Mudassir Project (1)

50
1 A Project Report On MARKETING RESEARCH OF AMWAY INDIA Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management” (PGDM 2010-12) Submitted To: Submitted By: Prof. S.C SHARMA MUDASSIR MIRZA (Internal Mentor) Roll No: 32 Batch 2010-12

Transcript of Mudassir Project (1)

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1

A Project ReportOn

MARKETING RESEARCH OF AMWAY

INDIA

ldquoSubmitted in the Partial Fulfillment for the Requirement of PostGraduate Diploma in Managementrdquo

(PGDM 2010-12)

Submitted To Submitted By

Prof SC SHARMA MUDASSIR MIRZA

(Internal Mentor) Roll No 32

Batch 2010-12

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ACKNOWLEDGEMENT

The beatitude bliss and euphoria that accompany the successful completion of any

task would not be complete without the expression of appreciation of simple virtues

to the people who made it possible

The final project report is submitted to JAGANNATH INTERNATIONAL

MANAGEMENT SCHOOL KALKAJI for partial fulfillment of diploma post graduate

diploma in management (PGDM)

This project is an attempt to study about the growing popularity of ldquoAMWAY in

INDIArdquo I express my thanks to all Staff and other under whose guidance and

direction I gave a good shape to my project report Their constant review and

excellent suggestions throughout the project are highly commendable My heartfelt

thanks go to all the staff members who helped me to gain knowledge about the

actual working and the processes involved in various stock market I would also like

to sincerely thank my faculty guide Prof SC SHARMA whose guidance has helpedme to Understand and complete my project in a timely and proper manner Prof SC

SHARMA helped me a lot in doing my project work

I am very thankful to my Internal Mentor Prof SC SHARMA and all respondents

who gave me their valuable time to complete my project work

MUDASSIR MIRZA

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DECLARATION

I MUDASSIR MIRZA do hereby declare that the project report is submitted as

partial fulfillment of the requirement of PGDM Program of JAGANNATH

INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

The Project has been done under the guidance of faculty guide Prof S C SHARMA

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

No part of this report has been published elsewhere

MUDASSIR MIRZA

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LIST OF CONTENTS

Executive summaryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 5

Introduction to marketing strategies of AMWAYhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7 Objective of the studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Introduction to direct selling 12

Current scenario of AMWAY INDIA 15

How does it workshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 17

AMWAY marketing plan helliphelliphellip 19

AMWAY Strategies in the Indian Markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 20

A) AMWAYlsquoS market Penetration Strategyhelliphellip helliphelliphellip hellip22

B) AMWAYlsquoS Market Extension Strategyhelliphelliphelliphelliphelliphelliphelliphellip25

Marketing mix of AMWAYhelliphelliphelliphelliphelliphellip hellip 27

Survey 1 ndash Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip hellip 31

o Interpretation of survey 1helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 38

SURVEY 2 ndash INTERVIEWhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 40

o Interpretation of survey 2helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 42

Conclusion about surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 45

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 47

Conclusion about the projecthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 48

Biblographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 49

Appendixhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

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EXECUTIVE SUMMARY

Amway is a unique company It is defined by the fundamental philosophy of helpingpeople 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 fertileground for the Amway Corporation In short it has made substantial value addition to

Indialsquos social economic life

The focus of this project is based on studying a single organization ie 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

companylsquos 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 is 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

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AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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2

ACKNOWLEDGEMENT

The beatitude bliss and euphoria that accompany the successful completion of any

task would not be complete without the expression of appreciation of simple virtues

to the people who made it possible

The final project report is submitted to JAGANNATH INTERNATIONAL

MANAGEMENT SCHOOL KALKAJI for partial fulfillment of diploma post graduate

diploma in management (PGDM)

This project is an attempt to study about the growing popularity of ldquoAMWAY in

INDIArdquo I express my thanks to all Staff and other under whose guidance and

direction I gave a good shape to my project report Their constant review and

excellent suggestions throughout the project are highly commendable My heartfelt

thanks go to all the staff members who helped me to gain knowledge about the

actual working and the processes involved in various stock market I would also like

to sincerely thank my faculty guide Prof SC SHARMA whose guidance has helpedme to Understand and complete my project in a timely and proper manner Prof SC

SHARMA helped me a lot in doing my project work

I am very thankful to my Internal Mentor Prof SC SHARMA and all respondents

who gave me their valuable time to complete my project work

MUDASSIR MIRZA

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3

DECLARATION

I MUDASSIR MIRZA do hereby declare that the project report is submitted as

partial fulfillment of the requirement of PGDM Program of JAGANNATH

INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

The Project has been done under the guidance of faculty guide Prof S C SHARMA

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

No part of this report has been published elsewhere

MUDASSIR MIRZA

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4

LIST OF CONTENTS

Executive summaryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 5

Introduction to marketing strategies of AMWAYhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7 Objective of the studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Introduction to direct selling 12

Current scenario of AMWAY INDIA 15

How does it workshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 17

AMWAY marketing plan helliphelliphellip 19

AMWAY Strategies in the Indian Markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 20

A) AMWAYlsquoS market Penetration Strategyhelliphellip helliphelliphellip hellip22

B) AMWAYlsquoS Market Extension Strategyhelliphelliphelliphelliphelliphelliphelliphellip25

Marketing mix of AMWAYhelliphelliphelliphelliphelliphellip hellip 27

Survey 1 ndash Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip hellip 31

o Interpretation of survey 1helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 38

SURVEY 2 ndash INTERVIEWhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 40

o Interpretation of survey 2helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 42

Conclusion about surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 45

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 47

Conclusion about the projecthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 48

Biblographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 49

Appendixhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

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5

EXECUTIVE SUMMARY

Amway is a unique company It is defined by the fundamental philosophy of helpingpeople 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 fertileground for the Amway Corporation In short it has made substantial value addition to

Indialsquos social economic life

The focus of this project is based on studying a single organization ie 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

companylsquos 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 is 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

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6

AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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13

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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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15

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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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16

Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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17

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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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20

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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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24

Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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3

DECLARATION

I MUDASSIR MIRZA do hereby declare that the project report is submitted as

partial fulfillment of the requirement of PGDM Program of JAGANNATH

INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

The Project has been done under the guidance of faculty guide Prof S C SHARMA

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

No part of this report has been published elsewhere

MUDASSIR MIRZA

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4

LIST OF CONTENTS

Executive summaryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 5

Introduction to marketing strategies of AMWAYhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7 Objective of the studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Introduction to direct selling 12

Current scenario of AMWAY INDIA 15

How does it workshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 17

AMWAY marketing plan helliphelliphellip 19

AMWAY Strategies in the Indian Markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 20

A) AMWAYlsquoS market Penetration Strategyhelliphellip helliphelliphellip hellip22

B) AMWAYlsquoS Market Extension Strategyhelliphelliphelliphelliphelliphelliphelliphellip25

Marketing mix of AMWAYhelliphelliphelliphelliphelliphellip hellip 27

Survey 1 ndash Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip hellip 31

o Interpretation of survey 1helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 38

SURVEY 2 ndash INTERVIEWhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 40

o Interpretation of survey 2helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 42

Conclusion about surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 45

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 47

Conclusion about the projecthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 48

Biblographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 49

Appendixhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

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5

EXECUTIVE SUMMARY

Amway is a unique company It is defined by the fundamental philosophy of helpingpeople 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 fertileground for the Amway Corporation In short it has made substantial value addition to

Indialsquos social economic life

The focus of this project is based on studying a single organization ie 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

companylsquos 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 is 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

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6

AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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13

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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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15

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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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16

Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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17

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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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19

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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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24

Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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4

LIST OF CONTENTS

Executive summaryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 5

Introduction to marketing strategies of AMWAYhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 7 Objective of the studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Methodologyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 9

Introduction to direct selling 12

Current scenario of AMWAY INDIA 15

How does it workshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 17

AMWAY marketing plan helliphelliphellip 19

AMWAY Strategies in the Indian Markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 20

A) AMWAYlsquoS market Penetration Strategyhelliphellip helliphelliphellip hellip22

B) AMWAYlsquoS Market Extension Strategyhelliphelliphelliphelliphelliphelliphelliphellip25

Marketing mix of AMWAYhelliphelliphelliphelliphelliphellip hellip 27

Survey 1 ndash Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip hellip 31

o Interpretation of survey 1helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 38

SURVEY 2 ndash INTERVIEWhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 40

o Interpretation of survey 2helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 42

Conclusion about surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 45

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 47

Conclusion about the projecthelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 48

Biblographyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip 49

Appendixhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

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5

EXECUTIVE SUMMARY

Amway is a unique company It is defined by the fundamental philosophy of helpingpeople 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 fertileground for the Amway Corporation In short it has made substantial value addition to

Indialsquos social economic life

The focus of this project is based on studying a single organization ie 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

companylsquos 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 is 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

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6

AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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15

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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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17

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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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24

Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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5

EXECUTIVE SUMMARY

Amway is a unique company It is defined by the fundamental philosophy of helpingpeople 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 fertileground for the Amway Corporation In short it has made substantial value addition to

Indialsquos social economic life

The focus of this project is based on studying a single organization ie 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

companylsquos 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 is 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

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6

AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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15

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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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16

Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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19

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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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20

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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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6

AMWAY VISION

ldquoHelping people live better lives In all aspects of our

products businesses and social responsibility we

strive to make a meaningful difference in the

communities in which we operaterdquo

AMWAY MISSION

ldquoThrough the partnering of Distributors Employeesand the Founding Families and the support of

quality products and service we offer all people the

opportunity to achieve their goals through the

Amway Sales and Marketing Planrdquo

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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7

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 5th1998 In the brief period since launch it has

emerged as the Countrylsquos largest Direct Selling Company

Facts

Over 200000 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)

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

(IDSA)

Direct Selling requires expertise and special skills Using the benefit of

Amways 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 350000 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 Indias blind

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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15

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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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26

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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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8

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 Indialsquos socio economic milieu It as either introduced unprecedented

benefits or upgraded existing facilities to international standards

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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26

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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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33

Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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9

OBJECTIVES

Primary Objective The main objective is to carry out an in-depth study of

Amwaylsquos overall marketing strategies in India In order to achieve this primaryobjective I have focused my research in three main segments

A Where the Company stands at present

B Where do they plan to go with their objectives for the Indian Market

C How do they plan to achieve the set targets

This report is appropriate for understanding the various concepts used ininternational marketing It is a complete information guide with relevant information

taken from reliable sources questionnaire and interviews with people who have

achieved success through this organisation

METHODOLOGY

The Methodology adopted was combination of

a Primary Data Collection

Direct Interview with people who are associated with the Amway

corporation in India Questionnaire filled by a selected group of people

b Secondary Data Collection The data has also been collected from

Books

Magazines

Editorials

Internet

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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19

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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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10

Nottingham e-Library

Amway Business Planner

Amway Opportunity Brochure etc

Sampling Plan I have tried to gather data on the basis of both the interview and

the questionnaire

Survey - 1 had been conducted by asking the people to fill in the

questionnaire and express their views about the company

Survey ndash 2 had been conducted in order to get some valuable data which has

been collected through direct telephone and online interviews with people

associated with Amway to get a better insight of Amwaylsquos operations in India

Survey -1

Sample Design Questionnaire method

Sample size 30 respondents

Sample Unit IBOs Customers and others

Segment Respondents

Women 14

Men 9

Others 7

Total 30

Others include elderly people and children

Survey -2

Sample Design ndash Interview method

Sample size ndash 7

Sample Unit ndash IBOs and people working in Amway India Corp

Segment Respondents

IBOs 6

Amway India employee 1

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My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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11

My project involves the study of Amwaylsquos marketing strategies in India I had

planned my work on the project along the following lines

1 Data Collection

2 Data Analysis

3 Data Compilation

4 The preparation and presentation of the report

My first step in data collection involved meeting my guide for having a general

understanding of what my product should be like and then some specific

understanding of the company

After deciding upon the broad frame work of my project I proceeded on a search

for secondary sources of data After analysing the data I prepared I proceeded

towards the primary sources in which direct phone and online interview were

conducted so as to substantiate my research with more facts

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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19

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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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26

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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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12

INTRODUCTION TO DIRECT SELLING

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 consumers convenience often at hisher

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 countrys 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

countrys 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 willreach its target of Rs 1000 crore turnover much before its declared target of the year

2004

The direct selling industry has grown rapidly over recent years Changing lifestyles

demographics and economic recession have all been factors influencing this growth

Amway provides people with business opportunities across the globe Direct selling

is not about getting rich quick it is about creating rewards for effort and initiative

With low risk and low capital investment Amway provides people with the

opportunity to achieve and to improve their lives

As a leading player in the world of direct selling Amway is helping to clean up the

industry and provide a valuable and acceptable form of product distribution In an

impersonal fast-moving world driven by technology Amway provides the personal

touch

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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

Amways 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

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 aproduct 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

Amwaylsquos 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

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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MLM -a definition

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 sellers

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

marketlsquos 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 hisher 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 companylsquos 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 andbelieve 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 Amwaylsquos unique

business opportunity

Benefits to companies

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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

suggested recommendations can be considered by the corporation for further

expansion and increasing market share

AMWAY - THE CURRENT SCENARIO

Amway is the largest multi-level marketing (MLM) organization in the world It is amulti-billion dollar company based on the sale of a variety of products Amwaylsquos

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 12000 employees

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

Americas with a turnover of US $57 billion

Amway is the wholly owned subsidiary of Alticor Inc

It has a sales force of over 33 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 amp D scientists and professionals ensure the exceptional quality of

its products across five product lines

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

Amway is committed to expanding the environment awareness of all people of the

world In June 1989 Amway was presented with the United Nationlsquos Environment

Programlsquos Environment Achievement Award This award recognised Amwaylsquos

commitment to environmental education and awareness

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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 upline 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 arent 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 its

right for them This is called sponsoring Amway distributors who sponsor others

generally have higher average sales volumes than those who dont sponsor

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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26

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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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18

Your Group is the team of distributors youve sponsored Many youve 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 its 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 US and Canada you can earn income in at least 10 different ways They

include 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

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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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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19

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 theDistributor Hall of Fame in Amways World Headquarters

AMWAYrsquoS 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 Amways retail strategy to provide high quality

readily purchasable items with a good environmental positioning 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 furtherDistributors 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

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

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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 obtainorders 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

AMWAYrsquoS 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

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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26

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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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21

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

organisations 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 product

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

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

company also offers a variety of third party services

A Amwayrsquos Market Penetration Strategy

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

products and competences by stretching them 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

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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22

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 ie

Home Care

Personal care

Cosmetics

Nutrition and Wellness

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

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

Amwaylsquos 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

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

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23

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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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

Amwayrsquos 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

Having decided on the target audience we turn our attention to the marketing mix

Product With the exception of the Nutrition amp Wellness and Cosmetics range all

Amway India productsbottles are manufactured through 3 third party contractmanufacturers using world class technology and processes The products match

Amways 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 Indias product portfolio comprises of

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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Ten products in the Personal Care category

Eleven in the Home Care category and

Six in the Nutrition amp Wellness category

Seven in the cosmetics category One product in the Agricultural Category

The other products are two soft toys

Amway Sales aid

Amways product range demonstrates its adaptability to the market based on a

close first-hand understanding of the Indian consumers 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 aremore 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 Amwaylsquos sales success over the years speaks volumes about its

product value and customer satisfaction

Place The Company Amway India launched with 5 offices (New Delhi Mumbai

Bangalore Chennai Kolkatta) 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 productknowledge comprise motivation sessions and seek to optimise the business

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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

B Amwayrsquos 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 Amwaylsquos distributors are now spread all over India even

across the rural areas

across the country

Demographic

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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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

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

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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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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27

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

- Amwaylsquos 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

- Amwaylsquos 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

- Amwaylsquos products being good in quality are also very much preferredby the upper class segment who can easily afford the pricing but they

donlsquot want to get involved with the business opportunity They are

mostly associated with Amway as their customer

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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Target group

Men ndash Professionals and small business owners

Age - 23 - 50 years

Income Status ndash Working class Middle income upper middle income

Women ndash Professional and housewife

Age ndash 20 ndash 50 years

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

Price Amwaylsquos 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 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 anunwritten rule of ―Be present where Amway distributors are

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 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 Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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Promotion Amway has come up with a vast promotional strategy to reach out to its

customers and other potential buyers

Amways Promotion channels

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 generatingpersonal 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 tomeet 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 worlds finest beach locations and hotels where they attend a

number of business sessions and exchange thoughts and ideas withcorporate staff

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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

presented by a road show of events

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

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

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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31

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 andthe legislation regulating the Direct Selling Industry

Special Literature - Occasionally Amway designs a brochure or leaflet which isused to address a particular change or launch eg new car care product range

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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33

Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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36

C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

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44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

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32

Survey 1 - Rationale Behind The Questions

The main reason to formulate this questionnaire was to find out as to why more and

more people in India are getting attracted towards Amway Is it because of its unique

business opportunity or the convenience of a wide variety of fine quality products

available the customerlsquos door step

The initial demographic information will help in understanding of Amwaylsquos popularity

among a certain group of customer and how they perceive of it

1 Are you an

Independent Business Owner Customer of Amway products

None of the above

This question is necessary as it will be able to provide us with a variety of views as

to how Amway is being perceived differently by people based on their association

with it

2 What is your income level (per Month)

Below Rs10 000

Rs 10000- Rs 20000

Rs 20000- Rs 30000

Rs 30000- Rs 40000

Rs 40000- Rs 50000

Rs 50000 and above

This question will help in understanding which income categories of people are

more likely to join the Amway business because of it unique income opportunities

3 a How do you feel are the Amway products priced (Multiple

Choice)

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33

Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

822019 Mudassir Project (1)

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34

6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

822019 Mudassir Project (1)

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35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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36

C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

822019 Mudassir Project (1)

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

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44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 3350

33

Too expensive

Expensive

Economical

Cheap

Poor

b Do you think they are fairly priced as compared to other

similar products available in the retail stores Yes No

This will indicate peoplelsquos perception of Amwaylsquos product prices and whether they

feel that the prices are in compliance with the product quality or not It would also be

able to give idea about customerlsquos preferences for Amway products in comparison to

other products easily available at the retail outlets

4 How would you describe the quality of the products

Excellent

Good

Average

Bad

Poor

This question is necessary for understanding whether the Amway products meet the

customerlsquos expectations for being the high quality products as being positioned by

the company

5 Are these products easily accessible Yes

No

Amway being a direct selling company totally relies on the door to door delivery of

products Thus it is important to know if the customers ever faced any dissonance by

Amway in its product and service delivery

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34

6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

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35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

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Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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34

6 What is it that attracts you more towards Amway why

Retailing

Sponsoring

This is an important question through which we can understand the main reason why

people would like to associate themselves with Amway Is it mostly because they like

consuming a good quality product or is it the unique business opportunity that

Amway provides which is a source of an extra income

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

This will indicate the most popular channel through which Amway is reaching out to

the potential customers

822019 Mudassir Project (1)

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35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

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36

C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4050

40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 3550

35

FINDINGS FROM THE QUESTIONNAIRE

1 Are you an

Independent Business Owner Customer of Amway products None of the above

Findings

A Independent Business Owners 17

B Customer of Amway products 3

C None of the above 10

2 What is your income level (Rs per month) Below Rs10 000 10000-20000 20000-30000 30000-40000 40000-50000 50000 and above

Findings

A Below 10000 NoneB 10000 ndash 20000 8C 20000 ndash 30000 17D 30000 ndash 40000 4E 40000 ndash 50000 1F Above 50000 None

3 a In your opinion how are the Amway products priced Too expensive Expensive Economical Cheap Poor

Findings

A Too expensive 11B Expensive 15

822019 Mudassir Project (1)

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36

C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

822019 Mudassir Project (1)

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

822019 Mudassir Project (1)

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

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36

C Economical 4D Cheap NoneE Poor None

b Do you think they are fairly priced as compared to other products of the same

category available in the retail stores Yes No

Findings

Yes 9No 21

4 How would you rate the quality of the products

Excellent Good Average Bad Poor

Findings

A Excellent 21

B Good 7C Average 1D Bad 1E Poor None

5 Do you have an easy access to Amway products Yes No

Findings

Yes 28

No 2

6 What is it that attracts you more towards Amway Why

Retailing

Sponsoring

Findings

822019 Mudassir Project (1)

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

822019 Mudassir Project (1)

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

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40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

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42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

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43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

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44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

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46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

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47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

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49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

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BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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37

A Retailing 6

B Sponsoring 24

Along with an excellent range of products Amway also gives its customers a unique

way of earning extra income which if worked on with full dedication can lead to

residual income to serve generations

7 How did you learn about Amway

Independent Business owner

MeetingsEvents

Newspaper

Peers

Internet

Others Please specify________

Findings

A Independent Business owner 19

B MeetingsEvents 3C Advertisement 1

D Peers 7

E Internet None

F Others Please specify________

822019 Mudassir Project (1)

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38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

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39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4050

40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4150

41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 3850

38

INTERPRETATIONS

1 Most of the people who filled up the questionnaire were Independent

Business Owners followed by regular customers of Amway products which

were

2 57 of the people fall in the Income group of Rs 20000 ndash Rs 30000 per

month This proves that Amwaylsquos major consumer group lies in this income

segment that get a chance to use quality products at the same time earn

money out of it

3 According to this survey majority of the people feel that Amway products are

expensive but at the same time they provide various explanations for them

Eg If asked why a person would spend Rs 29000 for 4liter of see spray

(household cleaner) instead of buying same quantity of Colin which is worth

only Rs 252 The obvious answer one can expect is that Amway products are

in concentrated form and last for a longer period of time In this case one

should consider per unit cost of the product which would make Amway

cheaper than other products Some people from the middle income group also

find these products very expensive at initial stages but once they start

earning through Amway they donlsquot mind spending on these products any

more

At the same time while answering the question related to price on the

contrary to the above statements some people also feel that they are not

fairly priced as compared other product in similar categories

4 90 people in the sample group are satisfied with Amwaylsquos product quality

and find them excellent

5 Almost everybody agrees that they have easy access to Amway products

whether directly from the company or through the Amway distributors

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 3950

39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4050

40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4150

41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

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45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 3950

39

6 87 of the people as per the sample group feel that they are more attracted

to Amway because of its unique business opportunity They get to use the

products of an excellent brand and at the same time benefit from the income

opportunities provided at Amway Some people also feel that product has an

important role to play in all this because if the productlsquos quality was not upto

the desired standards the business opportunity no matter how good it is will

have no meaning So itlsquos the combination of Amwaylsquos excellent quality

products and the income opportunities that has brought more and more

people to join the Amway family It is because of this winning combination that

Amway has been so successful over the last 4 decades and still running

strong

7 Amwaylsquos IBOs are a strong medium through which Amway reaches out to the

masses It conducts special training programs for its IBOs to use their

products and at the same time motivates them to refer these products to their

family friends relatives etc Amway markets its products through the IBOs

and in turn rewards them depending on the number of sales they make

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4050

40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4150

41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4050

40

SURVEY -2 RATIONALE BEHIND QUESTIONS

Guidelines for consulting people associated with the Amway Corporation

1 What is Amwayrsquos Target audience

To get a clear understanding of who are the main users of Amway products and

business opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

This will indicate Amwaylsquos plans to increase its market share in India and the

strategy it uses to achieve it

3 How is the company planning to expand its home delivery coverage

This will indicate the companylsquos idea of expansion by making its products

available at every corner of the country

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

This will indicate the increasing demand for Amwaylsquos products in the Indian market

and highlighting the emerging trends of both buyers and sellers

5 Are all these products sourced in India

This will indicate Amwaylsquos commitment to the quality of its products and how they try

to maintain the same product standards in India

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4150

41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4150

41

This will indicate Amwaylsquos value added services to its distributors by forming

strategic alliances with companies which have products and services that are

relevant and of use to them

7 Has there been any changes made in the Amway product offerings

according to the Indian Market

This will indicate the extent to which Amway has adapted its product keeping in

mind the needs of the Indian customers

8 We have heard Amway products are expensive Why is this

Since Amway products are considered highly priced this question will justify

Amwaylsquos reason for their expensive products

9 What does Amway see as the role of Women in the Amway business

This will explain Amwaylsquos strategy as to why there are majority of the women doing

the Amway business

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

This will help clearing peoplelsquos doubts about Amway as not being associated with

illegal pyramids or cults

RESULTS OBTAINED THROUGH THE INTERVIEW

1 What is Amwayrsquos Target audience

Amwaylsquos products are used by people of all age groups It basically depends on the

distributorlsquos way of targeting people So for every distributor there may be a separate

target audience There has also been an overwhelming response from people in

rural areas and far away states like Nagaland Jammu and Kashmir Arunachal

Pradesh etc how use Amway products and make use of the Amway business

opportunity

2 a What is Amwayrsquos expansion strategy

b How is it planning to go about it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4250

42

a Amway plans to add more and more people as its distributors to facilitate more

sales of the Amway products

b They plan to achieve this by increasing the consumption of their products ie the

products are consumed by the distributor as well as sell them to their respectivecustomers

3 How is the company planning to expand its home delivery coverage

Home delivery coverage will be expanded through e-commerce setting up order

booking centre at the courier office so that the products can be ordered through

telephone or in person and this request can be forwarded to the Amway office

whereby from there they are delivered to the respective customers

4 a How many products has Amway launched in the Indian market

b How many more are they planning to launch and in what product

category

a So far Amway has launched about 45-50 products in the Indian market which is

about 10-11 of its total product range They will introduce more as the market gets

matured and people are ready to accept new products

b Amway is planning launching its new product categories in India ie Home tech

and food items In the existing categories they are planning to bring more indigenous

products eg persona powder etc

5 Are all these products sourced in India

Almost all Amway India products are manufactured in the country through 3 third

party contract manufacturers (Sarvotham Care Hyderabad Jejuplast Pune Naisa

Industries Daman) To bring the identified contract manufacturers production

facilities and skills to international standard Amway has invested in excess of US$ 4

million (approx Rs 17 crore) The transfer of this state-of-the-art world class

technology has been free of cost

6 a With what companies does Amway have strategic alliances in India

b What benefits the IBOrsquosCustomers drive from it

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4350

43

In India Amway has tie ups with Bharat Petroleum Corporation Ltd for its customer

loyalty programme and has come up with co-branded Amway-BPCL Petro card for

its distributors

The company also has strategic alliance with standard chartered Bank for a co-

branded Amway - SCB credit card for the distributors

b The benefits the IBOs gets is in the form of additional Point Value which adds up

to their total earnings from Amway On collecting a certain point value they can also

redeem it for a free gift

7 Has there been any changes made in the Amwayrsquos product offerings

according to the Indian Market

To meet the local market requirements Amway has now introduced sachets instead

of big bottles which are more economical and can also be given to customers on trial

basis

8 We have heard Amway products are expensive Why is this

Amway products are competitively priced and offer a good value for money ManyAMWAY 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

9 What does Amway see as the role of Women in the Amway business

Amway has helped to empower millions of women around the world by offering them

a low-cost low-risk opportunity to achieve their goals by owning their own business

This fact is especially gratifying to us There are countless examples of single

women who have achieved success in the Amway business just as there are of

women who have succeeded in partnership with their spouses

10 a What is the difference between Amway and illegal pyramids

b I have heard rumors that Amway is a cult Is this true

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4450

44

Unlike illegal pyramids Amway and other legitimate direct selling business A

pyramid scheme is something in which a person gets benefited the most by other

people working for him Eg An owner of a big company gets paid more while the

employees work the maximum number of hours but in case of Amway people gets

paid according their capability to work The harder they work the more they earn

The best answer to this question is that pyramid schemes typically operate for a few

months before they ultimately collapse and disappear Amway however has been in

business for more than 40 years

b No Amway Corporation is a business and similar to other large and established

companies has a distinct environment defined by shared business goals Shared

business philosophies should not be misinterpreted as a cult While unique as

individuals Amway distributors share a desire to succeed in a business of their own

and recognize Amway as an excellent opportunity to achieve their goals New

distributors receive training motivation and support in building independent

businesses and are rewarded for their achievements

A close look at Amway will reveal that any reference to Amway as a cult is incorrect

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4550

45

CONCLUSION OF SURVEY

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 ones 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 Donrsquot

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

4400 million (Rs 440 crores or US$ 20680 million) in up-front cash from this

cash richlsquo country

They will have earned all this money without having sold a single one of theirvery expensive products but just by sponsoring people to this business

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4650

46

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 mdashin the beginning and again every year

as a renewal feemdash it looks like Amway seeks to build a captive consumer

base Once someone has paid Rs 4400 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

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 1500 worth of Amway soaps every month seems

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

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4750

47

RECOMMENDATIONS

After conducting an in-depth analysis of Amwayrsquos 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 PowderThis 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 ie to make the products available to them at their conveniences

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 ie Quixtar in India It will help in enhancing the

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4850

48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

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48

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

CONCLUSION

On the basis of the above report we can derive the following

conclusions

Low start up cost

With an Amway Business Kit being the only start-up cost Rs4400 virtually anyone

can own an Amway business Compared to other business opportunities initial costs

for starting an Amway business is intentionally low priced affordably for nearly

anyone with a desire to invest in their future

Low risk

Amwaylsquos product-buy-back policy and no inventory requirement ensure a very low

risk when starting an Amway business Its ―Satisfaction Guarantee has always been

a measure of confidence in the quality and value of AMWAY products one more way

Amway supports the business opportunity for distributors

Performance based

Amway is a performance-based business that rewards people in direct proportion to

their effort The bigger the financial goal the more time and effort a distributor will

need to put into his or her business With an Amway business a distributor can work

as much or little as he or she likes The rewards are based directly on the

distributors accomplishments

Direct selling is trend

Thirty-four million people worldwide are engaged in direct selling which is a $82

billion industry (Source DSA 2002) As people become busier they are looking for

ways to save time on routine tasks such as shopping for everyday needs Direct

822019 Mudassir Project (1)

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selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 4950

49

selling fills this need nicely because Amway distributors deliver products to their

doors In addition Amway is one of the oldest and largest direct selling companies in

the world

Flexibility

Goals and rewards are different for each distributor You have the flexibility of

working part time while keeping a full-time job or building an Amway business into a

full-time career You choose the time you invest in building your Amway business

Product support

The Amway business opportunity is supported by a diverse line of hundreds of

quality AMWAY products and in many markets thousands of other brand-name

products and services Amway has established a reputation for innovation in

developing top quality products and packaging

Corporate support

More than 12000 people worldwide are employed in Amway manufacturing

administration and distribution facilities totaling 10 million square feet (929000

square meters) Amway manufactures products in the United States China and

Korea and maintains product warehousing facilities around the globe

Equality of opportunity

Anyone starting an Amway business gets in at the same level Each new distributor

has the same opportunity to surpass the most successful distributor and the

business opportunity is continually improved The Amway opportunity has been

imitated often but the level of support Amway provides its distributors is difficult to

duplicate

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011

822019 Mudassir Project (1)

httpslidepdfcomreaderfullmudassir-project-1 5050

BIBLIOGRAPHY

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Internet

wwwamwayindiacom wwwamwaycom

wwwonlinemlmcom

wwwamquix50megscom

wwwskepdiccom

wwwgetfactscom

wwwcocscom

wwwgooglecom

wwwmsncom

Newspaper and Magazine

The Hindu Saturday May 10 2011

The Financial Express February 1 2011

The Hindu February 16 2011