Eureka Forbes Case Study on “Eureka Forbes”

Presented By:

Saurabh Kumar B-46Nikhil Sharma C-51

About Eureka Forbes

• Consumer durable company • A joint venture between the Shapoorji Pallonji Group’s Forbes &

Company Ltd. based in Mumbai,and Electrolux of Sweden ,in 1982.• Started as a small firm to introduce domestic water purifier – the

Aquaguard.• Now a multi-product, multi-channel organization.

Eureka Forbes-Products and Services• Vacuum Cleaners •Water Purifier • Air Purifier • Security Solutions• Life Automation Solutions

History • Fred Wardell, a well-known businessman of Detroit, Michigan launched

vacuum cleaners under the Eureka brand name in 1909.

• Eureka’s vacuum cleaners-sleek, versatile & lightweight.

• In 1913 Eureka launched six different models & offered various add-ons for cleaning floors, walls, upholstery & crevices.

• During early days it employed 5000 salesmen ,had 400 branches to cater growing demand.

• Established itself as market leader in Vacuum Cleaner industry within a decade of its inception.

• 1915- Received the highest award the "Grand Prize", by a jury of electrical experts at the San Francisco International Exposition.

•Became No1 Vacuum cleaner company of US in 1920s and manufactured 1/3 of total purchase made in US. •By 1919 production at Detroit factory was over 2000 units per day•World War II Eureka had to stop production and its business suffered to a great extent for a couple of years.•1945-Headquatered shifted from Detroit to Bloomington,Illinois. Merged with leading heating and air-conditioning equipment manufacturer William Oil-O-Matic, which was renamed as Eureka-Williams.• Diversified into the manufacture of oil burners & government defence equipments.•1960 -Merged with electronic good manufacturer National Union Electric and also manufactured a battery operated automobile named Henney Kilowatt. But it was a failure.

History

•1974-Electrolux of Sweden, the world's largest producer of home appliances, purchased Eureka-Williams and changed its name back to Eureka.•1983- El Paso (Texas, US)unit - world's largest vacuum cleaner manufacturing facility.

Foray into Indian Markets

1981- Electrolux brought the Eureka brand to India through Eureka Forbes, a joint venture with FGL (Forbes Gokak Ltd). Pattern of stake: Electrolux : FGL :: 40:60

FGL(Forbes Gokak Ltd)- A 60:40 joint venture between the construction major Shapoorji Pallonji Group and the Tata Group of companies.

1982- Launched first range of vacuum cleaners, "Euroclean". established its direct sales division and Aquamall Water Solutions Ltd.,subsidiary for manufacturing water purifiers.

1985- Established Dealer sales division.1986- Established Industrial sales division

Foray into Indian Markets•1989- Established Export sales division•Mid 1990s-Foray in mixers and irons, which failed miserably.•1994-Entered air purifiers segment.•1995-Launched “Tornado” range of vacuum cleaners and “Aquaflo” range of water purifiers exclusively for marketing through the dealer route.•1997- Diversified into electronic security solutions under the brand name “Eurovigil”.

•One of the first direct selling companies•Pioneer in direct marketing

SWOTStrengths•Strong brand of Aquaguard and vacuum cleaner•A pioneer and benchmark in direct marketing.•Asia’s largest direct selling company.•Strong dealer sales network.•World class quality products.•Stronghold and large market share in its prominent brands.•Strong and effective Customer Response Centers.•Effective use of IT.•Core strength- Its workforce

SWOT

Weakness:•Margins may get affected due to heavy investments in direct

selling.• Difficult to serve huge customer base.• Sales information took 45 days to reach(15 days for processing)

on a monthly basis.• Intermittently introduced new product segment and failed.

SWOTOpportunity• Huge market in rural and semi-urban areas.• To cater to the demands of corporates .• To capitalize people’s demand for pure drinking water and

general hygienic and cleanliness .• Provide more robust and effective after sales service. •More technological innovations in products.•More versatility.• Focus on core product brands.

SWOT

Threats•Competitors• Low awareness among people regarding usage and

usefulness of its products.•With exit of Electrolux in 1999 in JV, there was a

setback in marketing expertise and financials

• Eureka Forbes followed the globally “tried and tested” DIRECT SALES route for marketing itsproducts in India, thus becoming one of the first direct selling companies in India.

Direct Marketing strategies

• Direct selling• One of the first direct selling companies

• Operations begin from Delhi with just 10 sales representatives.

• The company believed that its core strength was its people.

•The company employed dynamic, highly motivated individuals, called ‘ Eurochamps’, who projected the image of

“The friendly man from Eureka Forbes”

Eurochamps

•Smartly dressed salesman who came to their houses and cleaned up things in a jiffy or showed how air/water purifiers were indispensable.

• Initially targeted the metros but soon began visiting smaller cities and towns also.

•The company began advertising across various media primarily to familiarize its target segment, housewives, with its products and introduce it to its sales force.

•Helpful salesperson who solved the problems of housewives. •Models appeared as Friendly and trustworthy.•Company also used actors from popular Hindi TV serials,

such as Nitish Bhardwaj and Amar Upadhyay, to enhance the friendly and trustworthy image of its salespersons.

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• It suffered a setback in 1992-93, when profits declined by 50% in comparison to previous year.

•However it gradually gained acceptance in Indian market & sales picked up.

•Customer Care Network with over 400 CRC, covering over 98 towns • ‘Annual Maintenance Contract’• mobile service van(Mumbai,New Delhi)•Water Labs (Mumbai,New Delhi, Kolkata,Chennai,Banglore

and Ahemdabad)

After Sale Services

•New water purifier against their old model at a discounted price .•Euroclean home contest•Service call back guaranteed with in 48 hours

•Call Center for customer service•With in a year 5 more CRC•B2E (business to employee) exercises and employees asked

to report weekly instead of monthly.•Ranking the salesperson according to their performance

“A relationship does not end with a sale, It actually begins”

•Regular information to suppliers and email identities.•Online training sessions by managers •Enabled its water labs to work online

•Net profit Rs 56million in 1995-96•Rs 2.29 billion in 1997-98

However

•Direct selling policy changed •Consumer training drive with a pager number for

demonstration and training by salesperson.

In 1999

• Advertising Policy Changed•Maidservant using a vacuum cleaner• Entered the water bottle market

• Eureka Forbes Institute of Environment.

• Daily measurement of air pollution in 8 metropolitan cities with NDTV and aired on star news, also published on website like www.ndtv.con and www.webhealthcare.com

• Held free pollution control camps in 10 metropolitan cities

Environment-friendly and hygiene-oriented

Propects• Decision to enter the retail business was primarily the result of its

launch of “Tornado” vacuum cleaners and “Aquaflo” water purifiers in 1995.• Till now, the retail route for this range was used mainly to cater to

the industrial segment.• By 1999, around 5% of the company’s sales came from the 2500-

strong dealer network.• In 2001, the dealer market was growing at the rate of 25% annually.

• Eureka forbes built a customer base of 2.5 million by 1999 and recorded a turnover of Rs 3.08 billion for 1999-2000.•Besides the household segment ,its client list included

leading hotels such as The TAJ ,The Oberoi ,The Centaur ,Four Seasons ,Orchid International, Leela Kempenski and corporates such as Mahindra & Mahindra ,TCS , Bajaj auto ,Wipro Fluid and Telco.

Achievements

• 2001 Turnover of Rs 3.68 million ,32% of which came from vacuum cleaners and 45% from water purifiers.

• 2002 undisputed market leader with 75% and 85% market share and vacuum cleaners and water purifier.

Recommendations

•Move to expand into retail to increase visibility of its products, but focus on its core competency-Direct Marketing.•Make its products compact and easy-to-use.• Focus more on Free Demonstration of products on

customers demand.• Emphasis on innovation on its core products.•Make a foray into untapped rural markets