1. Grayson Wise, Ali Frank, Mitchell Kim
EnviroFit
Case Study
Grayson Wise, Ali Frank,
Mitchell Kim
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2. Qualitative Analysis Customer Value Proposition Go-To-Market Plan
Focused on attacking the problem of indoor air pollution (IAP) on health
500,000 deaths per year
92% of poorest quintile in India used biomass fuel for cooking
160,000,000 potential customers -- viable market
Low customer switching cost
No change to culturally ingrained cooking habits
Target market is mostly unaware of the problem with IAP on health/environment
Necessary to educate consumers on effects of IAPs, and hope they also see it as a problem worth spending money to fix
This is risky; hard to predict how customers will react
Lightweight, low-cost, high performance stove
Had a huge benefit in BoP areas where improving quality of life at a low cost was hard to find
Go-To-Market Plan
Consumer awareness surrounding IAP was nonexistent; had to raise awareness in order to make the products seem useful and beneficial to the residents
Had insight into why their product wasn’t working and how they could adjust to impact
Receptive to customer feedback/response
Developed product videos for each regions that they targeted for each region because the customers were different
Focused marketing on the women, as they were the ones cooking
Found an innovative solution
This proved challenging as men did not see the need to purchase a new stove
The videos were educating people, but not driving sales
This needs to be looked into and reformed, as they currently are costing Envirofit money without driving any revenue
Technology & Operations Management
Patented techology inside the cookstove
Reduced fuel used by 50%
Shell Foundation pilot project found that people needed consistent performance and high fuel efficiency to switch to a new stove
Hard to achieve large scale production due to “inconsistencies in cookstove quality”
Centralized production for now to acquire users
Local production as a goal in the future
Using the information gathered by the pilots, Envirofit built a cookstove with the necessary improvements to gain customers
Cut emissions by 80%, doubled fuel efficiency, reduced cooking time
Switched production to China
High quality, cheap price- smart way to produce a quality good economically efficiently
“Revolutionary design”- increased fuel efficiency and reduced cooking time
Developed patented alloy in chamber that made the cookstoves inexpensive and durable with great performance
Profit Formula
Target customer (BoP) earns $2-$7 a day
Cookstove prices reflect their target -- low cost
Shell Foundation tried strictly NGO’s/non-profits which proved to be limited and relatively unfruitful; found that market driven approach was significantly more effective and profitable
Economically stable and sustainable
Eventually became entirely market driven
Highly price sensitive
Competitor priced product too high and lost a potentially viable share of the market
Envirofit’s cost structure is increasing- important to be careful in this segment of their strategy to not to push the boundary of overly expensive and worthless to the customer
Customers have little money to begin with, altering the price can have huge impacts

3. Quantitative Analysis
Based off of the financial analysis from the past three years (left), conducted the rough sensitivity analysis (right) with estimated regular price growth, with and without the cell phone marketing (12USD / unit) and with First Energy’s increase in price (50% decrease in sale estimated, and thus the operational costs that mostly depend on importing & marketing costs). First Energy sales seems to be a bit over-estimated, and it is clear that with the estimated, regular price increase, Envirofit cannot afford the cost of free cell phone marketing.

4. Recommendation
Envirofit has a superior product and a viable market in which to sell, now they need to refocus their marketing to work as well as possible
Marketing Videos
Great idea to make different videos for different regions - language/culture barriers are significant in India and this is a great way to overcome that
Focusing on the health improvements for the women makes sense, but it isn’t driving sales
If men control the money, advertising needs to be directed toward them and their potential benefits
Envirofit cooktop is more fuel efficient, so one purchase now saves money in the long-run
Other benefits
The five-year warranty helps alleviate the uncertainty behind buying a new product
Use network of salespeople as customer service as they travel
Installing cookstoves and explaining how to use them
Educating people who haven’t bought on the benefits
Focus more on direct-to-consumer sales
Retail stores do not seem interested in pushing the cooktop to their customers
It is not smart to continue the relationship
Introduce a “brand ambassador” program
Have current customers reach out to other potential customers in exchange for rewards
Keep prices low, don’t repeat the mistakes of First Energy
Competitor priced themselves out of the market by raising their price from Rs. 675 to Rs. 1500
Clear decrease in their sales after this spike in prices
Current price for Envirofit cookstove - Rs. 691
Up from Rs. 486 in last two years, a 42% increase
At this rate they will be over Rs. 1,000 in two years
This is a dangerous trend, and they need to take steps to prevent a further increase to their prices