THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

A SUMMER INTERNSHIP REPORT

ON

AMWAY CORORATION IN INDIA

TOPIC: MARKETING STRATEGIES OF AMWAY IN INDIA

SUBMITTED BY:

MANAB JYOTI BORUAH

UNIQUE ID NO: D1012FWISBE-B10169-(DEL-4-DA-3648)

BATCH: FW 10-12/ISBE-B SECTION: FF1

E Mail ID: boruah.manab@gmail.com Contact No. 8860757056

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ACKNOWLEDGEMENT

As a result of teaching system that promotes cramming up of facts I

looked upon my research guide as a source of free flowing information

source who will just hand me down the information as I take down notes.

This way I had learnt to learn. This was fortunately not the case with me.

The knowledge gained from independent thinking is something we do not

experience in our way of education. As a result of this research and

interaction with my guide it seems that the real meaning of research is just

beginning to show.

Last but not the least I would like to take this opportunity to

acknowledge my faculty members, Ritu Jhalani (Guide) for her motivation,

teachings and guidance for making this project come to the present stage.

(Manab Jyoti Boruah)

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Contents

EXECUTIVE SUMMARY 3

Chapter 1: Introduction 4

Chapter 2: Amway Profile 8

How it works?

Current Scenario

Chapter 3: Amway’s marketing strategies 18

Sales & Marketing Plan

Strategies in the market

Penetration

Segmentation

Chapter 4: Research Methods 32

Chapter 5: Questioner Analysis 37

Chapter 6: Conclusion & Recommendation 46

Bibliography 51

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EXECUTIVE SUMMARY

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

philosophy of helping people help themselves. Amway has helped

millions of people run their own independent business around the world.

Today, Amway continues to grow by offering new products and business

opportunities to people from all cultures and walks of life. Whether they

are employees, distributors, or citizens in the community, Amway

touches their lives for better.

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

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

substantial value addition to India‘s social economic life.

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

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

marketing strategy adopted by Amway in the Indian market. An attempt

has been made to study the company‘s perspective in the new market and

analyse on how the company plans its expansion in India.

I have substantiated my research by conducting interviews to gain more

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

2 surveys which were conducted by me.

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

Survey 2 was conducted by gathering information through structured

questionnaire and the interpretation for the same has been provided.

I have finally concluded my research by providing a summarized conclusion

and also suggested recommendations on the basis of the marketing mix.

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INTRODUCTION

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

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

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

selling of products and services directly to consumers in a face-to-face

manner, through demonstration of usage, by an independent direct

salesperson. Direct Selling benefits consumer because it sells high quality

products at the consumer's convenience, often at his/her home or

workplace. Customers value the advantages of convenience, personalised

attention, demonstration of usage, and a wide choice of products backed

by Customer Satisfaction Guarantee.

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

been the fact that it has touched the average man and women in a manner

never experienced before. Amway India Corporation is the country's

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

contribution Direct Selling is making to India. In a little over two years of

commercial launch Amway India has emerged as the country's largest

Direct Selling Company. It closed its financial year with a turnover close

to Rs. 250 crores (the Amway Financial year runs from Sept. to Aug.). It

will reach its target of Rs. 1000 crore turnover much before its declared

target of the year 2004.

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

traditional distribution channels. Its Independent Business Owners own

their own business, with the flexibility to deal directly with their own

clients and to build up personal relationships. These Independent

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Business Owners also have the ability to deliver Amway's products to

their customers' homes. Independent Business Owners sell to people they

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

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

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

Business Owners.

The channel of distribution describes the stages of ownership that take

place as a product moves from a manufacturer to a consumer. The

increasing use of the Internet by consumers has created a real potential

for developing different types of business models and for new approaches

to reaching users directly and quickly in their homes.

This report examines in detail the marketing strategy of the leading

global direct marketing major, Amway in India. In the initial stages of the

report I have focused on Amway‘s current position in the Indian market.

As the research progresses I have tried to analyse the companies

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

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

marketing and tries to make the reader understand the difference between

multilevel marketing and the traditional distribution setup in the FMCG

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sector, so as to give an idea as to how the system is being utilized by

companies like Amway.

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 seller's personal sales AND on the combined sales of those

people they have sponsored, trained and motivated. The story of Amway

is intended to drive home the point of a company being alert enough to

modify its globally accepted practices to suit the local market‘s needs.

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

derived from my research.

Benefits to customers

This report will be beneficial for consumers who prefer the marketing

goods or services directly to them: at their own convenience often in

his/her home either on a one-to-one basis, or in the context of a sales

party. Through this the customers will get a better idea about the

company‘s product offerings and value the advantages of: convenience,

personalised attention, and a good selection of quality products available

at their door steps.

Benefits to sellers

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

own business, but do not have: considerable funds required to buy a

franchise or start a new company. Among the top five reasons people sell

direct because they like and believe in the product, like being their own

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boss, and working their own hours, like the supplemental family income

or making extra money for themselves. It can be beneficial from the

sellers point of view as it may give them the idea of exactly how they can

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

unique business opportunity.

Benefits to companies

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

through personal interviews by many IBOs and Amway customers who

have helped in adding valuable data to this project which can be useful

for the company. The suggested recommendations can be considered by

the corporation for further expansion and increasing market share.

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AMWAY PROFILE

COMPANY HISTORY

Amway began in 1959 with two young entrepreneurs in the United

States, Rich DeVos and Jay Van Andel. Their concept for an innovative

business opportunity, centered around person-to-person marketing,

established itself as a leader among one of today's fastest-growing

industries.

Today, more than 3.6 million independent business owners distribute

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

of the Alticor family of companies whose global sales totalled $4.5

billion in its most recent fiscal year.

1950s - A Friendship Forms

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

business proposition, when Rich struck a deal with Jay for a ride to

school for 25 cents a week. After high school they entered the military,

but they planned to start a business together after separate tours of duty.

A friendship formed and became a business relationship that has lasted to

this day.

1960s - The Early Years

Amway quickly outgrew its original facilities in the basements of Rich

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

Amway's sales were more than half a million dollars.

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1970s - The Decade of Growth

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

rebuilt the aerosol plant and went on. The ' 70s began with sales of more

than $100 million at estimated retail, and kept going strong. After a

lengthy investigation, the FTC verified that Amway is a genuine business

opportunity and not a "pyramid."

1980s - The Billion-Dollar Decade

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

estimated retail in 1980. Building expansion at Amway World

Headquarters continued at breakneck speed as Amway scrambled to keep

pace with demand, opening its new cosmetics plant in Ada.

1990s - The Second Generation

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

and DeVos families took the helm during the ' 90s. Steve Van Andel and

Dick DeVos succeeded their fathers as Chairman and President.

Distributors witnessed a similar trend, with the second generation of

many distributor families taking on important leadership roles.

2000s - The New Millennium

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

Alticor, Inc. Chairman Steve Van Andel and President Doug DeVos

share the Office of the Chief Executive.

Amway - The Current Scenario

Amway is the largest multi-level marketing (MLM) organization in the

world. It is a multi-billion dollar company based on the sale of a variety

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of products. Amway‘s philosophy is defined by commitments, trusts,

enduring relationships, and the ideal of perfection above profit. From a

humble beginning in 1959, using an old gas station, Amway the

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

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

worked to provide better opportunities for people through active support

of various community projects.

Corporate Profile:

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

billion dollar company managed by 12,000 employees.

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

the Americas with a turnover of US $5.7 billion.

Amway is the wholly owned subsidiary of Alticor Inc.

It has a sales force of over 3.3 million distributors.

The company Manufactures 450 products of which 350 are patented.

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

Federation of Direct Selling Association (WFDSA).

Over 500 R & D scientists and professionals ensure the exceptional

quality of its products across five product lines:

Home Care

Personal care

Home Tech

Cosmetics

Nutrition and Wellness

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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 5th,

1998. In the brief period since launch, it has emerged as the Country‘s

largest Direct Selling Company.

Facts:

Over 200,000 entrepreneurs have adopted the Amway business

opportunity; and are actively involved in building their independent

Amway business.

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

in the form of Direct Foreign Investment. (IDSA)

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

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

Bangalore, Mumbai, Chennai, Kolkatta) which serviced 150 locations.

At present, in addition to 32 offices in all metros and major cities,

Amway India services over 379 cities and towns in the country.

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

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

2004.

In India Amway Corporation comprises of 72% women, 24% Couples,

and 4% men. (Source IDSA)

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Amway India is the founder member of the Indian Direct Selling

Association (IDSA)

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

Amway's leadership status in the global Direct Selling industry, Amway

India has in the past 12 months, conducted over 8000 training sessions

with an attendance of approximately 350,000 Distributors.

Amway India was honoured by the AICB Millennium Outstanding

Service Award, 2000 by the All India Confederation of the Blind in

recognition of its sterling contribution to the cause of India's blind.

The Karnataka Welfare Association awarded Amway India with the

`Rising Business Star of the Millennium' during a ceremony held at

Bangalore during October, 2000.

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

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

introduced unprecedented benefits, or upgraded existing facilities to

international standards.

Corporate Responsibility

Through its presence in India, Amway continues to enhance human

resource development using its experience in entrepreneurial opportunity

and self employment. Amway has conducted several seminars on

"Entrepreneurial Development and Direct Selling" in concert with the

Confederation of Indian Industries (CII) and the All India Management

Association (AIMA) to educate popular opinion on the benefits of

organized direct selling.

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HOW IT WORKS

Amway is different from the more traditional distribution channels in that

the business has developed through direct selling. In Amway, one is

recruited as an "independent" distributor of Amway products by buying a

couple of hundred dollars worth of the products from the one who

recruits you, known as your "up-line." Every distributor in turn tries to

recruit more distributors. Income is generated by sales of products by the

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

recruit-descendents.

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

distributor and you obtain the Amway Business Kit. The Business Kit

contains basic AMWAY products and literature for your use and for

sharing with others. You begin by developing both customers and

distributors.

Customers or clients are the people who buy the AMWAY products

from you but who aren't Amway distributors. One of your best sources

for building a customer base is a group of people you already know.

These acquaintances try AMWAY products and become your customers

as they use and re-order various AMWAY items. However, I have found

that people everywhere need high-quality, Satisfaction Guaranteed

products which they believe Amway is able to provide.

Independent Business Owners or Distributors are people who have

evaluated the Amway business opportunity and elected to join the

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business. IBOs deal directly with Clients, build up personal relationships

and deliver direct to Clients' homes. They are highly motivated, selling to

people they know or meet. The personal contact and care that they

provide is an important element in direct selling. IBOs are self-employed

and can introduce others to the business, and so form their own sales

network. The most successful Amway businesses enjoy a balance of

merchandising AMWAY products and sponsoring distributors. Growth in

your business comes from sharing the Amway business opportunity with

others and helping them decide if it's right for them. This is called

sponsoring. Amway distributors who sponsor others generally have

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

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

sponsored personally, but others were sponsored by those you personally

sponsored. You train and motivate your group and, as a result, you earn

extra income when they earn income. As you continue to grow your

business and they continue to grow theirs, you both can benefit.

Like any other business, your Amway distributorship needs frequent

input and activity to grow. However, whatever your goals are, you

control how quickly or how slowly you build your business. After all, it's

your independent Amway business.

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

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

stronger your business will become, and the higher the pin levels you can

qualify for. We call them "pin levels" because you earn incentive pins at

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the various achievement levels of the business. Each pin level features a

set of incentives and rewards for being successful.

Income Incentive and more

The Amway Opportunity offers distributors many benefits. Some are

financial, others are intangibles, such as peer recognition, pride in

achievement, the joy of helping others, working with family, and the

esteem of owning your own business

Income potential

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

instance, in the U.S. and Canada, you can earn income in at least 10

different ways. They include retail profit (the difference between

Distributor Cost and the Retail Price) and nine different bonuses

rewarding various levels of accomplishment.

Special leadership programme

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

attend various Amway leadership programs:

Annual Business Meetings

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

Amway leaders to meet in a business-building atmosphere.

Variety of Special Programs

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

invitation occurs. Imagine your special day at an Amway facility, your

own success story featured in our distributor magazine, and your name

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and picture added to the Distributor Hall of Fame in Amway's World

Headquarters.

AMWAY’S MARKETING OBJECTIVE

The objective involves matching consumer needs with the product. The

better the match, the more lasting the potential for the relationship

between the seller and the buyer. The selling process is aided by

Amway's retail strategy to provide high quality, readily purchasable items

with a good environmental positioning, and offering consumers‘ good

value for money.

AMWAY SALES AND MARKETING PLAN

Amway practices direct selling which is a method of selling goods

directly to the consumer by an independent Distributor. A Distributor can

then introduce further Distributors and generate income from retail

profits supplemented by bonus payments based upon the total sales of the

group built by a Distributor'.

Income is generated by a distributor through:

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

basic wholesale price represent income to the selling distributor.

Additional performance and leadership bonuses, paid on the volume of

personal business of the distributor and the business volume of the

distributors he has introduced to the business.

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

shape of the business, paid on achieving different levels of business

performance.

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

sponsoring.

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

earned and performance bonuses gained.

Sponsoring - the introduction of other individuals to establish and

develop their own independent Amway distributorships.

Retailing enables distributors to provide immediate financial incentive

rewards. Sponsoring enables distributors to replicate the base with other

people, thus allowing the organization to grow.

Direct selling involves sales people showing and demonstrating products

to obtain orders. As with all direct selling activities, the process involves

two-way communication and this can be time-consuming. Business

success and the resulting financial results are a direct consequence of

effort, commitment and personal group motivation. Personal contact

between distributors at one-to-one or group meetings provides the

opportunity for individuals to discuss strategies, difficulties, levels of

involvement and plans for the future. The income objectives and

individual targets may be determined by each distributor based upon

what he or she wants to earn. Distributors who develop direct selling

businesses may come from widely different backgrounds, with vastly

different levels of experience and knowledge - the common factor to their

success is the desire to achieve.

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AMWAY’S STRATEGIES IN THE INDIAN MARKET

INTRODUCTION

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

effort and careful planning. Research and development uses advances in

science and technology to enhance products, while market research is

carried out to examine changing consumer tastes and fashions. The key to

successful marketing is to clearly identify at which market segment the

product should be aimed, find out precisely what consumers in this target

group want and then plan the marketing strategy accordingly. The focus

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

of paramount importance.

All organisations face an external business environment that constantly

changes. Changes in the business environment create both opportunities

and threats to an organisation's strategic development, and the

organisation cannot risk remaining static. It must monitor its environment

continually in order to:

build the business

develop strategic capabilities that move the organisation forward

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

existing markets with a view to offering its customers better service.

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

capabilities and uses this review to develop its products and markets.

More than 450 products carry the Amway name in the areas of nutrition,

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health, beauty and home. Amway also has a range of products that

include other well known branded goods. The company also offers a

variety of third party services.

Amway’s Market Penetration Strategy

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

current products and competences by 'stretching' those new markets. One

great benefit of direct selling is that it is an immediate channel to the

marketplace that offers customers a good service, while at the same time

providing business opportunities for individuals.

Special incentives enable IBOs and end consumers to take advantage of

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

also helped to increase market penetration. There are also special events

such as Leadership Training Seminars. These enable IBOs to spend time

with others involved in the business and to learn about 'best practice'

from each other, whilst also sharing ideas.

Target Markets and Market Segmentation

Segmentation: The Amway business opportunity is open to everyone,

regardless of sex, race, age, religion, or political or other personal beliefs.

The Amway business appeals to women, men, couples, and families from

all backgrounds.

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

five main product categories i.e.

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Home Care

Personal care

Cosmetics

Nutrition

Wellness

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

which were home and personal care products.

Target Audience: Although it was recognised by Amway that groups

such as children, men and teenagers are likely to become targets in the

future, the Amway‘s range of products was aimed mainly at adult

females between 23 and 44 years of age.

These products are daily use items catering mainly to the household

sector. Through Amway‘s extensive market research it was proved that

that women are often looking for new products and technologies that will

provide a more satisfying product experience. Thus Amway has

segmented its market on the basis of typical consumer from this target

group:

is probably a professional woman

is very product conscious

wants professional, quality products

Regular user of home care and beauty products

relies on recommendations from friends when making any purchase

decisions

Makes buying decisions based on clinical evidence.

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

a new market place are of paramount importance. Thus, it was important

for Amway to create a strong brand image for the total product range for

entering the Indian market. The image created would reflect a great deal

about the product and its consumers. One of the most important

challenges for Amway was to develop an appropriate packaging for all its

products to appeal to the Indian consumer.

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

went to great lengths to ensure that the packaging and design appealed to

the target audience.

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

white gives a sense of clarity, while the blue caps represent water and

blue sky. The silver metallic touches add luxury and spice. All the

colours are designed to suggest cleanliness. This design was used to

create a brand image. The following objectives for the brand were set:

to increase distributor profitability and productivity by providing a new

and exciting business opportunity

to optimise consumer convenience and value through enhanced product

differentiation by providing them with an exclusive and revolutionary

range of products.

Amway’s products are positioned as :

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

commitment to excellence backed by the resources to do the job right and

confident that every product will meet your satisfaction -- guaranteed.‖

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

Marketing Mix:

Product: Considering the overwhelming success its receiving in the

Indian market, Amway has introduced more products in each category. It

is also planning to expand the product category by introducing Home

tech and food items in India. Amway has also adapted itself to the local

market by introducing the sachets and small bottle packs which can be

used by people in small quantities and are very economical.

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

Amway India products/bottles are manufactured through 3 third party

contract manufacturers using world class technology and processes. The

products match Amway's global quality standards. They carry a tamper-

proof seal and a 'Customer Refund Policy'. If not completely satisfied

with the product, the consumer can return it for a refund. Amway

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

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

prevent their misuse.

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

Ten products in the Personal Care category,

Eleven in the Home Care category and

Six in the Nutrition & Wellness category.

Seven in the cosmetics category

One product in the Agricultural Category.

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The other products are two soft toys.

Amway Sales aid.

Amway's product range demonstrates its adaptability to the market based

on a close, first-hand understanding of the Indian consumer's nuances. An

aggressive product launch plan introduces new products every few

months. In the coming months, Amway will further expand its product

portfolio through the launch of several new core line products. Amway

had initially started with 6 products for the Indian market in 1998. At

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

which is about 11% of its total product category.

Pricing: Amway products are price competitive and overall a good

value for money. While some of its products are more expensive than

their counterparts, others are less expensive and most are competitively

priced. Products that are more expensive usually have greater features

and benefits over competitive goods. Many AMWAY products are highly

concentrated, meaning a single purchase lasts longer. On a cost-per-use

basis, these products are priced very competitively from their local

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

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

value and customer satisfaction.Amway‘s pricing strategy remains the

same but with the introduction of sachets and small bottles, people can

now enjoy its products at an economical rate.

Place: Amway India enterprise is redefining its structure by overhauling

its supply chain. The network marketing company is looking at reducing

the lead time by moving closer to the point of consumption, improving its

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information system and reaching out to homes through a better delivery

system. It is expanding its presence across the country and adding new

products to its portfolio. The company has done away with its central

warehouse at Nagpur and opened four regional ware houses in

Bangalore, Kolkatta, Delhi and Mumbai that are serviced directly from

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

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

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

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

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

―Be present where Amway distributors are.‖

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

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

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

offices, and a reach to 352 locations.

Promotion: Amway promotes its products through its Independent

Business Owners. It has a heavy accent on training. Every Amway

distributor enjoys free, unlimited access to training sessions. These

training sessions impart product knowledge, comprise motivation

sessions, and seek to optimise the business potential of participants.

Recently Amway has also started advertising about its products in

various Newspapers and Magazines to promote its products and reach out

to their target markets. Amway has come up with a vast promotional

strategy to reach out to its customers and other potential buyers.

Amway's Promotion channels

There are five different promotion channels:

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Corporate Events

Corporate events include specially arranged functions, such as product

fairs, conferences and seminars, which distributors at different levels are

invited to attend. Face-to-face communication at a range of events helps

Amway and its distributors to get to know each other. They also provide

an opportunity for distributors to get to know each other and are useful

for relaying messages, giving advice and generating personal discussion.

Events include:

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

reach the 6bonus level within three consecutive calendar months.

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

and sponsoring - essential for long-term success and profitability.

Direct Distributor Seminar - allows newly qualified Direct Distributors

to meet the Amway Management Team, tour the UK Headquarters,

attend key informative, motivational business sessions and go to the New

Direct Distributor Gala Dinner.

Leadership Seminar - where distributor leaders who have achieved a

target criteria set by Amway, travel for a seven day trip with

compliments of Amway to some of the world's finest beach locations and

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hotels where they attend a number of business sessions and exchange

thoughts and ideas with corporate staff.

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

presented by a road show of event.

Training

Training builds the skills and knowledge of distributors and therefore

improves competence levels. For Amway, the starting point of the

training process is to identify the skills and knowledge necessary for

distributors to carry out their role. Acquiring product knowledge is an

important aspect of training and preparation. As Amway relies upon the

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

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

how to merchandise them to their best advantage.

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

Training on specific product brands. Distributor input into these sessions

provides informative help for the management of independent businesses.

Once a distributor has achieved an advanced knowledge of a specific

brand, they can then receive the training and tools required via a 'Train a

Trainer' session whereby they will be taught how to train their own

group, therefore maximising their expertise.

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Lines of sponsorship

Amway is essentially a people-based business - without people, the

business cannot expand. The business of each distributor grows via new

customers and through the sponsorship of new distributors.

Established distributors are involved in helping newly sponsored

associates to merchandise Amway products. Distributor groups meet to

discuss company procedures and their goals. The groups also discuss new

product launches and promotions, the administration of their businesses

and support new and existing distributors. These lines of sponsorship

provide constant, face-to-face support from professional associates.

Publications

Written communication is useful as a permanent source of reference.

Amway uses a range of written communications to promote its ideas and

products across its target audience. These include:

Amagram - This magazine is mailed directly to all Amway distributors

in the India. Amagram is used to communicate information about new

products, promotions, community news, distributor events and

recognitions as well as news of other affiliates throughout the Amway

world. Amagram shows how distributors can make more out of their

business. It is also used to help distributors understand the philosophy by

which the business operates and the legislation regulating the Direct

Selling Industry.

Special Literature - Occasionally, Amway designs a brochure or leaflet

which is used to address a particular change or launch, e.g. new car care

product range.

28

B. Amway’s Market Expansion Strategy

One method used by Amway involves expanding the ways in which

individuals can be involved with the Amway business. Amway has

developed a structure known as the IMC model. This increases the

number of ways through which people can become involved in the

Amway business. Each of the letters IMC stands for a different type of

involvement.

I - Independent Business Owners (IBOs)

M - Members

C - Clients (customers) of the IBOs.

Members are allowed to purchase Amway products at a price equivalent

to that paid by IBOs, but do not participate in the Amway Sales and

Marketing Plan. They are a new type of 'customer' who deals directly

with Amway.

Target Markets and Market Segmentation

Segmentation:

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

even in the remote areas of the country. Amway‘s distributors are now

spread all over India even across the rural areas.

Demographic:

29

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.

30

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

middle class, Upper-Middle class.

Behavioral

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

product which is available to them at their door steps.

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

status. They slowly start replacing Amway products with other local

products and can continue to use these products for life.

Attitude towards product: Amway people are usually very enthusiastic

and optimistic in everything they do.

Target Audience:

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

India.

It is targeting people who believe in using high quality products

which are conveniently available to them.

Amway business opportunity is attracting the middle income group

to earn extra income.

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

couples who are very ambitious to earn high level of income in a

short span of time.

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

preferred by the upper class segment who can easily afford the

pricing but they don‘t want to get involved with the business

opportunity. They are mostly associated with Amway as their

customer.

31

Target group

Men – Professionals and small business owners

Age - 23 - 50 years

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

Women – Professional and housewife

Age – 20 – 50 years

32

RESEARCH METHODOLOGY

OBJECTIVES

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

of Amway‘s overall marketing strategies in India. In order to achieve this

primary objective, I have focused my research in three main segments:

Where the Company stands at present.

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

How do they plan to achieve the set targets?

This report is appropriate for understanding the various concepts used in

international 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

33

methodology

The Methodology adopted was combination of:

Primary Data Collection:

Direct Interview with people who are associated with the Amway

corporation in India

Questionnaire filled by a selected group of people.

Secondary Data Collection: The data has also been collected

from:

Books

Magazines

Editorials

Internet

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 – 2 had been conducted in order to get some valuable data

which has been collected through direct, telephone and online

34

interviews with people associated with Amway to get a better

insight of Amway‘s operations in India.

Survey -1

Sample Design: Questionnaire method

Sample size: 100 respondents

Sample Unit: IBOs, Customers and others

Segment Respondents

Women 55

Men 36

*Others 9

Total 100

*Others include elderly people and children.

Survey -2

Sample Design – Interview method

Sample size – 7

Sample Unit – IBOs and people working in Amway India Corp.

Segment Respondents

IBOs 6

Amway India employee 1

My project involves the study of Amway‘s marketing strategies in India.

I had planned my work on the project along the following lines:

35

Data Collection

Data Analysis

Data Compilation

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.

.

.

36

LIMITATIONS OF THE PROJECT

The company or the IBO’s were hesitant to give time and good

information to students, so information required for the primary

research which is a basic need of this project was not easily available

in required quality and quantity.

I have conducted this type of an elaborate and analytical project for

the first time so information might not be utilized adequately.

Time constraint.

37

QUESTIONNAIRE ANALYSIS

Q1. Are you an:

Independent Business Owner

Customer of Amway products

None of the above.

55%

20%25%

0%

10%

20%

30%

40%

50%

60%

Independent Business

Owner

Customer of Amway

products

None of the above.

38

Q2. What is your income level: (per Month)

Below Rs.10, 000

Rs 10,000- Rs 20,000

Rs 20,000- Rs 30,000

Rs 30,000- Rs 40,000

Rs 40,000- Rs 50,000

Rs 50,000 and above.

5%

10%12%

18%

25%

30%

0%

5%

10%

15%

20%

25%

30%

35%

Below

Rs.10, 000

10,000-

20,000

20,000-

30,000

30,000-

40,000

40,000-

50,000

50,000 and

above

39

Q.3 How do you feel are the Amway products priced:

Too expensive

Expensive

Economical

Cheap

Poor

a)

30%

20%

35%

7%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Too

Expensive

Expensive Economical Cheap Poor

b)

49%

51%

Yes

No

40

Q.4 Do you think they are fairly priced as compared to other similar

products available in the retail stores? Yes / No.

35%

40%

15%

0% 0%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Excellent Good Average Bad Poor

Q.5 ) Are these products easily accessible? Yes/No

40%

60%

Yes

No

41

Q.6 What is it that attracts you more towards Amway? Give

reasons to support your answer

Retailing

Sponsoring

50%50%

Retailing Sponsoring

42

Q.7 How did you learn about Amway?

Independent Business owner

Meetings/Events

Newspaper

Peers

Internet

Others, Please specify________

55%

5% 5%10% 10%

0%0%

10%

20%

30%

40%

50%

60%

Ind

ep

en

de

nt

Bu

sin

es

s o

wn

er

Me

eti

ng

s/E

ve

nts

New

sp

ap

er

Pe

ers

Inte

rnet

Oth

ers

43

Q.8 How do you rate the presence of Amway in the market?

Very strong

Strong

Moderate

Weak

15%12%

50%

13%10%

0%

10%

20%

30%

40%

50%

60%

Very strong Strong Moderate Weak Low

44

Q.9 Rate the appeal of Amway’s advertisement?

Very much

Moderate

Poor

25%

50%

25%

0%

10%

20%

30%

40%

50%

60%

Very much Moderate Not so much

45

Q. 10 Do you think the products of Amway are environment-

friendly?

Yes

No

Maybe

60%

15%

35%

0%

10%

20%

30%

40%

50%

60%

70%

Yes No May be

46

CONCLUSION & RECOMMENDATION

Positive side to Amway

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

It is the chance to get oneself involved in a trade as a side business,

especially if one is trying to recover from a failed (or failing business) or

one has lost one's job. To the extent that a few people will surely make

money, the system works.

Amway has also helped solve the problem of unemployment in the

country and given a hope to earn high incomes through their independent

business to millions of people all over India.

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

responsibility to serve the community in which they live. Through

Amway Motivational Organisations (AMOs) it has try reach out to a lot

of handicap people and provided them with free services at any time. It is

also involved in helping the blind by providing them with proper

education. Amway is also actively involved various environmental

projects such as planting more trees etc.

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

available to people at their door steps.

Underside side of Amway

Why Amway Will Make Money Even If You Don’t

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

receive Rs. 4400 million (Rs. 440 crores or US$ 206.80 million) in

up-front cash from this ‗cash rich‘ country.

47

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

one of their very expensive products but just by sponsoring people

to this business.

How This Is Done At The Expense Of The Middle Class

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

succeed in the business is to be able to sign up vast numbers of

people and make them use the products for themselves.

The other way is to run around peddling soap from door to door

after having bought it from Amway at a discount.

This is exactly where the Amway business strategy comes into

play. It makes people hand over their savings to Amway to buy

them a dream.

If all Amway did was to manufacture and sell their products

through door-to-door salespeople there would be no problem. The

choice of purchase is left up to the individual.

By asking for deposits from buyers —in the beginning and again

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

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

Amway, he is naturally disinclined to buy Nivea hand cream

instead of Amway Gly-Honey hand lotion. The element of

personal choice is thus prejudiced.

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

the-line commissions they are given the impression that there is a

limitless market for Amway products.

48

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

market share for any other product. Traditional retail trade is not

about to collapse and because of the expensive price structure; the

growth of that market is restricted to the very wealthy.

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

like calling the purchase of a Mercedes Benz for Rs. 25 lakhs an

"opportunity", when an efficient Maruti 800 for one-tenth of that

price will do nicely.

With all these constraints, telling people of profit mechanisms tied

into several thousand people buying Rs. 1,500 worth of Amway

soaps every month seems laughable in a country where entire

families lead their lives on less money.

49

RECOMMENDATIONS

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

strategies in India, I would like to suggest a few recommendations

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

organization must inject new life into the growth period through

readjusting the ingredients of the marketing mix. To ensure the Amway

range of products would stay in line with evolving market trends and

tastes, Amway should set about upgrading its brand with the additional

objective of increasing its global competitiveness.

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

Persona Powder. This product will also give the IBOs and customers the

cost advantage.

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

products are expensively priced. If they are trying to target the middle

income group they must reconsider their price structure once again and

make it a bit economical for the Indian audience. This way may be they

can enjoy a larger market share, as it could be one of the reasons why

some people may be hesitant to join the Amway business.

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

over India. But keeping in mind the overwhelming response it is getting

from the rural segment of the country to join the Amway business they

should focus on the needs of these people i.e to make the products

available to them at their conveniences.

50

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

then reduce the cost pressure on its customers.

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

Kerala is a very good market for the Direct Selling industry for various

reasons; the two most important factors seen favouring the industry are

the high literacy rate and the willingness to try something different.

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

time to Introduce the e-commerce Amway i.e. Quixtar in India. It will

help in enhancing the Multi-level marketing to a great extent. It will also

create a new business experience for the Indian IBOs and will also help

in promoting their sales.

51

BIBLIOGRAPY

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

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

websites and magazines facilitated the preparation of this project.

Books and Secondary data

Amway Company Planner

Amway Opportunity brochures

Websites

www.amwayindia.com

www.amway.com

www.onlinemlm.com

52

NAME :MANAB JYOTI BORUAH

EMAIL ID :boruah.manab@gmail.

CONTACT NO : 8860757056