amway

A STUDY ON MWAY COMPANY

INDEX

CHAPTE

R NO.

CONTENTS PAGE

NO.

1 EXECUTIVE SUMMARY

2 INTRODUCTION

3 AMWAY PROFILE

4 VISION, MISSION & GOALS OF THE

AMWAY

5 AMWAY’S MARKETING STRATEGIES

6 SWOT ANALYSIS OF AMWAY

7 FINDING AND SUGGESTION

8 CONCLUSION & RECOMMENDATION

9 BIBLIOGRAPY

10

11

12

13

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1. EXECUTIVE SUMMARY

Amway is a unique company. It is defined by the fundamental philosophy of

helping people help themselves. Amway has helped millions of people run

their own independent business around the world. Today, Amway continues to

grow by offering new products and business opportunities to people from all

cultures and walks of life. Whether they are employees, distributors, or

citizens in the community, Amway touches their lives for better.

India with its rich reservoir of will, talent and enterprise is perhaps the most

fertile ground for the Amway Corporation. In short it has made substantial

value addition to India‘s social economic life.

The focus of this project is based on studying a single organization i.e. The

Amway Corporation. This research has been conducted to study the marketing

strategy adopted by Amway in the Indian market. An attempt has been made

to study the company‘s perspective in the new market and analyse on how the

company plans its expansion in India.

I have substantiated my research by conducting interviews to gain more

insight about the corporation. The data has been analysed on the basis of 2

surveys which were conducted by me.

Survey 1 was conducted through direct, phone and online interviews. Survey 2

was conducted by gathering information through structured questionnaire and

the interpretation for the same has been provided.

I have finally concluded my research by providing a summarized conclusion and

also suggested recommendations on the basis of the marketing mix.

2. INTRODUCTION

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Direct Selling is a remarkable business model, which brings the market to the

customer and offers a unique business opportunity to anyone eager to adopt the

spirit of enterprise. Direct Selling can best be described as the selling of products

and services directly to consumers in a face-to-face manner, through

demonstration of usage, by an independent direct salesperson. Direct Selling

benefits consumer because it sells high quality products at the consumer's

convenience, often at his/her home or workplace. Customers value the advantages

of convenience, personalised attention, demonstration of usage, and a wide choice

of products backed by Customer Satisfaction Guarantee.

One of the most tangible impacts of Direct Selling in its new advent has been the

fact that it has touched the average man and women in a manner never

experienced before. Amway India Corporation is the country's leading Direct

Selling Company. It is perhaps the best example of the contribution Direct Selling

is making to India. In a little over two years of commercial launch Amway India

has emerged as the country's largest Direct Selling Company. It closed its

financial year with a turnover close to Rs. 250 crores (the Amway Financial year

runs from Sept. to Aug.). It will reach its target of Rs. 1000 crore turnover much

before its declared target of the year 2004.

Because it focuses upon direct selling, Amway is different from more traditional

distribution channels. Its Independent Business Owners own their own business,

with the flexibility to deal directly with their own clients and to build up personal

relationships. These Independent Business Owners also have the ability to deliver

Amway's products to their customers' homes. Independent Business Owners sell

to people they know or meet. The personal contact and care they provide is an

important element in direct selling. They are also self-employed and can introduce

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others to the business to form their own sales group of Independent Business

Owners.

The channel of distribution describes the stages of ownership that take place as a

product moves from a manufacturer to a consumer. The increasing use of the

Internet by consumers has created a real potential for developing different types of

business models and for new approaches to reaching users directly and quickly in

their homes.

This report examines in detail the marketing strategy of the leading global direct

marketing major, Amway in India. In the initial stages of the report I have focused

on Amway‘s current position in the Indian market.

As the research progresses I have tried to analyse the companies marketing

objective for India and how they set out to achieve them.

This report also provides a brief introduction to the concept of multilevel

marketing and tries to make the reader understand the difference between

multilevel marketing and the traditional distribution setup in the FMCG sector, so

as to give an idea as to how the system is being utilized by companies like

Amway.

MLM -a definition

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Multilevel marketing allows sellers to build a business through their own sales

efforts and by inviting others to become sellers. Remuneration is based on a

seller's personal sales AND on the combined sales of those people they have

sponsored, trained and motivated. The story of Amway is intended to drive home

the point of a company being alert enough to modify its globally accepted

practices to suit the local market‘s needs.

This report has been made keeping in mind the benefits which can be derived

from my research.

Benefits to customers

This report will be beneficial for consumers who prefer the marketing goods or

services directly to them: at their own convenience often in his/her home either on

a one-to-one basis, or in the context of a sales party. Through this the customers

will get a better idea about the company‘s product offerings and value the

advantages of: convenience, personalised attention, and a good selection of quality

products available at their door steps.

Benefits to sellers

Many people have chosen direct selling because they want to build their own

business, but do not have: considerable funds required to buy a franchise or start a

new company. Among the top five reasons people sell direct because they like and

believe in the product, like being their own boss, and working their own hours,

like the supplemental family income or making extra money for themselves. It can

be beneficial from the sellers point of view as it may give them the idea of exactly

how they can go about creating their own business and benefit from the Amway‘s

unique business opportunity.

Benefits to companies

In this report I have deeply analysed the marketing strategy for Amway through

personal interviews by many IBOs and Amway customers who have helped in

adding valuable data to this project which can be useful for the company. The

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suggested recommendations can be considered by the corporation for further

expansion and increasing market share.

3. AMWAY PROFILE

COMPANY HISTORY

Amway began in 1959 with two young entrepreneurs in the United States, Rich

DeVos and Jay Van Andel. Their concept for an innovative business opportunity,

centered around person-to-person marketing, established itself as a leader among

one of today's fastest-growing industries.

Today, more than 3.6 million independent business owners distribute Amway

products in more than 80 countries and territories. Amway is part of the Alticor

family of companies whose global sales totalled $4.5 billion in its most recent

fiscal year.

1950s - A Friendship Forms

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.

1960s - 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.

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1970s - 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."

1980s - 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.

1990s - The Second Generation

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

families took the helm during the ' 90s. 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.

2000s - The New Millennium

In 2000, Amway Corporation became a wholly-owned subsidiary of Alticor, Inc.

Chairman Steve Van Andel and President Doug DeVos share the Office of the Chief

Executive.

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Amway - The Current Scenario

Amway is the largest multi-level marketing (MLM) organization in the world. It is a

multi-billion dollar company based on the sale of a variety of products. Amway‘s

philosophy is defined by commitments, trusts, enduring relationships, and the ideal of

perfection above profit. From a humble beginning in 1959, using an old gas station,

Amway the brainchild of Co founders Rich DeVos and Jay Van Andel, is now one of

the largest and most successful direct sales companies. Amway has also worked to

provide better opportunities for people through active support of various community

projects.

Corporate Profile:

Between then and now, Amway corporation has grown into a US Multi-billion dollar

company managed by 12,000 employees.

It operates across 80 countries and territories in Asia, Africa, Europe and the

Americas with a turnover of US $5.7 billion.

Amway is the wholly owned subsidiary of Alticor Inc. It has a

sales force of over 3.3 million distributors.

The company Manufactures 450 products of which 350 are patented.

The company is also a long standing, active member of the World Federation of

Direct Selling Association (WFDSA).

Over 500 R & D scientists and professionals ensure the exceptional quality of its

products across five product lines:

Home Care

Personal care

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Home Tech

Cosmetics

Nutrition and Wellness

AMWAY INDIA

Amway India is a wholly owned subsidiary of Amway Corporation, Ada, Michigan,

USA. Amway Corporation is a 42 year old company, and is among the largest Direct

Selling companies in the world. It was established in 1995. It commenced commercial

operations in May 5th, 1998. In the brief period since launch, it has emerged as the

Country‘s largest Direct Selling Company.

Facts:

Over 200,000 entrepreneurs have adopted the Amway business opportunity; and are

actively involved in building their independent Amway business.

Amway has invested US $ 35 million in India. Of this, US $6 Million is in the form

of Direct Foreign Investment. (IDSA)

US $4 million has been spent in transferring state-of-the-art technology. The

company Amway India was launched with 5 offices (New Delhi, Bangalore, Mumbai,

Chennai, Kolkatta) which serviced 150 locations. At present, in addition to 32 offices

in all metros and major cities, Amway India services over 379 cities and towns in the

country. Turnover of Rs 100 cr. and Rs. 250 cr. in the first and second years of

operation respectively. Plans to reach Rs. 1000 turnover by the year 2004.

In India Amway Corporation comprises of 72% women, 24% Couples, and 4% men.

(Source IDSA)

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Amway India is the founder member of the Indian Direct Selling Association

(IDSA)

Direct Selling requires expertise and special skills. Using the benefit of Amway's

leadership status in the global Direct Selling industry, Amway India has in the

past 12 months, conducted over 8000 training sessions with an attendance of

approximately 350,000 Distributors.

Amway India was honoured by the AICB Millennium Outstanding Service

Award, 2000 by the All India Confederation of the Blind in recognition of its

sterling contribution to the cause of India's blind.

The Karnataka Welfare Association awarded Amway India with the `Rising

Business Star of the Millennium' during a ceremony held at Bangalore during

October, 2000.

In the short period since its advent in the country, Amway has made several

contributions to India‘s socio economic milieu. It as either introduced

unprecedented benefits, or upgraded existing facilities to international standards.

Corporate Responsibility

Through its presence in India, Amway continues to enhance human resource

development using its experience in entrepreneurial opportunity and self

employment. Amway has conducted several seminars on "Entrepreneurial

Development and Direct Selling" in concert with the Confederation of Indian

Industries (CII) and the All India Management Association (AIMA) to educate

popular opinion on the benefits of organized direct selling.

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HOW IT WORKS

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

business has developed through direct selling. In Amway, one is recruited as an

"independent" distributor of Amway products by buying a couple of hundred dollars

worth of the products from the one who recruits you, known as your "up-line." Every

distributor in turn tries to recruit more distributors. Income is generated by sales of

products by the distributor plus "bonuses" from sales of his or her recruits and their

recruit-descendents.

How do you begin? First, you are sponsored by another Amway distributor and you

obtain the Amway Business Kit. The Business Kit contains basic AMWAY products

and literature for your use and for sharing with others. You begin by developing both

customers and distributors.

Customers or clients are the people who buy the AMWAY products from you but

who aren't Amway distributors. One of your best sources for building a customer base

is a group of people you already know. These acquaintances try AMWAY products

and become your customers as they use and re-order various AMWAY items.

However, I have found that people everywhere need high-quality, Satisfaction

Guaranteed products which they believe Amway is able to provide.

Independent Business Owners or Distributors are people who have evaluated the

Amway business opportunity and elected to join the business. IBOs deal directly with

Clients, build up personal relationships and deliver direct to Clients' homes. They 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. The

most successful Amway businesses enjoy a balance of merchandising AMWAY

products and sponsoring distributors. Growth in your business comes from sharing

the Amway business opportunity with others and helping them decide if it's right for

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them. This is called sponsoring. Amway distributors who sponsor others generally

have higher average sales volumes than those who don't sponsor.

Your "Group" is the team of distributors you've sponsored. Many you've sponsored

personally, but others were sponsored by those you personally sponsored. You train

and motivate your group and, as a result, you earn extra income when they earn

income. As you continue to grow your business and they continue to grow theirs, you

both can benefit.

Like any other business, your Amway distributorship needs frequent input and

activity to grow. However, whatever your goals are, you control how quickly or how

slowly you build your business. After all, it's your independent Amway business.

Over time, a distributorship can grow considerably. The more distributors in your

group who become successful in the Amway business, the stronger your business will

become, and the higher the pin levels you can qualify for. We call them "pin levels"

because you earn incentive pins at the various achievement levels of the business.

Each pin level features a set of incentives and rewards for being successful.

Income Incentive and more

The Amway Opportunity offers distributors many benefits. Some are financial, others

are intangibles, such as peer recognition, pride in achievement, the joy of helping

others, working with family, and the esteem of owning your own business

Income potential

As an Amway distributor, you can earn income many different ways. For instance, in

the U.S. and Canada, you can earn income in at least 10 different ways. They include

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retail profit (the difference between Distributor Cost and the Retail Price) and nine

different bonuses rewarding various levels of accomplishment.

Special leadership programme

As you qualify at various levels of achievement, you may be eligible to attend various

Amway leadership programs:

Annual Business Meetings

In countries around the world, company - paid invitations are extended to Amway

leaders to meet in a business-building atmosphere.

Variety of Special Programs

When your business qualifies at a specific distributor level, a special invitation

occurs. Imagine your special day at an Amway facility, your own success story

featured in our distributor magazine, and your name and picture added to the

Distributor Hall of Fame in Amway's World Headquarters.

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4. VISION, MISSION & GOALS OF THE AMWAY

Company Vision:

Corporate vision is a short, succinct, and inspiring statement of what the

organization intends to become and to achieve at some point in the future, often stated

in competitive terms. Vision refers to the category of intentions that are broad, all-

inclusive and forward-thinking. It is the image that a business must have of its goals

before it sets out to reach them. It describes aspirations for the future, without

specifying the means that will be used to achieve those desired ends.

Warren Bennis, a noted writer on leadership, says: "To choose a direction, an

executive must have developed a mental image of the possible and desirable future

state of the organization. This image, which we call a vision, may be as vague as a

dream or as precise as a goal or a mission statement."

Core values include:

Safety – Safety serves as a barometer of our company’s overall success and is a

specific measure of our operating excellence.

Trust – Trust is the mutual respect for and confidence in people. Trust recognizes

the importance of individuals and appreciates their diverse opinions. Trust compels us

to share information and encourage new ideas. It requires an open, honest, forthright

manner.

Confidence – Self-confident people take initiative, handle the unexpected, stand

behind their convictions and support the efforts of others. They take bold,

innovative, creative actions, capitalize on opportunities, make sound decisions

quickly, and mobilize the best resources for rapid action.

Teamwork – Teamwork is personal involvement and collaboration in a team

environment. It includes setting a common goal in support of business objectives,

making an individual commitment to the team’s success and recognizing the success

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http://www.1000ventures.com/info/leader_360_brief.html

http://www.1000ventures.com/info/people_inspiring_brief.html


of the team.

Accountability – Being accountable means every employee assumes ownership

and responsibility for his or her own work, regardless of the job they perform.

Being accountable means making decisions and holding oneself responsible for the

consequences of those choices.

Doing What’s Right – Doing what’s right is being honest, ethical, and having

personal and professional integrity. It means consistently treating all people fairly,

delivering on promises, and taking personal responsibility for your actions.

Quality – Quality is the primary determinant of customer satisfaction and loyalty,

and it requires employees to continuously provide internal and external customers

with the right product or service...done right...the first time. In today’s increasingly

competitive business environment, better quality translates into better value for our

customers and, subsequently, better value for their customers-and this is the very

essence of competitive differentiation.

Mission:

Most businesses have some form of mission statement ,whether they know it

or not. For example, other names for a mission include: founder's philosophy,

statement of purpose, business philosophy. An organization's mission describes its

fundemental purpose and overall philosophy. A mission statement (what we are) is

different than a vision statement (what we want to become).

Mission statement:

Provides thrust and direction to the organization.

Cornerstone of all strategic planning.

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A mission statement is an organization's vision translated into written form. It

makes concrete the leader's view of the direction and purpose of the organization.

For many corporate leaders it is a vital element in any attempt to motivate

employees and to give them a sense of priorities.

A mission statement should be a short and concise statement of goals and

priorities. In turn, goals are specific objectives that relate to specific time periods

and are stated in terms of facts. The primary goal of any business is to increase

stakeholder value. The most important stakeholders are shareholders who own the

business, employees who work for the business and clients or customers who

purchase products and/or services from the business.

The mission statement should be a clear and succinct representation of the

enterprise’s purpose for existence. It should incorporate socially meaningful and

measurable criteria addressing concepts such as the moral/ethical position of the

enterprise, public image, the target market, products/services, the geographic domain

and expectations of growth and profitability.

The intent of the Mission Statement should be the first consideration for any

employee who is evaluating a strategic decision. The statement can range from a very

simple to a very complex set of ideas.

Specific:

The Mission Statement should represent the broadest perspective of the

enterprise's mission. You may want to take the approach of being very specific. For

instance, a Mission Statement for a fictitious airline could be worded as follows: Your

mission statement is an opportunity to define your business at the most basic level. It

should tell your company story and ideals in less than 30 seconds: who your company

is, what you do, what you stand for, and why you do it. Do you want to make a profit,

or is it enough to just make a living? What markets are you serving, and what benefits

do you offer them? Do you solve a problem for your customers? What kind of

internal work environment do you want for your employees? All of these issues may

be addressed in a mission statement.

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Other ways to think about a mission statement as you begin to write one include:

Answers the question, “What business are we in?”

Provides thrust and direction to the organization.

Must be market-oriented (focusing on the problem the business is solving),

not product-oriented.

Basic guidelines in mission:

Your mission statement is about you, your company, and your ideals.

Don’t “box” yourself in.

Keep it short.

Ask for input.

Goals:

The major outcome of strategic road-mapping and strategic planning, after

gathering all necessary information, is the setting of goals for the organization based

on its vision and mission statement. A goal is a long-range aim for a specific period.

It must be specific and realistic. Long-range goals set through strategic planning are

translated into activities that will ensure reaching the goal through operational

planning.

Some company Goals may be as follows:

To promote a profitable and sustainable business activity that meets the

customers’ needs.

To increase the company's market share.

To gain the competitive edge.

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

To provide excellent customer service.

5. AMWAY’S MARKETING STRATEGIES

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AMWAY’S MARKETING OBJECTIVE

The objective involves matching consumer needs with the product. The better the

match, the more lasting the potential for the relationship between the seller and the

buyer. The selling process is aided by Amway's retail strategy to provide high quality,

readily purchasable items with a good environmental positioning, and offering

consumers‘ good value for money.

AMWAY SALES AND MARKETING PLAN

Amway practices direct selling which is a method of selling goods directly to the

consumer by an independent Distributor. A Distributor can then introduce further

Distributors and generate income from retail profits supplemented by bonus payments

based upon the total sales of the group built by a Distributor'.

Income is generated by a distributor through:

The retailing of goods to consumers. Retail margins (mark-ups) on the basic

wholesale price represent income to the selling distributor.

Additional performance and leadership bonuses, paid on the volume of personal

business of the distributor and the business volume of the distributors he has

introduced to the business.

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Various levels of leadership bonuses, dependent upon the overall size and shape of

the business, paid on achieving different levels of business performance.

This plan, therefore, rests upon the twin foundations of retailing and sponsoring.

Retailing - the selling of goods to consumers on which retail margins are earned

and performance bonuses gained.

Sponsoring - the introduction of other individuals to establish and develop their

own independent Amway distributorships.

Retailing enables distributors to provide immediate financial incentive rewards.

Sponsoring enables distributors to replicate the base with other people, thus allowing

the organization to grow.

Direct selling involves sales people showing and demonstrating products to obtain

orders. As with all direct selling activities, the process involves two-way

communication and this can be time-consuming. Business success and the resulting

financial results are a direct consequence of effort, commitment and personal group

motivation. Personal contact between distributors at one-to-one or group meetings

provides the opportunity for individuals to discuss strategies, difficulties, levels of

involvement and plans for the future. The income objectives and individual targets

may be determined by each distributor based upon what he or she wants to earn.

Distributors who develop direct selling businesses may come from widely different

backgrounds, with vastly different levels of experience and knowledge - the common

factor to their success is the desire to achieve.

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AMWAY’S STRATEGIES IN THE INDIAN MARKET

INTRODUCTION

The launch of any new product requires a considerable amount of time, effort and

careful planning. Research and development uses advances in science and technology

to enhance products, while market research is carried out to examine changing

consumer tastes and fashions. The key to successful marketing is to clearly identify at

which market segment the product should be aimed, find out precisely what

consumers in this target group want and then plan the marketing strategy accordingly.

The focus of brand image and positioning of the product within the marketplace are

of paramount importance.

All organisations face an external business environment that constantly changes.

Changes in the business environment create both opportunities and threats to an

organisation'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,

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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’s Market Penetration Strategy

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

products and competences by 'stretching' those new 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.

Target Markets and Market Segmentation

Segmentation: The Amway business opportunity is open to everyone, regardless

of sex, race, age, religion, or political or other personal beliefs. The Amway business

appeals to women, men, couples, and families from all backgrounds.

Amway also offers a range of Fast Moving Consumer Goods through its five main

product categories i.e.

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Home Care

Personal care

Cosmetics

Nutrition Wellness

But initially Amway was launched in India with only 6 products most of which were

home and personal care products.

Target Audience: Although it was recognised by Amway that groups such as

children, men and teenagers are likely to become targets in the future, the Amway‘s

range of products was aimed mainly at adult

females between 23 and 44 years of age.

These products are daily use items catering mainly to the household sector. Through

Amway‘s extensive market research it was proved that that women are often looking

for new products and technologies that will provide a more satisfying product

experience. Thus Amway has segmented its market on the basis of typical consumer

from this target group:

is probably a professional woman

is very product conscious

wants professional, quality products

Regular user of home care and beauty products

relies on recommendations from friends when making any purchase decisions

Makes buying decisions based on clinical evidence.

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Positioning: The focus of brand image and positioning of the product in a new

market place are of paramount importance. Thus, it was important for Amway to

create a strong brand image for the total product range for entering the Indian market.

The image created would reflect a great deal about the product and its consumers.

One of the most important challenges for Amway was to develop an appropriate

packaging for all its products to appeal to the Indian consumer.

Packaging can be crucial to the success of a new product and Amway went to great

lengths to ensure that the packaging and design appealed to the target audience.

The colours are light, elegant, soft and culturally appealing. Soft, metallic white gives

a sense of clarity, while the blue caps represent water and blue sky. The silver

metallic touches add luxury and spice. All the colours are designed to suggest

cleanliness. This design was used to create a brand image. The following objectives

for the brand were set:

to increase distributor profitability and productivity by providing a new and exciting

business opportunity

to optimise consumer convenience and value through enhanced product

differentiation by providing them with an exclusive and revolutionary range of

products.

Amway’s products are positioned as :

―At Amway, quality means innovation in formulas and technology. A commitment

to excellence backed by the resources to do the job right and confident that every

product will meet your satisfaction -- guaranteed.‖

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Having decided on the target audience, we turn our attention to the

Marketing Mix:

Product: Considering the overwhelming success its receiving in the Indian market,

Amway has introduced more products in each category. It is also planning to expand

the product category by introducing Home tech and food items in India. Amway has

also adapted itself to the local market by introducing the sachets and small bottle

packs which can be used by people in small quantities and are very economical.

With the exception of the Nutrition & Wellness and Cosmetics range, all Amway

India products/bottles are manufactured through 3 third party contract manufacturers

using world class technology and processes. The products match Amway's global

quality standards. They carry a tamper-proof seal and a 'Customer Refund Policy'. If

not completely satisfied with the product, the consumer can return it for a refund.

Amway products are environment friendly, and are not tested on animals. Amway

encourages the return of its used product bottles for re-cycling and to prevent their

misuse.

At present, Amway India's product portfolio comprises of::

Ten products in the Personal Care category,

Eleven in the Home Care category and

Six in the Nutrition & Wellness category.

Seven in the cosmetics category

One product in the Agricultural Category.

22

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The other products are two soft toys.

Amway Sales aid.

Amway's product range demonstrates its adaptability to the market based on a close,

first-hand understanding of the Indian consumer's nuances. An aggressive product

launch plan introduces new products every few months. In the coming months,

Amway will further expand its product portfolio through the launch of several new

core line products. Amway had initially started with 6 products for the Indian market

in 1998. At present it has about 45-50 products in its various product categories

which is about 11% of its total product category.

Pricing: Amway products are price competitive and overall a good value for

money. While some of its products are more expensive than their counterparts, others

are less expensive and most are competitively priced. Products that are more

expensive usually have greater features and benefits over competitive goods. Many

AMWAY products are highly concentrated, meaning a single purchase lasts longer.

On a cost-per-use basis, these products are priced very competitively from their local

brands. The consumer is the ultimate judge of price and value, and

Amway‘s sales success over the years speaks volumes about its product value and

customer satisfaction.Amway‘s pricing strategy remains the same but with the

introduction of sachets and small bottles, people can now enjoy its products at an

economical rate.

Place : Amway India enterprise is redefining its structure by overhauling its supply

chain. The network marketing company is looking at reducing the lead time by

moving closer to the point of consumption, improving its

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information system and reaching out to homes through a better delivery system. It

is expanding its presence across the country and adding new products to its portfolio.

The company has done away with its central warehouse at Nagpur and opened four

regional ware houses in Bangalore, Kolkatta, Delhi and Mumbai that are serviced

directly from the manufacturing units. The company today has 36 offices serving over

385 locations across the country. It plans to add 14 more offices to its

network this year taking the total number of offices to 50 which will

serve over 450 locations. These new offices will be opened at strategic

locations spread across the country and governed by an unwritten rule of ―Be

present where Amway distributors are.‖

The Company Amway India launched with 5 offices (New Delhi,

Mumbai, Bangalore, Chennai, Calcutta) and a Central Warehouse

(Nagpur), which serviced 150 locations. At present Amway India has 32

offices, and a reach to 352 locations.

Promotion: Amway promotes its products through its Independent Business

Owners. It has a heavy accent on training. Every Amway distributor enjoys free,

unlimited access to training sessions. These training sessions impart product

knowledge, comprise motivation sessions, and seek to optimise the business potential

of participants. Recently Amway has also started advertising about its products in

various Newspapers and Magazines to promote its products and reach out to their

target markets. Amway has come up with a vast promotional strategy to reach out to

its customers and other potential buyers.

Amway's Promotion channels

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There are five different promotion channels:

Corporate Events

Corporate events include specially arranged functions, such as product fairs,

conferences and seminars, which distributors at different levels are invited to attend.

Face-to-face communication at a range of events helps Amway and its distributors to

get to know each other. They also provide an opportunity for distributors to get to

know each other and are useful for relaying messages, giving advice and generating

personal discussion. Events include:

Pace Setter - a reward incentive to help new and existing distributors reach the

6bonus level within three consecutive calendar months.

It also encourages a balanced business, with equal amounts of retailing and

sponsoring - essential for long-term success and profitability.

Direct Distributor Seminar - allows newly qualified Direct Distributors to meet

the Amway Management Team, tour the UK Headquarters, attend key informative,

motivational business sessions and go to the New Direct Distributor Gala Dinner.

Leadership Seminar - where distributor leaders who have achieved a target

criteria set by Amway, travel for a seven day trip with compliments of Amway to

some of the world's finest beach locations and hotels where they attend a number of

business sessions and exchange thoughts and ideas with corporate staff.

Launch into '03 - a major annual launch of new products and services presented

by a road show of event.

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Training

Training builds the skills and knowledge of distributors and therefore improves

competence levels. For Amway, the starting point of the training process is to identify

the skills and knowledge necessary for distributors to carry out their role. Acquiring

product knowledge is an important aspect of training and preparation. As Amway

relies upon the personal service of its distributors and the quality of its products, it is

essential that distributors are not just shown how to use products but also how to

merchandise them to their best advantage.

Training may involve either Corporate or Group (Line of Sponsorship) Training on

specific product brands. Distributor input into these sessions provides informative

help for the management of independent businesses. Once a distributor has achieved

an advanced knowledge of a specific brand, they can then receive the training and

tools required via a 'Train a Trainer' session whereby they will be taught how to train

their own group, therefore maximising their expertise.

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Lines of sponsorship

Amway is essentially a people-based business - without people, the business cannot

expand. The business of each distributor grows via new customers and through the

sponsorship of new distributors.

Established distributors are involved in helping newly sponsored associates to

merchandise Amway products. Distributor groups meet to discuss company

procedures and their goals. The groups also discuss new product launches and

promotions, the administration of their businesses and support new and existing

distributors. These lines of sponsorship provide constant, face-to-face support from

professional associates.

Publications

Written communication is useful as a permanent source of reference. Amway uses a

range of written communications to promote its ideas and products across its target

audience. These include:

Amagram - This magazine is mailed directly to all Amway distributors in the

India. Amagram is used to communicate information about new products,

promotions, community news, distributor events and recognitions as well as news of

other affiliates throughout the Amway world. Amagram shows how distributors can

make more out of their business. It is also used to help distributors understand the

philosophy by which the business operates and the legislation regulating the Direct

Selling Industry.

Special Literature - Occasionally, Amway designs a brochure or leaflet which is

used to address a particular change or launch, e.g. new car care product range.

27

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B. Amway’s Market Expansion Strategy

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.

Target Markets and Market Segmentation

Segmentation:

Geographic : Amway is now trying to reach people by setting offices even in the

remote areas of the country. Amway‘s distributors are now spread all over India even

across the rural areas.

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Demographic:

Age: Amway products are meant for people of all age groups. It includes a wide

variety from soft toys meant for children to health and nutrition products for the entire

family. But to join the Amway as an Independent Business Owner a person should be

above 18 years of age.

Income: Amway business opportunity is more popular among the middle income

group since it gives them a chance to increase their income level by using its products

and also making others use them as well.

Gender: Majority of Amway products cater to the needs of Women Eg: cosmetics,

home care and personal care. But Amway is introducing many new products in the

Indian market the choices are increasing for both men and women.

Family Life cycle: Majority of people joining Amway are young women and

newly married couples.

Occupation: Most of the people who are engaged in the Amway business are

either professionals or small businessmen.

Psychographic

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Personality: It appeals to people who are ambitious and want to earn high incomes

with in a short span of time. Amway through it unique business opportunity gives

them a chance to earn enough income and show them the path to realise their dreams.

Social Class: Majority of Amway people comprise of working class, middle class,

Upper-Middle class.

Behavioral

Benefits: The consumers enjoy the benefit of using a high quality product which is

available to them at their door steps.

Loyalty status: People working with Amway have a very high loyalty status. They

slowly start replacing Amway products with other local products and can continue to

use these products for life.

Attitude towards product: Amway people are usually very enthusiastic and

optimistic in everything they do.

Target Audience :

Amway‘s products appeal to a large number of buyers all over

India.

It is targeting people who believe in using high quality products which are

conveniently available to them.

Amway business opportunity is attracting the middle income group to earn

extra income.

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Amway‘s target audience include a lot of professionals and young couples

who are very ambitious to earn high level of income in a short span of time.

Amway‘s products being good in quality are also very much preferred by the

upper class segment who can easily afford the pricing but they don‘t want to

get involved with the business opportunity. They are mostly associated with

Amway as their customer.

Target group

Men – Professionals and small business owners

Age - 23 - 50 years

Income Status – Working class, Middle income, upper middle income

Women – Professional and housewife

Age – 20 – 50 years

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6. SWOT ANALYSIS OF AMWAY:

STRENGTH:

Based on direct selling operations. Hence it can be A home based business.

Every can participate in business. It’s easy to get admission in Amway with

easy rout like intent.

Training to staff.

Functions are performed by IBOs.

Organize meetings and events time to time.

Have good customer service system.

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

reselling attitude in customers.

Quality Products that Inspire Confidence. Almost no risk of money as world

class quality Minimal start up costs gives strong base to the initiation of

business. So everyone can participate in business. The person who wants do

something can be make profit with investment of low cost.

Products are easy to sell.

A business with national and international scope gives more opportunity to the

costumers.

The possibility of financial security and freedom of time to enjoy life.

WEAKNESS:

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.

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OPPURTUNITIES:

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.

THREATS:

Too much freedom to IBOs.

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

company.

Competitors like AVON, MARY KAY; SUNRIDER creates lot of

competition in market which leads to strong marketing competition in market.

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7. FINDING AND SUGGESTION

FINDING:

I’ve written about Amway based entirely on factual, confirmable sources. If

you’re researching Amway, especially on the Internet, chances are you’ve

encountered people who claim Amway is some kind of scam business, it’s illegal, the

products are poor quality, or some other information that has made you think twice

about being involved.

Skim through these finding and decide for yourself whether those kinds of

opinions really have a lot of credibility in the face of all of these facts. Have all these

major companies and organizations that have recognized Amway for excellence been

conned? For fifty years? Or perhaps the opinions you read on the internet have been

formed from limited or even no experience – from encountering some new or

inexperienced Amway rep that never bothered to learn how to act professionally or

properly explain the concept, and probably never did much more than dabble for a

few months. Or perhaps the experience was with just one of dozens and dozens of

different Amway affiliated organizations, each with different ways of doing things

that may not all appeal to everyone? Or perhaps their opinions driven by business

interests working or being paid by competitors or potential competitors to Amway?

SUGGESTIONS:

Trial packs should be used because customer must have to introduce the

product. Once customer gets idea about product he comes to know advantages

of products.

The products should be cheap the home delivery system takes at least two

days to deliver the products so the delivery should be instant.

There must be multiple options for purchasing the products for distributers

like online, tale and instant purchasing.

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In every city, the Amway office should be situated in such a location so that it

is in reach of all distributers.

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8. CONCLUSION & RECOMMENDATION

Positive side to Amway

The only positive side to Amway is the chance to make money. It is the chance to get

oneself involved in a trade as a side business, especially if one is trying to recover

from a failed (or failing business) or one has lost one's job. To the extent that a few

people will surely make money, the system works.

Amway has also helped solve the problem of unemployment in the country and given

a hope to earn high incomes through their independent business to millions of people

all over India.

It is involved in a lot of community services. Amway feels that it is their

responsibility to serve the community in which they live. Through Amway

Motivational Organisations (AMOs) it has try reach out to a lot of handicap people

and provided them with free services at any time. It is also involved in helping the

blind by providing them with proper education. Amway is also actively involved

various environmental projects such as planting more trees etc.

Amway offers a wide range of good quality products which are easily available to

people at their door steps.

Underside side of Amway

Why Amway Will Make Money Even If You Don’t

An interesting calculation: If 1 million people sign up, Amway will receive

Rs. 4400 million (Rs. 440 crores or US$ 206.80 million) in up-fron cash

from this ‗cash rich‘ country.

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They will have earned all this money without having sold a single one of their

very expensive products but just by sponsoring people to this business.

How This Is Done At The Expense Of The Middle Class

While doing this research, I have found that the only way to succeed in the

business is to be able to sign up vast numbers of people and make them use

the products for themselves. The other way is to run around peddling soap

from door to door after having bought it from Amway at a discount.

This is exactly where the Amway business strategy comes into play. It makes

people hand over their savings to Amway to buy them a dream.

If all Amway did was to manufacture and sell their products through door-to-

door salespeople there would be no problem. The choice of purchase is left up

to the individual. By asking for deposits from buyers —in the beginning and

again every year as a renewal fee— it looks like Amway seeks to build a

captive consumer base. Once someone has paid Rs. 4,400 to Amway, he is

naturally disinclined to buy Nivea hand cream instead of Amway Gly-Honey

hand lotion. The element of personal choice is thus prejudiced.

By involving their "distributors" in a complicated system of down-the-line

commissions they are given the impression that there is a limitless market for

Amway products.

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The truth is that the market share for Amway is as limited as the market share for any

other product. Traditional retail trade is not about to collapse and because of the

expensive price structure; the growth of that market is restricted to the very wealthy.

Calling this "an opportunity to use world class products" is a bit like calling the

purchase of a Mercedes Benz for Rs. 25 lakhs an "opportunity", when an efficient

Maruti 800 for one-tenth of that price will do nicely.

With all these constraints, telling people of profit mechanisms tied into several

thousand people buying Rs. 1,500 worth of Amway soaps every month seems

laughable in a country where entire families lead their lives on less money.

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RECOMMENDATIONS

After conducting an in-depth analysis of Amway’s various marketing strategies

in India, I would like to suggest a few recommendations

Product: To prolong the life-cycle of a brand or product range, an organization

must inject new life into the growth period through readjusting the ingredients of the

marketing mix. To ensure the Amway range of products would stay in line with

evolving market trends and tastes, Amway should set about upgrading its brand with

the additional objective of increasing its global competitiveness.

They should introduce more products which are made in India. Eg: Persona Powder.

This product will also give the IBOs and customers the cost advantage.

Price: As a result of my research I have discovered that all the Amway products are

expensively priced. If they are trying to target the middle income group they must

reconsider their price structure once again and make it a bit economical for the Indian

audience. This way may be they can enjoy a larger market share, as it could be one of

the reasons why some people may be hesitant to join the Amway business.

Place: There is still a long way to go for Amway to have its presence all over India.

But keeping in mind the overwhelming response it is getting from the rural segment

of the country to join the Amway business they should focus on the needs of these

people i.e to make the products available to them at their conveniences.

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They should also try to Manufacture their products in India, which will then reduce

the cost pressure on its customers.

They should also try to set up their offices in states like Kerela, because Kerala is a

very good market for the Direct Selling industry for various reasons; the two most

important factors seen favouring the industry are the high literacy rate and the

willingness to try something different.

Promotion: Sine India is advancing on the technological front, I feel its time to

Introduce the e-commerce Amway i.e. Quixtar in India. It will help in enhancing the

Multi-level marketing to a great extent. It will also create a new business experience

for the Indian IBOs and will also help in promoting their sales.

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9. BIBLIOGRAPY

This project work is based on the information that has been collected

from various sources. To mention a few, information from some

websites and magazines facilitated the preparation of this project.

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Websites

www.amwayindia.com

www.amway.com

www.onlinemlm.com

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T.Y.B.M.S

amway

Documents

amway corporation

amway india corporation

amway profile

introduction direct

contribution direct

selling of products

amway financial year

executive summary amway