The Tupperware Concept
Tupperware conducts its business through a single business segment, manufacturing and marketing a broad line of high-quality consumer products for the home. The core of Tupperware's product line consists of food storage containers that preserve freshness. In recent years, Tupperware has expanded its offerings in the food preparation and servicing areas through the addition of a number of products lines; microwaveable cooking, pots and pans and other kitchen tools. The development of new products varies in different markets in order to address differences in cultures, lifestyles, tastes and needs of the markets.
Tupperware Corporation, whose well-known Tupperware parties have spread to more than 100 countries, is one of the largest direct sellers in the world. Tupperware depends almost exclusively on the word-of-mouth from their independent sales force, with no other advertising taken into use. Relying on independent consultants for sales, the company generated more than $2.3 billion in sales revenues in 2010.
The History
To understand Tupperware reputation a look into the origins and early history is needed. Company founder Earl Tupper had by 1942 developed a plastic that was both durable and safe for food storage. The lightweight, flexible, and unbreakable material was also clear, odorless, and nontoxic. Tupper dubbed the new material Poly-T, and he further refined the product over the next few years. In 1946 he founded Tupperware, and began manufacturing food storage and serving containers with Poly-T. The containers were enhanced the following year with the unique Tupperware airtight seal.
Although Tupper quickly found department and hardware stores to carry his product, customers were harder to come by. Consumers were unfamiliar with the benefits of the new material and did not know how to operate the seal. Sales finally took off in the late 1940s when a few direct sellers of Stanley Home Products added Tupperware to their demonstrations. The products flourished with the direct selling approach because salespeople could explain the benefits of the plastic and personally demonstrate the seal to consumers.
The most successful direct seller of Tupperware was Brownie Wise, a Detroit secretary and single mother. Tupper hired her in 1951 to create a direct selling system for his company. Within a few months Tupper had established the subsidiary Tupperware Home Parties, Inc. and had abandoned selling his products through retail stores. Wise's home party system used a sales force of independent consultants who earned a flat percentage of the goods they sold and won incentives in the form of bonuses and products. Wise created the Tupperware Jubilee, an annual sales convention that became famous and provided a format for the conventions of numerous direct-selling companies. Sales skyrocketed, multiplying 25 times within three years. By the late 1950s Tupperware had become a household name. With almost no advertising, Tupperware had created remarkable brand awareness. Tupperware home parties provided an easy entrée into the workforce for women. Able to schedule the parties around their home and family responsibilities, women could earn extra cash and get together with friends and neighbors at the same time. In addition, the home party plan provided a milieu in which women were trusted as salespeople, unlike door-to-door sales, where women were not accepted at the time.
In 1958 Wise resigned from her vice-president position. Despite the change in management the company continued to thrive. Throughout the 1960s and 1970s sales and earnings doubled every five years. The company had grown not only in the United States but also had entered and thrived in several foreign countries.
Tupperware's growth slowed in the early 1980s due to competition and an economic recovery that had allowed many part-time sales people to find full-time work elsewhere. Sales continued to fall. Tupperware finally took action, bringing in a new management team in 1985. K. Douglas Martin took over as president of Tupperware USA. Several changes were made. To bolster slipping party attendance, he loosened the rules governing parties and allowed adaptations to the parties that would appeal to working women, such as shorter parties and parties thrown at the workplace. In addition, work was done to improve Tupperware's training of its salespeople and eliminated any bonuses and sales incentives that appeared ineffective. The company introduced its first catalog, which was sent out only in response to requests made to its toll-free number. In addition, national print and television advertising was stepped up to help counteract competition from Rubbermaid and other retail product lines. To improve the company's delivery speed, Tupperware built several new warehouses and a large distribution center.
Progress at Tupperware was uneven over the next several years. Sales in the United States continued to decline, although international business grew steadily. As a result, the proportion of U.S. to international sales gradually shifted until international sales accounted for more than half the company's revenues in 1992. Another management shift took place, Rick Goings, executive at direct sales leader Avon, took over as president of Tupperware in 1992 and is still president of Tupperware today.
In an effort to stop the decline in U.S. earnings, Tupperware cut costs and stepped up its sales force recruiting efforts. In addition, the company moved into direct mail, for the first time sending out unsolicited catalogs in 1992. The company saw the catalog as yet another way to entice busy working women back into the Tupperware fold. In 1993 the company was again enjoying profits in the United States, with earnings that year at $12.5 million. Sales also continued to grow internationally, helping improve the company's image on Wall Street.
Overall sales continued to improve in the mid-1990s, in part fueled by massive product introductions. Tupperware brought out approximately 100 new products between 1994 and 1996, including entire new product series.
Wall Street responded positively; Tupperware shares began trading at $42 and soon rose to $55. Certain analysts sang the company's praises, including David Boczar, who told Financial World, "There is a perception of higher quality with Tupperware as well as the multi-functionality of the products, and also the nature of the distribution." He felt that the long-term prospects for the newly independent company were good.
The steady improvement in sales and earnings in the mid-1990s faltered in 1997. Revenues declined from a high of $1.37 billion in 1996 to $1.23 billion in 1997. Earnings plummeted 53 percent, from $175 million in 1996 to $82 million in 1997. Several factors had contributed to the decline. Domestically, a change in the company's sales plan led to a loss in its vital sales force.
In 1997 Tupperware experienced further discord with some of its U.S. consultants when it began enforcing a company policy prohibiting the sale of Tupperware online. The company's crackdown included cutting off from their distributors consultants who refused to shut down their web sites. Consultants with web sites resented the intrusion into how they ran their businesses, for as independent franchise owners, Tupperware consultants are not employees. By early 1998, however, only six web sites remained in operation from a high of almost 100 in 1996. Lawrie Hall, director of external affairs at Tupperware, explained the policy to Fortune: "We believe that the product-demonstration and customer services that our consultants offer face to face can't be adequately provided in an Internet environment." The following year, Tupperware announced plans to sell merchandise over its own corporate web site.
Sales and earnings fell further in 1998. In the late 1990s Tupperware pursued several strategies to stop persistent declines in sales in the United States. Diversifying its distribution channels was one strategy. Tupperware had plans for selling over the Internet, through television infomercials, and at shopping mall kiosks. Diversifying its product line was another. Throughout the middle to late 1990s, Tupperware had been expanding into new product areas, including kitchen tools, small kitchen appliances, and children's products. Tupperware introduced a new sales technique in April 1998 with the "Demo in a Box." Consultants can purchase these boxes that come completely outfitted with recipes, apron, invitation inserts, video and audio training tapes, etc. Internationally, Tupperware continued to move into new geographic areas and to expand its independent sales force.
Although some analysts saw hope in the company's move into more traditional retail venues, overall confidence on Wall Street was low, as evidenced by the 63 percent decline in the company's stock price between 1997 and 1999. However, new products are introduced each month along with hostess incentives to keep interest high for customers to host/attend frequent parties and customer loyalty remains strong.
From 2000 and to now Tupperware has shown a steady global growth, even during the financial crisis. It’s important though, to notice that Tupperware have had losses in several years in many of their old main markets. The overall growth is due to the expansion into new markets where growth is vast, which is in lower developed countries then the ones where the earnings is falling.