New Delhi: The consumer electronics and appliances division of Godrej and Boyce Manufacturing Co. Ltd is developing a water purifier for the rural markets, following in the footsteps of the Tata group and Hindustan Unilever Ltd (HUL).
As part of the push into areas outside India’s towns and cities, the company also intends to sell solar-powered products and other appliances. One of these is ChotuKool, a Rs3,200 refrigerator that’s being tested in Maharashtra.
“We are currently working on several product categories, including water purifiers and solar lanterns,” George Menezes, chief operating officer, Godrej Appliances, told Mint. “The company is aiming for a unique position in all products, including premium, mid-end and really affordable, in terms of pricing and features.”
New challenge: Godrej Appliances’ George Menezes says the firm is aiming for a unique position in all products in terms of pricing and features. Abhijit Bhatlekar / Mint
Godrej, which launched UV (ultra violet) water purifiers for the urban market priced at Rs6,500 last year, will use different technology for its rural product.
It “may not require after-sales service for the entire lifetime”, said Kamal Nandi, vice-president, sales and marketing, Godrej Appliances, without elaborating on the technology to be used. As for the price, he said: “If we are selling a refrigerator for about Rs3,000, that’s the kind of value-for-money approach we would take for other products as well.”
The total water purifier market size is currently estimated at Rs1,500 crore, according to Pricewaterhouse Coopers (PwC).
“The size of the rural market is still unknown but definitely the potential is huge which is why big companies such as HUL and Tata Chemicals Ltd have entered the segment,” said P. Rashmi Upadhya, managing consultant, strategy and practice, PwC.
Tata Chemicals, the latest entrant, has launched a water purifier, Tata Swach, starting at Rs749, joining HUL’s Pureit. The two companies are using chemical purification technology, which is cheap, unlike reverse osmosis (RO) or the UV technology being used by players such as Eureka Forbes,Kent RO System Pvt. Ltd and Whirlpool India Ltd.
Experts are of the view that for any durables company to be successful in rural areas, it needs to have the pricing strategy, network and after-sales service in place.
“Before we start rolling out, we need to get the distribution channel right,” Menezes said.
For instance, the refrigerator to be launched in villages nationally next year, will not be sold through the company’s existing dealer network.
The product will be sold “through the rural channel we are setting up by involving NGOs, microfinance companies and community workers”, Menezes said. “The new channel will help us sell other durables developed for rural consumers.”
Another critical issue which the companies would need to deal with is acceptability and product preference.
“It is difficult for consumers living in remote villages to understand the need and accept such products,” said Rajesh Shukla, senior fellow, at the National Council of Applied Economic Research, or NCAER. Also, the television set takes first preference when it comes to choice of appliance, he said.
Still, this also allows companies to make people aware of other products, given that the penetration level of TV is about 30% in Indian villages, reaching about 200 million people, who “could be prospective buyers for other consumer durables items”, Shukla said.
Another hurdle to be overcome is the expectation of rural consumers for some kind of subsidy on solar-powered devices and water purifiers, said Pradeep Lokhande, founder of Pune-based rural marketing agency Rural Relations. He, too, backed the view that after-sales service and selecting the right distribution model was key to breaking into any rural market across India.
The appliances division of Godrej is growing at more than 20% with an estimated turnover of Rs1,400 crore for the current fiscal.