introdution - copy

8/8/2019 Introdution - Copy

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Amway's Indian Network

Marketing Experience


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Amway is one of the worlds largest direct sellingbusinesses. Founded in 1959 and headquartered in Ada,Michigan, USA, Amway offers consumer products andbusiness opportunities in more than 80 countries andterritories worldwide.

The company also provides product development,manufacturing and logistics services through its Access

Business Group and Alticor Corporate Enterprisesdivisions. In its most recent fiscal year, the Amway familyof companies reported annual sales of $8.2 billion.


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Amway is present in over 80 countries and itsmanufacturing plants were located in US, Hungary,Korea, China and India.

The company had over 3 million distributors acrossthe world.

Amway's domestic operations fell into five areas -personal care, homecare, nutrition, cosmetics and

home tech.


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How Amway come into indiayAmway had received permission from the Foreign

Investment Promotion Board (FIPB) in 1994, to invest

$15 million in the Indian operations and to sourceproducts from India

y Company began with the help of small and mediumscale companies.


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Manufacturing partnersy Jejuplast at Pune,

y Naisa Industries at Daman,

y Hyderabad-based Sarvotham Care

y These industries help Amway to manufacture highlevels of product development, engineering and

quality.


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ADCsyADCs are Amway Distribution Centers

yADCs operated as product selection centers for

Amway's entire product range and as training centersfor distributors.

y The company supported its independent distributorswith five full service ADCs at New Delhi, Bangalore,

Chennai, Calcutta and Mumbai.


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Journey to Indian markety The most significant of Amway's Indian initiatives

were its 'Indianisation' efforts.

y Hindi slogan 'Hamara apna business' (our ownbusiness) on its stationery.

y . Amway even named its expansion drives as'Operation Gaadi' and 'Operation Ghar.


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Researchy Before entering into indian market they conduct

market research agencies for identifying indian

industry these agencies were Pathfinders and ORG-MARG.


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PROBLEMy Amway's failure to sell the basic concept of direct

selling to the Indians.

y Though the company managed to rope in asubstantial number of distributors, the attrition rate

was at an alarming high of 60-65%.

y Most of the products that the distributors bought, they

consumed themselves. Estimates put the percentage ofself-consumption at almost 50-60% of the total

volume.


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Problemy India-specific pricing strategy and eventually there

were just a few marginal cuts in the prices, which were

still almost 20% higher than those of the competingFMCG products

yAmway was burdened with an image that had littlebasis in fact. Its products began to be perceived as

being very expensive and meant only for the premiumsegment.


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Problemy Since the distributors themselves were unsure about

the price-value equation of the products they were

selling, they could not effectively convince theconsumers either. poor customer service on the part ofthe company(e.g. Of loc and dilute prices)


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DISCUSSION

Of the total distributors, only about 10% showed

reasonably high levels of activity.

Its products began to be perceived as being very

expensive and meant only for the premium segment. Even though customers complained of the lack of

services, the company deemed it more beneficial to

go for higher sales force motivation programs rather

than undertake customer service initiatives.


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CONT.

Unavailability of critical infrastructure like

networked banks, toll-free phones and multi-service

courier companies.

The cost of making long-distance calls, the courier

companies' refusal to accept cash and the time

taken to deliver products were the three major

hurdles that Amway faced. Threat of internet.


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In India, distributors also needed to know the valueof the products they were selling, this aspect wasoverlooked by the company. One of the first

'corrective' measures it took was putting stickers onits products, which clearly indicated the number ofusages.

Amway also decided to focus on the market in the

smaller towns. The game plan was to reach consumerhomes all over directly by making the currentdistribution system more effective and decentralized


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The company also decided to give incentives to costand freight agents (C&FAs) who could deliver parcelsin the same city within 48 hours outside, in about 72hours.

Ina bid to make its products more affordable, Amwayintroduced value-for-money 'chota (small) packs' inDecember 1999.

Amway provided graphics and three-dimensional

views in the product display sections on its website.The company also planned to have portals in variousIndian languages to ensure wide coverage


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y Appointing more distributors but also giving themsome training and knowledge about market.

y For more work from distributors they make incentive

plans .y These distributors were duly provided with starter

business kits containing products, training material,and sales literature.

y Amway also utilized the Internet and electronic kiosksto hook up with its distributors and give theminformation


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y Operation Gaadi - where a store was mounted on a truck and made

trips to different regions on different days. (West Bengal & UttarPradesh).

y Operation Ghar - designed to provide better service to the customersas well as to its large family of distributors.

y Involving an outlay of Rs 15 crore

y Covered 19 state capitals

y Provide five Es - ease of ordering, ease of paying, ease of receiving, ease ofreturning and ease of information/operations

y Utilized the Internet

y Electronic kiosks


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CONCLUSION

y There was some resistance to the network-marketingconcept in India, as Indians preferred the security of a

job. Being a salesperson in an MLM setup did notprovide this security. This hampered the company'sability to attract competent personnel.

y One positive aspect of network selling was that it was

very convenient for women as the job could be donepart-time and at hours of their convenience.


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NEWSNEWS

y Amway India Enterprises Pvt. Ltd, thecountry's largest Direct Selling FMCGCompany, has set itself a 22% growth

target for the fiscal year 2010.y Last year (2009), the company recorded a

sales turnover of Rs. 1407 crores


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PRESENT SCENARIO

Has 130 offices and 55 city warehouses across thecountry, covering over 4000 cities and towns through

its home delivery network.

Almost 85% of the products sold by Amway India are

now manufactured within the country through 7 third-

party contract manufacturers.

Amway India currently offers over 115 products in five

categories of Personal Care, Home Care, Nutrition &

Wellness, Cosmetics and Gift catalogue.


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PRESENT SCENARIO

y Amway India now ranks amongst the top FMCGs inIndia, a feat achieved in just over 10 years ofcommercial operations - making a truly fast moving

FMCGy Recently, Amway has tripled production capacities at

its leading vendor facility at Baddi, HimachalPradesh by commissioning four new production lines

at an investment of Rs. 55 crores


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THANK YOU

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