Mkg Stat of Amway

Marketing Strategies & Swot of Amway

Chapter 1: INTRODUCTION

All organisations face an external business environment that constantly

changes. Sometimes these changes are slight e.g. minor amendments to regulations

or a new firm entering the market as a 'small player'. At other times, however,

changes in the environment may have important consequences for organisation e.g.

new technologies, changing consumer tastes or a merger between two large

competitors.

Changes in the business environment create both opportunities and threats to

an organization’s strategic development, and the organisation cannot risk remaining

static. It must monitor its environment continually in order to:

build the business

develop strategic capabilities that move the organisation forward

Improve the ways in which it creates products and develops new and existing

markets with a view to offering its customers better service.

Amway is an interesting example of a company that reviews its strategic

capabilities and uses this review to develop its products and markets. More than 450

products carry the Amway name in the areas of nutrition, health, beauty and home.

Amway also has a range of products that include other well known branded goods.

The company also offers a variety of third party services.

Amway is different from the more traditional distribution channels in that the

business has developed through direct selling. Amway has over three million

Independent Business Owners (IBOs) worldwide.

IBOs deal directly with Clients, build up personal relationships and deliver

direct to Clients' homes. IBOs are highly motivated; selling to people they know or

meet. The personal contact and care that they provide is an important element in

direct selling. IBOs are self-employed and can introduce others to the business, and

so form their own sales network.

VIVEK COLLEGE OF COMMERCE Page 1 of 39


INTRODUCTION TO AMWAY

Amway is part of the Alticor family of companies, which generated

worldwide retail sales of US$6.4 billion in 2005.

Over 40 years ago, Rich DeVos and Jay Van Andel, two young entrepreneurs

from the USA, created a plan that enabled anyone to start their own business by

selling quality products and giving other people the chance to do the same. This

unique business opportunity has enabled Amway to grow into one of the world's

leading direct-selling companies.

Today, Amway supports your business with over 450 exclusive products and

services, a state-of-the-art global ordering and distribution network and over four

decades of experience and advice to help you when you need it.

Amway's world headquarters in Ada, Michigan, USA, is over a mile (1.6km)

long and is home to more than 300 research and development scientists, product

development teams and global business support personnel. All these resources are

dedicated towards helping you achieve business success. Ada is also one of the four

global manufacturing centers, along with Buena Park, California, USA; Lakeview,

California, USA; and Guangzhou, China. Alongside the manufacturing facility at

Lakeview is one of four farming centers that use organic and natural practices to

grow ingredients for our health and wellness products. Other farms are located in

Trout Lake, Washington, USA; El Petacal, Mexico; and Tiangu, Ceara, Brazil.

The buzzwords for business in the 21st century are Think Local, Act Global.

Amway has been doing just that for over 40 years. With operations in more than 80

countries and territories, and products tailored for local regulations and preferences,

Amway is one of the largest local companies in the world.

Amway’s co founders, Rich DeVos and Jay Van Andel, believe that people

everywhere desire the opportunity to achieve and better their lives. Amway has

developed a series of statements which outline its culture. As with many different

types of statements of corporate purpose, these statements fall into a hierarchy.



MISSION OF AMWAY

Through the partnering of Distributors, Employees, and the Founding Families

and the support of quality products and service, we offer all people the

opportunity to achieve their goals through the Amway Sales and Marketing Plan.

Broad over riding statement of purpose.

To facilitate best business opportunities.

To deliver high-quality products to semi-urban and urban homes in diverse areas

of insurance, home tech, home care, personal care, cosmetics and wellness.

VISION OF AMWAY

Helping people live better lives.

Showing where the business wishes to be in the future.



GOAL OF AMWAY

The development of new business opportunities.

To increase the company's role in relations to social responsibility.

To provide excellent customer service.

Everyone needs a guiding vision to help direct their future. A business is no

different. At Amway, our vision is quite simple “we work each and every day to Help

People Live Better Lives.” So how can we make a positive difference to you and to

others around the world? By helping people everywhere to discover their potential

and achieve their goals, by offering better products and opportunities for the future,

and by sharing generously with the global community.

Helping Consumers Live Better Lives

By providing products and services that offer superior quality and value - to

better meet personal and household needs around the world.

By making the Amway shopping experience faster, easier, and more

convenient.

Helping Business Owners Live Better Lives

By providing a business opportunity that empowers people to realize their

dreams.

By making that opportunity flexible enough to accommodate each person's

individual goals, priorities and interest.

Helping Employees Live Better Lives

By providing a stimulating work environment that encourages everyone to

reach his or her full potential.

By creating opportunities that help all employees fulfill their personal and

professional goals.

Helping Neighbors Live Better Lives

Through corporate contributions that help improve the quality of life in every

community where we do business.

By providing personal assistance to individuals in needy particularly children.



VALUES OF AMWAY

Amway has established some simple shared values that unite the entire

company, and all of the Business Owners that are associated with Amway. It believes

that these values guide their actions and help it to achieve everything it is capable of

without compromise or harm.

Partnership

Amway is built on the concept of partnership, beginning with the partnership

between our founders. The partnership that exists among the founding families,

distributors, and employees is our most prized possession. Amway always try to do

what is, in the long-term, in the best interest of our partners, in a manner which

increases trust and confidence.

The success of Amway will reward all who have contributed to its success. It

will collaborate across boundaries and find common ground by sharing ideas and

resources, with a wide range of stakeholders. Amway will develop networks and build

long term alliances with internal and external customers.

Integrity

Integrity is essential to our business success. It does what is right, not just

whatever ‘works’. Amway’s success is measured not only in economic terms, but by

the respect, trust and credibility we earn. Amway wants to uphold the highest personal

and professional integrity which demonstrates honestly, loyalty, respect and high

ethical standards in all their responsibilities, obligations and other activities. It is

committed to behave at all times in accordance with the ethical practices of the

organization.

Personal Worth

Amway acknowledges the uniqueness created in each individual. Every person

is worthy of respect, and deserves fair treatment and the opportunity to succeed to the

fullest extent of his or her potential.

Achievement

Amway are builders and encouragers. It strives for excellence in all that it

does. Its focus is on continuous improvement, progress and achievement of individual

and group goals. Amway anticipates change, responds swiftly to it, takes actions to



get the job done and gains from its experiences. It encourages creativity and

innovation.

Personal Responsibility

Each individual is responsible and accountable for achieving personal goals,

as well as giving 100 per cent effort in helping achieve corporate or team goals. By

helping people help themselves, it furthers the potential for individual and shared

success. It also has a responsibility to be good citizens in the communities where it

lives and works.

Free Enterprise

It is a proud advocate of freedom and free enterprise. Human economic

advancement is clearly proven to be best achieved in a free market economy.

Trust

Building reliability and dependability for self by displaying commitment,

honesty, confidentiality and consistency in all actions.

Transparency

It wants to promote a culture of openness and mutual trust by interacting

objectively and without underlying personal interests.

Service Orientation

It is committed to serve its customers to fulfill our needs by focusing efforts

on discovering and thereby meeting stated and unstated requirements.

Recognition

It is committed to honor, encourage and support individuals and teams who

contribute, through its behaviors and actions, to the success of the organization.



AWARDS AND RECOGNITION:

Presented the Millennium Outstanding Service Award 2000, by the Confederation

for the Blind (AICB), in recognition for work carried out for the visually

challenged.

The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for

conducting a mega-Blood Donation camp of 816 units on 4th May, 2003.

The Surat Raktdaan Kendra felicitated Amway India at their annual function on

5th Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC)

held by any financial and commercial institution and industry. The Mayor of Surat

- Snehlata Chouhan - presented a trophy and a certificate of appreciation.

SOCIAL RESPONSIBILITIES PERFORMED BY AMWAY

One by One Campaign for Children

Amway Opportunity Foundation (AOF)

National Project for the Blind:

Project Sunrise: The objective is to identify one orphanage/institution at each

location where Amway has a modestly-large office (52 cities). On-going assistance to

be provided in education, healthcare and vocational training under the following

heads:

· Health care

· Education and vocational training

· Safe drinking water

· Children’s Day and AOF Day celebration with Amway staff & Amway.



HISTORY OF AMWAY

What does the word Amway mean?

Amway is an abbreviation for "American Way" and was coined in 1959 by

company founders, Jay Van Andel and Richard DeVos. Short, unique and easy to

remember, Amway has been registered as a corporate name and trademark ever since.

In the following decades, Amway Corporation successfully established itself as a

leading multilevel marketing business, built on strong values and founding principles

that continue to sustain our company today. The business is built on the simple

integrity of helping people lead better lives.

Today, Amway is a multibillion-dollar international business representing

freedom and opportunity to millions of people in more than 88 countries and

territories around the world. Amway offer over 3 million Business Owners the

inspiration to grow those businesses, and to work hard to provide new and better ways

for them to achieve their life goals.

A SOLID FOUNDATION

Rich DeVos and Jay Van Andel's friendship actually began with a business

proposition, when Rich struck a deal with Jay for a ride to school for 25 cents a week.

After high school they entered the military, but they planned to start a business

together after separate tours of duty. A friendship formed and became a business

relationship that has lasted to this day.

THE EARLY YEARS

Amway quickly outgrew its original facilities in the basements of Rich

DeVos's and Jay Van Andel's homes. In its first full year of business, Amway's sales

were more than half a million dollars.

THE DECADE OF GROWTH

As vowed by Jay Van Andel the night of the 1969 disaster, Amway rebuilt the

aerosol plant and went on. The '70s began with sales of more than $100 million at



estimated retail, and kept going strong. After a lengthy investigation, the FTC verified

that Amway is a genuine business opportunity and not a "pyramid."

THE BILLION-DOLLAR DECADE

The '80s will be remembered for the first Billion Dollar Year at estimated

retail in 1980. Building expansion at Amway World Headquarters continued at

breakneck speed as Amway scrambled to keep pace with demand, opening its new

cosmetics plant in Ada, Michigan.

THE NEXT GENERATION

As carefully planned by Rich and Jay, the second generation Van Andel and

DeVos families took the helm during the ' 90s. The Policy Board was formed and

Steve Van Andel and Dick DeVos succeeded their fathers as Chairman and President.

Distributors witnessed a similar trend, with the second generation of many distributor

families taking on important leadership roles.

NEW HORIZONS

In 2000, Amway prepared for a new century and a new exciting era. Almost

50 years after Amway began, the DeVos and Van Andel families created a new

structure to meet the challenges of this new century. A parent company, Alticor, was

established with subsidiaries Amway, Quixtar and Access Business Group—the latter

to consolidate manufacturing and distribution for the enterprise. At the helm of

Alticor are Steve Van Andel (Chairman) and Doug DeVos (President), jointly holding

the Office of the Chief Executive. Today each area of the business, including Amway,

has the freedom to build on its strengths.

Amway continues to be a leading company in the direct selling industry. Its

fundamental principles—freedom, family, hope and reward—hold as true today as

they did in the very beginning.



Chapter 2: MARKETING STRATEGIES OF AMWAY

DIRECT SELLING

The concept of direct selling is based upon person-to-person relationships. The

seller goes to the consumer rather than the consumer to a shop. In today’s fast

changing society, where more people work and shopping patterns have altered, this

type of shopping not only provides consumers with accessibility to a wide range of

products but is also convenient.

An organization involved in direct selling cannot sell without a sales force! At

the heart of Amway’s approach to direct selling is the critical relationship between

Amway and the seller or distributor. There are more than 2.5 million renewed

independent Amway distributors world-wide, around 37,000 of whom are in the UK.

Each of these distributors is self-employed. Anyone over 18 can establish their own

business as an Amway distributor, either on a part-time or full-time basis. Amway

offers individuals the chance to set up their own business with little or no experience

or capital investment. Working hours and flexibility can be adjusted to suit each

individual. Individuals may have many different motives for starting their own

businesses.

Amway products are sold person-to-person, rather than door-to-door or via

party plan. Distributors earn their income through retail profit on the goods they sell.

In addition, they receive a commission from Amway based on the volume of sales

they generate personally, as well as those by their own distributor network.



MULTI-LEVEL MARKETING (MLM) / PYRAMID SCHEME

Also called network marketing (NM) - is a business model which utilizes a

combination of direct marketing and franchising. Typically, individuals become

associated with a parent company in an independent contractor relationship. Sellers

are compensated based on their sales of a product or service, as well as the sales of

those they bring into the business.

Pyramid Scheme Accusations

Amway has several times been accused of being a pyramid scheme. A 1979

FTC investigation in the United States (see below), a 1997 Belgian court and a 2008

court judgement in the United Kingdom all dismissed these claims.

FTC Investigation

In a 1979 ruling, the Federal Trade Commission found that Amway does not

qualify as a pyramid scheme since Amway compensation system is based on retail

sales to consumers, not payments for recruiting.

It did, however, order Amway to stop retail price fixing and allocating

customers among distributors and prohibited the company from misrepresenting the

amount of profit, earnings or sales its distributors are likely to achieve with the

business. Amway was ordered to accompany any such statements with the actual

averages per distributor, pointing out that more than half of the distributors do not

make any money, with the average distributor making less than $100 per month. The

order was violated with a 1986 ad campaign, resulting in a $100,000 fine.

BUSINESS MODEL

Amway combines direct selling with a multi-level marketing strategy. ABOs

may both market the products directly to potential customers and also recruit

(sponsor) and train other people who become Amway Business Owners (ABOs)

themselves and in turn have the same opportunity. Each ABO may earn income both

from the retail mark-up on any products they sell personally, plus a performance

bonus based on the sales volume they and their down line have generated. People may

also register as ABOs to buy products at a discounted rate.



CHANGE MANAGEMENT

When the Amway entered into India they soon realised that the business is not

usual here and they will have to go under some changes for business to be fit for

locals. So they brought in the following changes especially for India.

Small Size packaging.

Low range products launched, like Attitude and dynamite.

Special product training sessions which guide how to use the product. (Since

Amway has concentrated products and peruse cost will be less if used properly)

Sale once in a year. (Diwali)

TV Commercial and marketing activities.

CSR (Corporate Social Responsibility) activities:

o Amway opportunity Foundation

o National projects for the blind

o Red Cross help

INTERACTIVE MARKETING OF AMWAY

The electronic way of communicating and selling directly to customers is

interactive marketing. The Internet provides marketers and consumers with

opportunities for much greater interaction and individualization.

There are some types of online component which are used by Amway.

Web sites :

Amway designed their websites that embody or express their purpose, history,

products and vision. Amway is designed a site that is attractive on first viewing and

interesting enough repeat visits. This website is containing all 7Cs of site.

(a) Context: Layout and Design

(b) Content: Text, picture, sound and video the site contains

(c) Community: How the site enables user to user communication

(d) Customization: Site’s ability to tailor itself to different users

(e) Communication: How the site enables site to user, or user to site

(f) Connection: Degree that the site is linked to other sites



(g) Commerce: Site’s capabilities to enable commercial transactions.

This site is easy to use and physical attractiveness. This site has good colour of

use. Their typefaces and font sizes are very readable. Individual pages are clean and

not crammed with content.

The site is quickly downloads. The first page is easy to understand. It is easy

to navigate to other pages that open quickly.

This website contains different information like,

o Amway Corporation

o The History of Amway

o Founder's Fundamental

o Amway India Factsheet

o Our Values. etc

Micro sites :

It is a limited area on the web managed and paid for by an external advertiser

company. Amway is used micro sites for excess their products from other sites like

Microsoft , Google’s, Yahoo and other web sites which are related to other groups.

Search Ads :

It is paid search or pay per click. The search terms serve as a proxy for the

consumer’s consumption interest and trigger relevant link to product or service

offering alongside search results from Google, MSN, and Yahoo!. Amway pay only if

people click on the links, but marketers believe consumers who have already

expressed interest by virtue of the search are prime prospectus. At an average of 35

cents, paid search is a lot cheaper than the $ 1 per lead for Yellow pages listings.

Display Ads :

These are small, rectangular boxes containing text and a picture that

companies pay to place on relevant web sites. Amway gave Display ads on different

websites like Amazon, Google, MSN, and Yahoo. Some banners are accepted on a

barter basis by Amway.


http://www.amway.in/Redirect.aspx?pid=ed4af036-9aa3-40c7-ae24-d3d1da14330a

http://www.amway.in/Redirect.aspx?pid=8d7694c8-241a-4fcb-8545-6f69fec18c01

http://www.amway.in/Redirect.aspx?pid=7fc29d39-19ad-4446-ab39-344eec941336

http://www.amway.in/Redirect.aspx?pid=8bcdebf6-fe9f-4998-9b73-df3796b7cb0c

http://www.amway.in/Redirect.aspx?pid=e53f9019-f19c-40b7-8cec-33536d8624cf


Interstitials :

This type of advertisement with video and animation, those pop up between

changes on a website. Amway Company used animation and video during accessing

website.

Internet specific Ads and Videos :

Amway Company produces Video and animation for their marketing of their

products and services. You tube, MySpace Video, Google video, Amway and

consumers and advertising company upload ads and video to be shared virtually by

millions of people.

Sponsorships :

Amway Company get their name on the internet by sponsoring special content

on websites that carry news, financial information. The Amway Company pays for

showing the content and in turn receives acknowledgment as the Amway suggested.

Alliances :

When one Internet company works with another, they end up advertising each

other through alliances and affiliate programs. Amway used this type of alliances.

Online communities :

Amway sponsor online communities whose members communicate through

postings, instant messaging and chat discussions about special interests related to the

company‘s products and services. Online communities for Amway are Face book,

Gmail, Yahoo, Rediff mail Amazon etc.

E-mail :

E-mail uses only a fraction of the cost of direct mail campaign. Amway

Company uses e-mail for their distribution channels and customer to aware their

products and services of Amway Company.

Mobile marketing :

Amway Company uses mobile marketing for their products on to mobile for

instant checking products and services.



AMWAY STARTS ADVERTISING

Amway is changing its way. The largest direct selling company in the world,

which has emerged a global retail giant over the last 50 years with minimal

advertising. The US-based wellness and personal care products firm is part of an army

of direct sellers in India that has woken up to the need for complete brand-building

exercise through mass media. Oriflame, Tupperware and Modicare have all started

spending more on advertising and even tying up with retailers as India’s Rs 3,300-

crore direct selling industry is bracing up for increased competition from traditional

players who have added direct selling to widen their reach to rural and semi-urban

areas.

Amway has seen its spending on advertisement rise from about Rs 4crore in

2005 to close to Rs 20crore in 2009. “Amway does not traditionally advertise but we

realised that India was a different market and that we would need to supplement sales

force’s efforts with brand campaigns in mainstream media,” says Bill Pinckney, CEO

and MD, Amway India

BUZZ MARKETING

Buzz marketing is a viral marketing technique that attempts to make each

encounter with a consumer appear to be a unique, spontaneous personal exchange of

information instead of a calculated marketing pitch choreographed by a professional

advertiser. Buzz marketing is not new; Internet technology has changed the way it's

being used. Buzz campaigns are now being initiated in chat rooms, where marketing

representatives assume an identity appropriate to their target audience and pitch their

product.

Following are the activities which might create buzz for Amway.

Daily meeting creating a buzz for new for not joint person.

Only training given to new joining person creating buzz that they are come in

that company which gives you a opportunity to be Financially free, gives you

security, gives you additional income.

All company seminars creates buzz as telling that company is registered at

FICCI and its 1st company among all networking companies.



Company’s advertisement and product also creating buzz for costumers.

Amway India Enterprises, the multilevel direct marketing company, which has

grown into a global multibillion corporation exclusively by creating buzz

through word of mouth publicity.

The campaign, with the tagline "The Power of Positive," is supposed to help

the company to create more buzz and attract more distributors at a time when

many people are unemployed--or tired of the jobs they still have.

It has created new corporate logo which has a few circles and semi-circles in

three different colours (red, green and greyish blue), overlapping each other.

They reflect three focus areas of the company -- home, beauty and nutrition

ranges

“More importantly, ads mention very distinctly about one of its important

unique selling points, which are the 100-per cent customer satisfaction or

money-refund policy commitment towards India.

Amway as a benevolent company has created a tag line such as. "We help

people build better lives, build their own businesses, and together, build better

communities," a voiceover says in one spot that breaks Monday.

Company is set to roll out its maiden product campaign for its Nutrilite brand.

The company has adopted the strategies of direct selling their product in the

market.

The product specific ad campaigns have been designed by ad agency

Rediffusion and will be rolled out in the print media and on television this help

in creating buzz.

DESIGNING THE SALES FORCE

Amway is using a direct-selling force for selling their various types of

product that they are providing. It uses a contractual sales force, it consist of sales

agents who earn a commission based on sales.

Amway is following multi level chain model. With an initial start up cost of

Rs.995 people sign contracts with the company to become Amway Business Owners

(ABO). When they become ABO they gets start up kit consist of product details and

free training sessions’ CD. They can choose to either sell products to other customers

of sign on their friends and relatives to become Amway business owners, who again



can choose to sell products to other people or sign on other people to the Amway

network. ABO earn commission only on the bases of sale of products by him and his

network not on the basis of number of people that ABO makes on his down line.

The Amway opportunity works in twofold: Giving you a chance to build your

own business at your pace & achieve the rewards and recognition linked to the plan

and at the same time helping other people do the same.

Sales-Force Compensation

Amway has developed attractive sales force compensation by providing

commission on the basis of sales turnover generated by ABOs and their group.

Amway’s performance bonus and award schedule is based on selling of Amway

products which is as under:

MANAGING THE SALES FORCE

Recruiting and Selecting Representatives


Business Volume(Business Volume is equal to the

Distributor Acquision Price of Amway Products minus Taxes)

16,500

55,500

1,10,000

2,20,000

3,85,000

5,50,000

Commission on Business volume

(% of business volume)

6%

9%

12%

15%

18%

21%


Amway recruit people in less numbers because it doesn’t require more salary

based employee as they makes sales with the help of multi level marketing model.

They make ABOs by convincing them that Amway will make their life time free and

provide opportunity to earn money and provide security which is the basic desire of

human beings.

Training and Supervising Sales Representative

Amway provides training sessions’ CD with the start up kit when any person

becomes ABO. And then after they provide training to ABOs about how to convince

people and make them buy the Amway product and become ABO. By this process of

training it helps people to spread their network and earn more commission by

increasing the sales turnover of their group.

Amway – Ahmedabad organises seminar for all new potential prospects as

well as for current ABOs near Natraj Cinema every Wednesday, and they charge

Rs.35 as an entry fee for attending the seminar. In such seminar they train ABOs

about how to sell Amway products and to widening the network. Motivating factor

that motivates Amway’s ABO is the commission that they earn on the basis of sales

turnover of Amway product.

Evaluating Sales Representative

Evaluation parameter for Amway Business Owners is number of down line

members i.e. network and sales turnover made by him and his group.

AMWAY’s CRM

CRM (customer relationship management) web system for trading systems to

manage client’s debts, complaints, comments and documents. The CRM user

interface is web think client which uses internet browser to access this system. The

server side provides role-based functionality for different users’ types.

Amway of Australia uses the Onyx application to consolidate and centralize

information about its Independent Business Owners (IBOs) and to automate

marketing campaigns and processes both for its Australian & New Zealand business.

Amway of Australia's roll out falls on the heels of the recent implementation at



Amway Korea Ltd. in February of this year. Amway deployed OEP to approximately

300 users in South Korea as part of the overall global deployment of Onyx.

"Amway is focused on building, and rewarding, lifelong relationships with

our Independent Business Owners," said Michial Coldwell, General Manager

Operations, and Amway of Australia & New Zealand. "We will be able to leverage

the Onyx application to ensure that we maintain a high level of service to our

Independent Business Owners and increase profitability per IBO by tracking overall

performance and dedicating our resources to those areas that gives maximum results.

With Onyx, we will continue to lead in the Direct Selling industry by providing

highly personalized service to improve overall success."

One of the factors driving Amway of Australia was its interest in capitalizing

on the success that Amway Korea has experienced with the Onyx campaign

management module. The campaign management tool enables Amway to run new

marketing campaigns. The new campaigns can, in turn, more effectively help

individual business owners achieve their monthly targets and improve overall

marketing return on investment. The Onyx professional services team was able to

quickly implement Onyx on time and on budget and fully integrate it with several

systems, including Amway of Australia's AS400, Business Intelligence system, and

Amway of Australia's custom EDM system used for sending all outbound

information.

"The implementation of Onyx at Amway of Australia is great example of how the

flexibility of our CRM platform allows customers to easily create a solution that is

tailored to meet their specific needs," said Brent Frei, Chief Executive Officer, and

Onyx Software. "Global customers like Amway were exactly who we had in mind

when we made the investment in things like a Internet architecture, web-services

enablement, and full Unicode support, and we're excited to see how they've

leveraged these features to provide a solution that is so critical to their business."

ANSOFF'S PRODUCT/MARKET MATRIX



Ansoff's product/market matrix is an accepted way of identifying and

categorizing market and product developments and opportunities. Amway makes

good use of the technique.

MARKET PENETRATION

Going for market penetration has involved Amway in making the most of

current products and competences by 'stretching' them to improve Amway's

competitive position within existing markets. One great benefit of direct selling is

that it is an immediate channel to the marketplace that offers customers a good

service, while at the same time providing business opportunities for individuals.

Special incentives enable IBOs and end consumers to take advantage of

particular offers at certain times of the year and these incentives have also helped to

increase market penetration. There are also special events such as Leadership

Training Seminars. These enable IBOs to spend time with others involved in the

business and to learn about 'best practice' from each other, whilst also sharing ideas.

PRODUCT DEVELOPMENT

Product development is a particularly appropriate strategy where an

organisation is strong in research and development. Product development is highly

important for products that have comparatively short life-cycles. Within Amway

there are approximately 500 active research and development projects in progress at

any one time.

With around 575 staff involved in research processes, and with strong links to

many universities, Amway formulates designs and develops new products to meet

customer needs and expectations within the global marketplace. Amway currently

holds more than 380 patents internationally and has approximately 430 patents

pending. Within its product development programme, Amway's technical teams use

the company's customer base to monitor and test new product ideas.

MARKET DEVELOPMENT



Market development involves taking existing products into completely new

markets. One method used by Amway involves expanding the ways in which

individuals can be involved with the Amway business. Amway has developed a

structure known as the IMC model. This increases the number of ways through

which people can become involved in the Amway business. Each of the letters IMC

stands for a different type of involvement.

I - Independent Business Owners (IBOs)

M - Members

C - Clients (customers) of the IBOs.

Members are allowed to purchase Amway products at a price equivalent to

that paid by IBOs, but do not participate in the Amway Sales and Marketing Plan.

They are a new type of 'customer' who deals directly with Amway.

DIVERSIFICATION

One way in which Amway have diversified its activities is through creating

an on-line business opportunity called 'AMIVO' to support and enhance its

traditional business. This makes use of the internet. The internet is a good example of

a structure that no one firm has had to pay to construct, but which is available to all

firms now that it has been constructed. The challenge to each business is to identify

how to use the internet in ways that are advantageous to it and also profitable.

Amway has succeeded in doing just that. The European platform of AMIVO

was first launched within the UK to provide a one-stop office for IBOs. IBOs can use

AMIVO for:

A means for Amway to communicate with IBOs quickly

Ordering products from their home 24 hours a day, 7 days a week

A communication tool to promote their business

Keeping track of their business status

A reference resource

A medium to recognise IBO business achievement.



AMWAY PRODUCT STRATEGY

Over 450 unique, high-quality products carry the Amway name in the areas of

nutrition, wellness, beauty and home, as well as commercial products and a variety of

services (from which 105 products are offered in India). In addition, Amway

independent business owners in selected markets sell additional brand-name goods

through local merchandise catalogues, plus a variety of services and educational

products. All products are backed by a customer satisfaction guarantee. Its product

lines include home care products, personal care products, jewellery, electronics,

Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics.

Amway conducts business through a number of affiliated companies in more than

ninety countries and territories around the world. Its product line is as follows:

NUTRITION AND WELLNESS

Nutrilite®

Nutrilite is the world’s leading brand of vitamin, mineral, and dietary

supplements, grown harvested and processed on its own certified organic farms.

COSMETICS

Our skin is the outward appearance of who or what we are , or what we would

like to be. But it is more than a simple cover. It is the largest organ of our body - a

complex and dynamic system that is vital to our health and reflects it as well.

Artistry®

Artistry® is one of the world’s top five largest-selling prestige brands of facial

skin care and colour cosmetics.

Attitude®

All products of Attitude contain Skin Vitalizing Complex that synergistically

combine to cleanse, Replenish & Moisturize the skin making it soft & supple.

HOME CARE

Amway’s Home Care Brands provide complete cleaning systems that fit with

everyone’s needs. Their versatile, effective product systems offer the features and



benefits consumers want. No matter what your lifestyle, Amway’s Home Care

products make light work of your cleaning chores.

SA8®

SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans

and softens.

LOC®

LOC High Suds is a multipurpose household liquid cleaner.

Dish Drops®

Dish Drops is a concentrated hand dishwashing liquid with a powerful

"Triadic Detergency System".

PERSONAL CARE

Amway Personal Care products have built global reputation based on their

world-class research and development. These products are designed to deliver the

ultimate grooming experience and the confidence that lasts long.

Glister®

Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent

that offers seven benefits.

Persona®

Persona Premium 3 in 1 Soap is a complete soap for the entire family promises

refreshing confidence.

Satinique®

Satinique Advanced Range with unique Ceramide Infusion System uses

nature's own renewing technology to rejuvenate, strengthen and protect your hair.

Dynamite®

Dynamite's range of male grooming products, formulated internationally is

designed to deliver the ultimate grooming experience.

G&H®

G&H Range enriched with the goodness of Glycerine and Honey, deeply

nourishes and hydrates the skin for a healthy glow.

Apart from this Amway also deals in Air purifiers and Water purifiers,

Jewellery, Electronics, & Insurance products.



Chapter 3: CASE STUDY ON SOME PROBLEMS

FACED AND STRATERGIES ADOPTED BY AMWAY

AMWAY IN USA

THE BUSINESS ENVIRONMENT

By the 1800s, direct selling decreased with the advent of mass

merchandising, such as department stores and mail-order sales. In the later 19th

century and early 20th century, however, some manufacturers found direct sales had

advantages over the sales of their products in large stores. They preferred the

personal touch, with salesmen making home demonstrations of their products

exclusively. By the 1920s door-to-door salesmen were marketing brushes, cooking

utensils, and other products.

Retail stores fought back with local laws on peddlers. The federal

government's regulations of company-employee relations led to the independent

contractor solution. As independent contractors, salesmen were no longer employees:

they were independent businessmen who bought products for resale. The first

network marketing began in 1941 when two men created a mechanism to distribute

Nutrilite vitamins. Within this mechanism, in addition to making money in retail

sales, distributors earned a bonus on the sales.

In 1949, DeVos and Van Andel became distributors of vitamins for the

Nutrilite Company of California. They enjoyed modest success from their own retail

sales and from bonuses earned on the sales force they created in the Midwest.

CHANGES IN THE ENVIRONMENT

Increasing government regulations and an internal conflict in Nutrilite led

Van Andel, DeVos and several other leading Nutrilite distributors to start their own

venture.

STRATEGY ADOPTED



In April 1959 they created The American Way Association, later renamed the

Amway Distributors Association, to protect the independent distributors. They chose

as their first product a biodegradable liquid organic cleanser made by a small

Michigan firm, the kind of high-demand merchandise that could be easily sold by

MLM. By September 1959 the Amway Sales Corporation and the Amway Services

Corporation were begun to assist the distributors.

RESULTS

The company rapidly expanded. The first full year of operations in 1960

resulted in gross sales of $500,000. That figure doubled in each of the next two

years, and in 1964 it reached $10 million. Thousands of distributors signed up each

month. The expansion was so rapid that as soon as the company moved into new

facilities, they were already crowded.

AMWAY IN CHINA

THE ISSUE

Amway entered China in April, 1995. Their entrance into the Chinese market

has earned big profits, with more potential to grow. But on April 21, 1998, Chinese

officials issued an immediate ban on direct marketing that threatened a multi-

million-dollar market for Amway and other potential direct marketing companies.

Chinese government officials claim the ban was absolutely necessary because the

direct-selling operations functioned as a base for criminal activity.

Amway's direct-selling techniques scared Chinese officials for fears of

spreading heretical religion and the start of secret societies. The ban was lifted three

months later on July 21 due to heavy lobbying from American businessmen and

Chinese government officials. But Amway was forced to revise their business plans

to only sell products in retail outlets, not through direct-selling. These new guidelines

are very different from Amway's selling technique, which is based on Amway's

pyramid building and selling system.



ANALYSIS OF THE SLEPT FACTORS IN CHINA

Economic

It has had positive GDP growth in the last five years, while other Asian

economies have stalled. China’s economy is growing at a rate of about 8 percent, the

fastest in Asia. It means that this country is certainly profitable.

Indeed, China is an emerging economy but a dual economy too, with a

wealthy urban professional and a poor country people.

The Chinese market has attracted foreign investors because of its huge size

and market potential. Some predict that China will become in few years the world’s

largest economy but that could fall flat due to political circumstances.

Political

The Communist Party of China has transformed itself. It has declared that it

represented capitalists as much as workers and peasants. The Old China defended the

working class against the capital class. China has just begun its transition to become

a democratic country. China’s new leadership has come to power facing enormous

economic, environmental, political and social challenges at home. So, Amway faces

the challenge to interpret the very different cultural and political implications of their

presence in a changing communist country.

Social

The Chinese population = 1.2 billion of people. The past decade has seen a

phenomenal rate of growth in China. It represents an important potential of

customers for a firm.

Cultural

The Chinese are sensitive to social risk and the loss of social status if a wrong

buying decision is made. The level of brand loyalty found in a market is also closely

related to the perception of risk. There are huge variations in attitudes to brand

loyalty across different cultures. In China, consumers are loyal, not really brand



conscious and not really used to cross product comparisons, except the urban

consumers, who have a wide recognition of foreign brand names.

There is a cultural gap between the USA and China. Chinese cultural values

are largely formed and created from interpersonal relationships and social

orientations. Chinese nations tend to rely heavily on personal relationship (Guanxi)

in business dealings.

Finally, Amway produces standard products to meet consumer needs in

Japan, Philippines, Taiwan, Singapore but their product range may not be appropriate

to China. Indeed, even if Amway has considerable experience in the Far East, the

Chinese market is not a mirror image of these countries. Then, door-to-door selling

and “party programmes” are not part of the Chinese culture.

Legal

In China, direct-selling operations function as a base for criminal activity.

Indeed, the market is riddled with unscrupulous operators selling substandard goods

with poor services, claiming to be legitimate direct marketers. So, Amway’s direct-

selling techniques could scare the Chinese government and all direct selling could be

banned; it means that Amway China affiliate could have to make changes in its

distribution methods in order to work with China’s regulations. Amway could have

to revise its business plans to only sell products in retail outlets.

Concerning the personal sales, customers could receive discounts by paying a

small annual fee, similar to buying a membership in a wholesale club. In fact, there is

a cultural gap between American companies trying to use American sales tactics in a

foreign country like China.

Technological

The internet and the access gained to the World Wide Web are

revolutionizing international marketing practices. This explosion of international

marketing activity and the associated emergence of the global information highway

will impact on all businesses

ANALYSIS OF THE REASONS FOR FAILURE



Inability to find the right market niches

Unwillingness to adapt and update products to local needs.

A vacillating commitment - Amway had not considered the environmental

influences on international marketing that could represent barriers to their entry

in China.

Inability to manage local stakeholders. This includes incompetence in developing

a satisfactory partnership relationship with unions and governments: Amway had

not developed a partnership/relationship with the Chinese government.

Inability to apply ideas developed in one country to other countries worldwide:

Amway tried to use American sales tactics in China, but cultural gaps are too

important.

STRATEGY ADOPTED

After widespread lobbying from American businessmen and several Chinese

government officials, the government accepted Amway's revised business plan to sell

products in retail outlets instead of direct selling on July 21, 1998. (Refer to Fig. 6 in

annexure)

The new plans include combining retail locations operated by the company

with a strong team of non-employee sales representatives to promote Amway's

products and services. It is essential for Amway to reiterate their independent sales

technique that is the heart of their business. The change is this: Customers now pay a

nominal fee to become privileged customers who are eligible to buy products at a

discount. They must physically go to a retail outlet where all Amway products have a

retail price marked. Amway's existing product distribution centers are located in 14

provinces. Amway invested $29 million to set up 100 stand-alone stores - something

it has nowhere else in the world. It started to run an advertisement which was another

first.

CRITICAL EVALUATION OF THE STRATEGY

The company began building close connections with government officials. At

the same time, Amway made highly visible changes to its sales operation. As a

result, with government approval, it racked up $700 million in sales in 2002, almost



four times what they were before the ban. China is the company's No. 4 market

world-wide, with China profits funding all its expansions here.

Chapter 4: SWOT ANALYSIS

This identifies factors that may affect the desired future outcomes of the

organization.

The SWOT model is based on identifying the organizations internal strength

and weaknesses and external threats and opportunities and consequently identifying

the company’s distinctive capabilities and competencies and key success area. Along

with the other consideration of the societal and company values they lead to creation,

evaluation and choice of strategy.

One of the most important benefits of this analysis is flexibility and

adoptability it can be used in variety of ways, using approaches specific to a

particular setting to create a unique picture of the institutions distinctive

environment.

SWOT’s objective is to recommend strategies that ensure the best alignment

between the external environment and internal situation. It endeavors to identify the

weakness in the external environment and develop ways and means to reduce them,

identify opportunities and take advantages of them in like of internal strength,

identify threats and take actions to stop or reduce their impact.

STRENGHTS

They are internal to an organization and may include marketing capabilities,

technological know-how, qualified personnel, financial strength R&D, good union

relations wide geographic spreads etc.

STRENGTHS OF AMWAY

100% cash based business (NO debts)

o No debts not only keeps a company’s interest cost down, but also gives it

flexibility to invest its cash back into the business to expand or develop

new products.



o As debt-free companies are mostly cash-rich, they also do not need to raise

large funds from the market to run their operations.

o There are many other advantages that debt-free companies enjoy.

o For instance, debt-free company need not keep aside a portion of the profit

to meet the cost of capital.

o They get interest on their cash deposited with banks, adding to their

reserves. They have low interest-rate risk.

Money back Guarantee

o Backed by a 100% Customer Product Refund Policy produce faith and

reselling attitude in customers.

o It gives a huge Competitive advantage.

o It influences the customers.

o It motivates the customers to make a move towards buying.

o It incentivizes the customers to make the buying decision.etc

CSR activities

o The high positive impact of CSR on employee wellbeing and motivation,

the role of HR in managing CSR projects is significant.

o Research shows that a strong record of CSR improves customers’ attitude

towards the company.

o CSR provides the opportunity to share positive stories online and through

traditional media.

o Companies no longer have to waste money on expensive advertising

campaigns. Instead they generate free publicity and benefit from worth of

mouth marketing. Companies reduce costs by:

More efficient staff hire and retention

Implementing energy savings programs

Managing potential risks and liabilities more effectively

Less investment in traditional advertising

Quality Products that Inspire Confidence

o Almost no risk of money as world class quality Minimal start up costs gives

strong base to the initiation of business.

o So everyone can participate in business.



o The person who wants do something can be make profit with investment

of low cost.

Loyal and Captive Consumer Base of Distributors

o Distributors have a personal stake in “growing with the business”, so they

are inclined to buy products themselves.

o They are influenced to a great extent by the groups as well and are always

encouraged to try the product beforehand, to be able to sell it better.

Consumer-Distributor Word-of-Mouth Magic

o Being a friend/relative of the consumer, the distributor would be expected

to share similar tastes and interests.

o Therefore, the distributor’s recommendations would be trusted and

acceptable.

o Many a times, it is just tough to say “no” to an old aunt or good friend.

Products

o Product quality has been acknowledged to be really good, and

endorsements.

o Training from specialists at the supplier’s training centers builds positive

perception as well.

o Products are extremely expensive, and high prices are justified on the basis

of quality

o And the concentrated form of the product, which implies lower cost per

use.

More & More Subscription Revenues

o The ever-growing urban middle class in countries like India is the ideal

pool for potential distributors, looking to make extra cash which denotes

“success” and “respect”.

o The margins seem extremely attractive in India, since some research

revealed that prices for many products are identical to those in the US.

o Thus on a pure PPP basis, Indian distributors are much better off.

o Amway boasts of almost 3 lakh active distributors today.

Aggressive Product Launch Strategy:



o Since a captive consumer base exists, trials and repeats are guaranteed to

an extent, so revenues are accelerated by launching a new product almost

every month.

Market-Specific Initiatives

o India

Mass advertising (this is not a usual practice in direct selling)

Smaller SKU’s (such as sachets)

Tie-ups with big names such as BPCL and Standard Chartered

through petro-card/credit card schemes to add credibility to the

business.

These factors have contributed tremendously to the huge success

that players

Like Amway have enjoyed in India.

o Europe

Vista Print Limited, the small business marketing company

announced a strategic partnership with Amway Corp.

As part of the agreement, Amway will offer Vista Print’s high-

quality marketing materials that are specific to Amway brands to

its independent European sales representatives.

These include business cards, postcards and promotional materials.

Amway Europe leverages its global reach by conducting because

related marketing activities.

Since 2005, Amway Europe has created collectible pins to support

UNICEF.

For every pin sold in 26 Amway Europe territories, a donation of

€1.40 is donated to UNICEF immunization and education

programmes in Africa and Eastern European countries.

Amway Europe also purchases customized retail UNICEF greeting

cards for all of its business operations worldwide.

In 2003, the company launched its Corporate Social Responsibility

Programme, the ‘One by One for Children Campaign,’ which now

incorporates the UNICEF partnership.



Since 2001, Amway Europe and its 500,000 European Direct

Sellers and 26 Affiliates have donated more than US $3.5 million

to facilitate UNICEF’s Immunization Plus efforts.

In 2005, Amway Europe re-committed to raise € 2.5 million to

support UNICEF Immunization and Education programmes over

the next five years.

o Australia

Traditionally Amway marketing strategies tended to target parents

who want to work from home.

In a shift away from this model Amway Australia signed swimmer

Libby Trickett and cricketer Adam Gilchrist in 2009 as Amway

ambassadors in a push to lift its standing with Generation Y.

This push saw 40% of new members in 2010 under the age of 30.

Increased knowledge about product develops confidence and preference

o Amway educates distributors who pass on the information to other

consumers about product attributes and ingredients.

o This high level of awareness results in inclination to purchase, especially

for high involvement personal care products such as cosmetics.

The Other Internal elements of the business that contribute to improvement and

growth of Amway are as follows:

o Brand Image

o Market share

o Vast network (operated in 63 countries)

o Environmental-friendly

o Amway’s global One by One Campaign for Children.

o Amway retail sales worldwide increasing considerably.

o Amway has long list of awards like Asia Pacific Frost & Sullivan Water

Filtration Company of the Year Award and LEED gold certification.

o Amway ranked as America's top 30 largest privately held companies

o Amway has presence in more than 80 countries with more than 3 million

business owners



WEAKNESSES

It is also a part of the internal systems of the company they may include poor

work force, high debts, bad products, de interested employees, poor past

performance etc.

WEAKNESSES OF AMWAY

More power to IBOs gives critical structure to organization.

Initially high entry cost leads to somewhat restrictions for business development.

Rumors for direct selling operations.

Focus shifted from selling products to recruiting.

The only mode of availability of product is online and business agents hence

missing out on retail sales.

Products are somewhat on costly side.

Not much of TV advertisement or brand ambassador, only mode of

communication is word of mouth

Highly decentralized

Fewer outlets(less distribution network)

Highly expensive

Lack of brand awareness



OPPOURTUNITIES

They present in the environment are many. They may be in the form of new

markets, new uses for the same product new technology, invention etc.

OPPOURTUNITIES OF AMWAY

Setup a manufacturing plant in all countries leads to better platform for

company.

Population of INDIA gives better opportunity to company to receive more

profit.

As the company name itself gives reliance and faith for the customer and

buyer produce greater opportunity for marketing which leads to decrease in

total expenditure of company.

Increase the availability of product in international markets.

Using various medium of communication like it is international brand; online

can be a good platform.

Can tie up with chains of beauty salons and health experts.

Awareness about Amway product is still less in certain region so they have to

focus on spreading awareness about its’ product. It can be done by

advertisement.

Prices of certain Amway products are much higher then what customers

expect so it should be decrease to increase sales volume of products.



THREATS

It also in the external environment they, may be in the form of competition,

imports, substitutes, new entrants in the market etc.

THREATS OF AMWAY

Too much freedom to IBOs.

Change in government policy may affect to the profit and freedom of

company.

Increasing competition in both national and international markets.

o Competitors like Avon, Mary Kay; Sun rider

o Other Local Market Competitors like VLCC, Loreal, HUL, P&G

o Create lot of competition in market which leads to strong marketing

competition in market.

o Replacement by local products

Switching cost is low.

In strategic planning the appraisal of a firm’s strengths, weakness,

opportunities and threats is often referred to as a swot analysis. Despite the name,

however analysts usually begin by considering environmental opportunities and

threats before determining whether there is likely to be a strategic fit between these

factors and the organizations strength and weakness.

Strength and weakness are normally analysed by reference to competitors

characteristics there is no point at being good at something if someone else is better.

There also very much considered in presentence we will have the best distribution

network in two years time is not strength today. Opportunities and threats are

however evaluated by reference to near future and opportunity that has passed or is

today being seized by a competitor is opportunity missed.



CONCLUSION

The main objectives of Amway are to profit there distributers by eliminating

the middlemen and provide the products to the distributers in cheaper price. The

products of Amway are world class product quality. They are made up of natural a

thing that’s why they are good for health and environment.

Amway covers a wide range of products from beauty care. Health care, to

clothing, and daily use products etc. the products are costly as compared to other

branded products available in market but if we compare the quantity while using the

products require less amount and thus can be used for longer time. Successful

business today depends upon a company's ability to quickly adapt to changes in the

marketplace.

At Amway, they pride it selves on knowledge of the dynamic networking

market that is quickly becoming central to modern business. This knowledge, and its

willingness to act upon it, has enabled us to become one of the industry's

technological leaders.

Through they continued pursuit of new product ideas, and by consistently

refining our existing product line, they have become one of the top providers of

cutting-edge networking products in the global market. If you're looking for high

quality products and solid customer support at rock-bottom prices, then choosing

Amway really does make sense.



To conclude a proper response from the environment is necessary for the

survival and growth of any business this response must be well thought of and

implemented in a planned and proper way to get the maximum beneficial results.

This can only be achieved after a careful and thorough understanding of the various

types of business environment that affect a business and will affect it in the future.

In today's highly competitive environment, an organisation has to develop a

business strategy that provides a strategic fit between its resources and the changing

business environment.

This project explains how Amway has continued to develop by using a range

of strategies. These strategies have enabled Amway to build its business by

continuing to broaden its customer base and enhance the service it offers to

Independent Business Owners, Members and Clients.



BIBLOGRAPHY

Books

Strategic Marketing: Creating Competitive Advantage (By Douglas C. West,

John Ford, Essam Ibrahim)

MBA Concepts and Frameworks (By Ohene Aku Kwapong)

Contemporary Strategy Analysis (By Robert M. Grant)

Business environment (Dr. Namita gopal)

Websites

http://www.business2000.ie/pdf/pdf_2/amway_2nd_ed.pdf

http://www.amway.in/Articles/Article

http://en.wikipedia.org/wiki/Amway

http://marketingpractice.blogspot.in/2008/05/amway-india-we-are-

listening.html

http://businesscasestudies.co.uk/amway/

http://www.reocities.com/TimesSquare/1848/amway.html

http://madlaw.in/multi-level-marketing-and-indian-law-amway-cases-in-india-

and-usa/

http://www.onyx.com/

http://www.amway.com/about-amway/our-company/heritage/vision-and-

values


http://www.onyx.com/

http://madlaw.in/multi-level-marketing-and-indian-law-amway-cases-in-india-and-usa/

http://madlaw.in/multi-level-marketing-and-indian-law-amway-cases-in-india-and-usa/

http://www.reocities.com/TimesSquare/1848/amway.html

http://businesscasestudies.co.uk/amway/

http://marketingpractice.blogspot.in/2008/05/amway-india-we-are-listening.html

http://marketingpractice.blogspot.in/2008/05/amway-india-we-are-listening.html

http://en.wikipedia.org/wiki/Amway

http://www.amway.in/Articles/Article

http://www.business2000.ie/pdf/pdf_2/amway_2nd_ed.pdf

http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Essam+Ibrahim%22

http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22John+Ford%22

http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Douglas+C.+West%22

Mkg Stat of Amway

Documents

steve van andel

blood donation camp

jay van andel

marketing strategies

ultimate grooming experience

independent business owners

chinese government officials

american sales tactics