VERIFY MARKETS INTERVIEWS MARZIN SHROFF OF EUREKA FORBES
Mr. Marzin Shroff is the Chief Executive Officer of Direct Sales and the Senior Vice President of Marketing at Eureka Forbes. He is the brand trustee of 3 Superbrands – Aquaguard, Euroclean and Eureka Forbes, and has the task of steering the largest vertical at the company. His responsibility is thought leadership, category leadership, and market leadership. Marzin proactively manages business risks and is responsible for cultivating best in class talent, along with building strong leadership and succession plans.
Marzin is a Chartered Marketer from the Chartered Institute of Marketing, UK, and has an MBA in Marketing.
Marzin started his career as a Brand Manager at Eureka Forbes. Subsequently, he has been associated with, consulted, and trained a number of well known companies. His last stint was with Suashish Diamonds where he set up their Brand operations. In a career spanning over 17 years, Marzin has acquired multi-dimensional experience in Direct Marketing, Advertising, Strategy, Luxury Branding, International liaison & Corporate Communications. He returned home to EFL in 2006 as Sr. Vice President Strategy, Business Development & Knowledge Management and successfully concluded a joint venture deal with GE.
Can you give us a brief review of history of Eureka Forbes?
The essence of Eureka Forbes, since our inception in 1982, can be summarized in a single word - ‘Relationships’. Relationships have made us reach out to our customers in their homes, transforming the way they purify their drinking water and the air they breathe, cleaning their homes and securing their families so that they can lead happier, healthier lives. We have already welcomed over ten million happy families into the Eureka Forbes family, which has also encouraged us to provide opportunities for our people to realize their potential and dreams.
Born as a joint venture between the Forbes & Campbell (a Tata Group company) and Electrolux of Sweden, today we are a multi-product, multi-channel organization that is part of the Shapoorji Pallonji Group and has a global footprint in over 50 countries. A Business Superbrand and one of India's Most Admired Consumer Durable Companies, we have been repeatedly chosen as one of the Best Employers in Asia and India (Hewitt studies) as well as one of India’s Best Places to Work For (Great Places to Work ® Institute study). We have also been honored several times as one of the Most Admired Knowledge Enterprises in Asia and India (KNOW Network). It was a special moment of pride to be inducted as a case study in the curriculum of the prestigious Harvard Business School and the Richard Ivy Business School, as well as to be featured in the respected Forbes Asia magazine.
The customer has always been at the centre of our business and we are constantly expanding our ways of reaching out to them to understand their needs and aspirations; bringing them products and services which effectively address them, and above all, ensuring their satisfaction and the well-being of their families.
We introduced direct selling to India and pioneered the water and air purification systems, vacuum cleaners and security systems categories, which we continue to lead. We are one of the largest direct selling companies in the world, cited as a classic direct sales reference by marketing ‘guru’, Philip Kotler, in his famous textbook ‘Marketing Management’ and featured in the top 50 of the DSN (Direct Sales News) Global 100. Our direct sales force that is over 7,000 strong, also known as Eurochamps, are specialists in direct selling and follow a door to door model for selling our products.
Recognizing the vital importance of service in ensuring that our products always performed optimally, we established one of the widest service networks in the country to back up our products. It was one of the first to bring service to the customer’s doorstep. Almost 80% of our customers have a service centre within a 5 km. radius of their machines. We meet as many people every year in India as the entire population of the United Kingdom. Over 5,800 company-trained technicians operating from service centers enter about 40,000 kitchens a day which essentially translates in to one kitchen every 2 seconds. They are ably supported by our Eurohelpline call centers, customer relationship specialists and mobile service vans. Caring for the needs of the customer has led us to a better understanding of the market and made us a true leader in customer care. We have been recognized several times for our exceptional responsiveness.
As an organization, we are propelled by the force of the youth. The average age is under 22 years and we give them a career and an opportunity to build a future with us. We have been tempted to get into entertainment, electronics, communication, etc., but have stuck to our long term vision. As far as the water business is concerned, which is more specific for you, we have been market leaders ever since we started the business. In cleaning, we have a market share of close to 85% in the vacuum cleaner business across the country. We are significantly present on the web and are among India’s top corporate websites. We are also present in the retail space through about 12,000 retailers across India. So while our direct sales presence is in about 450 towns, through retail we cover about 4000 towns across the country.
We entered the international market to seize the opportunities that opened up by globalization, tying up with another giant in the world of direct sales, Lux International, Switzerland, through a joint venture - Forbes Lux - which now has a footprint in the water purification and cleaning markets of over 50 countries across Europe, Asia, the Middle East and South America.
Can you give us a bit of background about yourself and how your involvement with Eureka Forbes started?
I joined as assistant brand manager for vacuum cleaners way back in 1991 and have been associated with the company ever since. I went out for a brief spell into the advertising world, but even when I was in the advertising world, I was working on the Eureka Forbes account. So indirectly, I have been involved with this company since 1991, which is pretty much the beginning of my career. I was in marketing and in brand management. Then I moved into business development and strategy. I handled the institutional business. Today, I oversee the direct sales and service verticals, as well as the new initiatives. As an organization, we are also present in the B2B segment in water. We have a strong presence through our sewage treatment plant, wastewater plants, effluent treatment, and we provide end-to-end solutions. Whatever the water, wherever the water, however bad it is, we will purify it for anybody. Education wise, I am a Chartered Marketer from the Chartered Institute of Marketing in the UK. I have done my MBA, but more than anything else, I think I am a salesman – be it selling concepts or ideas or whatever, I am, at heart, a salesman.
That’s great. You started from the bottom almost and you have been pretty much exposed to all aspects of the organization.
Absolutely. Yes. This is one of the great things about Eureka Forbes where our leaders are exposed to cross-functional experience making them holistic in their approach.
What about the value proposition and Vision and Mission for Eureka Forbes?
We have always been a very customer focused organization, and let me tell you what that means. When we started our business, we use to sell vacuum cleaners door-to-door, and the customer said, ‘Hey, this is fantastic, can you help me with a vacuum cleaner for my office?’ So we started selling to the customer vacuum cleaners for his office, and then he said, ‘This is not good enough; I need a bigger vacuum cleaner.’ We went back and made a bigger vacuum cleaner, and then the customer came and said, ‘This great, how about helping me out in my factory, can you give me a product for my factory?’ We tied up with an international company and started bringing in vacuum cleaners for their factories. Customers kept saying, ‘This is fantastic, but I don’t have the expertise to run this kind of sophisticated equipment. Can you help me run it for me?’ We entered the facilities management business. Today, we run a facilities management company for large institutes and industries. We have been growing by listening to our customers. When you are directly dealing with customers directly, you tend to get feedback pretty quickly, so it is this focus and this kind of listening approach that has given us the kind of success we have today.
Eureka Forbes revolves around 2 core elements: the Customer and the Eurochamp. In all other organizations, a sales guy is a sales guy at the end of the pipeline; nobody cares about him. People think that we have to incentivize the guy, so let’s incentivize him, but in Eureka Forbes, they are central to everything we do. Our Eurochamp is our hero. He is the man who pays for my salary. So we glorify him as a Eurochamp. In the month of July, we have hired a cruise liner and we are taking a 1000 of our team members who qualified for a cruise from Singapore to Phuket and back to Singapore over 3 nights. We really go out of our way to make our Eurochamps feel special; we go out of our way to make our customers feel special. We have a customer base of about 10 million today. We are in the service business, so with 10 million customers, if you have 0.1 percent of unhappy customers, we are talking about 10,000 unhappy customers. Since we have a fantastic service and redressal system, any mail which gets escalated to my table is answered within 2 hours personally, by me, by my office, and we tend to be as focused as we can on our customer. So that’s really what we look at.
You guys seem to do an excellent job of listening and responding to your customer requirements. Do you do anything proactive to find out what your customers might need, but not know that they need?
Yes, we do that as well. One of the things that we have looked at is that in India, water changes pretty quickly. We have among the worst water in the world; wherein we have about 12.5% of the world’s population and only 2.5% of the world’s water. What typically happens is that people start digging water out of the ground and in many places in the country our water table is down to 15-18%, which is frightful. The quality of water that comes out is not of the desired standard. What does happen is that when a metropolis or a large city is expanding, typically the municipalities cannot always provide this expansion through its own water. So while the people do tend to get municipal water during the morning, but during the afternoon, they do not have access to such water. So they dig it out of the ground through a bore well. Sometimes they try to get the water through a tanker or a bowser, which goes around the city. You have different sources of water coming in at all times and they have different TDS levels. TDS levels are the total dissolved salt level in the water. The taste of the water changes dramatically and the quality of the water changes also dramatically. We at Eureka Forbes anticipated this problem and created a product that understands what water type it is and then puts it through the appropriate purification system. This is something that we have done ahead of the customer’s needs.
With respect to vacuum cleaners, for example, Indian dirt is much more grimy and sticky than what you find in Europe because of our moisture content. We have created specific accessories which you will only find in our vacuum cleaners and won’t find anywhere in the world. By listening, and by sometimes preempting, we have created and anticipated the needs of our customers and tried to stay one step ahead. We will be launching a product at the end of the next month, so it is a little premature for me to talk about that, but it is again in anticipation in the need of the customer. These are some of the things that we have done. We also looked at the business in water. Purity is fast becoming a norm, in a way. You have water, you have safe water, and you have pure water. We have moved beyond the realm of safety and purity and we have occupied the high ground of health. We are giving the customer healthy water, which means the optimum balance of minerals in his or her water, to be able to give them the right amount of nutrients and balance with the right amount of taste. If a customer likes water that is more mineralized, like let’s say an Evian, you can give them that water. If they want more sweetness in their water, we can give them water like Kinley or Aquafina, and the customer now has the power to adjust the taste of water in their own home. They can just press a plus or a minus button and change the mineral content of the water and they can change the taste of the water. These are some of the innovations that we have been working on along the way, anticipating the needs of our customers.
Is there any kind of business process in place to identify those needs? How does it work? How do you come to these decisions and stay a step ahead?
Well, that’s a tough question to answer because there is really no formal feedback system, but we are always listening. We have reviews and we have concept called ‘Leader’s Day Out’ where every single leader in our organization goes out and meets customers. Most organizations lose touch with this basic principle of success, which is being in touch with the market and with customers. Every time we go and visit a customer, we learn something different. It is interesting and it keeps you grounded, it keeps you awake, it keeps you on the move. This is our approach where there are no structured systems of ‘quality circles’ or ‘innovation circles’.
In terms of the products that differ from competition, the first one was the product which automatically detects which purification system gives you optimum minerals and taste. The other is the green RO. A lot of people in India think, due to our competitors advertising, that RO is the latest technology, which really isn’t. In some parts of the country, for example, in Mumbai where we live, where I come from, we don’t need a RO system because the water doesn’t have any salt content. All that you have is bacteria and virus and all you want to do is remove microbiological impurities. Customers keep saying that, ‘RO is the latest’. We innovated a little and we said, ‘We will give you an RO membrane, but we called it the Green RO’. We were the first to launch the Green RO. The Green RO has the unique technology that saves water. I am not sure you know this, but for every litre of water that goes through an RO system, you are losing 6 liters of water, which is quiet disastrous when you look at the fact that India is such a water stressed nation. It is very important for us to ensure that we don’t waste water as an environmentally responsible organization.
One of our key initiatives and the apple of our eye is EuroAble. Every company has a contact center, or a call center, and these call centers are outsourced to specialist companies. We decided to do things slightly differently. We gave an opportunity to the differently abled to come and work with us. We have a contact centre of about 80 plus people that work here and each one of them has a physical disability. The whole centre is built around people who have some physical challenge in life and who probably would never have got a job anywhere. We at Eureka Forbes give them a living, we give them an opportunity to get some respect in society and to make some money, and they love it. Three couples have already got married at our Euroable center! We are happy to do things to please others, we are happy to do things to please ourselves and we work as a one big, happy family. That’s really something about value, or vision if you’d like; it is very difficult to encapsulate on a sheet of paper, but we have our vision and mission written out. It is all on our website, which can be viewed from there. One thing is to have it on paper and one thing is to actually put it in practice, and these are the ways in which we put it into practice. If you have a look at employees, they have an organization called Great Places to Work who conduct a study across the country. We participated in the survey and are ranked the 12th best company to work for in India.
How do your products differ from the competition?
I mentioned two; one is the green RO and the other one is the automatic technology that detects water quality and provides an optimal output of water with the required minerals and salt contents.
Another interesting product which we have launched is the personal purifier. It is probably one of the first of its kind in the world; we worked for around 7 years on this with a US based company and launched this bottle for school children. What typically happens is that kids carry safe water to school, but what happens is when they go to school, they run out of water and fill up their bottles with dirty water. Unlike the US, any water from the faucet is not necessarily safe or pure. We came up with a bottle, which purifies water on the go. It delivers 99.99% purity and any person can fill any water and still be able to drink it and be healthy. Also, in terms of difference, it’s not just products, but how you service your customer and the satisfaction level of customers. I think post sales service plays a key role in our differentiation for proposition to the customer.
I think that’s excellent. You are one of the first direct selling companies in India. Do you think that message is key in being the largest player in the states over there?
It is certainly our competitive advantage and our weapon in today’s marketplace. Direct selling works best when you create a need for customers. When the category is a ‘push’ category, it’s great to have a direct sales module, but when it is a ‘pull’ category, the customer feels the need to go out and get the product themselves without a person coming home and doing the sale. The move from ‘push’ to ‘pull’ category, perhaps means it is time for the category to move into conventional forms of distribution. We have emerging channels, we have conventional retail, we have what you call ‘modern retail’ and as the category starts to move from push to pull, we look for optimal balance. Direct sales is the core of this organization and will continue to be. Our people are passionate, they love their jobs, and they are great at relationship building. They can go back to a customer and get a reference. But at the same time, we don’t want to miss out on the consumers who go to stores where we are not present. We have ramped up our retail presence significantly. We have also started our institutional business where we go to meet builders, coming up with new constructions and see if we can start installing purifier in the building before the building is erected. The customers not only move in with purified drinking water but with the trust of the Aquaguard brand as well. We also have our other institutional, or our B2B business, which sells large plant community solutions.
We are launching a very interesting initiative wherein we will provide water kiosks for people on the streets; they can just come in and fill in water, wherever they like. Other innovations we have created include community plants where we provide the entire village with safe water. Villagers come in with their own vessels, collect water, and carry it back home. This is for people who cannot afford individual water purifiers, people who are really at the absolute bottom of the pyramid. We give them a smart card which they swipe, fill in the water, go home and they have to pay at the end of the month. It is convenient for everybody. We work with NGO’s, we work with World Vision, etc. where we partner with them. We work with self-help groups where the local community, themselves, put a team together and then the 3 of us work together in supplying, servicing, installing and running the plant as well. We have 100 such plants, the number is not significant, but it is growing, and we put their small plants as a pilot in small villages. We’ve seen some success and based on our experiences from these units, we will then extend it nationally. So, while direct selling is an integral part for what we are known for, we are now evolving in other forms of distribution as well.
With multinational companies entering the Indian market and many others planning to enter the Indian market? Do you see that as a threat?
If you really look at our mission statement, it is to provide every Indian with safe drinking water. Purification is a very nascent industry in India. The penetration level is ridiculously low and there is enough scope for everybody to enter the market and to provide safe water. As a leader and as a custodian of the industry, we welcome competition. We welcome healthy competition! A lot of international players who come in are healthy and it is good that they enter the market because they improve the market; they improve our quality as well because it keeps us on our toes. We really think that it is a great thing to happen because more Indians will have access to safe water. Having said that, there is a large and growing unorganized sector, which is the real danger to us. This unorganized sector provides products without any certification. India is a country where, unfortunately, we don’t have norms and standards yet. One of the other things that I do is that I am the chairman of the Indian WQA, the Water Quality Association (India). We are a team of like-minded people from the industry where we are laying down the standards of performance for water purifiers. As an industry body, we are trying to look at ways how we can protect the consumers so that the consumer is not affected by drinking with cheap products, or reject quality products or recycled products, from the market. These are some of the things that we are doing. We do like it when competition comes up. It helps us sharpen ourselves and I think it is a good thing; it is a welcome sign for us. It’s just that the healthy competition which is good, it’s the unhealthy competition, like people who don’t pay taxes, who copy our design and passing it on as Aquaguard itself, which is where the concern really arises from our side.
What can be done to address that? I know this is a big problem in China and India, especially.
We have tried different things. We tried education, but it’s an expensive exercise when you do it across the country. We have tried the legal system, we have worked with the legal people, with the police where X person sets up a small plant, but runs it at the back of his garage. You shut it down and 3 weeks later, he runs it from his cousin's house 5 miles down the road. It is really a tough one to address. Unless there are standards and norms and these norms are enforced, it is difficult to control. We have tried various methods, but we have not been able to succeed in controlling this. We are trying to fight and combat it, as an industry, and I think time will tell how things go. We also know that the government is also setting up the standards of their own as well. So we will see how this goes.
What trends are you currently seeing in the residential water treatment market in India?
I think there are some trends which are emerging, the movement of the mass market, the bottom of the pyramid. People want cheaper solutions; people want easier solutions. There are a couple of initiatives that we have undertaken which I think it is a little bit premature for me to talk about because we have people who copy just exactly as we do. I would rather be a little careful at this stage telling you what we are doing until we actually have done it. But in terms of broad trends, I would say bottom of the pyramid is one. The higher end is another. The third is transition from UV to RO to RO+UV. Those are three broad indicative trends in a way that are happening in a market.
Why is the trend shifting from UV to RO?
I think it is a form of sheer presence of two factors.
1: Some of our competitors going tom-tomming (drumming around) that RO is the latest technology and they switch to RO, which is rather irresponsible but it’s being done.
2: All unorganized sector player are selling RO. There is no unorganized sector selling UV, all unorganized sectors are selling RO because they all come in from reject Chinese components, which hit the Indian market through the grey market. We try to educate the customer to get the optimal purification system rather than just going in blindly buying an RO system. We educate our sales people and through this education process, we try to tell the customers that you don’t need an RO, why would they want to waste 6 liters of drinking water and get just 1 liter? We have got trends now. I got a mail from a customer about couple of weeks ago saying that, ‘I have bought a RO system, but I feel so guilty wasting all this water. Can I switch back to a UV system?’ This is also happening; as education happens, we try to educate our customers, but eventually it is the choice of the customer. If there is something in their mind, they would say, ‘You don’t have a RO system? Of course we have an RO system, we have the best RO systems,’ but we wouldn’t recommend it. That’s really an education process, in a way, but these are the broad trends. Also, as the city expands, there are some places where you genuinely need RO systems. When we mapped out the country, one of the biggest IP advantages is that we have 17 water laboratories across India. These 17 laboratories have been constantly and consistently tracking the quality of water over the last 15 plus years. We know exactly what kind of impurities are there in which part of the country and we do provide customized solutions. So an Aquaguard in Kolkata and Aquaguard in Mumbai will look the same, but there will be a completely different product inside. Through our experience and through our expertise, we know what solution we need to provide for any water condition. In parts of west Bengal, for example, there is arsenic in the water; there is high iron content in the water. In parts of Gujarat there is fluoride, in fact in Andhra Pradesh there is fluoride in the water. Depending on the need, we provide the ideal purification system to clean up all these impurities. That is also a comparative advantage.
Most of the companies that we speak with say that India is a market with huge potential. With that in mind, not many companies succeed, despite such a developing and existing middle class. What do you think the reason for this is?
A lot of companies look at the market and say, ‘Hey, let me get there; let me get a piece of the pie,’ without doing their homework, without understanding the consumer, without being able to give the customer what they want. The Indian consumer is very, very price sensitive, number one, and the Indian consumer is also very demanding. They want the best price for the best quality and they are not ready to trade off price for quality. Whereas people feel that, ‘There’s a huge market, let’s look at it, let’s put a guy, one of our best people, over there,’ it doesn’t work that way. You know you have to understand the psyche of your customer, you have to understand the needs of the customer, you need to understand really what problems they need to resolve. You need to position yourself as well. I’ll give you an example from another industry. When McDonalds came to India, they did so much of homework. They understood that Indians don’t like beef because the cow is sacred to them in India. The biggest selling product in McDonald’s worldwide is the Big Mac or the Quarter Pounder, but they don’t sell that in India. You come to India and you get a Chicken McBurger. You will get a Vegetarian McBurger. They customize and today, McDonald’s is one of the biggest, successful multinationals in India. They understood what the customer wants and they came in and they created their product around the Indian Market. Today, there is a McDonald’s in every street corner in the city. They have been extremely successful because they came in they took the trouble and took the pain to understand what the market needs, and then they came back with it. They didn’t take their own products which were successful around the world and bring them in. Imagine not having a Big Mac in India. It’s just not there; you cannot buy it because it offends the sentiments of the larger community. They came in with an ice cream at 10 rs or 20 rs, ridiculous because it is so low priced, that people will just walk in to buy that one ice cream and they just get the experience of McDonalds and then they keep coming. There are lines in a McDonald’s store to have dinner on a Sunday, and people go out for dinner as a family. It is uniquely different from the US, where someone wants a quick bite to eat get in get that and they are done with it. Here, the whole family goes there they make a meal out of it, they make an experience out of it. It’s the understanding that the customer wants; it’s the understanding what the market needs, creating a product or service around that which makes it successful, not duplicating what is successful in China and India. China and India are two completely different countries. What works in the north doesn’t work in the south. Take the pain, take the trouble, and you have no option but to succeed. The other important thing is the service. An Indian doesn’t change his own light bulb. He doesn’t change his own leaking faucet. They seek help for that. It’s not that they are lazy, just that they don’t know how to do it. There is no concept of DIY in India.
Do you see that trend happening in the future? Because that was the case with the US with the Culligan Man 40-50 years back, but that model has become very do-it-yourself.
Markets do evolve, as labor gets more expensive and India will evolve as well, but the companies that listen and understand will make change. Philips came in with a DIY product about 4-5 years ago. They came in as quickly as they went out. Great product, fantastic product, brilliant, if you ask me, but will it work in India? No. They didn’t understand the psyche of the customer.
There are issues with the inconsistent water supply. Are you coming up with new products to address the challenge with electricity and water supply?
Oh, absolutely, yes. We have some very interesting products. We already have a lot on the anvil in the market and there are some that we are creating and launching around these situations. We have a UV storage, for example. We know that sometimes we have electricity and no water, and sometimes we have water and no electricity. So we have created a product around this unique need and have called it Aquaguard Pride. When we launched it, people felt the need for it immediately. So, yes, we have created products around these unique needs. We have created products around inconsistency in water, which is what I was telling you about earlier. Definitely, as listening company, we do create need based products.
What are the key drivers impacting the market?
Sure, low quality of water, increasingly high salt content as we dig deeper into the ground. The municipality and the government, though they are trying very hard, are unable to cope up with this increasing needs of metropolitan, so everybody needs to fend for their own water safety. Poor quality of water is certainly one big worry, low market penetration of water purifiers is another key driver, and quality of water changing from what it was 10 years ago is a third driver. I think, by and large, if you look at its awareness of the category, also makes a big difference. There is a lot of growing awareness; there is a lot of water. If I am not mistaken, water is the 8th largest spent category on television. There is growing awareness, there is growing need, there is also the middle class that is growing in terms of wealth and income and they do evolve to quality water purifiers. Also, 65% of our hospital beds are filled with people suffering from gastrointestinal diseases, which can be directly attributed to unsafe water.
What are some of the key expansion points you are looking at? Was that the personal water purifier you mentioned the Kitanu Magnet Bottle?
Yes, the Kitanu Magnet Bottle. It’s called the Aquaguard On The Go. It is a great opportunity; the higher end of the market is the great opportunity. We have launched a hot and cold purifier for homes. We are going to launch next a unique product that will provide absolutely healthy water, if you had this interview one month later you would have known about it, but I can’t tell you about it now. We are looking at Water Plus.
Where you envision Eureka Forbes in the next 4-5 years?
We see ourselves as innovators, we see ourselves as listeners, we see ourselves as leaders, and we will strive to keep our customers and our Eurochamps happy, and I think that growth is the byproduct of customer satisfaction. I think that we will continue to dominate this market, we will continue to focus on our customers and we will continue to build new, innovative and unique products, we will continue to add value to our customers’ lives to create safe, happy, healthy and trustworthy relationships. I don’t think marketing is any rocket science. It is about doing small things right; and it’s about one odd game-changer. We are working on new technologies and building robust relationships.