EFL, A Case Study in Direct Marketing

7/29/2019 EFL, A Case Study in Direct Marketing

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EFL(a case study in Direct Marketing approach and Related Strategies)

Group 5

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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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EFL, A Case Study in Direct Marketing

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