Tupperware (2)
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c A Study of Distribution Channel and Marketing Communication of Tupperware India
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Table of Contents Introduction....................................................................................................................................... 2 Key strategies ................................................................................................................................ 2 Sales and Distribution........................................................................................................................ 3 Marketing channel ......................................................................................................................... 3 Marketing Strategy ........................................................................................................................ 4 Sales Force Design ........................................................................................................................ 5 Marketing Communication ................................................................................................................ 7 Message Decision ........................................................................................................................ 10 Media Decision ........................................................................................................................... 12 Recommendations ........................................................................................................................... 13 References c c
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Introduction iupperware Corporation, US, has set up its subsidiary in India, called iupperware India Pvt Ltd (iIPL). Since then it is growing at a compounded annual growth rate of 30%. ihe company's expansion in India also fuelled the growth of the overall kitchenware market, which increased from 6.7 billion rupees in 2003 to over 12 billion rupees in 2008-a 12 percent annual rise (report by Euromonitor).iupperware has gone on to become a 'top of mind' brand for many middle-class households across India's main metros, according to a survey undertaken by ihe Nielsen Company in 2008. ciupperware is rated among India's top 3 percent of brands across all categories and segments by µSuper brands¶, a well-respected and independent organization.
Ôey strategies ihe key strategies that iupperware followed to gain the competitive position in one of the largest and most exciting emerging markets (from being global to local) are: Focus on a core business/category Entering a new market in the core business area a company brings in innovation, resources, the weight of your global organization, and learning from other markets. iupperware was able to c ´et the attention, expertise and support from the parent company c Convert Indian consumers from traditional metal food containers to plastic ones that catered to local food habits c Ëuild a strong distribution network by popularizing "iupperware Parties" Adapt products but maintain global brand integrity Companies adjust their product line to meet local needs in emerging markets but without losing their brand cachet. c iupperware localized its pricing strategy, making its products more affordable to more Indian customers. Also it offered 25 products that are customized for Indiankitchen use, of their 100 products. c iupperware maintains lower costs by producing locally, set up plants in India to cater exclusively to the Indian market. ºnderstand local costs and leverage local talents c
iupperware instead of entering competing with the domestic companies in the low cost points offered products at attractive prices, locally developed models to cater to Indian customers.
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iupperware realized local talent (iIPL MD Asha ´upta, Indian) so that it can get superior customer insights.
uesource to potential iupperware's marketing efforts have been directed at resourcing to the potential of the market through multiple initiatives. From media tie-ups, advertorials, partnerships with Ëollywood production houses, and tie-ups in India with top brands such as Samsung, P&´ or American Express, iupperware has kept its brand resonating in consumers' minds in urban areas where it is still developing the market. It plans to focus on rural areas after it further builds its presence in smaller cities and towns.
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Sales and Distribution Marketing channel A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process. uoles of marketing channel in marketing strategies: c Links producers to buyers. c Performs sales, advertising and promotion. c Influences the firm's pricing strategy. c Affecting product strategy through branding, policies, willingness to stock and customizes profits, install, maintain, offer credit, etc. An alternative term is distribution channel or 'route-to-market'. It is a 'path' or 'pipeline' through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A marketing channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer. xarty xlan&Chain of Confidence CampaignȂ methods by Tupperware iupperware came up with its unique µParty plan Method of marketing¶ following its failure to cater to the consumers because of its high price and lack of awareness about the product when introduced in hardware and department stores. iupperware products were. In party plan marketing, home party is conducted and the iupperware products and their uses were demonstrated to consumers. "iupperware Parties" involved sharing of recipes, cooking advice and health tips among Indian housewives(augmentation and emotional appeal). ihe demonstration is a way chosen by the company to communicate to the customers about the quality of the product and its uniqueness, the usage and the reasons for higher cost of its products. io have the positioning as a high quality wares helping in leading active and healthy lives, iupperware in kitchenware market represents µwholesome¶, µkeeping it fresh¶ and µPremium Mass¶, iupperware opted for direct marketing. iupperware has imbibed the Chain of Confidence Campaign in its direct selling model, creating invaluable connections that last a lifetime. Chain of Confidence invites women to share in the immeasurable rewards of selfconfidence and ensures the next generation of women will benefit from this knowledge.
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Marketing Strategy iupperware India initially launched its products in Delhi. Realizing the potential,the company ventured into 14 other SEC A cities and widened its operations to another three SEC Ë and C cities by 2000. ihe company entered into the eastern market as well.
Corporate tie ups and cobranding ihe company has tied up with Procter and ´amble (P and ´) in Chennai and with Pringle chips in Chandigarh for cross promotion scheme. After successful test marketing the companies took out the alliance further. Since both P&´ and iupperware had top-end market customers, they tied up for more joint promotions. iupperware tried to have tie ups with FMC´ companies and consumer electronic brands to promote its product range. It also proposed to have tie-ups with food companies selling flour, cooking oil and tea to sell the products in iupperware packaging. ihe direct marketing company also entered into negotiation with Hindustan Lever Ltd (HLL) to start a crosspromotion exercise in the Northern, Eastern and Western Regions of India. iupperware containers were bundled with HLL¶s Dalda refined oil packages. iupperware India introduced its products in a few new shopping malls as part of its strategy to achieve a turnover of Rs206 crore in the next two years. ihe company intended to market its products through distributors in these malls. iupperware also tied with Sahara India to increase brand awareness and its customer base through bid-n-win scheme. iupperware tied up with Ëig Ëazaar to set up touch points to establish contacts with consumers. iupperware Worldwide also has alliance with some consumer durable companies like Whirlpool. iupperware consented a cross promotion deal with home appliances company Whirlpool of India as well. ihe iupperware organized roadshow at Kolkata as a part of promotional deal with the white goods major Whirlpool. Ôiosks iupperware opened kiosks in shopping malls to create brand awareness and to reach potential customers who are unable to attend iupperware parties. ihe company spent INR 2.5L in each kiosk with a strategy of increasing the sales by 10 ± 12%.ihis is a part of its integrated direct access strategy. ihe initiative is aimed at increasing recruitment, awareness about the company and promoting its products. xroducts launches Initially iIPL came up with 25 products customized for Indian kitchen and it targeted top-end customers. In years iIPL launched many products to suit modular kitchen ± microwave wares, aquasafe bottles etc. It also launched a low-price range called Classic. iPIL came up with Indianized products in order to improve its market share in the country.iupperware is planning to launch products for rural India with an intention to expand its presence from 59 cities to across the country. ihe products were given special offers during festival occasions ± discounted rate. Channel Management Decisions ihe dealers organized product demonstration at parties where the guests order for the products and the hosts are given free gifts. A comprehensive training program and a new incentive scheme for conventional managers like a paid trip to Malaysia were later announced to encourage the dealers.
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When iPIL noticed that some of their distributors are using retail outlets to sell their products to meet the sales target it terminated the distributorship of these errant distributors, as it is against the principles of direct selling Fitness iIPL exhibits Reward Power on their dealers and distributors by giving them free gifts and taking them for free trips(to Malayasia). It also exhibits coercive power on failure to meet the norms of the firm (distribution). ihese practices suit the Indian market conditions where it is easier to get a job done through reward than through punitive measures. Further 99% of the distributors are housewives who get motivated by the reward power exerted by the dealers. iupperware Corporation has succeeded in gaining a strong market in India. Unlike in UK where they tried serve to A & Ë group customers with the sales force belonging to C & D group, it has catered to right kind of sales force and customers. Initial entry into the top-end market with the customized products and selected cities (SEC A) developed the awareness about the credibility of the product and hence venturing into other cities and launch of new products was well accepted by the consumers as the credibility reached them through word of mouth. WOM has been the biggest strength and the reason for the success of the iupperware products. iIPL also adapted Indian designs like the Jaipur blue pottery designed containers for dry storage and it formed their unique level of products. iIPL with its Classic models have got access to enter the rural market ± a low price model that never compromised on the quality but the design. iIPL went in for selective distribution which improved the visibility of its products. iheir option of cobranding with HLL and P&´ is a successful strategic move as it has improved their customer base. Ëut road shows might raise doubt about the product¶s superior quality level among the niche customers. c
Sales Force Design iupperware is sold mostly through a party plan, with rewards for hosts. A iupperware party is run by a iupperware consultant for a host who invites friends and neighbors into his or her home to see the product line. iupperware hosts are rewarded with free products based on the level of sales made at their party. Parties also take place in workplaces, schools, and other community groups. ihe business of direct selling is
very
different from
other businesses
because,
here,
the level of
sales depends very much on how the members of the Sales Force feel about the product and the promotion. Sales in this type of business depend a great deal on the size of the active productivity.
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Sales Force
and
their
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In most countries, iupperware's sales force is organized in a tiered structure with consultants at the bottom, managers and star managers over them, and next various levels of directors, Legacy Executive Directors at the top level. In recent years,
iupperware
has
done
away
with
distributorships in the U.S. ihis has allowed iupperware more flexibility, and more generous commission and rewards for their consultants. cc c c
ihe iconic food storage container is enjoying a surge in popularity in fast-changing India and the concept of the iupperware party has been rekindled. Its active sales force comprises
c c c c . In New Delhi alone, there are an estimated 300 iupperware managers who each host 10 to 15 parties every week. c In recent years, iupperware in North America has moved to a new business model which includes more emphasis on direct marketing channels and eliminated its dependency on authorized distributorships. ihis transition included such strategies as selling through iarget stores in the US, and Superstores in Canada, with disappointing results. iupperware states this hurt direct sales. In countries with a strong focus on marketing through parties (such as ´ermany and Australia/New Zealand), iupperware's market share and profitability continue to decline. When it comes to forecasting, the
direct
selling
industry is unique. io understand it, one has to know
what the direct selling business is and how it works. How does it differ from the retail industry? Here, the emotions of the Sales Force members play a very important role. ihe sales sharply rise and fall depending on how the Sales Force members feel about the product and/or the promotion. At iupperware, the sales model is a party plan where someone arranges a party and invites his/her friends and contact people to the party as prospective customers. ihe party is initiated by the Sales Force member. So, sales are primarily made through the party, though they are supported to some extent by catalogs, television, and online advertisements. ihe Sales Force members are independent contractors; each one can choose which products and offers they want to push. Direct selling started in early 1900s. In the early years, the direct sellers were traveling salesmen. However, as the business model changed to a party plan model, women comprised the majority of direct sellers. ioday, the average direct seller is a woman between the age of 35 and 54, has some college or maybe even a four-year degree, and works part-time. How the Sales Force members feel about a particular product or promotion pretty much determines their success. Direct
selling varies greatly
when compared to
the retail industry. If you sell a product at Wal-Mart, plans about which products will be promoted, when and how, are made ahead of time. ihere is a weekly replenishment plan based on store inventory and sales. New Products are planned very early on to prepare for theirlaunch date. When an expansion is planned for additional space or stores, it is done in advance as well. ihe implementation of a strategy takes anywhere from 6 to 12 months. Ëut this timeline is significantly different
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in direct selling businesses: Promotional planning is
done only 24 hours in advance based on the best indicators! Indicators include how many parties are planned for the next week and beyond and the number of active team members (Sales Force) we have. New Products are planned based on what the Sales Force wants. ihere are no iupperware stores; instead, there are just Sales Force members who enter and leave the business on a dailybasis. Our
customer
strategy
changes daily. Our customer, which is our Sales Force, changes constantly. As such, our customer strategy changes, based on what is occurring within the Sales Force. Calculation of Sales Forecasts Sales forecast are prepared by using a formula called iAP: ihe "i" stands for team members; the "A" is for activity; and the "P" is for productivity. ieam members represent the Sales Force the organization has in any given time. Activity refers to the percentage of people within team members who are active and selling. Majority of the team members work part-time; as such, many of them don't sell on a regular basis. One month they may be very active in selling, but that may not be the case in another month. Productivity refers to how much each member sells. After these parameters are estimated, four different methods are used to create a forecast. c 120-Day trend based on the iAP formula. c 90-Day trend based on channel. c §ear-to-year comparison based on iAP formula. c Make adjustments based on whether the emotional response of the Sales Force and/or the consumer is favorable or unfavorable. Initially, the forecast is based on the average sales utilizing the first three methods. Next, we incorporate the feedback we get from the Sales Force, which may increase or decrease the number.
Marketing Communication Marketing communication mix used by company includes mainly: Direct marketing, xersonal selling&Word of mouth marketingc ihe most extensively used communication approach by company. ihey have launched µParty Plan Method¶ and µChain of Confidence´. ihere is also a blog on iupperware so that also contributes to make people aware about various products of company plus reviews in blogs increase credibility. xarty xlan Method: (A mixture of informational as well as transformational appeal) iupperware came up with its unique µParty plan Method of marketing¶ following its failure to cater to the consumers because of its high price and lack of awareness about the product when introduced in hardware and department stores. iupperware products were. In party plan marketing, home party is conducted and the iupperware products and their uses were demonstrated to consumers. "iupperware parties´ involved sharing of recipes, cooking advice and health tips among Indian housewives (augmentation andemotional appeal).
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ihese demonstrations helped the company to explain to the customers, the quality, the usage and the reasons for higher cost of its products. io have the positioning as a high quality wares helping in leading active and healthy lives, iupperware
in
kitchenware
market
represents
µwholesome¶, µkeeping it fresh¶ and µPremium Mass¶, iupperware opted for direct marketing.
Chain of Confidence Campaign: A Transformational appeal iupperware has imbibed the Chain of Confidence Campaign in its direct selling model, creating invaluable connections that last a lifetime. Chain of Confidence invites women to share in the immeasurable rewards of selfconfidence and ensures the next generation of women will benefit from this knowledge.
Centre of web portal is women. So, it generates interest in women. And various rewards are motivations for women.
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Celebrating women and the powerful bond of friendship that connects them together, iupperware¶s Chain of Confidence honors women across the globe and the profound life altering impact they can have on one another. irue to its virtue, iupperware recognizes the extraordinary source of strength women derive from one another which enables them to feel confident and secure in their ability to succeed.iupperware gives every woman the flexibility to set work schedules, own a business, earn extra income and have a wide circle of influence. ihe Chain of Confidence also provides an incredible support team of women all with a vested interest in personal and financial success. ·vents and xromotions: (A mixture of informational as well as transformational appeal) Company promotes its product by being sponsoring certain events involving mainly women. Events and promotions done by company in 2010 are shown below. It is Involving and Implicit.
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c So from above it is very clear that how company is promoting its product by being part of various events. xublicity Company has been in news for its continuous growth despite recession. Plus increase in reach of company to farther area has made it continuous news maker. Company has been associated with Movies like µËillu Ëarber¶ and µ´olmaal 3¶ and so was in news for quite a sometime. It has Dramatizing effect as well as provides some credibility.
Sales promotion
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Company has been continuously coming up with various sales promotions like shown below.
Colours used are eye catching plus if you see the concession rate it is incentive for buyers as well as an invitation. Advertisements Company¶s focus on advertisement is not much visible. ihis is because company¶s main source of communication is direct communication. So company is reaching masses in a different way. Company¶s advertisements mainly have informational appeal about product. From ages their focus id their product. So whenever they launch any new product they mainly show the product and its benefits and price etc.
Message Decision iupperware has gone on to become a ³top of mind´ brand for many middle-class households across India's main metros, according to a survey undertaken by ihe Nielsen Company in 2008. ihe message that the company wants to drive is that iupperware products depict quality, robustness and are aesthetically designed. ihe iupperware products carry a lifetime guarantee. Any damaged product (cracks or breaks) could be replaced by same/similar new iupperware product from any place in the world. The 3 · s of Tupperware ·nlighten io share insights & provide products and knowledge that makes life simpler and more enjoyable for families. ·ducatec
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io provide smart, simple solutions that enable customers to save time, money and effort while leading active and healthy lives. ·mpower io better the lives of women by giving them the confidence to live with respect in the society and becoming independent. Message Strategy Lifetime Warranty: iested in extreme conditions and built to last long, really long. Ëuying with confidence is assured with iupperware products that are guaranteed against chipping, cracking or peeling under normal noncommercial use for the lifetime of the product. When a iupperware product shows a defect in material or function, one may visit any iupperware Ëusiness Center or call iupperware Ërands consultant for a free replacement. Chain of confidence:Enlighting, educating and empowering women across the globe. iupperware has imbibed the Chain of Confidence Campaign in its direct selling model, creating invaluable connections that last a lifetime. Chain of Confidence invites women to share in the immeasurable rewards of self-confidence and ensures the next generation of women will benefit from this knowledge. iupperware gives every woman the flexibility to set work schedules, own a business, earn extra income and have a wide circle of influence. ihe Chain of Confidence also provides an incredible support team of women all with a vested interest in personal and financial success. Legacy: What started as an innovation in 1942 now has become an inseparable part of many families. For over 60 years, iupperware has been creating a niche for itself in the business world, making a difference to the lives of millions through its innovative storage products and extremely attractive business opportunity. In recent years, iupperware has made tremendous inroads into becoming a true global entity. Despite the success and astounding growth of iupperware Ërands, the Company¶s mission and passion to enlighten, educate and empower customers and their families tops the priority list. xroduct range:With hundreds of products for every range, consumers are spoilt for choice. ihe major categories are: c Aquasafe c Canisters c Dry Storage c Food Preparation c Freezer c Fridge Smart c Lunch 'n' Outdoor c Microwave c Refrigerator c Serving c iupËaby Inspiration center:ihat's the iupperware Party experience. ihis unique, interactive party offers the opportunity to see, taste and experience the new iupperware lifestyle - amazing products, delicious recipes and smart, simple
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solutions to improve the consumers¶ life. Plus what a great opportunity to exchange ideas and make new friends. Whether one is a consultant, a host or a guest, there's a lot to enjoy at a iupperware Party! It¶s party time!
Smart companies like iupperware adjust their product line to meet local needs in emerging markets but without losing their brand cachet. iupperware has done that, maintaining a "premium mass" image. Striking this balance is a critical success factor in emerging markets like India and China where customers aspire for a certain brand status but at "good enough" quality and affordable prices. io compete more effectively, iupperware has localized its pricing strategy, making its products more affordable to more Indian customers, but, at the same time, has not compromised on quality. It maintains lower costs by producing locally, as seen in its state-of-the-art plant in Dehradun, which caters exclusively to the Indian market.
Media Decision Media selection is the process of choosing the most cost-effective media for advertising, to achieve the required coverage and number of exposures in a target audience. Magazines Since women are the majority purchasers of iupperware products, they are advertised in magazines through which they can reach a wider female audience such as c Elle c Femina c Parenting Internet and online media iupperware has unveiled an all new iupperware India website in September 2010 through which it conveys most of the information about its rich heritage, variety of products, new product releases, sharing recipes. It is interactive in the sense that users can upload their own recipes. advertises
iupperware
though
social
network
medium
such
as
Facebook.http://www.facebook.com/pages/iupperware-India/294670044329?v=wall&filter=2 c It releases a number of consumer flyers, recipe lists, vintage collection photos in the space where they can upload photos. c It also conducts online quizzes related to recipes and distributes prizes c It uploads testimonial videos by women who have used iupperware products and other promotional videos iupperware promotes its products by having different videos describing its products on youtube. It has more than 90 videos which talk about being eco conscious, its sustainability story, iupperware art and design, etc http://www.youtube.com/watch?v=EWajv4gcNs8&feature=player_embedded
iupperware is also marketed in online media such as
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http://hyderabad.olx.in/tupperware-modern-kitchen-fridger-items-iid-41215945 Îewspapers iupperware advertises in all national and regional newspapers about its existing products and more so when there are any new product releases. Television Ads ihe company launched a television commercial to coincide with the release of the µWe are family¶ film to ride along the hype associated with a Karan Johar and Kajol film. ihey adopted the product placement strategy which is explained in detail below. Alternative Advertising Outdoor campaigns iupperware conducts campaign of lunch series in select locations such as Ëig Ëazaar in metro cities. It also conducts festive campaigns. xroduct xlacement In Karan Johar¶s Ëollywood remake of Hollywood hit Step mom, We are family, plastic tubs seem to be everywhere which are iupperware moments. iupperware is the only direct selling company in India that got associated with in-film branding. iupperware India is targeted towards SEC A and SEC Ë women and mothers in the 30 plus age group. iupperware felt Kajol, the movie¶s heroine represents its target audience and saw their brand fitting into the storyline of the film. iupperware also associates with certain campaigns such as ³UNICEF Awaaz Do´ campaign through which it does both marketing as well as sale of products.
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c iIPL operates in Kiosks in many shops; instead it could start exclusive iupperware stores in shopping malls. With the increase in the number of products ± models, different sized containers, entry into low price models, microwave utensils, Jaipur designed wares ± exclusive stores will give the customers a wide choice to choose from. ihough catalogues give information about the products, with repeated buying customers may prefer to have wide options to choose from so that they may buy mew products the utility of which they might not have realized while looking at the catalogue. ihis may also provide an opportunity to know the customers demand/ necessity and come up with more innovative products. ihe shops should be run by the distributors; this may also reduce the shipping cost and also bring in new customers who may wish to try out the products. c Co-branding though increase the visibility, it may hamper the image of the quality of the wares especially when it comes with low preferred products. ihe premier customers may not be satisfied with this kind of approach. Similar is the case with displaying the product in roadshows. Entering into corporate tie up ± gifts could improve its visibility and improve its business. c With the company growing and the sales consultants became successful in recruiting more and more people to the business, they ended up facing so much paperwork at the top that they no longer had time to perform the strategic work of selling and recruiting. ihis led to them to invest heavily on developing Ii infrastructure to help its sales force focus on thing that they are best at doing. ihere was a period when iupperware lost sales because of its in efficiency in its internal Ii infrastructure. ´etting the Indian sales force used to these new technology will be another huge task. Proactive steps have to be taken to address these issues c A related challenge was that distributors usually submitted several orders at a time, which meant iupperware needed resilient technology with the capacity to process orders in big batches c Corporate communication to sales force is another key challenge that iupperware faces. It¶s very easy for the sales force to get demotivated when the information and proper communication are not available to them. iupperware has created http://my2.tupperware.com/ exclusively for its sales force, which provides them ease of access to information and also a personal mail for corporate communications. For people who don't read e-mail every day, maybe they'll listen to a voice mail, or for people who don't listen to their voice mail right away, maybe they'll read a text message on their cell phone. ihis can be implemented in India since the mobile penetration is much more as compared to internet. c From analyzing the above media through which iupperware reaches its consumer base we can clearly see that the social network media works very well for iupperware. It has more than 3200 followers in Facebook and people get to know about iupperware products and parties and contact details of iupperware distributors. Even product placements helped iupperware to reach out to entirely new set of audience. c iupperware should focus upon mass media to cater to large masses and create awareness about their products c ihey should plan more parties in order to use the power of word of mouth c ihey can also go for Co- creation and thus use the power of involvement c People don't mind a joke, an interesting story, the ability to make their own messages on a chocolate bar wrapper or just something unexpected - it makes a pleasant pit stop in their day, lifts their emotions and potentially gives them something to talk about with the brand at the center of the discussion. ihis power of Entertainment can be utilized to make communication more interesting
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ueferences c Duffy D.L. (2005).³Direct selling as the next channel´ ß c Campbell O (2008).Forecasting In Direct Selling Ëusiness: iupperware's Experience ß c Davis, iim R V (1994) ³ihe Distribution Revolution´ Ê ! c iupperware
everywhere
(2011,
January
30)
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from
Ô
c iupperware
in
India
(2011,
Ô
January
30)
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from
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c Ëackground Information on iupperware Corporation (2011, January 30) Retrieved from Ô Ô Ô
c iupperware
Home
Parties
and
the
Jubilees
(2011,
January
Ô Ô Ô
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30)
Retrieved
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