have a breakthrough approach to
market the product. They approached the potential consumers through women micro entrepreneurs
through NGO "Swayam Shikshan Proyog" (SSP). The women are close to the community to
facilitate diffusion of ideas. These women also earned commission money by selling. In effect,
Chotukool impacted the Living standard, Livelihood and Life style of these women at the bottom
of the pyramid.

As an example of the disruptive innovation, Chotukool could be a groundbreaking product

on several levels, in terms of technology used, its design and also the business model used to
develop and deploy it.

That is however Godrej developed a brand new business model to serve necessary unmet needs.
2. Chotukool is an example of livelihood, increasing the living standards and
enhancing the usage of products. Explain these 3 objectives which Godrej did
through co-optation and disruptive innovation. You May highlight the reasons
suggested by Godrej to enter into the rural market.

Chotukool, being the only reasonable factor that was kind of like a refrigerator , created a
large demand in rural areas and covered the market as individuals living in rural
areas weren't nonetheless using refrigerators and it had been not thought-about as a
necessary product also. Individuals there had a list of reasons for not using refrigerators and not
considering it as a necessary product. Their main issue was the worth and
so different basic issues like size and electricity. Apart from that they were
already using earthen pots that didn't build that product essential. Considering all factors, Godrej
came up with Chotukool that was terribly little in size which might not much abundant of
the area and simple to carry, ran on battery and price and value and this made an area within
the market with its disruptive innovation.

Not solely this, to hide of these issues they not solely did a pursuit however went there to seem into
it so they may realize the reason behind individuals not using refrigerators and created a market
survey so they may build the most effective of the product.

The team conjointly found that few individuals had second hand refrigerators and that
they were mostly empty, there was nothing to stay except water. These insights helped
Chotukool produce, based on several of those latent wants and virtually invisible insights.

While observant to do to know the unmet wants of the people who don't use a refrigerator was
crucial. Mr. Sunderraman was convinced of the benefits of full community
immersion. that's however and why they used the fish bowl theory “Only after you jump into the
fishbowl are you able to learn the way the fish live. If you’re outside the fishbowl observant you
can not perceive what the fish undergo. only if you jump in are you able to perceive however cold
the water is, or that some fish bite however most of them area unit friendly.”
This theory helped them to know their needs and what exactly could be done for them. It helped
them to know about things in depth, as being in their place made them think of every possible
situation.

“We recognised the immense untapped buying power in the rural segment and decided to fill the
void in the refrigerator market with our Chotukool offering,” says G Sunderraman, vice -president
of corporate development, Godrej & Boyce.
“The fish bowl approach” - Prof Shiba

Chotukool had cut down the price to half of the price of the cheapest refrigerator, it compressed
the size and other than that they also came up with a battery solution.

By making it quite affordable, it created a want in the market. People started to buy Chotukool and
also earned their livelihood through that. They made out a business out of it. People used
Chotukool for several small businesses like flower selling, snacks vending and small kiosk shops,
Chotukool became an earning asset for them.

The company has involved the villagers not only in designing the product but also to take
ownership for selling the product. Godrej has dropped the traditional model of a proprietary
channel with a sales force and a distributor-dealer chain. It has resorted to an unorganised but
effective distribution network by partnering with rural self-help groups, non-government
organisations and micro-finance institutions to boost sales. They have involved village girls as
salespeople to canvas for the benefits of Chotukool.

The concept of inclusive growth gains momentum only if large corporations inculcate the three L’s
as a strategic intent into their business plans - growth in living standards, lifestyle improvement and
livelihood generation of the socially backward.

Godrej’s accent is clearly on bettering the lives of the socially backward with innovation at all
levels; design, technology, pricing and marketing.

Chotukool did increase the living standards as before this, people were using earthen pots to keep
things cool and were not accessible to products with high technology and were also not able to
afford them. Godrej thought to create a product which could give people something they can use to
meet their everyday needs. They wanted to make a difference to their lives by understanding their
unmet needs. That is when they came up with chotukool. Chotukool which could make all things
possible for them,a low cost solution to preserve perishable foods for longer periods. It created a
better life with innovation at all levels, design, technology, pricing and marketing. They helped
them upgrade their lifestyle and ways through this.

It also enhanced usage of product as when chotukool did research they found out many things and
the major one was affordability. For which they thought they could also earn money out of this
product and kept the price drastically low in comparison to refrigerator. That way people could
afford it and not just use it for personal use to store vegetables and keep drinks cool but to also
generate income out of it. That way they could start a new business or grow it in a different way by
storing their products. That way it increased the usage of Chotukool.

That is how Chotukool became an example of livelihood, increasing the living standards and
enhancing the usage of products by disruptive innovation and co-optation.
 References

https://hbr.org/2011/01/new-business-models-in-emerging-markets

https://pdfs.semanticscholar.org/2143/f79a78a708ea005f819415735ba8c1d95eca.pdf

https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/

https://www.jica.go.jp/india/english/office/topics/100517.html

http://jugaadtoinnovation.blogspot.com/2011/12/godrej-chotukool-challenges-in.html?m

https://www.wipo.int/wipo_magazine/en/2013/06/article_0003.html