CASE STUDY:GODREJ APPLIANCES
1) The core problem faced by the company is that they are losing contact with their costumer.The
company and its product were not connecting with the young people. The average age of its
customers was 35 to 45 years - a serious hindrance in a country with 45 per cent of its population
below 25.
2) The challenges faced by the company are mentioned below:
-. Liberalization and the entry of foreign players saw its market share in the segment drop by
half.
-prior to this Godrej is not taken as a technology brand ,the market did not think that its product
can manage with the advancement of technology.
-. No doubt competition had stiffened following liberalization and the entry of aggressive foreign
players, especially Korean brands like LG and Samsung, and the Japanese like Akai and Aiwa.
-Youth are taking godrej as mom and pop brand ,at that time they thought that new enteries in
the market is any how much better to Godrej.
-Godrej is selling mainly Refrigerators since 1958 in electronics sector but the foreign players
introduced a front loading washing machine was launched in 2010 with an upward facing tilted drum
so that the user does not have to sit while loading or unloading clothes.
The Eon brand has been very successful, contributing 30 per cent of the company's total revenues, even
though it costs five to 30 per cent more than rival brands
While matching Godrej in the quality of their products, the new foreign players also employed
advertising blitzkriegs, attractive packaging and aggressive pricing strategies to push sales.
"At one point, Godrej's products were priced 15 per cent higher than similar products offered by foreign
players," Slowly, Godrej's market share began to fall.
3) Measures taken by the company to overcome the problems are mentioned below:
-LG first introduced in India in 1993, then sporting its original name, Lucky Goldstar - had been a failure.
But LG's second coming, in 1997, proved to be completely different. By 2000, Godrej refrigerators'
market share had fallen by half - to 13 per cent.
-. It introduced some innovative technologies like 'Penta Cool' in refrigerators - which provided cooling
from five sides, unlike others those days whose cooling came only from the back of the refrigerator - but
failed.
-- The company began selling air conditioners from 2004 and microwave ovens from 2005.
-'Penta Cool' it moved on to introduce the 'cool shower technology' in its high-end refrigerators that
took into account the Indian habit of overstuffing them.
- In 2010, it came up with a fully automatic front-loading washing machine with an upward facing tilted
drum so that the user does not have to sit down while loading or unloading the clothes being washed.
-Again, in 2006, it was the first to introduce an air conditioner, or AC, with a compressor that ran at
different speeds depending on room temperature, thereby reducing power consumption by about 30
per cent compared to other products, where compressors run at a single speed.
4) By adapting above mentioned measures Godrej regain its position in this way:
- To address the market better, Godrej Appliances also began differentiating its product offering,
providing different models for different socio economic groups. The high-end 'cool shower technology'
refrigerators were given the label Eon. For the mid-market segment Godrej launched the brands Edge
and Axis, while for the cost conscious mass market, it had Neo.
- , the same with its ACs, washing machines and microwave ovens.
-Despite the crowded consumer durables field, the strategy is working. From the nadir of 13 per cent
market share in refrigerators, Godrej has climbed to 17.2 per cent for the 12-month period.
- The Eon brand has been particularly successful, even though it costs five to 30 per cent more than
similar products of rival brands, and contributes roughly 30 per cent of the company's total revenues.
- Godrej's market share has jumped from six per cent in 2008 to 11 per cent.
- In ACs, Godrej's share is the fastest growing, having risen from 3.5 per cent in 2005 to seven per cent
now.
-, Godrej Appliances has posted a compound annual growth rate of 35 per cent, much higher than the
17 per cent growth rate of consumer durables industry.
- The pinnacle may still be some distance away, but the progress made is significant. Equally important,
Godrej Appliances’ average customer is now in the 25 to 35 age bracket.
