efl, a case study in direct marketing
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EFL(a case study in Direct Marketing approach and Related Strategies)
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Overview of the Company
Eureka Forbes was formed from a joint venture between
The Shapoorji Pallonji Groups Forbes & Company Ltd based in
Mumbai and
Electrolux of Sweden in the year 1982
Marzin Shroff, CEO - Direct Sales and Vice-President -
Marketing
EFL is now a 250million USD consumer durable company with
products ranging from Vacuum Cleaners to water purifiers and is
Asias largest direct sales company
by Brand equity
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Eureka Forbes had introduced the direct-selling concept in India
and has a lion's share of 52 per cent market share in the Rs`1,500-
crore water purifier segment, with its Aquaguard and Aqua Sure
brands.
The company believes in creating a market for products which do
not sell through dealers, especially vacuum cleaners, which need tobe demonstrated to consumers.
In 2002 the company had 84% market share in the Vacuum Cleaning
segment with some of the competitors like LG, BPL and Philips
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Synopsis
EFL adopted the direct selling route for marketing its products such
as Vacuum cleaners and water purifiers which were rather new
concepts for Indian consumers
The company employed dynamic, highly motivated individualscalled 'Euro champs' who projected the image ofThe friendly man
from Eureka Forbes and cleaned up things in a jiffy or showed how
air/water purifiers were indispensable.
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contd
The company started scaling its operations through direct selling by fixing
the quota for its euro champs and giving appropriate rewards on the basis
of sales
However the CEO realised that euro champs are going through the
motions very mechanically and focused more on closing the sale.
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To overcome this practice he introduced a new practise of not rewarding the
Euro champs solely on sales volume but to award points on various aspects
right from demo to closing the sale
However, it had challenges:
The time took to fill out all the forms was too much
It ate two to three hours of supervisors time in reporting
Senior managers worried that it might reward low performers
Other managers felt a risk in self reporting
Differences between the first generation euro champs and second
generation euro champs
The CEO wanted its people to focus more on customer retention and
customer referrals. Moreover the CEO wanted to emphasis on how rather
than how much
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What should the company do??
Should the company continue to focus on direct marketing as
its sole marketing effort or the company should adopt for
other marketing strategies like:
Appointing dealers
Indirect Marketing Methods
Promotions,
Displays, and Billboards
Appointing channel partners
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Direct Selling
Direct-Selling players bet BIG on marketing; Industry toreach Rs 10,844 crore by 2015
USP of low investments and high returns direct selling
will be a great equalizer and a key driver of balancedgrowth in the country.
Some players in Direct marketing are
TupperwareAmway
Avon Beauty products
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Benefits of Direct Selling
Direct selling offers self-employment opportunities to a
large number of people, especially women
DS is expected to offer employment opportunities not onlyin urban areas but also in rural areas
Financial independence, development of personal and
business skills, flexible timings
Improved ability to take care of families
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Challenges in direct selling
With 75 millions knocks per year the
company has managed well to irritate a
large urban population
Biggest threat Fraud Companies
Increasing competition
Government intervention in this regard
is immediately required
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What company did as part of market building
exercise
The company took different marketing strategies, Some of the
most common strategies companies adopted was promotions
other which the company can adopt are :
Online marketing
Social media
Dealers Channel
The company opened dealer network to boost its sales
The company also focus on retail segment and diversify its
product line.
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Dividends Declared
No Dividends were declared for the year 2011-12
Transferred to Reserves
The Company transferred 42.5 million to general reserve and 578.24million to appropriations account
Operations
The revenue from operations has been increased by 13% to 12,345million from 10,958 million in the previous year and increase in netprofit after tax has been 208% to 322 million from 105 million in theprevious year
Current year 2011-2012
Previous Year 2010-2011
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Future plans
Eureka Forbes eyes 33% revenue from vacuum cleaners by 2014
Today, in the vacuum cleaning category Eureka Forbes has over 80 percent market share and in water purification, 52 per cent
The companys ambition is to duplicate in rural India what has been donein urban India, as we see a huge market there
price and value equation remain a challenge. How you break down theprice and what value is seen in your product are the key challenges.
Institutional business will bring the second area of growth. The companyalready has a substantial business in cleaning trains and railway stationsand sees air purification, security and home automation as growth areasof the future.
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