In 1922, Godrej – the makers of the world’s first vegetable oil soap Chavi, amidst the Swadeshi fervor, introduced Godrej No. 1. This breakthrough by Godrej, given that the European soaps were generally made of animal fat against the principles of non-violence & vegetarianism in India, received endorsements by the likes of Rabindranath Tagore, Annie Besant, and C. Rajagopalachari.
This was amongst the first of many brushes with success for Godrej in the fast-moving consumer goods space, having struck a chord with the masses. GCPL ranks first in household insecticides in India and Indonesia and currently expanding its footprint in Africa. It is the number one player in hair color products in India and Sub-Saharan Africa and among the leading players in Latin America. Godrej stands second in air fresheners, soaps, and liquid detergents in India, and first in air fresheners and wet wipes in Indonesia, according to their annual report 2020-21.
The FMCG industry has witnessed myriads of disruption on the back of innovative products from the house of Godrej. Few examples – Good Knight Fast Card (the first 1 rupee insecticide product), Godrej Expert Rich Crème (first hair color crème in a sachet in India), or Aer Pocket (First paper-based gel bathroom air freshener), Goodknight Fabric Roll-On (first fabric dot-based insect repellent), Godrej Protekt Magic (first powder to liquid handwash), Hit Anti Roach Gel (innovative gel solution to destroy roach nest).
Such innovative products have resulted from the design-led thinking at the heart of GCPL’s brand strategy. Started by Nisaba Godrej, the design-led thinking of the combined entity was given a structure, known as ‘RIDE’ – Research & Development, Innovation, Design, and Expertise – where all teams come together, bringing in new perspectives to product formulations, packaging, and marketing communication.
The company has refashioned its approach by accelerating its innovation pipeline, ramping up internal capabilities, investing significantly in R&D and sharing learning across geographies to create more exciting products.Former MD, Vivek Gambhir
Innovation Strategy of Godrej
In an interview in 2014, Nisaba Godrej, who oversees innovation strategy, stated that Godrej spends up to 1% of sales on R&D. GCPL’s Innovation is a two-pronged approach: in-house and collaboration based. The former cashes in on the in-house expertise and know-how. At the same time, the latter capitalizes on external tried-and-tested technologies, which, when married to GCPL’s scale, reach, and equity, deliver trailblazing yet relevant products to value-seeking consumers.
The key highlight and, in some cases, the foundation of these product innovations is the unconventional targeting of the bottom and middle sections of the economic (and quite often social) pyramid, attempting to give them a taste of premiumization at affordable rates.
Frugal innovation focuses on delivering more value at lower costs to more people. It is about adopting a mindset of simplicity and meager cost without compromising the quality of the user experience, stripping away the extras, and delivering simple, hardy, and less resource-intensive products of good quality.
While innovation has traditionally meant the development of new products with more advanced features at premium prices, in emerging markets, for products to appeal to the millions who don’t have millions, companies have begun realizing the need of mastering the art of frugal innovation.
For Godrej, the hair color industry pioneers, the ideology of constantly innovating and making hair color with care accessible to the masses proved to be a recipe for renewed success. The portfolio has seen experiments with new formats and packaging for years and GCPL struck gold.
In 2012, India saw its first crème hair color launched in convenient pre-measured sachets, making hair coloring extraordinarily suitable. The disruptive pricing made upgrading almost irresistible, forcing competitors to play catchup with their offerings.
Take the example of another dominant space for GCPL, the Rs 3600 crore- household insecticide category. Around 56% population of the country (the figure as high as 70% in rural India) does not use mosquito repellent. Godrej identified consumers’ need to move away from the coil format and understood the hindrance of high pricing of non-coil designs and an insufficient supply of electricity.
Hence GCPL introduced the Good knight Fast Card in 2018. A paper-based mosquito repellent for Re 1 that does not require electricity, the strip burns for three minutes and keeps away mosquitoes for four hours. Looking back, this innovation seemed to have been hiding in plain sight.
Godrej- Continuing product diversification to solve real problems
An inspiration from its Indonesia business, the product was substantially modified for the Indian market giving birth to one of the fastest-growing products for the company.
An instant hit across rural areas where power supply is erratic and inadequate; the innovation was a step in the right direction away from the mosquito repellent coils. Hence, it sold like hotcakes and touched a Rs 100-crore turnover in less than a year.
The focus on innovation helped Godrej soar in its core categories and discover its footing in adjacencies, thereby broadening its portfolio and driving additional sales. Case in point, the air care category. Did you know that GCPL was selling Ambi Pur through a joint venture with US-based Sara Lee?
However, they exited in 2010 when Sara Lee sold its personal care business to Procter & Gamble, bringing the 15-year-old partnership to an end. Cut to 2012, Godrej announced its re-entry into the air care category with a new brand, ‘aer.’
This was their independent foray into the Rs. 300-crore category which ironically, they had been instrumental in developing for the past decade and a half. This lifestyle category was then growing by 20%. The launch of Godrej Aer funnily involved Nisaba Godrej clarifying at press conferences that it wasn’t a spelling mistake.
Little did the competitors know that GCPL aimed at spelling out a revolution in the air freshener category – home, car, bathroom. The brand promised contemporary design, an on/off feature, and gel technology at the core of the products. The category was mainly restricted to block and room freshener spray formats.
The innovation was combined with a focus on experiential marketing. The idea was to spread fragrance via print and awaken a fragrance brand’s sense of smell. Perusing the Bombay Times on September 18, 2012, the readers experienced a pleasant aroma. The front page in The Times of India led the reader with a slug stating, ‘Fresh news and fresh aer in Bombay Times today. Check it out. The fragrance effect in the supplement was created through a fragrance spray technique at The Times of India Press, while Godrej provided the fragrance mix of the brand essence. Other such features followed this in print in the rest of the metros.
In 2016, Godrej aer pocket was launched to redefine bathroom fragrances with power gel technology in a paper-based format and propagated it with the tagline, Happy Bathrooms! As reported by BusinessWire in 2020, overall, the bathroom segment had grown historically at a CAGR of over 9%. In the car freshener category, the Godrej Aer click and then Aer twist launched in 2017 overtook incumbents’ market leadership in no time.
All in all, the innovative click, twist, and spray formats coupled with slim-gel, clever gel technologies distinguished Aer on the lines of design and fragrance and put GCPL in the first spot in air freshener products in India and Indonesia. Currently, the air freshener industry in India is estimated at Rs 1,200 crores, and GCPL succeeded in commanding more than 50% market share in this segment by 2020, according to their 2019-20 annual report. As of 2020, air fresheners were amongst the fastest-growing products in GCPL’s portfolio at 35% CAGR.
An anecdote here from my B-school days might add to the point I am trying to make. Godrej Aer came up during a pre-placement talk, as did its clever gel technology. I still remember the speaker saying, “How hard is it to imagine a spill-proof solution for a drive on Indian roads?” There it was again, in plain sight.
Staying true to its principle of constantly innovating, the latest addition to the portfolio is Godrej aer smart-matic – India’s first-ever mobile-enabled fragrance diffuser. The device is Bluetooth-enabled and can be controlled via a mobile app available for Android and iOS. With this feature, the consumer can adjust spraying schedules and get timely notifications about refill and battery replacements.
Yet again, hand wash was not a GCPL dominated category. The category was still finding its feet due to its perception of being expensive, keeping it out of reach, or considering many households.
An innovation that managed to break this barrier and take the category by storm was Protekt Mr. Magic, the first-ever powder to liquid handwash. Its disruptive pricing of Rs 15 (for refill), one-third the cost of existing liquid handwash refills, aimed to nudge the Indian households across segments and geographies to adopt this innovative format. The handwash market in India was pegged at Rs 740 crore in 2018, with a CAGR of 15 percent. So, the market was wide open and the opportunity lucrative.
Interestingly, the COVID wave significantly commoditized the category of handwashes. The penetration of hand washes went up to 32.9% during January-September in 2020 from 11.9% a year ago. Even with the dynamics shifting tremendously, leaving little to no differentiation among competitors, Mr. Magic still manages to stand out in its format as well as pricing.
Godrej: Building a Culture of Innovation
As has been sufficiently established and displayed from the various examples so far, the culture of Innovation at GCPL has shown itself up repeatedly and been able to generate brand equity constantly. The 124-year “young” Godrej group has done this by developing several internal initiatives and physical spaces over the years, such as their Innovation Centre, The Hubble, the Global Design Lab, and Godrej India Culture Lab. The element of innovation in culture does not cease to exist outside of GCPL but extends to other arms of the Group’s businesses and has done wonders over the years.
As a resounding testament to the communication leg of innovation, the following corporate video can summarize Godrej’s commitment towards this element of their culture. At the risk of beating the word “innovative” to death here, allow me to sign off by giving you the address of the “wonderland” where all this magic seems to happen, albeit in an unconventional fashion.