Direct Marketing by Eureka_Forbes

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Direct Marketing by Eureka ForbesEureka Forbes followed the globally 'tried and tested' direct selling route formarketing its products in India, thus becoming one of t ~ f { r r s t direct sellingcompanies in India. Vacuum cleaners and water purifiers w ~ r e r - i t ~ e r new conceptsfor Indian consumers, who had till then followed only the t r ~ d i t i : J h a l methods ofcleaning and filtering. Therefore, Eureka Forbes had tQ-first e s t a b l i ~ h the concept ofvacuum cleaners and water purifiers in India before i t ' ~ o u f d sell 'Eureka' as a brand.The company believed that its core strengthi was its people. It employed dynamic,highly motivated individuals, called 'Eurochainps,' who projected the image of 'Thefriendly man from Eureka Forbes.' T h u ~ , for the average Indian consumer, EurekaForbes became synonymous with the smartly dressed salesman who came to theirhouses and cleaned up things in a jiffY or showed how air/water purifiers wereindispensable. Eurochamps 'ioj_tial!y targeted the metros but soon began visitingsmaller cities and towns also-.:-'" --- Though the company p o s t e ~ p r o f i t ~ i n i t i a l l y , it suffered a setback in I 992-93, whenprofits declined by 50% Itt c o ~ p a r i s o n to the previous year. The following year, thecompany even h a s l ~ t o p o s ~ its :first-ever loss of Rs 42.5 million. However, graduallythe company's , ; ; ~ ? l : l q e t s \ * a i n e d acceptance in InJiau markets and company salespicked up. The compariy began advertising across various media primarily tofamiliarize its target segment, housewives, with its products and introduce it to itssales force. -@ 2005. ICFA! Center for Management Research All rights reserved No part of his publication may bereproduced, stored in a retrieval system. used in a spreadsheet, or transmitted in any form or by anymeans- electronic or mechanical, without permissionTo order copies. call +91-40-2343-0462163 or write to ICFAI Center for Management Research.Plot #49, Nagarjuna Hills, Hyderabad 500 082. India or email icmr@icfi!i.org Website:www. icmrindia.Orf: http://www. icmrindia.orgThis is an abridged version of the case "Eureka Forbes - The Direct Marketing Pioneer." Case Studiesare intended to be used as a basis for class discussion rather than to illustrate either effective orineffective handling of a management situation.


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11111 Direct Marketing by Eureka ForbesThese advertisements showed helpful salespersons who solved the problems ofhousewives. Television commercials typically featured models who appeared'friendly' and trustworthy. The company also used actors from popular Hindi TVserials, such as Nitish Bhardwaj and Amar Upadhyay, to enhance the friendly andtrustworthy image of its salespersons.The company's direct marketing thrust did not end with the conversion of orders intosales. Eureka Forbes started a customer care network that took care of after salesservices offered by the company. The company's c u s t q l ' < i t ~ t \ service networkcomprised over 400 CRC (Customer Response Centers), c o ~ ~ r 98 towns withmore than 4000 sales personnel working under it. T h e s e 4 ~ ~ ) o f W e d a plethora ofoptions to ils customers in order to enhance their satistiiC-tloifwiln):heir purchases.

' \The company believed that 'A relationship llOes n 6 ' t ~ ~ with a sale. It actually, I .begins.' Eureka Forbes gave a lot of i i n p o r t a n c , ~ to Customer RelationshipManagement (CRM) and tried to maintain high level of post-sale customer contact.As after-sales service formed a crucial elbrtent of its marketing mix, the company setup a 24 hour-365 day virtual call C!Olnter. Th'e call center's software built into ittracked a complaint back to the nearest sales office or franchisee on the basis of thecomplainant's telephone number of-rlN -'code. Updates were arranged at an interval ofevery 30 minutes. Over the y e a r s ~ ~ e n u m b e r of call centers was increased to six.

' ' - ~ ? .\,As a result of its focused . ~ ~ a c h ~ m d innovative products, the company was able torecord an o p e r a t i n ~ ) n ~ ~ & - o f > ~ s 1.59bn and a net profit of Rs 56mn in 1995-96. In

/ . ----- ' ~ 1997-98, t h e s e ~ m r e s ~ ~ f c h e d Rs 2.29bn and Rs I 04mn respectively. However,Eureka Forbes was not)satisfied with the growth of the vacuum cleaner market.Though many Indian W ~ u s e h o l d s bought vacuum cleaners, the product's usage wasvery limited. This was because many housewives found the product bulky andcumbersome to use in comparison to the broom and cloth duster that weretraditionally used. Moreover, since domestic help was easily available, the need forvacuum cleaners was not felt. Thus, not only was the penetration limited, productupgrades were also low due to the infrequent usage.

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To rejuvenate the vacuum cleaner market, Eureka Forbes changed its advertisingstrategy in November 1999. Instead of focusing on the 'friendly salesman' theme, thecompany released an advertisement campaign featuring a maidservant using thevacuum cleaner. This shift was made after examining certain facts about end usersand vacuum cleaners usage patterns in the Indian market. Marzin Shroff, VicePresident of Eureka Forbes' advertising agency, Triton Communications, said,"Market studies and research carried out by us in the past few years indicated thatowners of vacuum cleaners use the product very sparingly. A ~ o r i t y of the Indian

.., \consumers allow their servants to operate their washing m a c h ~ ~ b ~ t not the vacuumcleaner, hence the frequency of product usage is reduced c ~ i t e r ~ ~ Y ' The company also launched a consumer training drive-t9;S1lp{:rQh t h ~ new can1paign.

c,._ . ' '/Sales personnel trained domestic help r e g a r d ~ o ~ } a g ' e , ; a n d upkeep. Palekarsaid, "Our direct sales team keeps contact wiP( the consumers on an on-going basis.We intend to use this as an occasion to d e n \ o n s t r _ _ ~ ! t h e product to the householdhelp." The new campaign aimed at esta,b1ishinglhe fact that vacuum cleaners wereeasy to use and that even maidservants could be trusted with the product. Thecompany also publicized a pager rwmber, along with the advertisement so thatcustomers could request product demonstration and training by a sales person. EurekaForbes expected to register a2Q%_increase in sales volume from this Rs 15 million adcampaign.To boost its image of an e ~ : v i r o n m e n t - friendly and hygiene-oriented company, EurekaForbes e s t a b l i s h e d J . R e < E u ~ Forbes Institute of Environment.' This move was

>-- ., ------"aimed at s p r e a d ~ ~ ~ W a " e r y e s s about pollution and its effects, and the importance ofprotecting the envtl:Qrtm&nt. Through the institute, the cc.:>mpany undertook variousinitiatives for environrrtent protection, including daily measurement of air pollution in8 metropolitan cities. This was done in association with TV media company NDTV,and was aired through a weather bulletin on the satellite TV channel 'Star News.' Itwas also published on the websites www.ndtv.com, and www.webhealthcare.com.The company held free pollution control camps in 10 metropolitan cities on WorldEnvironment Day on June 5, 2000, in association with TV channel NationalGeographic and the United Nation's body UNICEF. In addition, the companyconducted lectures and cleanliness drives in various parts of the country.

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LllQJ Direct Marketing by Eureka ForbesAs a result of the above initiatives, Eureka Forbes built a customer base of2.5 millionby 1999 and recorded a turnover of Rs 3.08bn for 1999-2000. Besides the householdsegment, its client list included leading hotels such as The Taj, The Oberoi, TheHyatt, The Centaur, Four Seasons, Orchid International and Leela Kempenski; andcorporates such as Mahindra & Mahindra, TCS, Bajaj Auto, HPCL, Wipro Fluid, DuPont and Telco.Questions for Discussion:1. With changing market conditions, is the direct s e l l i ~ ~ t r a ~ still the right

strategy for a consumer electronics manufacturer like}31Jfek)a)fotl)es?2. Analyze the shift in the company's a d v e r t i s i n g ~ ~ m focusing on the

'friendly salesman' to the 'maidservant' in , ' --- ); ,3. How can Eureka Forbes benefit from ~ k Q _ c i a t i n , - w i t h various environmental

protection activities? ' - ~ ' Additional Readings and References: --

1. Dubey, Chandan. " E u r e k a F o r h ~ s _:.. New M ~ i d to Order Strategy for EuroClean." The Financial Express. 23, November, I 999.

2. Bhushan, Ratna. "Direct Selling Poised for Rapid Growth." www.blonnet.com.22, March, 2000.

3. "New Vacuunr Cl'e&ner'1from Eureka Forbes." www.business-standard.com.April, 2 0 ~ J . \)4. Mehta, Mona. "ompact Vacuum Cleaner: Eureka Forbes Plans Aggressive

F .Sales Strategy." www.fmanctalexpress.com. 22, June, 2001.5. Dua, AartL "Double Departure at Eureka Forbes." Business Standard.

01, May, 1999.6. "Eureka Forbes First-Half Net Profit Rises to Rs 8.10 cr." www.business

standard.com. 03, December, 1997.7. "Eureka Forbes PBT at Rs 21.48 crore." www.expressindia.com.

24, June, 1998.

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8. Sen, Shunu. "Networks Can Work for Consumer and Personal Goods."www.blonnet.com. 04, January, 2001.9. Sen, Shunu. "Brands That Don't Shout to be Heard." www.blonnet.com.20, June, 2002.

I0. Zachariah, Reeba. "Brand Rights Hold Up Deal on Eureka Forbes." BusinessStandard. 22, July, 2002.

II . www.eurekaforbes.com12. www.webhealthcenter.com

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Direct Marketing by Eureka_Forbes