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Monday, October 12, 1998

New products via direct selling route soon 

Alice Guram  
The concept of direct selling is not new in India. Our domestic market has seen companies such as L B Publishers, Lotus Learning, Eureka Forbes and Sterling Holidays and Resorts take this marketing route a long time ago in order to develop and sell their brands.

But the entry of major multinationals into this area has catapulted this fledgling industry to centrestage. Cosmetics majors like Avon and Oriflame and consumer product manufacturers like Tupperware and Amway have added vibrancy to the already throbbing industry.

But in what way has the Indian consumer thus gained? ``Phenomenally,'' states Raksha Sethi, Reader, Department of Zoology, Delhi University, and a consumer who is very fond of the direct sellers.

She says that she saves a lot of time in purchasing from a direct seller. ``Most of the time the direct sellers come from very reputed companies. So you can purchase their products without any hesitation,'' she feels.

But this is only the case of products that are not so highly priced.``Look, when it comes to products like water filters, we do look at the House of Tatas behind the Eureka Forbes brand before venturing to spend that amount,'' she adds echoing the views of many other consumers.

Direct selling basically adopts the marketing plan, whereby the customer is approached directly by the company without using fixed retail outlets. Additionally, unique marketing systems are often developed -- Tupperware's party plan, Amway's multi-level marketing approach and Avon's independent beauty advisors.

According to the annual survey conducted by the Indian Direct Selling Association (IDSA), comprising member companies (Amway, Avon, D K Family Learning, L B Publishers, Lotus Learning, Oriflame, Tupperware, and associate members like P S Press and Aero Pharma), the direct selling industry is in for exciting times and a lot of action ahead. Against the backdrop of the world direct selling industry turnover of $80 billion in 1997-98, the Indian direct selling turnover has already crossed Rs320 crore with the estimated number of people involved in direct selling in the same year crossing 1,20,000. This translates into a growth of 33 per cent in turnover and 25 per cent for the number of people involved.

According to estimates carried out by IDSA, the industry is expected to grow at the rate of 50 to 100 per cent in 1998-99. This is largely due to the fact that direct selling companies like Amway have launched their products this year. According to the president, IDSA, Laxminarayan, who is heading L B Publishers, ``Our vision is that we will fuel the economic growth and provide independent business opportunities to tens of thousands of people in the coming years.''

But in their zeal to do well, some direct sellers can become very over-bearing. According to Raman Mohan, Manager Marketing, Indian Subcontinent, Amadeus India, ``Most of the distributors of the direct selling companies tend to be too pushy and so invariably consumers are forced to buy their wares. I also feel that consumers needto be able to exercise a choice and so it is essential that they approach the retail trade to purchase their products.''

A consumer who has not bought any product through the direct selling route, Raman Mohan, feels that the phenomenal growth figures doled out by the direct selling companies can be attributed to the fact that our population is very large. ``Even if you look at sales through the retail trade, you will find similar growth figures and so the growth of these companies is not something unexpected,'' he feels. In addition, he feels that prices of these products tend to be a little steep when compared to their counterparts sold in retail trade.

But there are some consumers who feel that purchasing from a direct seller brings a sense of exclusivity in the whole exercise. ``Due to the fact that the directly sold products are not available at the shop shelves, I feel that there is no compromise on the quality of the same. I do not mind paying a little extra for the product. In fact, I feel thatthese companies have brought in a new concept in marketing in the country,'' feels president of the Modern Group, Tapan Jha.

Echoing the sentiment is Subhash Sood, divisional manager, C K Birla Group of companies. He says: ``With very little time on their hands, consumers are greatly benefited if a reputed company comes right to their doorstep to sell. In fact the popularity of this selling concept in the West is slowly catching up even here and has ensured good growth of an otherwise dormant concept.''

In line with this, IDSA estimates that new kinds of products and services are also expected to be sold via the direct selling method. These include consultancy services in real estate, sales and marketing of education programmes and professional services like immigration, health and nutritional products, skin care products, costume jewellery and consumer durables.

In order to circumvent some initial problems being faced by companies in the domestic market, some direct selling companies have introducedchanges and modifications in their products and plans to better adapt to the demands over here. They have realised that despite being a price-sensitive market, the Indian consumer demands global quality of products and does not accept anything less.

But the Indian market does have its plus points which is basically the reason why these companies are flocking here. The middle class is growing at the rate of 21 per cent per annum, indicating that people have more money to spend. In addition, there is still an untapped large rural market. But the rural market has different needs and perceptions and needs to be addressed differently.

IDSA predicts that in the near future the direct selling market is likely to get further segmented with each company having its own USP and preferred range of products. Officials at IDSA maintain that ``the most important thing that needs to be driven home is the fact that goods sold through the direct sales route are of high quality and cannot be compared to products soldthrough retail shops.''

All in all, the Indian consumer seems to have gained with the entry of these multinationals through the direct selling route. What is essential though is that more and more products should be introduced via this route, in order to ensure that ``freshness'' which is essential with every marketing plan.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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