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CROSS-COUNTRY ANALYSIS OF
AMWAY’S INTERNATIONAL
MARKETING STRATEGY
PROJECT REPORT FOR COURSE ON
INTERNATIONAL MARKETING
MANAGEMENT
SUBMITTED TO PROF. R.M. JOSHI
SUBMITTED BY MOHONA DEY, 129
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BACKGROUND
Amway is the largest direct selling company and manufacturer in the world that uses
network marketing to sell a variety of products, primarily in the health, beauty, and homecare markets
.Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in
Ada, Michigan, the company and family of companies under Alticor reported sales growth of
2.3%, reaching US$8.4 billion for the year ending December 31, 2009. Its product lines
include home care products, personal care products, jewellery, electronics, Nutrilite dietary
supplements, water purifiers, air purifiers, insurance and cosmetics. Amway conducts
business through a number of affiliated companies in more than ninety countries and
territories around the world.
Multi-level marketing (MLM) is a marketing strategy in which the sales force iscompensated not only for sales they personally generate, but also for the sales of others
they recruit, creating a down-line of distributors and a hierarchy of multiple levels of
compensation. Other terms for MLM include network marketing, direct selling, and referral
marketing.
Amway combines direct selling with a network marketing strategy. Independent Business
Owners (IBOs) may both market the products directly to potential customers and also
recruit (sponsor) and train other people who become IBOs themselves and in turn have the
same opportunity. Each IBO may earn income both from the retail markup on any products
they sell personally, plus a performance bonus based on the sales volume they and their
down-line have generated. People may also register as IBOs to buy products at a discounted
rate.
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PROBLEMATIC SITUATION
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.
The process of strategic analysis helps an organisation to understand more about its
strategic position and to construct answers to questions such as:
What is happening to our business environment?
What do we need to know about our markets and customers?
What new options should we consider?
How can we develop our competencies to meet all the changes in the business
environment?
By asking these questions, a business looks to match its own objectives for growth and
development with the reality of the business environment.
Amway is an interesting example of a company that reviews its strategic capabilities and
uses this review to develop its products and markets.
As an international company operating in 80 markets, Amway adapts its business model to
the cultural and economic needs and standards of the markets in which it operates; their
business model varies slightly from market to market owing to the unique problems faced in
each new market.
For the purpose of this project, the pitfalls faced and strategies adopted in the following
markets will be studied – the parent country USA, Australia, Europe, India, China and Japan.
Special emphasis will be given to Amway’s operations in China as it faced a host of different
problems in the country.
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AMWAY IN USA
The Business Environment - Amway's history represents a recent chapter in the long history
of direct selling, which began in America's colonial period with unorganized Yankee peddlers
selling tools and other items door to door. By the 1800s, direct selling decreased with the
advent of mass merchandising, such as department stores and mail-order sales. In the later
19th century and early 20th century, however, some manufacturers found direct sales had
advantages over the sales of their products in large stores. They preferred the personal
touch, with salesmen making home demonstrations of their products exclusively. By the
1920s door-to-door salesmen were marketing brushes, cooking utensils, and other
products. Retail stores fought back with local laws on peddlers. The federal government's
regulations of company-employee relations led to the independent contractor solution. As
independent contractors, salesmen were no longer employees: they were independent
businessmen who bought products for resale. The first network marketing began in 1941
when two men created a mechanism to distribute Nutrilite vitamins. Within this
mechanism, in addition to making money in retail sales, distributors earned a bonus on the
sales.
In 1949, DeVos and Van Andel became distributors of vitamins for the Nutrilite Company of
California. They enjoyed modest success from their own retail sales and from bonuses
earned on the sales force they created in the Midwest.
Changes in the Environment - Increasing government regulations and an internal conflict in
Nutrilite led Van Andel, DeVos and several other leading Nutrilite distributors to start their
own venture.
Strategy Adopted - In April 1959 they created The American Way Association, later renamed
the Amway Distributors Association, to protect the independent distributors. They chose as
their first product a biodegradable liquid organic cleanser made by a small Michigan firm,
the kind of high-demand merchandise that could be easily sold by MLM. By September 1959
the Amway Sales Corporation and the Amway Services Corporation were begun to assist the
distributors.
Results - The company rapidly expanded. The first full year of operations in 1960 resulted in
gross sales of $500,000. That figure doubled in each of the next two years, and in 1964 it
reached $10 million. Thousands of distributors signed up each month. The expansion was so
rapid that as soon as the company moved into new facilities, they were already crowded.
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AMWAY IN AUSTRALIA
Overseas expansion in the 1970s began with Australia in 1971, a choice that was partly
influenced by the common culture, language, and economic system. The number of
independent business owners has continually grown since Amway Australia’s beginning. The
number of Australian and New Zealander IBOs increased by 15% in 2009 [1] and by 2010
100,000 were registered as IBOs.
AMWAY IN EUROPE
From day one, Amway's primary business objective has been growth, and the European
market-place has been a key part of this goal. Operations in the United Kingdom began in
1973. Other European operations began with West Germany in 1975, France in 1977, and
the Netherlands and the Republic of Ireland in 1978.
AMWAY IN JAPAN
Japan was probably one of Amway's most successful foreign markets in the 1990s. In a
culture where many Japanese businesspeople were accustomed to staying with one
company for their entire career, Amway offered new economic freedom. In fact, word of
mouth recommendations allowed Amway to operate in Japan without spending any money
on advertising up until around 1989. In 1990, over 500,000 Japanese belonged to Amway,
making the company one of the largest and most profitable foreign companies in Japan.
AMWAY IN INDIA
Amway India, a wholly owned subsidiary of Amway Corporation, USA, was established in
1995 and has emerged as the largest direct selling FMCG company in India. Having
commenced its commercial operations in May 1998, Amway India has established a
nationwide presence with more than 125 offices and 55 warehouses. Over 450,000 active
distributors carry out business in every corner of the country, reaching as many as 2,000towns and cities.
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AMWAY IN CHINA
The Issue
Amway entered China in April, 1995. Their entrance into the Chinese market has earned big
profits, with more potential to grow. But on April 21, 1998, Chinese officials issued an
immediate ban on direct marketing that threatened a multi-million-dollar market for
Amway and other potential direct marketing companies. Chinese government officials claim
the ban was absolutely necessary because the direct-selling operations functioned as a base
for criminal activity. Amway's direct-selling techniques scared Chinese officials for fears of
spreading heretical religion and the start of secret societies. The ban was lifted threemonths later on July 21 due to heavy lobbying from American businessmen and Chinese
government officials. But Amway was forced to revise their business plans to only sell
products in retail outlets, not through direct-selling. These new guidelines are very different
from Amway's selling technique, which is based on Amway's pyramid building and selling
system.
Analysis of the SLEPT factors in China
Economic : Fuelled by foreign direct investments, China’s economy is beginning to dominate
the Asian economic landscape. Indeed, China springs past tiger nations. It has had positive
GDP growth in the last five years, while other Asian economies have stalled. China’s
economy is growing at a rate of about 8 percent, the fastest in Asia. It means that this
country is certainly profitable. But Amway must ask itself if the market demand is important
and if it will be competitive.
Indeed, China is an emerging economy but a dual economy too, with a wealthy urban
professional and a poor country people. The gap between rich and poor has grown almostas fast as overall income, meaning that inequality is increasing nearly with the country’s
development. There are huge income discrepancies that are emerging within social groups
and between regions.
The Chinese market has attracted foreign investors because of its huge size and market
potential. Some predict that China will become in few years the world’s largest economy but
that could fall flat due to political circumstances.
Political : The Communist Party of China has transformed itself. It has declared that it
represented capitalists as much as workers and peasants. The Old China defended theworking class against the capital class. China has just begun its transition to become a
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democratic country. China’s new leadership has come to power facing enormous economic,
environmental, political and social challenges at home. So, Amway faces the challenge to
interpret the very different cultural and political implications of their presence in a changing
communist country.
Social : The Chinese population = 1.2 billion of people. The past decade has seen aphenomenal rate of growth in China. It represents an important potential of customers for a
firm.
Cultural : The Chinese are seen as having a low level of involvement when purchases are for
private consumption but a high level of involvement when they are buying products for
their social or symbolic value. Since the Chinese greatly value social harmony and
smoothness of relationships within the extended family, the social significance of products
are highly important be it to express status, gratitude, approval or even disapproval.
The Chinese are sensitive to social risk and the loss of social status if a wrong buyingdecision is made. The level of brand loyalty found in a market is also closely related to the
perception of risk. There are huge variations in attitudes to brand loyalty across different
cultures.
In China, consumers are loyal, not really brand conscious and not really used to cross
product comparisons, except the urban consumers, who have a wide recognition of foreign
brand names. Indeed, there are sharp differences between rural and urban attitudes. On a
national level, Chinese consumers prefer to buy domestically manufactured products rather
than comparable foreign-made goods. But, consumers in big cities are less likely to favour
domestic products than are consumers nationally.
And, typical Chinese consumers do not want to be amongst the first to try a new product.
They are reluctant to be pioneers, especially for an expensive, unrecognised (in terms of
brand) foreign product. Concerning the cognitive style; the Chinese have a quite synthetic,
concrete and contextual orientation in their thought patterns. Thus culture not only impacts
on how we behave as consumers but on the whole decision-making process, advertisers,
and marketing managers need to examine how they can exploit such nuances in building
their global brands.
There is a cultural gap between the USA and China. Chinese cultural values are largely
formed and created from interpersonal relationships and social orientations. Chinese
nations tend to rely heavily on personal relationship (Guanxi) in business dealings.
A culture of Guanxi networking is already established. "Guanxi" means connections or
relationship. Guanxi is essential in the initial stages of entering the Chinese market. For
foreign investors who seek to do business in China, to understand the dynamics of Guanxi
can contribute to the success of business.
Finally, Amway produces standard products to meet consumer needs in Japan, Philippines,
Taiwan, Singapore but their product range may not be appropriate to China. Indeed, even if
Amway has considerable experience in the Far East, the Chinese market is not a mirror
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image of these countries. Then, door-to-door selling and “party programmes” are not part
of the Chinese culture.
Legal : Government policies are barriers in international markets. In China, policies and
regulations are often applied inconsistently and can vary between regions. Both foreign
nationals and Chinese officials themselves lack a solid understanding of China’s policies. The
key policies which act as barriers to entry relate to foreign exchange control policies and
foreign investment policy. Concerning foreign exchange control policies, the state is
responsible for formulating and promulgating the principles, degrees and regulations for
foreign exchange control.
The acquisition of foreign exchange is a significant non-tariff barrier to doing business in
China. Concerning foreign investment policies, China encourages joint ventures. The barriers
to access China’s distribution system make this system unstable : wholesalers at both the
local and central levels, new collective and private enterprises and factories, as well as some
foreign companies compete to distribute consumer products. Local ministry of commercewholesalers traditionally served as intermediaries between the producer and retail outlets.
Foreign companies were not permitted to engage in wholesale trade. A strict isolationist
policy kept foreign goods and trends out of reach of the average Chinese person, because
Chinese consumers have less abundant information and purchasing experience with foreign
products, they may rely more heavily on information such as the producing country’s image
in product evaluation.
In China, direct-selling operations function as a base for criminal activity. Indeed, the market
is riddled with unscrupulous operators selling substandard goods with poor services,claiming to be legitimate direct marketers. So, Amway’s direct-selling techniques could scare
the Chinese government and all direct selling could be banned; it means that Amway China
affiliate could have to make changes in its distribution methods in order to work with
China’s regulations. Amway could have to revise its business plans to only sell products in
retail outlets.
Concerning the personal sales, customers could receive discounts by paying a small annual
fee, similar to buying a membership in a wholesale club. Goods could be sold by “sales
representatives”. They will theoretically operate from the retail establishments. But most
former distributors will probably continue to do business as usual, telling the retail centrethey are purchasing goods for themselves and then re-selling them to customers on the rare
occasions where there actually is an end consumer. In fact, there is a cultural gap between
an American company trying to use American sales tactics in a foreign country like China.
Technological : The internet and the access gained to the world wide web is revolutionising
international marketing practices. This explosion of international marketing activity and the
associated emergence of the global information highway will impact on all businesses
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Analysis of the reasons for failure
1. Inability to find the right market niches
2.
Unwillingness to adapt and update products to local needs.3. A vacillating commitment - Amway had not considered the environmental
influences on international marketing that could represent barriers to their
entry in China.
4. Inability to manage local stakeholders. This includes an incompetence in
developing a satisfactory partnership relationship with unions and
governments : Amway had not developed a partnership/relationship with the
Chinese government
5. Inability to apply ideas developed in one country to other countries
worldwide: Amway tried to use American sales tactics in China, but cultural
gaps are too important.
Strategy adopted
After widespread lobbying from American businessmen and several Chinese government
officials, the government accepted Amway's revised business plan to sell products in retail
outlets instead of direct selling on July 21, 1998. (Refer to Fig. 6 in annexure)
The new plans include combining retail locations operated by the company with a strongteam of non-employee sales representatives to promote Amway's products and services. It
is essential for Amway to reiterate their independent sales technique that is the heart of
their business. The change is this: Customers now pay a nominal fee to become privileged
customers who are eligible to buy products at a discount. They must physically go to a retail
outlet where all Amway products have a retail price marked. Amway's existing product
distribution centers are located in 14 provinces. Amway invested $29 million to set up 100stand-alone stores - something it has nowhere else in the world. It started to runadvertisements which was another first.
Critical Evaluation of the strategy
The company began building close connections with government officials. At the same time,
Amway made highly visible changes to its sales operation. As a result, with government
approval, it racked up $700 million in sales in 2002, almost four times what they were
before the ban. China is the company's No. 4 market world-wide, with China profits funding
all its expansions here.
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AMWAY’S INTERNATIONAL MARKETING STRATEGY
Amway's growth was predicated on the success of its independent distributors. Lacking
formal control over the distributors, Amway relied on bonuses and incentives to motivate
them. As the company grew, distributors built larger and larger sales organizations. Their
status and income increased and were marked by achievement levels identified as "pin
levels."
The corporation kept in touch with its distributors through a monthly magazine, the
Amagram, and provided a wide variety of sales literature, audiocassettes, and
videocassettes. Although much of the product promotion was done by distributors, Amway
also sponsored advertising in magazines, newspapers, radio, and TV. Its advertising costs
were much less than other corporations, allowing Amway to introduce new products
inexpensively.
Amway's success depended in part on its ability to adapt its product line to suit local
cultures. In Japan, for example, the company began marketing a small induction range made
by Japan's Sharp Company, which proved ideal for the small homes of Japan and sold well
when demonstrated in the home by Amway distributors. Perseverance and high quality
goods resulted in 1988 sales of $536 million for Amway (Japan) Ltd., Amway's largest
overseas subsidiary.
With the failure of communist economies in Eastern Europe and other nations, Amway's
promotion of free enterprise became increasingly noteworthy in the years ahead. During
the first half of the 1990s, Amway's territories expanded into Korea, Hungary, Brazil,
Portugal, Indonesia, Poland, Argentina, the Czech Republic, Turkey, and Slovakia. In addition
to tapping into new, emerging economies, foreign expansion was possibly part of Amway's
strategy to offset slowing U.S. sales, prompted, according to one article in an October 1994
U.S. News & World Report, by regulatory investigations and media criticism of the company.
In 1991, for example, Procter & Gamble won a $75,000 judgment from a group of Amway
distributors, who were accused of spreading rumors that Procter & Gamble's products were
instruments of Satan.
Japan was probably one of Amway's most successful foreign markets in the 1990s. In a
culture where many Japanese businesspeople were accustomed to staying with one
company for their entire career, Amway offered new economic freedom. In fact, word of
mouth recommendations allowed Amway to operate in Japan without spending any money
on advertising up until around 1989. In 1990, over 500,000 Japanese belonged to Amway,
making the company one of the largest and most profitable foreign companies in Japan.
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Much of the company's success during the latter half of the decade depended on continued
growth in foreign markets, but continued growth did not arrive. The foray into China,
financed by the 1994 public offering of Amway Asia Pacific, ran into a pernicious obstacle in
1998, when the Chinese government banned direct selling because of concerns it would
spawn illegal activity. Eventually, Amway was able to sidestep the prohibition by sellingproducts through sales representatives that did not buy products and resell them, as
traditional Amway distributors did.
In September 1999, the company established a new company named Quixtar to sell
consumer products on the Internet. With Quixtar, Amway used the same marketing concept
as it did in its traditional business: distributors purchased products at volume discounts and
earned commissions on the sales and bonuses from the sales of new recruits. Apart from
Quixtar's business being conducted electronically, the greatest difference between Amway
and its new company was the conspicuous absence of the Amway name. Years of negativepublicity stemming from the numerous lawsuits filed by Proctor & Gamble had stained the
Amway name, observers contended, prompting Amway to distance itself from a
questionable reputation by adopting a new name. Additionally, by excluding the Amway
name from its Internet venture, the company hoped to attract younger customers and
younger distributors.
The company is in its third year of a strategic plan intended to drive innovation, talent and
growth. "Amway has hired 23 executive leaders in the past three years," said Van Andel,
"adding to a world-class senior management team that has grown with the Amway
business. The new leaders bring outside perspectives and insights to us, and the veterans
are giving them a strong, supportive base to build from."
Ansoff's product/market matrix is an accepted way of identifying and categorising market
and product developments and opportunities. Amway makes good use of the technique.
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MARKET PENETRATION
Going for market penetration has involved Amway in making the most of current products
and competences by 'stretching' them to improve Amway's competitive position within
existing 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.
PRODUCT DEVELOPMENT
Product development is a particularly appropriate strategy where an organisation is strong
in research and development. Product development is highly important for products that
have comparatively short life-cycles. Within Amway there are approximately 500 active
research and development projects in progress at any one time. With around 575 staff
involved in research processes, and with strong links to many universities, Amway
formulates, designs and develops new products to meet customer needs and expectations
within the global marketplace. Amway currently holds more than 380 patents
internationally and has approximately 430 patents pending. Within its product development
programme, Amway's technical teams use the company's customer base to monitor andtest new product ideas.
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MARKET DEVELOPMENT
Market development involves taking existing products into completely new markets. 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 deal directly with Amway.
DIVERSIFICATION
One way in which Amway have diversified its activities is through creating an on-line
business opportunity called 'AMIVO' to support and enhance its traditional business. This
makes use of the internet. The internet is a good example of a structure that no one firm
has had to pay to construct, but which is available to all firms now that it has been
constructed. The challenge to each business is to identify how to use the internet in waysthat are advantageous to it and also profitable.
Amway has succeeded in doing just that. The European platform of AMIVO was first
launched within the UK to provide a one-stop office for IBOs. IBOs can use AMIVO for:
a means for Amway to communicate with IBOs quickly
ordering products from their home 24 hours a day, 7 days a week
a communication tool to promote their business
keeping track of their business status
a reference resource
a medium to recognise IBO business achievement.
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CRITICAL EVALUATION OF THE STRATEGY ADOPTED
Amway’s parent company, Alticor Inc., announced record sales of more than US$8.2 billion
for the year ended Dec. 31, 2008, a 15 percent increase over the $7.1 billion reported in2007. Two-thirds of the company’s 58 affiliates recorded sales increases in 2008, including
strong growth in the China, Russia and In Amway Global's parent company, Alticor, today
announced sales of $8.4 billion for 2009, a 2.3 percent increase over 2008 and another
record year for the company. The company has posted increases nine of the past 10 years.
In Amway's 50th year, Amway Global helped move the company forward by launching an
application for iPhone to connect Independent Business Owners (IBOs) with consumers,
continuing the successful Mobile Brand Experiences and spreading the word about the
company through advertising and sponsorships.
Amway is also one of the top 100 consumer brands in China (refer to fig. 3 in annexure).
Refer to Fig. 1 and 2 in annexure for detailed sales data.
KEY SUCCESS FACTORS
Loyal and Captive Consumer Base of Distributors: Distributors have a personal stake in“growing with the business”, so they are inclined to buy products themselves. They are
influenced to a great extent by the groups as well and are always encouraged to try the
product beforehand, to be able to sell it better.
Consumer-Distributor Word-of-Mouth Magic: Being a friend/relative of the consumer, the
distributor would be expected to share similar tastes and interests. Therefore, the
distributor’s recommendations would be trusted and acceptable. Many a times, it is just
tough to say “no” to an old aunt or good friend.
Products: Product quality has been acknowledged to be really good, and endorsements andtraining from specialists at the supplier’s training centers builds positive perception as well.
Products are extremely expensive, and high prices are justified on the basis of quality and
the concentrated form of the product, which implies lower cost per use.
More & More Subscription Revenues: The ever-growing urban middle class in countries like
India is the ideal pool for potential distributors, looking to make extra cash which denotes
“success” and “respect”. The margins seem extremely attractive in India, since some
research revealed that prices for many products are identical to those in the US. Thus on a
pure PPP basis, Indian distributors are much better off. Amway boasts of almost 3 lakh
active distributors today.
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Aggressive Product Launch Strategy: Since a captive consumer base exists, trials and
repeats are guaranteed to an extent, so revenues are accelerated by launching a new
product almost every month.
Market-Specific Initiatives: Some of the other market-specific initiatives include –
INDIA: Mass advertising (which is not a usual practice in direct selling), smaller SKU’s (such
as sachets) and tie-ups with big names such as BPCL and Standard Chartered through petro-
card/credit card schemes to add credibility to the business.
These factors have contributed tremendously to the huge success that players like Amway
have enjoyed in India.
EUROPE: VistaPrint Limited, the small business marketing company announced a strategic
partnership with Amway Corp. As part of the agreement, Amway will offer VistaPrint’s high-
quality marketing materials that are specific to Amway brands to its independent European
sales representatives. These include business cards, postcards and promotional materials.
Amway Europe leverages its global reach by conducting cause related marketing activities.
Since 2005, Amway Europe has created collectible pins to support UNICEF. For every pin
sold in 26 Amway Europe territories, a donation of €1.40 is donated to UNICEF
immunization and education programmes in Africa and Eastern European countries. Amway
Europe also purchases customized retail UNICEF greeting cards for all of its business
operations worldwide.
In 2003, the company launched its Corporate Social Responsibility Programme, the ‘One by
One for Children Campaign,’ which now incorporates the UNICEF partnership.(refer to Fig. 7 in annexure)
Since 2001, Amway Europe and its 500,000 European Direct Sellers and 26 Affiliates havedonated more than US $3.5 million to facilitate UNICEF’s Immunization Plus efforts. In2005, Amway Europe re-committed to raise € 2.5 million to support UNICEF Immunizationand Education programmes over the next five years.
AUSTRALIA: Traditionally Amway marketing strategies tended to target parents who want
to work from home. In a shift away from this model Amway Australia signed swimmer Libby
Trickett and cricketer Adam Gilchrist in 2009 as Amway ambassadors in a push to lift itsstanding with Generation Y. This push saw 40% of new members in 2010 under the age of
30. (refer to Fig. 4 and 5 in annexure)
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LEARNINGS FOR MARKETERS
Despite its evident strengths, some conventional marketers do not wish to enter network
marketing purely because it seems to involve mixing a bit of ‘false hope with good soap’. So
could there still be any takeaways? Seemingly there is a lot more to direct selling than meets
the eye and there is a wealth of consumer knowledge that can be derived from this model:
* Consumers demand sustained benefits in return for sustained loyalty: This point has
been made again and again in marketing theory. Distributors see points translating into cash
in each bottle of shampoo they purchase. This sustained benefit influences their decision
making to try as many products as possible under the mother brand. Some firms such as
Britannia did a good job of implementing this learning. The loyalty points program provided
consumers an excellent sustained benefit in each product they would purchase with the
Britannia brand name.
* Increased knowledge about product develops confidence and preference: Amway
educates distributors who pass on the information to other consumers about product
attributes and ingredients. This high level of awareness results in inclination to purchase,
especially for high involvement personal care products such as cosmetics.
* The power of word-of-mouth: When friends recommend a product, they do so without
any vested interest, and that increases the credibility. This action generates trials and
awareness and later becomes a great channel for consumer feedback on the product.
Though most of these aspects seem obvious and easy to reapply, yet it is necessary to point
out that the ultimate driving force remains hard cash. And that is a tough motivation to
substitute.
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ANNEXURE
FIGURE 1
FIGURE 2
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REFERENCES
Chen, Robert, Wang & Cheng, 1998; “The Success Factors for Direct Selling Business”, 1998
Asia Pacific Decision Sciences Institute Conference, Proceedings p.p. 17-23.
Reichheld, F. F., 1996, Ed.; “Quest for Loyalty: Creating Value through Partnership”; Harvard
Business School Press: Cambridge, MA.
Wotruba, Thomas R., 1990; “Full-Time vs. Part-Time Salespeople: A Comparison on Job
Satisfaction, Performance, and Turnover in Direct Selling", Intern. J. of Research in
Marketing 7, 97-108.
http://companies.jrank.org
http://www.thetruthaboutamway.com
The Times 100
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