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Direct-selling companies go beyond word of mouth

By Kangen Water on November 22, 2013 | Leave a comment

Hemmed in by slowing sales on the one hand and the rapid rise of online sales on the other, direct-selling companies in India, which together account for 35.8 per cent of non-store retail sales and 0.07 per cent of gross domestic product, are again relying on the charisma of star endorsers and the power of mass media advertising.

While Herbalife, a US-based direct-selling company that entered India in the 90s, has roped in Arjuna award winning cricketer Virat Kohli, direct selling brands such as Eureka Forbes, Tupperware and Amway have upped the ante by increasing spends on print, television and digital advertising.

Ajay Khanna, country head, Herbalife India, says: “At Herbalife, we do realise the importance of communicating to the consumers about the brand, which stands for nutrition. Our communication platform is predominantly print-focused. Our campaign stresses on nutrition, which is what the brand signifies. Our print campaign features our brand ambassadors such as Virat Kohli, Saina Nehwal, Dipika Pallikal and Mary Kom, who carry our brand vision forward.”

While Amway has no ‘Indian’ brand ambassador so to speak, the company has announced a partnership with Australian screen actress Teresa Palmer for its skincare and colour cosmetics range. The company, whose ad budget is pegged at Rs 15 crore, is also investing in brand assessment-cum-experience centres for basic health and beauty assessments for customers.

courtesy : MLM Bhaskar

This year, Amway launched new advertising campaigns for Attitude, its affordable skincare and cosmetics range. This is not the first time the company has launched a television-based campaign. In 2000, it had launched its first television campaign to establish the Amway brand name in the Indian market. Now, its ads are largely product-specific.

Some direct-selling companies are giving traditional one-to-one communication a more professional face. Traditionally, 40 per cent of the cost of bringing a product or service to a consumer is marketing-related. Till a few years ago, this expenditure was perceived as a waste by direct-selling companies, which sold their products on three pillars—word of mouth, face-to-face interactions (road shows, sampling and events) and experience centres or small retail outlets.

Direct communication was favoured, as it was cost-effective and, to an extent, measurable. With increasing competition from brick-and-mortar stores and the mushrooming e-commerce portals, leading direct-selling brands have had to rework marketing strategies.

There are other issues. Unlike Singapore, Malaysia, the US, and the UK, there is no regulatory framework for the direct-selling industry in India. Besides, there are issues concerning quality or mis-selling. “The industry suffers from some perception issues,” says a brand consultant based in Bangalore. “So, it is incumbent on more professional players to establish their credentials and remove any niggling doubts in the minds of consumers.”

Eureka Forbes, the manufacturer of Aquaguard RO, as well as a range of household products, claims the company is investing heavily on building online relationships with customers. Shashank Sinha, general manager and head of marketing (direct-selling), Eureka Forbes, says, “We have achieved this by spending 20 per cent of our media budget on digital.”

This trend, however, does not take away from the significance of word of mouth as a communications tool. Daniel R Pranjal, chief strategist at Strategy India, which works with many direct-selling companies, feels above-the-line media can, at best, be a reminder medium because direct-selling primarily relies on word of mouth, which continues to be a powerful medium. He adds a direct-selling company has no need to deal with the challenges traditional retail faces such as confusion over which media to choose for advertising, air time cost/space cost, credits, actors posing as users of the products, etc. Since it comes from product users, word of mouth is usually authentic.