Union Bank School Of Management

MEP-4 Marketing Management

A Case Study on

Eureka Forbes

Presented By

R K Mittal S Baiju V B Sahay

Table of contents

1 Overview of Company

2 Industry Analysis

3 Environment Analysis (PEST)

4 SWOT analysis

5 4’P

6 Competitor Analysis

7 Marketing Strategy

8 Gap Analysis

9 New Initiatives

10 Facts of the case

11 Recommendations

11 Bibliography

Eureka Forbes Limited – A Case study

1. Overview of the co mpany : Eureka Forbes Limited (EFL) started with joint venture between Forbes (India) and Electrolux (Sweden) by introducing water purifier (aqua guard) and vacuum cleaner (Euro clean) in the market. They were the first to innovate and make the

Indian homes realize the need of water purifiers and vacuum cleaners. The company offers water purification systems, vacuum cleaners, air purifiers, security solutions including home security systems, intrusion alarm systems, access control systems, fire alarm systems and surveillance systems. In addition, it offers industrial solutions such as industrial water purifiers, commercial and industrial vacuum cleaners, hard floor cleaning and maintenance machines, high pressure cleaners, cleaning and hygiene products.

Rs.12 billion multi product, multi channel corporation – Part of the Shapoorji Pallonji group inception in 1982

Over 7000 sales men-called eurochamps Largest network catering to the need of 131 cities, 398 towns across the country 10000 strong dealer sales network and 58 distributors strong industrial sales

network. Pioneer in Direct Selling –Asia’s largest direct sales organization A strong service network that backs up sales efforts, supported by call centre,

customer care representatives, mobile service vans and 24 hours helpline to the customers –Euro helpline

They are in close and constant touch with their customers, listening to them and understanding their needs. They have created exiting new products and services to satisfy customers’ needs.

A sale is only the beginning of the relationship—They make a special effort to let the bond of friendship endure through service, post purchase training and a host of other customer care incentives.

Concept of Direct Selling

It is observed that more than 80% of the diseases in India are water related made people conscious of its quality. In India, in every 20 seconds, a person dies of water borne diseases. However for most Indians, the accepted way to purify water was to boil it.

Health is wealth was the advertising message at the first launch of aqua guard. The primary objective of initial communication was to introduce the EFL’s salesman called Eurochamp to its target audience –home maker-and persuade them to accept the concept of direct selling. After establishment of concept, they began to propagate the importance of drinking water in improving the quality of life. Its “Celebrate Water” strategy laid the foundation of aqua guard. Eurochamps were positioned more as solution provider than as sales persons –as friends who come to house and demonstrated the impurities of water.

Target audience: Primary

Main target has been families with young children who are most prone to water borne disease.

Only 1% of rural population has access to purified potable water, whereas 68% of population lives in villages. So people living in rural areas are also main audience.

Hospital, clinics, Govt. and non-Govt. bodies and health care agencies Industries which use mineral water in manufacturing their goods

Secondary target audience:

Small children basically infants, teenagers who are immature and incapable to have direct purchase

People going to hospitals, clinics, Govt. and non Govt. bodies and health care agencies

EFL – Friends to society:

Aqua guard water right child bright program for educating the school students on healthy living and building an army of young Aqua Ambassadors to spread the message of water conservation.

Established an institute of environment in 2000 to promote awareness about managing our natural water and air resources. First to have daily pollution data telecast on NDTV.

Set up of various recreational parks for senior citizens Installing free water purification systems in time of calamities e.g. Bhuj earthquake

in 2001, Mumbai floods in 2005, Tsunami in Tamilnadu in 2005 Free pollution under control ( PUC) camps at petrol pump all over India Awareness program and seminars on water borne and respiratory disease.

Awards:

The Frost & Sullivan Environment Excellence Award 2010 – Best company of the year award in Residential Point of Use ( POUs) treatment systems in India and with customer service leadership award

UNESCO Water Digest Award 2009-10 – Continuous three times as the best complete domestic water solutions providers

Super brand –Aqua guard 2009-10 --- Third time in a row Super brand Euroclean –2009-10 – Second time in a row Winner of Most Admired Knowledge Enterprises ( MAKE) Asia award

Holds the distinction of being a case study at the prestigious Harvard Business School.

Industry Analysis :

At the time of launch in 1982 there was no player in the market for purifiers and cleaners. The product with which company entered into the Market i.e. water purifier and vacuum cleaner were completely new for Indian market.

As the products were completely new for the market. Therefore company gained 100% market share initially. Effect of this can also been seen as Aquaguard has become synonyms for water purifier like Xerox, Dalda, Surf etc.

People were not aware of these products therefore company created the need for the product and made people aware of benefits of Water Purifier and Vacuum Cleaner and how they are useful in day-to-day life.

Water Purifier and Vacuum Cleaners were no were in the wishlist of Consumer Durables. After its launch new category was introduced in India.

PEST Analysis :

Political Factors

• Every time Government was talking about providing pure drinking water to common man. So, many plan were also introduced. But result was not encouraging and only 5 to 6% population was getting safe water. Therefore, it was Government failure to provide minimum needs of the people.

• As there was no concrete plan to provide health and hygienic atmosphere in the society. Therefore spending on this front was far below than requirement.

Economic Environment:

• At the time of introduction of the company India was in development stage. Infrastructure condition was not up to the required levels.

• As India was in Development stage middle income group was expanding. They were in a position to spend on their basic needs. Also they were able to spend some %age of their income in luxurious items to gain social status.

• Unemployment was in alarming situation at that time. %age of unemployed youth was increasing. This was a ideal situation for a company for getting qualified and cheap labour required.

Social Environment

• Only 5 to 6% population in India was getting safe water. This was due to lack of proper infrastructure facilities.

• Growth rate at that time was high. And population was rising towards undesirable level. And therefore proper plan for cleaning water and hygenic condition was required to prevent from further worsening the problem.

• Unsafe water is the causing 80% of the diseases and in every one minute 5 deaths was occurring due to water born diseases.

• Literacy rate was increasing in the country. And therefore, people were becoming more conscious regarding and their health problems.

• Per capita income was increasing resulting rise in standards of living. And middle income group was increasing vastly.

Technological Factors

• Technologically India was not a good position. And in most of cases we were dependent on developed nation. EFL was not an exception. Because they were planning for complete new product for India, suitable technology was required. For this they collabarated with Electrolux of Sweden, which was a well known company in world.

SWOT Analysis

Strength • Its Brand Name. Eureka Forbes has its own Brand Image. The name of its water purifier

‘Aquaguard’ has become synonymes for the water purifiers and whenever we think about water purifier name Auaguard comes to our mind.

• EFL is Asia’s largest direct selling company. It has 7000 dedicated, motivated work force. On the strength of this company is able to achieve its mission and goals.

• The technologies, company using are world class technology. Their R & D department is continuously engaged in innovations for providing best products regularly in changing environment. For example in vacuum clean category they have brought fully automated cleaner, which is the Asia’s 1st fully automated cleaner.

• EFL has one of best training facilities for their employees. And the company is 5 times winner of Most Admired Knowledge Enterprise.

• The company has Unique compensation plan named as “Bettering the Best”, which is stage based incentive scheme. In this scheme more thrust has been given for efforts and not on actual sales.

• It is an open and democratic organization. Organization has a scheme for getting feedback from staff in regular intervals.

Weakness• Earlier there were very few players in the market and customers had limited options.

But now-a-days numbers of players in the market are increasing day-by-day. Therefore, various options are available with the customers.

• Very few people like a marketing to knock their door. Because they are often cheated by low profile companies and their bogus products. This has become negative for the company as company’s 75% sale is done through this channel only.

• Attrition is another major issue and like other industry EFL is also facing the same.• Product Life Cycle (PLC) is on declining stage. Some of the company’s product not gets

sufficient market penetration. Demand of Domestic Vacuum cleaner is in declining stage.

Opportunity

• Till now EFL has concentrated its business in Semi-urban, Urban and Metro areas. But, 68% of population lives in rural area, which is not touched by the company. There is ample opportunity for the company to expand its business to rural country to sale especially low cost purifiers and cleaners.

• Company is known for taking challenge by introducing new products. Company has given trust on R & D for innovations and providing world class product to people. But still more effort required to introduce product like Robocleanz and also to fill the portfolio gap.

• The position of safe drinking water in the country in not well. 80% of the diseases are water born diseases. This is an opportunity for the company to educate the people for the use of their product.

• In India only 8% of the people use water purifier. And therefore, it is an opportunity for the company to expand their business to rest of the population.

• Till two year back company’s product price was not in range of lower middle income group and lower income group. The success of low cost purfiers from HUL has given a lesson for company that there is huge demand of low cost purifier and company has great opportunity in low cost products.

Threats:

• When company entered entered into the market there was no competitor in the market. But now-a-days no of competitors are increasing day by day and for company it has become tough to maintain its market share.

• Three years back Hindustan Unilever Limited ( HUL ) launched storage based water purifier. And within period of less than three years of time company gained 50% market share in storage based water purifiers. This has become one of the major threats for the company.

• Higher Income Group is shifting fast for the use of bottled drinking water.

• Now people have become choosier and are more aware. Living standards of life is also improving. Therefore, customers are searching products as per their requirement.

4Ps of Marketing

Eureka forbes has positioned its products aimed at all segments of customers.

Vacuum Cleaners:

9 different types of Vacuum cleaners with different capacity and features.

Product Overview

Vacuum Cleaners

Eureka Forbes has marketed their products under two brand names

1. Euroclean range through Direct selling 2. Forbes range through retail chain outlets 

Some of the products are listed below:

Euroclean Wet & DryEuroclean Ace

Euroclean power wash Euroclean BravoSpakle Euroclean X ForceRobocleanz Euroclean lite vac

 

Eureka Forbes introduced Robocleanz, which is is India’s first fully automatic Vacuum Cleaner.

Water Purifiers

Eureka Forbes has marketed more than 20 different types of Water purifiers affordable by all segments.

Some of the products are listed below:

Aquaguard Total protect(RO)

Aquasure 3PCTi (storage)

Aquaguard Total SENSA (UV+RO+UF+SMP+Eboiling)

Aquaguard Total reviva(RO)

Aquasure Xtra (storage)

Aquaguard Total Infinity(UV)

Aquaguard Total atom(RO)

Aquasure Supremo(storage)

Aquaguard(Classic UV)

Aquasure Elegant(RO) Aquasure Crystal (UV) Aquaguard(CompactUV)Aquasure Elegant(RO) Aquasure Ivory (UV) Aquaguard Booster (UV)

Aquasure Nano Aquasure Aquaflow (UV)

Aquaguard Total miracle

Aquaguard Ultra (UF) Aquasure Storage UV

AquaGuard Total SENSA is world’s only purifier purifier equipped with E-boiling +, UV+, RO+ UF+ and SMP+

A buy back policy has also been framed by the company as a marketing strategy as well as to reward customer loyalty.

Place

Eureka Forbes’ reach is spread across 398 towns and 131 cities in India. The sales force numbering 7000 people are connecting to 2 million homes adding 1500 customers daily. It has also put in place a retail distribution channel with 10000 dealers. They also have 58 distributors for institutional sales. Nearly 4000 company trained technicians augment their business by providing after sales service. On a typical day these technicians visit 20000 kitchens acroos the length and breadth of the country. Eureka Forbes has also put in place a call centre , customer care representatives and mobile service vans. Their products are available for purchase through the webite also www.eurekaforbes.com

Promotion

The company used to promote their products through Radio, Print media during the 80s. The reputation of the company also spread across country by word of mouth. Later they extensively used TV .A campaign called pani ka doctor was catchy and got more attention . Incidentally company also ran a campaign against water purifiers using Chlorine, particularly HUL ‘s low cost storage purifiers. Now internet is also used to promote their products using company website as well as banner ads in major websites with more traffic.

Competitor analysis

To start with, Eureka Forbes did not have any completion for years together. Some of the companies which started marketing these products fell by the wayside. It was only after 2005 that competition heated up with the arrival of players such as Kent, Hindustan Unilever,Philips and Tata group. Kent positioned most of their products across the high end segment in RO, UV, and UF . They also unleashed a blitzkrieg campaign across television channels using Actress Hemamalini as their brand ambassador. They have been successful in wresting 32% market share in RO type purifiers and 25% in UV type .Unilever had the advantage of being the first mover in low cost storage purifier market. They also used a direct marketing strategy to capture more than 50% in this segment. Tata has also launched their low cost models starting from as low as Rs 700 in this segment so as to capture the vast potential market of lower income groups.

Marketing Strategy In India

At the time of launch in India there was no player in the market for water purifiers and vacuum cleaner . Eureka Forbes decided to market their products primarily through the less travelled route of direct sales . They were the pioneer of direct marketing in India. Thus they had the advantage of being the “first mover.”

They recruited young men- from middle class families in their early 20s straight out of College. Attitude, interpersonal and communication skills were a pre-requisite. The company christened them Eurochamps.After recruiting they would be put through training to get knowledge about company products , functional skills. These sessions will be both in –class and onfield. Training is an ongoing phase with mentoring and pairing with seasoned marketing people. Sometimes new salesmen are recruited using Friend –get a friend scheme. And in some cases potential Eurochamps are located during sales call at customers house.

The customer is not aware that he may have some use for the product. The company created a need for the product by bringing on the theme of clean environment. The salesman will make a cold call initially and try to woo the customer with logic and reason If he is successful in his attempt he will arrange for a demo . On closing the deal order will be placed and the product is delivered in two days. The man with a case became a second logo for the company.

A typical day in the life of a Eurochamp

Daily Routine of Eurochamps

7.30am to 8.00am - Getting briefing for the day work.

8.15 - 11.15 am - For Household knocking.

12.00 - 2.00 pm - Reporting.

2.00 - 4.00 pm - Commercial Knocking.

4.00 - 5.00 pm - Reporting.

5.00 - 8.00 pm - Demos.

8.00 pm - Reporting

The revenue of the company depends on how well the Eurochamp conducts himself and his attitude, skill and motivation. He has to possess good manners to get himself into households.

The remuneration for Eurochamps was also based on a fixed portion + incentives in the form of commission. Initially a sales volume based incentive scheme was followed by the company. To attract and retain the Eurochamps company had schemes such as own your bike scheme.

The marketing strategy of the company was a resounding success that it was taken up as a case study at Harvard University. Later a new system called Bettering the best was launched by the company. Rather than rewarding only sales volume a stage based incentive would be given using a point system for going through different cycles of a sale.

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Gap Analysis

In the beginning the company had the whole market to themselves. But their products catered only to a niche market. They did not have a product for the masses. Hence they missed the bus to HUL who provided India with low cost models suiting every purse..In terms of promotional gap Company is falling behind its main competitor Kent . They should plug this hole. There is no image gap as such in case of eureka Forbes because their Brand is already established and deep rooted in the mind of consumers.

In terms of usage gap a lot of ground is to covered by the Company as vast sections of the society is deprived of clean drinking water and low cost purifiers. In fact all the companies in the fray has lot of potential in plugging the latent market potential . That is by going into the rural market and tapping the full potential. The market is so big that there is still lot of room at the top. Whoever penetrates this sector will win the race in the long run.

New Initiatives

Providing aquaguard on rental basis Installation of water filtration plants at villages Cleaning and maintenance of public places like railway station Buyback scheme of aqua guard

In the course of the case study following questions were thrown open

Q 1 : Consumers today are far more sophisticated than before. Does Eureka Forbes still need to continue with this direct selling model, when consumers are already well acquainted with its products? After all, direct selling is an expensive means of reaching out to consumers, which is justified when the product is new, and hence, purchase risks are high. Besides, why would a customer tolerate the Euro Champ intruding on his time and privacy now?

Ans : a) Number of people using water purifier in India is still very low and company has gained its position mainly due to direct selling approach. For more penetration company should continue same model besides offering customers more choice through dealer outlets. b) Pricing of a product is done only after cost analysis. Company finds direct selling process a cost effective method. 75% of their sales is still routed through direct sales. Therefore, it should continue with this method.

c) It is true that very few people like marketing personnel to knock at their doors. It is happening because people are often cheated by low profile companies and their bogus products. In the case of Eureka Forbes it is not completely true, because EFL has its own Brand Image and Eurochamps are skilled and trained enough to know how to manage such calls and only after getting positive response from the customer they enter into their houses.

Q 2: How would Eureka Forbes manage to keep its sales force motivated, when there are several opportunities available for the salespeople, in the market? Several industries, for instance, financial services, consumer durables, and BPOs are recruiting salespeople/telesales executives with better incentives. On the other hand, if Eureka Forbes were to argue that they take less qualified sales people from small towns, and provide them jobs, is this likely to work for the company in today’s market? After all, the customer today is sophisticated, smart and suave. Giving similar incentives as earlier are not likely to work for the company now. So how can Eureka Forbes keep its sales force motivated? Can compensation plans be altered to account for efforts put in be the sales force at every stage of selling process, rather than only on the basis of sales volumes (sales closed)?

Ans : a) It is true that there are several opportunities in the market for sales personnel. At the same time working with big organization renders social status as well as different kind of experience. And EFL has its own Brand image and a sales person feels pride in working with it. In the present scenario lot of MBA graduates are available and company should go in for their professional services. b) Any company can survive if it changes and adapts itself as per environmental needs . EFL is not an exception. It has own HR Department and it should revisit some

of their policies and incentive schemes may be restructured to reward only the performers even while retaining its stage based incentive. Salary and incentives may be raised on par with today’s insurance/BPO and MLM companies to attract new staff and keep them motivatedc) Unlike western countries Indian needs some secured income. The same rule is applicable in EFL also. Employees are getting package in mixed terms. In salary there is a some fixed component and other is variable component in the form of incentives, which is based on sales volume.

Q 3: The sales person is the company for the customer. The Eureka Forbes salesperson does not seem to be highly motivated while doing his job. He is just carrying out the motions. Besides, the company itself is not as aggressive in its branding activities as it was before. Has the organization as a whole become complacent in managing its branch?

Ans: It is not true because it were true company would not have established its Brand image. It has changed it HR policies to keep their employees motivated. There are some employees who have been staying in the company for more than 20-25 years. There are few examples where some sales person has become Vice-president & more.

Q 4: Is the company’s portfolio adequate? The best seller products of Eureka Forbes, i.e. the vaccum cleaner and the water purifier are both facing intense competition in their own ways. The vacuum cleaner is either rally low, or completely absent in the consumer’s hierarchy of durable purchase. Its product life cycle may be in the maturity or decline stage. The water purifier is being fast replaced by better technologies of other companies, for instance, Usha and Kent, or by bottled water, which is far more convenient and healthy according to various surveys. Given these arguments, comment about the company’s product portfolio, and its future direction.

Ans : In past view yeas company has shown sufficient interest towards entering into new businesses. Now, in water purifier segment it has brought products of low range targeting low income groups and also to compete other players.

The vacuum cleaner is targeted to high income group and for industrial use. And company is continuously getting good patronage in targeted group.

To fight its competitors companies has developed new and enhanced products and through some products they are providing fresh technologies.

To augment its portfolio company has entered into the business of Air purifier and Security system and company is getting encouraging response.

Facts of the case:

Attrition –The Eurochamp job is a high pressure job which involves travelling, meeting many people, carrying products and demonstrations and putting a lot of energy into presentations. Further chances of demoralizing are very high on getting from door slams during cold calls. Further, there is no comfort of a sufficient quantum of fixed monthly salary. They have to earn two thirds from their sales efforts. Considering the above and demand of sales talent, there are more chances of existing jobs

Poor performance of Eurochamps – Focus only on completing their demo instead of maintaining relationship. Moreover, the demo equipment was damaged or they were not clean.

No proper review of field staff by senior management – DDSMs and DSMs are expected to visit the field at least once every 15 days to review performance and set targets. Paper work for detailed information on the eurochamps door knock, demos, sales closing and installation took lot of time of supervisors. Moreover Regional Heads are dependent or relying on the formal and informal reports instead visiting field and out of field for many months.

Territory conflicts due to increase of sales force—Initially territory conflict was rare due to small sales force. However with the increase of sales force especially in urban markets, several eurochamps called on the same potential clients on the same day. This caused irritation to

homeowners thus registering complaint with EFL’s central office or just slammed the door in the next eurochamps face. Further, due to change of demographic, some territories have become more lucrative than other. Hence senior representatives claim more popular territories assigned to new representatives, which is also a source of conflict and tension within the eurochamp ranks.

No formal customer contact database –In the absence of formal customer contact database, senior managers find it difficult to monitor sales activities.

New compensation plan – Bettering the best EFL established centralized recruitment and training centers to ensure formal standardized firm wide training approach. Special people and resources were dedicated to training. This plan reconfigured EFL’s compensation and incentive structure. Rather than reward, Eurochamp solely depend on sales volume. The new system would award points for successful completion of various stages of the selling process and link compensation to the points scored. A knock earned 5 points, demo 100, attending meeting 200, a sale 300. Short term incentives were offered on the basis of points earned. Monthly reward and divisional level rewards also.This led to disputes in calculation of points for incentives.Specific objectives --- Improving the productivity level of low performers, increasing daily demos, and enhancing customer engagement time “Bettering the best.”General objective – Making eurochamp feel good about themselves, improving the spirit and morale of the sales team, improving sales productivity and overall quality of sales.New system was an effort to split bigger goals into smaller targets and to encourage each and every eurochamp to achieve the smaller targets.

Recommendations:

Addressing the price gap More value addition to existing product A lead management system with integrated customer database More attention to promotion and after sales service of products Restructure of incentive schemes More innovations Expansion its reach by organic and inorganic ways

Company has to address the price gap vis a vis the products offered by HUL,Tata etc. They need to market intensively these products in the rural

market and recapture the lost market in low cost storage type purifiers. The existing products to be re packaged or reformulated so that customer gets a value for money proposition out of it.

The Bettering the Best initiative may be taken forward with proper review system in place to reward only the performers. For this a “lead” management system is to be evolved with integrated database of prospective customers so that genuine performers will feel a sense of pride and involvement. Incentive and pay packets should be raised so that People will feel attracted to come over instead of other options such as BPO/Insurance etc. A proper review system is also to be put in place to monitor performance of eurochamps.

Company needs to promote their products more effectively to counter the campaigns done by competitors like Kent. Gaps in distribution have to be filled by expansion of dealer network.

And finally company should keep up their R&D and innovation to keep up with the times and competition.

Bibliography

1. www.eurekaforbes.com

2. www.economictimes.com

3. www.rediff.com

4. www.kent.co.in

5. www.companiesandmarkets.com

6. Marketing Management by Philip Kotler/Kevin Keller

7. Principles of Marketing by Philip Kotler/Gary Armstrong

8. Case studies in Marketing in Indian Context by R Srinivasan 9. Money control.news.business dated 8.12.09, &10.10.09