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

Group 5

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

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`1,500crore 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 to be 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

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 individuals called 'Euro champs' who projected the image of The friendly man from Eureka Forbes and cleaned up things in a jiffy or showed how air/water purifiers were indispensable.

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.

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

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

Direct Selling
Direct-Selling players bet BIG on marketing; Industry to reach 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 balanced growth in the country. Some players in Direct marketing are
Tupperware Amway Avon Beauty products

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 only in urban areas but also in rural areas Financial independence, development of personal and business skills, flexible timings Improved ability to take care of families

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

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.


Dividends Declared No Dividends were declared for the year 2011-12 Transferred to Reserves The Company transferred 42.5 million to general reserve and 578.24 million to appropriations account Operations The revenue from operations has been increased by 13% to 12,345 million from 10,958 million in the previous year and increase in net profit after tax has been 208% to 322 million from 105 million in the previous year Current year 2011-2012 Previous Year 2010-2011

Future plans
Eureka Forbes eyes 33% revenue from vacuum cleaners by 2014 Today, in the vacuum cleaning category Eureka Forbes has over 80 per cent market share and in water purification, 52 per cent The companys ambition is to duplicate in rural India what has been done in urban India, as we see a huge market there price and value equation remain a challenge. How you break down the price and what value is seen in your product are the key challenges. Institutional business will bring the second area of growth. The company already has a substantial business in cleaning trains and railway stations and sees air purification, security and home automation as growth areas of the future.