Direct selling firms go off the beaten track

A few days ago, the front pages of quite a few newspapers carried advertisements by Tupperware, a leading kitchenware brand. Nothing unusual, except that Tupperware is a direct selling company that has traditionally been avoiding advertising campaigns.

Ad campaigns, brand ambassadors, in-film promotions – direct selling companies are doing all they can to attract eyeballs in a market that is getting increasingly crowded. The reason is obvious: the Rs 4,120 crore direct selling market in India is set to touch Rs 7,120 crore mark by 2012-13, clocking a 20 per cent CAGR.

But why go off the beaten track? Tupperware Marketing Director Anshu Bagai says “the Indian consumer does not go out of her way to reach out to a brand. The brand has to reach out to her. As a result, direct selling companies have started advertising in India”.

That’s the reason why California-based global nutrition company Herbalife signed on cricketer Virat Kohli for its nutritional products and dietary supplements. Amway India, another direct seller, is the sponsor of a popular show in Hindi movie channel, Zee Cinema.

“Such associations help in better brand recall, and also build confidence among distributors. We have managed to clock growth rates above 99 per cent for the last two years,” says Ajay Khanna, country manager, Herbalife. The company is operating in India for the last 11 years and has presence in 75 countries.

Tupperware has decided to associate with popular Hindi films to leverage the potential of its kitchenware brand. As Bagai puts it, “Movies are a passion here. Thus, an association with movies is an excellent way to position the brand in the Indian context”.

Historically, the direct selling industry started with the concept of ‘word-of-mouth’ publicity so that overhead costs are not very high, the Indian Direct Selling Association (IDSA) points out. Chavi Hemanth, secretary general, IDSA says, “Concepts started changing as something that started as a low cost business grew to include billion dollar companies with global presence. Especially, if one talks about the Indian context, there is a hierarchy of consumers, and in the age of the retail boom, companies are trying to position their brands with long-term goals in mind.”

Companies also feel that the Indian consumer is ‘touch-and-feel’ oriented, prompting many of them to even open Experience Centers across major cities. Tupperware has such centers in malls, Big Bazaars and Spencers in 15 cities.

Amway India, the largest direct selling company in India with a product offering of 123 items across categories that include nutrition and wellness, cosmetics, personal care and homecare, has increased its ad-spend budget from Rs 12 crore in 2008 to Rs 30 crore. Apart from promoting the brand, Amway has also started category and product-specific advertisements on television, such as Nutrilite health Tips twice a week on NDTV 24x7. The Nutrilite ad started in November last year,” says Achinta Banerjie, vice-president, western region, The company will consider the money well spent as revenues have grown from Rs 1,128 crore in 2008 to Rs 1790 crore in 2010.

Companies, however, are being judicious in choosing the medium when trying to reach out to the target customer. Another leading cosmetics brand in the country, and a direct selling company, Oriflame India, has chosen to associate with fashion magazines. “We initiated our full-fledged advertising campaign in the last quarter of 2010 with key fashion and women’s magazines where we highlighted some of our best products from the portfolio ,” says Sharmili Rajput, marketing director.