prahalad effect_1st round

8/8/2019 Prahalad Effect_1st Round

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Copyrights Reserved by NEEV 2010 Symbiosis Centre for Management & HRD

Prahalad Effect Page 2

Kata Technologies Limited (KTL) is one of

the leading players in the agribusiness

sector. The companys portfolio includescrop nutrition and consumer products like

Salt and its customer base is spread across

five continents.

Exactly one year ago,

AnirbanShukla, MD of the KTL was

watching news on TV and was shocked to

know that waterborne diseases are the single

greatest threat to the global health.

Contaminated Water is the main cause of

diseases like typhoid, cholera,diarrhea,

jaundice and gastroenteritis. United Nations

report (2007)says that half of the worlds

hospital beds are occupied by the patients

suffering from waterborne diseases. In India,waterborne diseases cause more than 1.5

times the deaths caused by the AIDS and 2

times the deaths caused by road accidents.

The Prahalad Effect


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After reading this,AnirbanShuklastarted

thinking that the primary reason for these

diseases is contaminated water, nowwhat if

we provide pure water to the people? The

problem will be solved. But when he

pondered on this issue for some time he

realized that the solution is not as simple as

it seems.

Government is doing their part to prevent

water borne diseases by spending heavily on

water purification and sewage treatment. But

this has been insufficient considering that

70% of Indian population lives in rural areas

and most of the government funds are being

utilized in the urban India. AnirbanShukla

thoughtthe best way to solve this problem

is if all the households of India use water

purifier. He decided to take up this issue

with his management in KTL.

The very next day at 90 clock in the

morning, AnirbanShukla reached his office

and called his management team for a

meeting at 110 clock. AnirbanShukla

started briefing his management team about

the issue which had kept him awake the

whole night. After the brief he asked his

team comprising of R&D manager,

Marketing Manager, Sales Director what if

KTL launches a water purifier? Hegave his

team a weeks time to come up with the

water purifier industry analysis.After a week

the meeting was again called by

AnirbanShukla to discuss on the findings.

Management team of KTL came up with

the following facts:

Total market for water purifiers in India is

valued at INR 9 bn in 2009.

There are both organized and unorganized

players in Water purifier sector and the

Water Purifier Industry

Water Purifiers Industry is growing at40% per annum.

Penetration level of purifiers in India asa whole still stands at less than 1

percent, with penetration in Tier I citybeing close to 35 percent, and in Tier II

cities at only 11 percent.


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contribution of unorganized sector in overall

business is estimated to be 45%

Organized players involve Pureka Korbes,

Dent, Tillips, Ruminous, Swirlpool and

BharatFever.

Penetration level of purifiers in India as a

whole still stands at less than 1 percent, with

penetration in Tier I city being close to 35

percent, and in Tier II cities at only 11

percent.

The highest penetration level recorded in

Delhi, where the figures stand at 25 percent,

when we look at the other parts of the

country penetration level of the water

purifier is 0.42 percent in Bihar, and less

than 5 percent for Gujarat, Tamil Nadu,

Punjab and Karnataka.

There are several kinds of purifiers in the

market. Most popular types are RO (reverse

osmosis), and UV (ultraviolet) based.

Besides these, there are simple candle filter

purifiers, softener plants, and distill water

plants (used for commercial purposes alone).

Pureka Korbes is the leader in UV categoryof water purifiers with 68% market share. In

the reverse osmosis segment, Pureka

Korbes is again the major player with 60%

share. A major portion of the remaining 40%

belongs to Dent reverse osmosis Systems.

Organized players usually sell their branded

UV purifiers between Rs 7,500 and Rs

10,000, while unorganized players sell the

same for anything between Rs 5,000 and Rs

7,500, and the Chinese UV purifiers are

priced between Rs 3,500 and Rs 4,500. As

far as RO purifiers are concerned, the

Chinese ones are at the lowest rung again,

selling at anything between Rs 5,500 and Rs

7,500. Unbranded good quality RO products

are sold between Rs 9,000 and Rs 12,000,

while branded RO purifiers range between

Rs 12,000 and Rs 18,000.

Indian market has tremendous potential

which is evident from the fact that global

majors such as Tillips and Bharat Fever

have stepped in and are looking to increase

their share of the market.

After going through the above facts

AnirbanShukla and his team were of the

view that penetration of water purifiers in

India is very low primarily because of the

price at which these water purifiers are

available. They came to the consensus that if

we can come up with a water purifier which

is very less in price and is efficient in water

purification then it can help us penetrate into

the Indian market. Anirban Shukla and his

The Big Plan


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team seeing the huge opportunity in water

purification segment started working on

developing a purifier which would meet

their criteria of lesser price and efficient

purification of water.

After six months of hard work Kata

Technologies embarked upon the journey

and unveiled Kata Shudh, the

nanotechnology water purifier, in December

2009, in two variants with retail prices of Rs

749 and Rs 999, respectively.

The technology was based on low-cost

natural ingredients like rice, husk, and ash,

and uses Nano technology to make it

efficient. It required no energy or running

water to operate. Based on low-cost natural

ingredients, it was a replaceable filter-based

product, which delivered safe drinking water

at a new market benchmark price of Rs30

per month for a family of five. The price

was less than half the cost of Cureit, a

purifier produced by Bharat Fever,

apparently the best machine of the lot.

Kata Shudh has a 9.5-liter capacity and can

filter 3,000 liters until the cartridge has to be

replaced. The Kata Shudh bulb (cartridge),

which shuts off water supply after its useful

life, is priced at Rs299 and is good to purify

3,000 liters. The product development has

resulted in 14 patents being filed by the

company. Kata Group already has set up a

plant in Haldia, in West Bengal, with a

capacity of 1 million units of Shudh. This

capacity will be increased by another 1

million units within 3 months.

Anirban Shukla thinks that this product will

enable KTL to penetrate into the rural

market of India and his initiative will help

India to reach the dizzy height of progress

which has been envisioned.

However, nearly a year has passed since

Kata Shudhs launch, although the product

has had a successful run in Maharashtra,

Karnataka and Northern India. Its eminent

runaway success as was imagined by all its

The Challenge


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creators had not taken place. There were

some hurdles that were being faced by KTL,

A: The rural market was made of the

following kinds of segments:

1: Purani Soch Junta: One that thought

that the conventional water purifier

substitutes of Alum and boiling water is the

best form of purification that can happen

and hence the water purifiers are a waste and

should not be purchased.

2: Bhool Chuk Junta: One that thought that

we have not been affected by any kind of

water-borne diseases, hence there is no use

of buying it.

3: Darpok Junta: One that thought that

water purifiers even if bought cannot be

bought from a village centre because then

quality will be doubtful also the machine if

bought will be difficult to service and will

cost them. Hence better not buy it.

It was very difficult in targeting the proper

audience. KTL needed a solution by which it

could convince consumers to use KATA

Shudh.

B: The market leader Pureka Korbes,to

counter the price point advantage of KTL

had initiated a marketing campaign that only

those technologies which are visible through

normal eyes can be believed Jo Dikhta Hai

Wohi Sach Hai, which was a total negative

campaign against KTL as it was using Nano

technology for water purification,

purification process was invisible to human

vision.

A solution for this marketing tactic was

needed desperately.

C:Anirban Shukla had estimated a sale of 30

lakh water purifier machines by the end of

the year and had scaled the total factory

capacity to such an extent. The existing

distribution system of agro-products and

consumer goods was by no means capable

reaching the rural consumers to this scale.

Moreover the existing system was totally

unprepared to act as a channel for such a

product. An altogether new distribution

system needed to be envisioned for this

purpose, keeping in mind the reach of the

competitor like Bharat Fever.

Besides these problems, the current market

scenario in water purifier is as follows:

Kata Shudh is now available in variants of

18, 15 and 7 liters storage capacity.KTL has

further breached the price point and

launched variants of Kata Shudh starting

from Rs499. This new variant comes with


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the patented Kata Shudh bulb and thus

carries the same performance guarantee.

On the pricing front, Shudh costs far less

than rivals Bharat Fever's Cureit and Pureka

Korbes' Quasure, which cost Rs 2,000 and

Rs 1,950, respectively. Interestingly,

Cureit's battery or its chlorine-discharger kit

lasts for 1,500 liters, after which it needs to

be replaced. This battery kit costs Rs 365.

The Quasure cartridge is priced at Rs 400.

Shudh's replaceable cartridge lasts longer,

KTL claims, and costs Rs 299.However one

of the competitors, Dent has also responded

to the challenge by launching its own two

variants of non-electrical water purifiers

Dent Bold Optima and Dent Bold Plus

priced at Rs 2,600 and Rs 1,500

respectively.

To counter these problems AnirbanShukla

has recruited you as one of the new MTs in

the company and you have been specifically

been assigned to this project. Anirban

Shukla now wants you to present to him the

solutions of the above questions along with

a proper road map of what needs to be done

in terms of the 4As

Of rural marketing such that KTL is able to

penetrate the rural market and achieve its

targeted sales of 30 lakh units in next five

years.

Marketing mix is such an element in rural

market which gives the sense to think of

marketing activities.

This 4Amodel is similar to the 4P model of

marketingmix, the difference it shows is

main streamline and Rural Market. 4A

perceived to be more customer oriented. The

4A's are Affordability, Availability,Awareness,

and Acceptability.


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Appendix

Appendix 1: Penetration of Water Purifiers

Appendix 2: Market Scenario

55%

45%

Market Scenario

Organized Sector

Unorganized Sector

Whole of India

Tier I cities

Tier II cities

1%

35%

11%

Penetration of Water Purifiers


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Appendix 3: Figure indication of working of Kata Shudh:

Appendix 4: Water Sample Before and After Water Filtering


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The name of the participants, college name etc. should be mentioned only on the coverpage and nowhere else in the entire document. Failure to adhere to this clause will result

in automatic disqualification.

The shortlisted teams will be invited on campus for subsequent rounds

For any queries regarding the case write to us [email protected]

Or Contact:

Ajay Kasana +91-9595058764

AdishAnanthakrishnan +91-9833033694
mailto:[email protected]:[email protected]:[email protected]:Ajay%[email protected]:Adish%[email protected]:Adish%[email protected]:Ajay%[email protected]:[email protected]

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