Godrej Appliances Case Summary

Kamal Nandi is faced with following dilemmas, work on which would help the organization
to remain competitive and probably attain strong third position after LG and Samsung or
possibly second position in certain product categories.
- Seasonality
- Improve speed to market
- Revitalize brand
- Product – messages – media mix
- Increase consumer pull
- Uniformity of training sales associates

Godrej appliances offers refrigerators, air conditioners, washing machines and microwave
ovens. Due to competitive pressures the organization entered into more product categories as
it was unable to sustain market pressures just with refrigerators.

The case can be understood from internal and external challenges to be solved for the
organization to achieve its prior mentioned objective.

Internal problems
- Capital intensive business
- Dependence on imports
- Improve speed to market
- Revitalize brand
- Product – messages – media mix
- Increase consumer pull
- Uniformity of training sales associates

External problems
- Limited scale and quality
- Tightening energy norms
- Increasing competition
- Seasonality of product sales
- Tough competitive scenario

The external problems are usually there for any organization, but internal problems weaken
the organization to face the external / market challenges.

Let us understand each of the internal problems

Capital intensive business: Godrej needs to invest more into producing quality spare parts by
itself or needs to create an eco-system which encourages MSMEs to come up. It can not
straight away arrange for capital as justification for the own unit or supporting MSME is not
viable financially. Government can encourage this if the industry is crucial for its popularity.
However, initiative needs to come from Godrej in terms of helping MSME to be set up and
mentored so that quality of spare parts can be monitored. This is essential for Godrej as it can
then improve quality of its products which makes it robust in terms of competition with LG
and Samsung. The company can justify all its activities to board or share holders if it can
increase its sales.
Dependance on imports: Godrej can find out a suitable partner / country from where to
import. Nations in south east Asia where LG and Samsung are producing their spare parts can
be considered for spare part imports. However, too much dependence on outside sources can
also jeopardise its business. But a low-cost manufacturer for whom Godrej can be a large
importer will perfectly fit the situation. It means Godrej needs to increase its sales so that it
can import more spare parts.

Speed to market: Godrej needs to improve its research and development focus on appliances
division. The organization is known for some innovations in the FMCG sector, which are
copied easily by market followers putting pressure on Godrej’s investments in R&D. also
Godrej is known to have made mistakes like Godrej Chotu Kool which it paid dearly. Such
initiatives should be retrenched immediately and only those activities which contribute more
towards the organisation’s profits need to be invested in. Though one can justify that finding
products for new and untapped markets is an excellent idea. Godrej needs to understand that
it need not always be the first mover in such risky projects. The resources then need to be
invested in the R&D for the durable goods which require lot of quality, variety and customer
friendly features. This will help it to be first mover and at the same time reap benefits of its
new products.

Revitalize the brand: It is well-known that Godrej is an ageing brand and lost touch with the
generation Y and Z consumers for its durables. This is largely due to invasion of LG and
Samsung into Indian markets. However, the organization needs to spend more budgets for
marketing its products, than it is currently doing. Sporadic investments in promoting or
revitalizing the brand will not work. There should be more rigour and consistency in the
marketing efforts which is not there. Somehow Godrej seems to be depicting a family whose
story is not gelling well with the consumers. The celebrity endorsement also worked for a
short period. Godrej can also think to make its products a celebrity to ensure that its ads can
do with normal models depicting Indian social classes. Currently the company is doing
neither. The work it is doing in the social media and digital media also seems like first mover
in the market, but there is a serious problem with the continuation of it. The organization
seem to suffering from the legacy effect that, the products can sell on their own and some
advertisement for advertisement sake is fine. The organization also needs to seriously invest
in its marketing and marketing research departments. New recruits who are very good at
social and digital media campaigns need to be recruited so that there is a continuity and
consistency in the message. Right now the organization is everwhere and the messages are
not very aligned to the product or the company. This needs to be changed. Godrej needs to
figure out newer ways of engaging the generation Y and Z consumers on digital space as
well. The social media pages of various brands of the conglomerate need to be made into one
or connected so that the fan base can have discussions across product categories creating
opportunities for cross selling. More budgets need to be allocated for the marketing
department to take up promotion of the brand.

Product-messages-media mix: Investments in marketing and marketing research department

can help in addressing this dilemma. With the growing markets, the consumers are also
becoming diverse requiring careful study before conceiving an advertisement. Godrej now
needs to identify segments for each of its four product categories in durables. It then needs to
find out what sort of messages are prevalent in the market to reach out to customers. Then it
needs to figure out media mix which is appropriate for each of the customer segments. Once
it is done, then the organization needs to bring in an alignment between the product and the
message regarding its value proposition and the media that is relevant for it. However, the
organization also needs to focus on giving umbrella advertising considering all its products
and services so that customers understand the magnitude of Godrej and its reach. At the same
time the organization needs to create opportunities for dialogue with its young customers.

Increase consumer pull: Godrej does a lot of activities which are indicative of its responsible
nature as a corporate entity. The organization is also producing the durables in an
environmentally friendly units (GreenCo rating – Platinum certified). Customers need to be
made aware of this. The organization also needs to be clearly present its value proposition via
more advertising. This will help consumers to develop an image of the brand before walking
into the store. If the customer comes with a neutral mind or a negative mindset about Godrej
then it is extremely difficult for the sales associates to convince them. Investments in
marketing and brand building are going to help.

Uniform training of sales associates: Sales associates across the country should speak the
same value proposition and explain the benefits in the best possible manner. For this their
training needs to be standardized and more training should be offered so that the associates
develop a flair for selling Godrej products. Coupled with the training the organization needs
to offer monetary and non-monetary incentives so that there is a healthy competition among
associates to sell more of Godrej products. The organization can appoint more sales
associates at the dealers and distributors so that it can sell more.

Additional steps to be taken at Modern retail: The organization needs to invest in reaching
out to modern retail outlets which are becoming popular destinations with younger
customers. As mentioned in the case these modern retail outlets demand more variety in
product portfolio, so Godrej needs to do incremental changes every year or at regular
intervals to its products to make them look different. The organization also needs to invest
money in bringing really new varieties so that targeted customers willing to pay premium will
prefer Godrej. More sales associates and attractive salaries need to be given in the modern
retail so that they will sell Godrej products.

All the issues discussed till now are interrelated. Without product quality, the value
proposition via advertising will not work. Once value is present then the media and message
should be well planned. Once the message is delivered the most important effort should be at
the sales outlets. After this is achieved the organization needs to establish a robust after sales
service network so that customer does not end up with dissatisfaction. The idea is also to
convert customers into repeat customers or brand messengers.

Let us understand each of the external problems

Limited scale and quality: All Indian manufacturers are facing this problem so Godrej needs
to set up its own eco-system or look for options of imports as mentioned earlier to counter
this issue.

Tightening energy norms: With climate change gaining momentum this is going to be regular
feature. Godrej is working in this direction so it has to publicise more about its efforts in
creating environment friendly products.

Increasing competition: Godrej needs to figure out who the exact competitors are, in this case
at least it is LG, Samsung and Whirlpool mostly. So the organization needs to gear up to fight
these giant with internal adjustments as suggested earlier.
Seasonality of product sales: The promotion programs of Godrej products need to be
designed in an effective way to ensure that there will be some uniformity in the sales.
However, considering the nature of air conditioner and refrigerator which are required more
in summer the organization cannot completely solve this issue. If it has to offer price
incentives on the products then the costs needs to be brought down, which again goes back to
increasing investments in production or encouraging MSMEs to produce quality products on
its behalf thereby sharing the costs as well as profits.

Tough competitive scenario: Being an emerging market, it is expected that India will attract
more foreign players in the future. Most importantly Indians as consumers have always
favoured a foreign product to India product. This sentiment is changing slowly, but for
Godrej to survive, it has to build its image as a quality-oriented manufacturer. This means
that they need to work on all the internal issues as suggested to make the organization robust
to face the competition.