Project Report on AMWAY Global
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PROJECT REPORT ON INDUSTRIAL EXPOSURE AMWAY GLOBAL
Page No Executive summary Scope & Objective
1.2 Primary objective 1.3 Social responsibility 1.4 Awards and recognization
2.1 Products of Amway 2.2 Selling strategies of Amway ? Direct selling
3.1 Product related strategies 3.2 Promotion strategies 3.3 Distribution strategies 3.4 Mega marketing of Amway 3.5 After sales services of Amway 3.6 Marketing mix 3.7 Concept of direct marketing of Amway
SWOT analysis conclusion
Findings and recommendation Bibliography
1.1 The 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.
Jay Van Andel and Richard DeVos, founders of Amway
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. We have long had a tradition of opportunity and success. Today, Amway is a multibillion-dollar international business representing freedom and opportunity to millions of people in more than 80 countries and territories around the world. We offer over 3 million Business Owners the inspiration to grow those businesses, and we work hard to provide new and better ways for them to achieve their life goals.
1950s A Solid Foundation
Jay Van Andel and Rich DeVos began their business in the 1950s using direct selling to market NUTRILITE Dietary Supplements. What they discovered more than 40 years ago still remains true today that people and relationships are at the core of any successful business. Always searching for new opportunities, in 1959 Rich, Jay and their associates looked for new product ideas to expand their business. They realized they wanted products that everyone needs, all of the time products whose features and benefits anyone could understand and communicate easily. "The products we want must be ones that just about anyone is familiar with and can sell. The examples that come to mind are laundry and cleaning products." Jay Van Andel The result of their search was Amway's first product, which today is called L.O.C. Multi-Purpose Cleaner. It was an instant sales success story, opening up a whole new world of opportunity.
With a strong belief in the power of initiative and free enterprise, Jay Van Andel and Rich DeVos created the Amway Sales and Marketing Plan. They knew that anyone who was willing to work hard could succeed using the same business methods. This simple idea quickly gained popularity throughout the US, and then Canada, as more and more people discovered what a real opportunity the Amway business offered.
The Early Years As Amway's annual sales rapidly expanded, exceeding US$500,000 for the first time, the company soon outgrew its basement office in Jay Van Andel's home. During this time, Amway moved to a larger facility and began developing new products, including SA8™ Laundry Detergent, which was launched in 1961. These Home Care products became big sellers for distributors and led to incredible growth for the company. Within a few short years, the company had more than 700 employees, over 200 exclusive products and more than 100,000 Distributors.
Rich and Jay knew that the best way to interest people in the Amway business was to bring the opportunity to them. So, in 1963, the famous "Showcase Bus" began touring many cities throughout the US. Stocked with products and literature, it helped distributors introduce Amway's growing product line and unique opportunities to people all over the country. In the 1960s, the achievement and enterprise of successful Distributors was recognized with the introduction of Direct Distributor status. It became a model for re- ward and
recognition programs that continue to be developed in Amway markets around the world.
In the midst of all this success and growth, however, tragedy struck as Amway's aerosol factory was completely destroyed by fire in 1969.
A Decade of Growth After the fire, Jay Van Andel vowed to reconstruct the aerosol factory and to salvage the business. The factory was rebuilt and sales reached an estimated retail figure of US$100 million. The Amway product line was also greatly expanded with NUTRILITE™ Dietary Supplements becoming a best-selling line, and the PERSONAL SHOPPERS™ catalogs continued this growth and diversification. By the mid '70s Amway trucks travelled more than 3.25 million miles (approx 5.23 million kilometres) shipping products to millions of Distributors. At the same time, the company expanded overseas, opening markets in eight countries on three continents. Amway launched its second international affiliate half a world away in Australia, swiftly followed by the UK, Hong Kong and Malaysia.
Amway Japan Limited (AJL), founded in Tokyo in 1979, quickly became one of Amway's largest markets in terms of product sales. As challenging as it was to enter new markets?faced
with everything from different languages and laws to difficult distribution channels?Amway continued to grow globally.
At home, in Ada, Michigan, the Amway World Headquarters complex grew rapidly to keep up with the exploding business. Amway's manufacturing facility grew to more than a mile long, and really became a self-contained city, with its own power generator, water treatment plant, recycling facility, shuttle bus service and fire department.
The Billion-Dollar Decade Estimated annual retail sales exceeded $1 billion for the first time. Pressed by the demands of increased growth, Amway expanded its US headquarters in Ada, Michigan and built a new cosmetic plant where ARTISTRY products are de- veloped and manufactured. It also pioneered an entirely new product category, wa- ter treatment systems, with very successful results. In fact, Amway's water treat- ment product line, under the eSpring brand name, continues to hold a top position in the marketplace today.In the meantime, the Distributor incentive program was enhanced to provide more rewards to those Distributors who put greater efforts into growing their Amway businesses.
Always concerned with the environment, Amway was recognized as a corporate environmental leader and promoter of environmental education when it won the prestigious United Nations Environmental Programme Achievement Award in 1989.
1990s The Next Generation
Following in their fathers' footsteps, Steve Van Andel and Dick DeVos succeeded Jay and Rich as Chairman and President of Amway. At the same time, a new generation of leaders also began to emerge within Distributor families, building upon and continuing the successes of their parents. The 1990s saw continued expansion with estimated retail sales volumes reaching US$5 billion. In California, Nutrilite's research into the links between diet and health was given a public face with the inauguration of the Rehnborg Center for Nutrition and Wellness, which gained world renown and was later renamed the Nutrilite Health Institute.
Amway's growing role in Asia led Amway Japan to sponsor the 1995 Nagano Winter Olympic Games in Japan. Around the world, Amway's regional and country affiliates continued to support their Distributors with the launch of e-commerce sites that extend the Amway opportunity into cyberspace. This remarkable decade culminated in the 40th anniversary of the organization in 1999.
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 multilevel marketing industry. Its fundamental principles—freedom, family, hope and reward—hold as true today as they did in the very beginning.
1.2 Primary objectives
Amway is a global organization which markets products in international market places. Planning for global markets is a much more complex process than for domestic markets. It presents many more risks than operating in a domestic market where goods are sold in only one local area. Global currencies. Though it is said that consumer needs around the world are converging, there are commonly accepted needs and wants that go beyond national barriers. The marketing mix consists of a complex set of variables which an organization combines together in order to ensure that both global and local corporate objectives are achieved. Standardizing elements of the marketing mix is key to operating successfully in the global marketplace. As a result, common needs and wants are identified across countries. At the same time, parts of the marketing mix requiring adaptation are identified so that it can be developed to cater for local differences. This requires a thorough understanding of every market in which Amway operates. Many advantages arise from competing in a global marketplace, including: Economies of scale - over a larger output, costs per unit are decreased to provide the supplier with a competitive advantage. Amway is able to spread its research, development, technology and distribution costs so that it can maximize its production efficiency. The development of new business opportunities - in numerous countries, markets are growing faster than in Europe and America. Overseas markets offer the opportunity to compete in different marketplaces and extend the life-cycle of products. marketing involves recognizing that people from all over the world have different needs, i.e. values; customs; languages; rules and
To meet the tastes of consumers from different nations - over recent years there has been a convergence of tastes resulting in a more global market- place. Founded in ADA, Michigan in 1959, Amway has become one of the largest 'Direct Selling' companies in the world with nearly three million Independent Distributors. Direct selling involves dealing with customers 'Face-to-face' so that personal attention can be given to each of their requirements. Direct selling differs from traditional retailing as it often involves selling to consumers on a one-to-one basis, usually in the comfort of their own homes. The industry has grown rapidly over recent years and is currently estimated to be worth £40 billion a year world wide. This case study examines this growth which has helped Amway to become one of the industry's market-leaders influenced by changing lifestyles, demographics and economic recession. Direct selling for Amway is undertaken by its own independent distributors. Their own income is based on the goods they sell, bonuses paid by Amway and the volume of sales generated through their own distributor network. These distributors sell to people they know or meet. Amway distributors operate as their own independent businesses. Amway is a long-standing member of the Direct Selling Association (DSA) in the UK and Republic of Ireland. The DSA regulates the industry by providing a Conduct endorsed by the Office of Fair Trading (OFT). Amway has developed into a global corporation manufacturing over 450 products and employing more than 12,000 people in over 80 countries and territories around the world. To supply a global base of customers, Amway manufactures products ranging from household cleaners to cosmetics, food supplements to house wares. It also markets products on behalf of other leading manufacturers, such as Kenwood, Aiwa and Philips. Code of
1.3 Social responsibilities performed by AMWAY One by One Campaign for Children
One By One – is Amway’s Global Campaign for Children. In each of the 80 countries and territories that Amway is present it takes up and supports these Children of Hope. In India, this work is carried out under the banner of Amway Opportunity Foundation (AOF) a registered non profit organization. All Amway employees and distributors are volunteers of AOF.
Amway Opportunity Foundation (AOF)
A Corporate Social Responsibility Initiative of India’s Leading Direct Selling FMCG Company Former President, Dr Abdul Kalam, has recently been quoted saying that instead of addressing (them as) ‘street children’, it would be better to refer to them as ‘children of hope’. If we stretch this definition a bit, that is what we are all about – reaching out to all Children of Hope in the best manner at our disposal: One By One – is Amway’s Global Campaign for Children. In each of the 80 countries and territories that Amway is present it takes up and supports these Children of Hope. In India, this work is carried out under the banner of Amway Opportunity Foundation (AOF) a registered non profit organization. All Amway employees and distributors are volunteers of AOF. And why work for children? Half of the world’s poor are children. Every year, 10 million children do not live to see
their fifth birthday. More than 115 million children don’t have access to the most basic education. With presence in most of the countries across the globe, Amway finds itself in a position to focuses its philanthropic efforts so as to maximize a positive and sustainable impact on society. The program pulls together all of our resources – Business Owners, employees, affiliates and customers – to make this happen. Each of Amway’s markets is free to decide in which sphere it would like to concentrate its resources. But in essence, One by One program is designed to build local partnerships, addressing issues specific to children in their community – Live, Achieve, Learn, and Play. As of December 31, 2006, we have provided hope and opportunity to 5 million children. Donated more than 600,000 volunteer hours to children’s programs. Contributed more than $39 million to children’s causes. In each country, success is measured by impact – whether it is the 250,000 children in West Michigan whose lives have been changed through the campaign, the 85,000 blind children who received Braille textbooks in India, the 1,135 children who received cleft palate surgery in Thailand, the 170,000 children in China who were given the opportunity to attend school, or the 90,000 boys and girls in developing countries who received vaccines that are giving them a fighting chance. National Project for the Blind In India, this work is carried out under the banner Amway Opportunity Foundation (AOF).Under its National Project for the Blind, AOF has: Ensured that around 85,000 visually challenged school-going children have had access to Braille textbooks. This
project has covered the following states: Rajasthan, Delhi, Maharashtra, Haryana, Uttar Pradesh, Punjab, Bihar, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka and Madhya Pradesh. This work had been carried out in partnership with the Delhi-based All India Confederation of the Blind (AICB) and the Mumbai-based National Association for the Blind (NAB). · Set up computer centers for visually challenged at · All India Confederation of the Blind – New Delhi
Antarjyoti Balika Vidyalaya – Patna, Bihar Ramakrishna Mission Blind Boy’s Academy – Kolkata, West Bengal Rajasthan Netraheen Kendra Sangh – Jaipur, Rajasthan National Association of Blind – Trivandrum, Kerala
Donated Audio textbooks for Bangalore University and extended support to the Karnataka Welfare Association for the Blind (KWAB) in conducting a cultural event in Bangalore in 2001
Presented a 20-volume Braille set of the Webster’s Dictionary in English, to the Delhi Blind School and donated a Brillion machine to the Indian Blind School at Madurai. Supported Dr. Shroff's Charity Eye Hospital in conducting communications workshops for the blind in 2002, and a Car rally for blind children at Surat. Distributed 1000 Braille kits for blind children in Kerala, and enabled the state- level chess tournament for the blind, in Tamil Nadu.
Organized cataract operation camp at Surat, and free eye camps at Erode, Balasore, Delhi and Siliguri - over 25,000 persons had free eye check ups and around 500 free operations were carried out. For this work towards the visually challenged, AOF has received a citation and award from the World Blind Union (WBU), in Dec 03. AOF is the only Indian NGO to be so recognized by WBU.
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 Business Owners Donation of clothes, books etc. on voluntary basis
Head Office Amway Opportunity Foundation 9th Floor, Express Trade Towers 1, Plot 15-16, Sector 16A, Noida, NCR Delhi 201301 Tel.: + 91-120-309 6601 Fax: 91-120-309 6555 Contact Person: Mr. Raj Narain
Regional Office - North Amway Opportunity Foundation 5, DDA Local Shopping Centre, Okhla Commercial Complex, Phase II, New Delhi 110020 Tel.: +91-11-422 95 900 Fax: +91-11-26 38 81 41 Contact Person: Mr. Shivam Lall Regional Office - East Amway Opportunity Foundation, The Legacy, First Floor, 25 A Shakespeare Sarani, Kolkata700017 Tel.: 91-33-30215666, 30215500
Fax: 91-33-30215557 Contact Person: Ms. Sarbani Bhattacharya
Regional Office -West Amway Opportunity Foundation "Landmark", A-Wing, Ground Floor, Andheri-Kurla Road & Suren Road, Junction Of Western Express Highway, Andheri East, Mumbai 400093 Tel.: 91-22-66681600 Fax: 91-22-66681555 Contact Person: Mr. Jignesh Mehta Regional Office -South
Amway Opportunity Foundation # 243, "Aisshwarya Ambassador" 80 Feet Road, Defence Colony, Indiranagar, Bangalore 560038 Tel.: 91-80-30561900 Fax: 91-80-25271999 Contact Person: Mr. S. Viswanath
1.4 Awards And Reorganization
Presented the Millennium Outstanding Service Award 2000, by the All India 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 Chowan - presented a trophy and a certificate of appreciation. Amway also received the Hajee Sulaiman Omar Memorial Ever Rolling Shield, by the Madurai Medical College. Amway was the ONLY corporate entity to conduct a BDC on such a scale - rest of the camps are held by educational institutions. Presented an award by the World Blind Union (WBU), for sterling contribution to improve and elevate the quality of life of visually impaired children', at a function in Delhi on Dec 2nd 2004. The award included a citation and a largesized statue of Saraswati, the Goddess of Knowledge, was presented by the Lt Governor of Delhi, Shri Vijai Kapoor. WBU is an apex body for the visually impaired that enjoys consultative status with the United Nations. The Central Red Cross Bank, Cuttack awarded Amway Opportunity Foundation with a trophy and Certificate for contributing the highest num- ber 400 units to
their Blood Bank.
CHAPTER 2 PRODUCTS
2.1 PRODUCTS OF AMWAY
Amway: A World of Product
Amway offers a range of exclusive, competitive brands that meet proven customer needs around the world. From nutritional supplements to water treatment, cosmetics to cleaning products, these brands are the solid foundation for a successful, in- dependent retail business.
Amway And Direct Selling
Amway products are sold directly to consumers by Independent Business Owners (IBOs) or sales representatives through one-on-one, in-person selling or via the internet
NUTRILITE is the world's leading brand of vitamin, mineral and dietary supplements (based on 2006 sales). Nutrilite is the only global vitamin and mineral brand to grow, harvest and process plants on their own certified organic farms. Nutrilite has made supplement products using natural plants and plant concentrates since 1934.The same high quality products produced by Nutrilite are sold under the NUTRIWAY brand in certain countries.
Nutrilite Health Institute
The Nutrilite Health Institute (NHI) is a worldwide collaboration of scientists dedicated to helping people achieve optimal health - through research, education, and practical, personalized solutions.
Center for Optimal Health
The Center for Optimal Health is a world class teaching and training facility within the Nutrilite Health Institute. Science, nutrition, fitness, research and people are brought together for a one-of-a-kind experience focused on optimal health and the NUTRILITE brand. There are products for kids also, at the early age of a person (childhood) needs some proteins and vitamins for a proper growth.
The spring Water Purifier is the first in-home system to combine ultraviolet light technology with a patented multistage carbon-block filter to provide the quality drinking water your family deserves. The spring Water Purifier destroys more than 99.99% of waterbourne disease-caus- ing bacteria and effectively removes more than 140 contaminants. Other systems treat water spring purifies it.
spring Water Purifier Technology
spring products are the result of nearly 20 years of research and technological breakthroughs. Beginning in 1996, a signi- ficant investment was made in emerging water-related technologies that led to the innovative spring system. The research was timeconsuming and costly but let to a spec- tacular end result-a product that is like no other in the marketplace.
iCook Cookware is the healthiest way to cook anywhere in the world. Trends indicate that consumers are becoming more focused on healthy and safe foods. The iCook Cookware brand delivers on its promise of quality and nutrition.
iCook Technology VITALOK
cooking method - compared to traditional cooking methods, the iCook VITALOK cooking method locks in over a third more essential vitamins and minerals.
DURAMIC nonstick coating system - is the toughest, longest lasting nonstick coating in the world. OPTITEMP evenly. The base the base improves is heat
distribution and retention so foods and sauces cook OPTITEMP base universally compatible with any cook top.
Home Care Products
Everyone loves clean. Clean says you are in control of your life and your surroundings. 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 with the SA8, LOC and Dish Drops brands.
COSMETIC PRODUCTS – ARTISTRY
Since its launch in 1968, the ARTISTRY brand has become a global leader in prestige beauty. ARTISTRY sets standards in skin science and research and is com- mitted to the synergy of health and beauty.
And Direct Selling
ARTISTRY is the only direct-sell brand classified in the prestige category, with over US $1 billion in annual sales.
ARTISTRY has researched, acquired and developed the most advanced technology and tools to evaluate skin and the performance of the brand products. ARTISTRY skin science and research is conducted in 89 Research and Development facilities around the world, representing over 4,500 collective years of research and development experience.
ARTISTRY Brand Worldwide
With more than 250 unique products sold in over 50 markets around the world, the ARTISTRY brand has attained an international following of loyal users. Superb quality and devotion to excellence have earned the ARTISTRY brand a reputation as one of the most admired companies in the skin care and cosmetics industry.
2.2 SELLING STRATEGIES IN AMWAY
Direct selling catching up in India
Turnover and growth trends in direct selling in India have been impressive, a pointer to the tremendous potential this concept has More importantly, that the trend is fast catching up here too. Though the direct selling industry has existed for over 15 years in India, the entry of international companies and their activities in the last five years has given greater visibility to the industry, which is still considered to be at a nascent stage in India. Yet during the last two years, the trends have been encouraging to the supporters of direct selling, whose basic philosophy is to eliminate middlemen in the sale of commodities, and instead provide employment to a large number of trained sales staff, who sell products directly to consumers either through group meetings or by hosting tea gatherings at their homes. According to the Indian Direct Selling Association (IDSA), the total turnover through direct selling in India in 1998-99 was $140 million. As against the expected growth of anywhere between 30 and 50 per cent, it registered a growth of 38.5 per cent for a turnover of $200 million in 1999-2000. For 2000-01, the growth is
projected at 40 to 60 per cent. Similarly, the growth in the number of sales people has been impressive during 1998-2000. From a five lakh strong direct selling force in 1998-99, it has grown to seven lakhs in 1999- 2000, a clear 40 per cent. For 2000-01 this is projected to grow by 50 to 60 per cent.
Does this indicate that the traditional industry is losing its market share to the new philosophy of taking goods directly from the manufacturer to the consumer? While it may not be so large as to create panic or alarm the well-established traditional players, it has created a place for itself in the hearts of the people. Interestingly, the IDSA says during 1999-2000, it received as many as 27 queries from national and international companies expressing interest in opening a direct selling business, or to start a new division for direct selling within their existing businesses in India. Set up in 1992, the IDSA is an association for companies that sell products directly. It was started by two companies `Lotus Learning (exclusive distributors of World book)', and `LB Publishers and Distributors (exclusive distributors for Time Life Books)'. In 1995 multinational companies such as Avon, Amway and Oriflamme joined the association. Since then, some more like the Tupperware, Herbalife, Modicare and Sunrider have joined the association. Of its nine members, three are fully Indian companies owned and run by Indians and three are wholly owned subsidiaries of foreign companies. All of them manufacture in India either through their own facilities or through contract manufacturers.
Another significant development is the emergence of direct selling as a women's
bastion. The direct selling industry in India comprises 72 per cent women, 24 per cent couples, and four per cent men. In the U.S., this is 69.7 per cent women, 10.4 per cent couples, and 19.9 per cent men. In two years, Amway, has emerged as India's leading direct selling company and registered a turnover of about Rs. 250 crores (September-August). It has ambitious plans of reaching a target turnover of Rs. 1,000 crores, much before its originally targeted year 2004. The company has invested over $35 million in India of which $6 million is in the form of direct foreign investment, and $4 million is for transferring technology, free of cost, to contract manufacturers. It has over 32 offices and a reach of 352 locations, and by 2001-end it envisages an office in every city with a population of 10 lakhs and above. It has trained 3.60 lakh distributors last year, overwhelming majority of whom were women. Against this background the industry expects to grow at 50 to 100 per cent rate for the next 3-5 years. Given the socio-economic conditions, the fact that a large proportion of the country's women are housewives, who can spare some time to take up concepts such as direct selling, and the growing need and realisation to supplement family incomes, are seen as encouraging factors for its growth potential. Viewed against the backdrop of a $80 billion global direct sales turnover already achieved last year, the future appears bright. Direct selling industry seeks legal framework THE multi-layer marketing (MLM) companies are worried that their legitimate businesses are hampered because their direct selling methodology is confused with the money rolling schemes or the prize chit fund schemes. This misconception has arisen partly due to lack of information/awareness on the functioning of the MLM and largely for want of a legal framework that checks the abuse of direct selling mechanism by unscrupulous elements.
The latter factor is a major issue confronting the genuine MLM companies, according to Mr Rathin Mathur, General Manager, Sales of the Rs 130-crore Modicare Ltd, the Delhi-based MLM company. Pressed against this background, the nascent MLMs coming under the Indian Direct Selling Association (IDSA) were moving with the Government to put in place a legislation that would prevent the misuse/abuse of the MLM system by the unscrupulous operators who had sought to fleece the consumers through `Pyramid schemes' in the garb of direct selling, said Mr Mathur, who was here on a marketing binge for Modicare's direct selling of consumer goods, including the personal care products.
Mr Mathur told newspersons that IDSA had been working with the FICCI in evolving a legal mechanism and with the support of the FICCI, the association had already put up a draft legislation to the Government. Now the Government was to suitably come out with its legislation, which had to be put in place in time; otherwise, the consumers' faith in this nascent but potential industry would be lost, he added. The main strength and the ethics of direct selling business, said Mr Mathur, stood quite distinctively apart from that of the `Pyramid selling systems'. While the direct selling offers a business opportunity based on the sale of products as well recruitment of `consultants' or agents, the rewards of `Pyramid system' emanates from the addition of new participants and their investments not necessarily from the sale and distribution of real products and the latter schemes need not have commercially viable products. The IDSA consists of 13 member-MLM companies of both Indian and MNCs and, according to Mr Mathur, in the absence of any set code of conduct evolved for direct
selling in India, these IDSA members' business practices are largely governed by the norms fixed by the world federation of direct selling associations formed in 1992. Though the MLM concept in India made its way some 15 years ago, the direct selling took off strongly from 1996 only and the business volume too steadily kept raising from Rs 300 crore six years ago to Rs 2,000 crore now. The potential for direct selling is huge (given the vast manpower and human resource available in teeming unemployed/ underemployed numbers) but it is yet to be fully exploited, as this system would understand the consumers' needs better.
Indian companies entering into direct selling have understood the needs of the consumers and their interests better and accordingly, the members taken in as consultant-recruits are given focussed training. Modicare currently has about 9.5 lakh persons as `Modicare consultants propagating its consumer goods ranging from personal care, home care, auto-care products and these persons are backed up by 52 `Modicare Success' centres that supply the products and serve as training centres. In Tamil Nadu, it has product centres in Chennai, Madurai and Coimbatore and will soon locate one in Tirunelveli.
Direct selling fits into Indian psyche
The great Indian middle class, with little inheritance, is the major ambassador of direct selling. Though direct selling is a concept considered alien to Indian culture, the sense of financial insecurity of Indians, especially regarding their post-retirement life, makes
them the ideal candidates to undertake this innovative method, Stephen Beddoe, Director, Distributor Relations and Marketing, Amway India Enterprises, tells G. Satyamurty. In Europe, 80 per cent of the last drawn salary gets back to the employees as pen- sion after their retirement. But the situation in India is not rosy. Most of the people are at the mercy of their children or kith and kin. Earning something substantial for the old age is almost in every Indian's mind. This has offered us the greatest opportunity. China is the biggest direct selling market in the world as a similar sense of insecurity prevails. It is way ahead of India because it took to this concept 15 years ago. "In 1959 we introduced this method in the United States and grandsons and great grandsons of many of the early distributors are now our proud ambassadors This has almost become a legacy. In India, it is so fast catching up, with 4.5 lakh direct selling agents, that we have ambitious plans of opening an office almost once in three days and have a sales target of Rs. 3,000 crore by 2012 from the current Rs.738 crore," says Mr.Beddoe. After all, every entrepreneur is also a consumer and all of us would like to bargain like hell to get the best price. We want value for the price and we are very careful with the money. Very few splurge. Direct selling gives an opportunity to make additional income as consumers. Our mantra has been "self-reliance and enterprise" and this firmly fits the bill among Indians Women, especially unemployed and hail from middle class, are our best entrepreneurs. These women want to supplement their family income. And they have a vision and a long-term plan. Can I help the family buy a house? Send my children to better school and provide them better education? Many middle class people have already been supplementing their income by becoming insurance agents and Peerless agents as direct selling is nothing but a part- time
avocation. They want to leave something for their children and this direct selling business itself becomes an asset for them to leave for posterity. Of course, Mr. Beddoe is not so sure of their enterprise. It depends upon their individual needs. He considers Coimbatore and Surat as "two islands" of enterprise. And they have the highest per capita income in the country. Adverting to the spread of direct selling, he compares it with other markets. Take for instance, market for the Fast Moving Consumer Goods (FMCG). While north accounts for lion's share of 30 per cent followed by the west, south is only the third with 20 per cent to 22 per cent share. East is the hardest market with just 11 per cent. The survey with regard to direct selling has revealed that all the four regions are "exactly the same." There is almost an equitable balance and it looks that direct selling has been accepted all over the country.
On the great urban-rural divide, Mr.Beddoe observes that there seems to be a greater need for direct selling in B1 cities and smaller towns. There is willingness to work harder in these places. In villages and small towns there is more time whereas metros do not have the same leisurely lifestyle. He considers that the sense of security among the people in metros is comparatively much higher than the other parts of the country. Metros have lesser needs. The future of direct selling lies in small locations. The AMWAY India Enterprises franchise is a global leader in multilevel marketing. The direct sales franchise is a part of the US-based Amway Corporation which brought about the concept of direct selling at the convenience of the customer. From the past 45 years, Amway Corporation has enabled people to have a business of their own,
providing home care and health care products of repute. Originally, the multi level marketing franchise was known for direct selling of its household cleaning products; but as time went on hundreds of high-quality products and brands were introduced to make the Amway India Enterprises Franchise what it is today. The Amway Corporation created a business opportunity for direct sale of products to others and later started the concept of sponsoring people to join the business. The Amway India Enterprises franchise, a wholly owned subsidiary the USA- based Amway Corporation, was established in 1995, and commenced commercial operations in May 1998. Today it has become the largest direct selling FMCG Company in India. With over 4,50,000 active independent Amway Business Owners, the Amway India Enterprises Franchise has grown to its present number of 74 offices and 55 city warehouses. Servicing over 2000 cities & towns of India, this direct sales franchise provides a 100 per cent money back guarantee if the product ids found unsatisfactory.
Today, Amway India Enterprises franchise promotes individual entrepreneurship through its novel direct selling approach of world class consumer products. Amway supplies all its products from within India, thereby providing motivation to the local manufacturing industry
CHAPTER - 3 MARKETING STRATEGIES
3. Marketing Strategies
3.1 Product strategies
The famous product in Amway is NUTRILITE. In the Olympic Games, it had been the only designated health food for Chinese sports delegation. NUTRILITE is an authority on the nutritional food all over the world. Why does this kind of product become famous?
This, of course, can not be separated from the management of Amway. The strict management for quality is a guarantee of Amway, which will produce efficient and highquality goods. In order to produce natural, healthy, nutritional food, Amway have set up the specialized research centers and laboratories.
Artistry is the brand of the facial care product and cosmetics. Various daily necessities are provided for consumers. Many products are according to Chinese people’s attitudes and preferences which are different from American’s. Any of them is given assurance of quality. The R&D center is the birthplace which is a major discovery and breakthrough of the skin and the beauty of science. In 2000, Artistry ranked one of the five facial care products and cosmetics in the world, and became one of the trends of leading brands in the beauty care products all over the world.The product of Amway is environmental protection, safety, and the concentration. It is suitable for everyone. Consumers can use the products they choose at ease.
3.2 Promotion Strategies
The selling method of Amway is Demonstration Act of Products Contrast Amway stresses the superiority of their products by comparing and testing the quality of products with others, which brings a big impact to customs. For example: showing the shampoo of Artistry compared with other well-known shampoo on the market, consumers can see the phenomenon and judge whether the shampoo of Amway is good or bad. As a result, consumers witness a better quality of Amway products. As we all know that Amway is famous for its Direct Selling. In Chinese market, Amway’s selling was limited by government. For adapting itself to new conditions, Amway set up its franchised stores and hired salesman. We can see Amway’s franchised stores in the big cities and they are uniform decoration. Establishing store not only increased the transparency of company, but also improved the image of company. And it made up the disadvantage of Chinese transport system. This new method “franchised stores + hiring salesman” makes consumers buy goods directly, and enjoy the pre-sales and after sales service.
Amway began to invite some sport stars to make the advertisements. During the time of Olympic Games, these advertisements created the image of NUTRILITE successfully. Amway also grasped the opportunity which was held a large-scale musical to promote the product of Artistry.
3.3 Distribution strategies
As everyone knows that computer plays an important role on promoting the development of direct selling. So Amway controls the shop sales and inventory through the Internet. Amway established its own logistics center. It is convenient for distributors to distribute the goods. Amway encourages more people to join, and open more franchised and chain stores. It is necessary to build a big commercial network and attract more consumers. The franchised stores can bring convenience to people. For instance, if people buy something they do not satisfy, they can return, consult or complain these products.Amway maintains the relationship with consumers all over the world, and always pays attention to their needs by the Internet or telephone.
3.4 Mega marketing of Amway
“In the competition of the future market, those companies, which have the political powers and the public connections, will win.” This is the famous word said by Philip Kotler. American government supports Amway. It obtains more commercial opportunities through the government’s effort. Amway has an excellent staff, and they set a good example and maintain the relationship with consumers in public. There is no doubt that Amway has a quick development and a good future. Amway takes part in the activities of charity, and pays tax actively. Amway also pay attention to the environment, children, and health. The running match of Nutrilite is a fad and promotes the word of health. The public activities which are supported by Amway are more than 770.From these, the consumers in China believe that Amway is an honest and trustworthy company.
3.5 After - sale services of Amway
Amway emphasizes on after-sales services and wants to become everyone’s good friend. If consumers use the cosmetics, Amway will be a professional beautician for them to make a facial care on a regular time schedule. If consumers use the health food of Nutrilite, Amway will be a dietitian for them to service their health all-round. If consumers use the home care product, Amway will provide a professional family consultant for them. If someone needs any product of Amway, he can call the special telephone or though the Internet searching. Amway will send the product which consumers choose to their houses without payment. After the product selling within 7days, if it has the problem of quality, consumers have right to return or change it, even return money. That is the promise and respect of Amway to the consumers.
3.6 MARKETING MIX
Product: The product aspects of marketing deal with the specifications of the actual
goods or services, and how it relates to the end users needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and
Pricing: This refers to the process of setting a price for a product, including discounts.
The price need not be monetary - it can simply be what is ex- changed for the product or services, e.g. time, energy, or attention.
Promotion: This includes advertising, sales promotion, publicity, and personal selling,
branding and refers to the various methods of promoting the product, brand, or company.
Place: It refers to how the product gets to the customer; for example, point-of-sale
placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales. These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan.
3.7 THE CONCEPT OF DIRECT- MARKETING
WHATEVER A PERSON EARNS, HE GOES TO SPEND IT TO THE MARKET, FOR EXAMPLE IF A PERSON GOES TO A MARKET WITH Rs. 4000 WITH HIM, THERE HE PURCHASE PRODUCTS OF DAY-TO-DAY USES. THE COST PRICE OF THAT PRODUCT IS Rs.1600 IN THE FACTORY, BUT HE GETS IT @ Rs.4000 BECAUSE OF THE MIDDLEMEN (ADVERTISERS, WHOLESALERS & RETAILERS). 60% OF THE MONEY IS DISTRIBUTED AMONG THE MIDDLEMEN.
BACK TO 45 YEARS, THERE WERE TWO FRIENDS WITH A DREAM TO GIVE EVERY INDIVIDUAL A CHANCE TO DO A BUSINESS, WHICH WILL BE TENSION FREE AND IN THE SAME WAY MAKE RICH. TODAY THEY HAVE ACHIEVED THEIR DREAM.
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BENEFITS FOR DISTRIBUTER.
The company provides world class products to the distributers. They also gets profit from the sales model of the company which is beyond their imagination that’s because it is fully acceptable and honest so that you can believe and have full trust and confidence on it. The products are of world class. The distributers get help from the easy marketing plan. There are demonstration lectures on each type of product 1. Full information about the product. 2. Full instruction on how to use the product properly and get 100% Advantages of it. 3. Qualities of products. Guarantee of full satisfaction from the use of the product by the company is one of the most important attractions of this business. These benefits of distributers are kept reserved by the company’s “CUSTOMER PRODUCT REFUND POLICY”.
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Some important attractions/ benefits for the distributors
With the help of this business after being a distributer can establish his own (independent) business all over the INDIA.
To be successful in this business one need “VERY LESS AMOUNT” and “DESIRE TO BE SUCCESSFUL”. If any distributor wants to leave the business can leave get the money back by returning the BUSINESS KIT within 90 days of joining.
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CHAPTER -4 SWOT ANALAYSIS
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4. SWOT Analysis
SWOT is the foundation of the marketing plan. Strength, weakness, opportunity, and threaten will be evaluate in the SWOT analysis. Those are included in the internal and external factor.
Amway is a united organization and has an excellent staff. The staff will have a special training on a regular time. Amway has its own farm and factory, and ensures that provide green product for consumers. Amway also has its own aircraft group and Five-star hotel for receiving the people who care and support it anywhere in the world. The leisure park on the sea is preparing for the outstanding staff in Amway. Amway in Guangzhou and Shanghai establish the research and development center, and have nearly 7 specialized laboratories and more than 100 technicians. The quality of Amway’s product is good, and strives for excellence. Because of the high demand, anybody needs its product anywhere in the world. At present, the business of Amway spreads around more than 80 countries and regions. The number of franchised stores in China is more than 100.Amway makes sure that the best product and the kindest attitude can be provided for consumers.
Amway’s direct selling in China is easily mistaken for “ selling.Amway had ever been infringed upon “selling”. That made many people misunderstood its products. And Amway rarely advertises for its goods. Some people do not know what Amway is, which
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function Amway is, though they heard this brand before. It can not only depend on the Word of Mouth Marketing, which sometimes makes people unclear. Besides, the stores of Amway are correspondingly passive, and the impact of those is small and restricted by the area. In resent years, Amway began attaching importance to advertisements, and try to carry out the strategy for advertising and marketing activities.
Amway entered in Chinese market in the appropriate time. With the developing of economy, people began to pursue a better life after solving the problem of food and clothing. Especially, during the time of SARS, Amway’s health food was pursued by consumers. In the 27th, 28th Olympic Games, Amway Nutrilite became the only designated health food for Chinese sports delegation. It is a good chance for Amway to raise the popularity. As we all know that the incident of “Sanlu Milk Powder” happened. The investigation proved that most nutritional health food had the quality problems or lacked the capabilities of research and development in China. Amway products have the assurance of quality and a good word of mouth. For example, the standard of Nutrilite is very high. The facilities of production and the means of management are far beyond the Chinese health food GMP requirements. So, it is a new opportunity to Amway.
Although Amway’s nutrition food is recognized by most people, it is still hard to make all of them accept this product which is expensive in their eyes. As we know that there is a lot of health food, such as “Gold Partner”, “Melatonin”, etc, they make many advertisements on TV. Obviously, most people would like to buy them.In the market, there is keen competition among many daily necessaries. Most people are familiar with these brands, such as AVON, OLAY, P & G, etc. The prices of these products are lower than Amway’s daily products. Some people still choose the products which are cheaper or something they like.
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So, it is really important to make consumers know the value of Amway products.
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Amway is a direct selling company. The main objective of Amway is to profit their distributors by eliminating the middlemen and provide the products to the distributors in a lower price. Amway is one of the largest direct selling companies in the world. The products are of the world class quality. They are made up of natural things that why are very good for the health and environment. Amway covers a wide range of products from beauty care, health care, skin care, home care to clothing, utensils and daily use products etc. Te products are costly as compared to other branded products available in market, but if we compare the quantity while using these products require less amount and thus can be used for a longer period.
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FINDINGS AND RECOMMENDATION
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FINDINGS AND RECOMMENDATION
TRIAL PACKS SHOULD BE USED.
THE PRODUCTS SHOULD HAVE A RESONABLE PRICE.
THE HOME DELIVERY SYSTEM TAKES ATLEAST TWO DAYS TO DELIVER
THE PRODUCTS, THE DELIVERY SHOULD BE INSTANT.
IN EVERY CITY OFFICE SHOULD BE SITUATED IN SUCH A LOCATION SO THAT IT IS IN REACH OF ALL THE DISTRIBUTERS.
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Description: Amway (short for American Way) is an American multinational direct-selling company using multi-level marketing techniques, that sells a variety of products, primarily in the health, beauty, and home care markets.