I am currently reading "Strategic Management of Technological Innovation" by Melissa Schilling, who also wrote "Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World." One case study she offers in the textbook seems to be quite relevant to the mass marketing of eco-ERE lifestyle. An old Indian company which manufactured household goods such as air conditioners and refrigerators was being competed out of the general market. So, it came up with the idea to manufacture a very, small efficient refrigerator for the poor, rural market in India, where refrigeration had not yet been widely adopted. Along the way, they discovered that many of their initial thoughts about potential design for the refrigerator and needs/desires of this niche market were mistaken:
- emphasis mine.
Based on these insights, the company designed a small and portable refrigerator based on thermoelectric cooling (rather than compressor technology). Thermoelectric cooling was the cooling method used in laptops; it involved running a current between two semiconductors. It was far more expensive on a per-unit-of-cooling basis, but it had much lower power requirements and could be used on a much smaller scale than compressor cooling. This enabled Godrej to make a very small, lightweight refrigerator with a relatively low price (35–40 percent cheaper than traditional refrigerators). It also lowered the power costs of operating a refrigerator, and made the refrigerator able to operate for several hours on a 12-volt battery, making it much more adaptable to situations where power was unreliable.
In Godrej’s initial plan for the chotuKool, the refrigerators would be cherry red and look like coolers. Soon, however, managers at chotuKool realized that if the refrigerators were just perceived as inexpensive alternatives to refrigerators, they had the potential to be stigmatizing for consumers who, in turn, would not talk about them to their friends. This was a serious problem because the company had counted on word of mouth to spread information about the refrigerators deep into rural communities. To get people to talk about the coolers they needed to be aspirational—they needed to be cool.
Godrej decided to revamp the design of the coolers, giving them a more sophisticated shape and making them customizable (buyers could choose from over 100 decorative skin colors for the chotuKool).c They also decided to market the refrigerators to the urban affluent market in addition to the rural market, as adoption by the urban affluent market would remove any stigma associated with buying them. To attract this market they positioned the refrigerators as perfect for picnics, parties, offices, dorm rooms, use in cars, and so on.
To get the chotuKool to rural customers would require a dramatically different distribution system than Godrej had traditionally used. However, building out a distribution system into rural communities would prohibitively raise the cost of chotuKool, potentially rendering the product nonviable. The development team was initially stumped. Then one day G. Sunderraman, vice president of Godrej and leader of the chotuKool project, happened to inquire with a university official about obtaining college application forms for his youngest son and the official pointed out that Sunderraman could get the forms at any post office. At that moment, Sunderraman realized that the post office, which had offices in every rural area of India, could be an ideal distribution channel for the chotuKool.d It was a very novel proposition, but India Post agreed to the collaboration and soon chotuKools were available in all post offices in the central region of India.e As Sunderraman noted, “The India Post network is very well spread in India and is about three or four times larger than the best logistic suppliers.”f
The chotuKool won several design awards in its first years, and after selling 100,000 units in its second year Fast Company gave Godrej its “Most Innovative Company” award. Godrej and Sunderraman were disappointed to discover that it was not as rapidly adopted by rural poor households as they had hoped; the roughly $50 price was still too expensive for most poor rural families in India. However, the chotuKool turned out to be much more popular than anticipated among hotels, food stalls, flower shops, and other small stores because it enabled these small stores to offer higher valued products (such as cold drinks) or to keep products fresh longer, thereby increasing their profits. The chotuKool also became a popular lifestyle product among the urban affluent population who began to widely use them in their cars.
Godrej’s experience developing and launching the chotuKool had provided many lessons. They had learned that to radically reduce the cost of a product might require completely rethinking the technology—sometimes even in ways that initially seemed more expensive. They learned that customers who had adapted their way of life to the lack of a technology (like refrigeration) might not adopt that technology even if it was made markedly less expensive. Finally, they learned not to underestimate the value of making a product work for multiple market segments, including those that might not be initially obvious as customers. Though some people considered chotuKool a failure because it had not achieved its original objective of wide adoption by the rural poor, Godrej (and many others) considered it a success: the product expanded Godrej’s market share, penetrated new market segments in which Godrej had not formerly competed, and demonstrated Godrej’s innovative capabilities to the world.
