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TERM PAPER REPORT

DIRECT SELLING: A STUDY ON THE

MARKETING STRATEGY OF AMWAY

SUBMITTED BY

ASNA ARIF

B.COM (H)

ENROLLMENT NO-A7004613148

Under guidance of:

Faculty Guide

MR.APOORVA SRIVASTAVA

ABS, Lucknow

(TERM PAPER IN PARTIAL FULFILMENT OF THE AWARD OF FULL TIME B.COM (H) (2013-16)

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

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AcknowledgementI would like to take this as an opportunity to express my deepest gratitude and appreciation to all those who have helped me out in completing this project.

First of all, I would like to thank my faculty guide, Mr.Apoorva Srivastava who is also an assistant professor in my university. Without his help and support, I wouldn’t have been able to complete my ‘Term Paper’. His valuable advice and constant guidance has not only been a help, but also encouraged me to see another side of my creativity through this work.

Furthermore, a genuine thanks to my friends, who are also my counterparts, for being available for me all the time, whenever I needed help even on the pettiest of the issues. I owe them for their constant support, as they too struggled with me through these times.

Lastly, I would like to express my gratitude towards my college i.e. ‘Amity University, Lucknow Campus ’, because of which I am getting the opportunity to learn so much and bring out the best in me.

Thanking You,

Asna Arif.

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CERTIFICATES

STUDENT DECLARTION

I, ASNA ARIF student of Bachelors of Commerce (Hons.) from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed my project work on “Direct Selling: A study on the Marketing Strategy of Amway.”

I further declare that the information present in this project is true and original to the best of my knowledge.

ASNA ARIF DR. APOORVA SRIVASTAVA PROF V.P.SAHI

(Student) (Faculty Guide) (Director ABS)

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FACULTY CERTIFICATE

I Mr. APOORVA SRIVASTAVA hereby certify that ASNA ARIF, student of B.COM (H) 4th

Semester of Bachelors of Commerce (Hons.) at Amity Business School, Amity University Utter Pradesh has completed her project on Marketing—with reference to ‘AMWAY’, under my guidance.

Mr. Apoorva Srivastava

AMITY UNIVERSITY

LUCKNOW CAMPUS

UTTAR PRADESH

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AMITY UNIVERSITY, NOIDA

---------------------------------------- AND CONFIDENTIALITY AGREEMENT

This AGREEMENT is between the office of the register Amity university Noida and ASNA

ARIF a student presently studying at the AMITY BUSINESS SCHOOL, Lucknow Campus

The student named above desires to undertake Dissertation / training program as student in

the institute / Department / Center AMITY BUSINESS SCHOOL, Amity University as a

part of his studies. The competent authority of the institute where the student is presently

studying has officially recommended the student, confirming his antecedents, track record

and good moral character.

CONFIDENTIALITY:

Confidential information means any information of a secret or confidential nature relating to

the internship / training workplace. Confidential information may include, but is not limited

to, trade secrets, proprietary information, customer information, customer lists, methods,

plans, documents, data, drawings, manuals, notebooks, reports, models, inventions, formulas,

processes, software, information system, contracts, negotiations, strategic planning,

proposals, business, alliances, and trading materials and / or any other intellectual property of

the University.

The student / intern agrees to observe the confidentiality requirements of the Amity

University, its Disciplinary procedure in all respects and any additional requirements set out

by the Amity University. Specifically, the students / intern agree to observe confidentiality in

the following respects.

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As University intern, I agree that:

1. I will use confidential information only as needed by me to perform my legitimate

duties as intern. This means, among other things that.

A. I will not seek confidential information for which I have no legitimate need to know,

B. I will not any way divulge share, copy, release sell loan revise, alter or destroy any

confidential information except as properly authorized within the scope of my

internship:

C. I will not misuse confidential information or carelessly care for confidential

information; and

D. I will strive to protect the privacy of all confidential information that I come into

contact with.

2. I will safeguard and will not disclose my access code or any other authorization I have

that allows me to access confidential information. I accept responsibility for all

activities undertaken using my access code and other authorization.

3. I will report to my Head / supervisor activities by any individual or entity that I

suspect may compromise the confidently of confidential. Reports made in good faith

about suspect activities will be held in confidence to the extent permitted by law,

including the identity of the individual reporting the activities;

4. I will be responsible for my misuse or wrongful disclosure of confidential information

and for my failure to safeguard my access code or other authorization to access

confidential information. I understand that I have no right or ownership interest in any

confidential information referred to in this agreement. The University may at any time

revoke my access code, other authorization or access or confidential information. At

all time during my internship with Amity University, I will act in the best interests of

PMC.

I have read and understand the above definition of “ confidential information “ I agree

that I will not at any time, both during and after my enrollment in University Internship,

communicate or disclose confidential information to any person corporation or entity.

It is understood that any breach of confidentiality will result in immediate termination of

the internship and that a report of the breach will be made by the concerned Head of

Institution.

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HAVE READ THE ABOVE CONFIDENTIALITY AGREEMENT AND AGREE TO

ITS TERMS.

AGREED ___________________ (SIGNATURE)

ASNA ARIF (PRINTED FULL NAME)

(DATE)

Signature of Authorized signatory of the institution

(Institution deputing the students)

ACCEPTED

REGISTRAR

AMITY UNIVERSITY, UP

NOIDA

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TITLE PAGE

EXECUTIVE SUMMARY 09

CHAPTER-1 Introduction History & Evolution of Direct Selling

1010-1111-12

CHAPTER-2 The Business model Methods used for Direct Selling Various forms of Networking schemes Scope of Direct Selling in the world WFDSA Direct Selling in India

13

1314-1515-16

1617-18

CHAPTER-3 Amway – Introduction Company History Many ways to receive Income

1919-2020-2121-22

CHAPTER-4 Amway’s Marketing Objective Amway Sales and Marketing Plan Amway’s strategies In the Indian

Market

2323

23-2424-28

CHAPTER-5 Research Methodology Conclusion

292930

Bibliography 31

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EXECUTIVE SUMMARYDirect Selling is a remarkable business model, which brings the market to the customer and offers a unique business opportunity to anyone who is interested in being an entrepreneur.

Direct selling can be best described as the selling of products and services directly to consumers in face-to-face manner, through demonstration of usage, by an independent direct sales person. This form of business benefits the customer as it sells them a high quality of product at the customer’s convenience i.e. his home/workplace etc. Customers value the advantages of convenience, advantages of convenience, personalized attention, and demonstration of usage and wide choice of products backed by Customer satisfaction Guarantee. In this paper I have studied about Direct Selling with reference to the world’s largest Direct Selling company-Amway.

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 the 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 socio economic life.

The focus of this project is based on studying a single organization, i.e. 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 analyze on how the company plans on its expansion in India.

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CHAPTER-1.INTRODUCTION

Direct Selling is a type of sales channel that involves selling the product directly to the

customers involving the elimination of middlemen i.e. wholesalers, advertisers and retailers.

It can be conducted on one-on-one basis, in a group or party format, or can be done online. At

various companies, the ‘direct’ part of direct selling also refers to the personal component of

the sales channel. Direct selling in short is about building relationships with people and

offering them a very high level of service.

Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the

marketing of products and services directly to consumers. The purpose of this paper is to

describe direct selling and the benefits that it brings to the marketplace.

Direct selling provides important benefits to individuals who desire an opportunity to earn an

income and build a business of their own; to consumers who enjoy an alternative to shopping

centers, department stores or the like; and to the consumer products market. It offers an

alternative to traditional employment for those who desire a flexible income earning

opportunity to supplement their household income, or whose responsibilities or

circumstances do not allow for regular part-time or full time employment. In many cases,

direct selling opportunities develop into a fulfilling career for those who achieve success and

choose to pursue their independent direct selling business on a full time basis.

The cost for an individual to start an independent direct selling business is typically very low.

Usually, a modestly priced sales kit is all that is required for one to get started, and there is

little or no required inventory or other cash commitments to begin. This stands in sharp

contrast to franchise and other business investment opportunities which may require

substantial expenditures and expose the investor to a significant risk of loss.

Direct Selling continues to successfully deliver a strong return on investment and creates

opportunities for millions around the world. Globally, direct selling includes more than 90

million independent sales people who sell nearly $154 billion of goods and services.

The direct selling industry is a growing force in the global economy and remains an attractive

investment opportunity because of its long-term growth potential. The industry, over the last

150 years, has continued to grow and deliver strong return on investment. Analysts are

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consistent in providing positive valuations calling for long-term stock investments in

publicly-traded companies. Many analysts have cited the operating margins, including low

overhead costs, low operating costs with minimal marketing and advertising costs, as a

positive to many of these companies.

History & Evolution of Direct Selling:

The modern direct selling industry can be considered to have pioneered in the USA, with the

establishment of Avon in 1886. With the success of this model, involving lower sales, and

distributions costs and greater direct interaction with the consumer, the portfolio of products

swelled to include cosmetics, personal care, household goods, accessories and other products,

over time. The movement was supported by the engagement of women as direct sellers, who

considered this opportunity as a means of empowerment and self-reliance. The introduction

of the multi-level marketing compensation plans (MLM plans) opened another chapter in the

evolution of direct selling. Introduced in the mid-twentieth century, the plan for the first time

enabled consumers to benefit from the success by providing them the option to become a

direct selling partner of the business. MLM plans became widely accepted and a large

number of companies adopted the same including global majors like; Avon, Tupperware and

Amway.

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Global Direct Selling Market Evolution:

Direct selling, this is an established global industry, evolved in the 1920s and 1930s in the

USA.

Direct selling is a dynamic and rapidly expanding channel of distribution for the marketing of

products and services. Direct sales generally depend on the explanation and demonstration

made by an independent direct salesperson to the consumer. Being a specialized channel of

distribution, it covers both business-to-business and business-to-consumer aspects.

Direct selling started with hawkers and peddlers, who travelled great distances to sell

unbranded products and services. Doorbells, catalogues and purchase orders were centuries

away from the early direct seller who relied on his instincts and common sense to make a

living through selling. The early direct seller exchanged pottery, stone weapons, tools,

agricultural products and raw materials with people from other lands.

They later evolved into independent salesmen who went from door to door and house to

house selling branded products in an urbanized environment.

Beginning in the mid to late 1800s, direct selling companies were formed in USA offering

various products directly to the final consumer. Avon, which today is one of the largest direct

selling companies, was established in 1886, initially represented a means for women to earn

money and work outside their homes, and by 1920 topped its revenue at USD1 million.

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CHAPTER-2

The Business Model:

Direct Selling uses a distribution and compensation method where products are used by a

sales force of independent contractors who market the product through personal explanation

and demonstration. Individual direct selling entrepreneurs earn compensation based on their

own sales, and often, the sales of others. Compensation is based on sales of products/services.

Individual direct sellers are not compensated for a simple act of recruiting.

Methods of Direct Selling :

Single-level Marketing (SLM)

Single-level Marketers make money by buying products from the parent company and selling

them directly to the customers. A direct seller buys products from the parent company and

sells them directly to his or her customers. Home based business people have been pursuing

single-level marketing for years. Single-level marketing is suited to those people whose focus

lies on the product and service. SLM rewards the sellers for their personal sales activity. They

cannot sponsor any other distributorship or sales personnel. Incomes come only in the form

of commission, bonus & retail markup, i.e. they receive payments through the sales they

make.

Multi-level Marketing (MLM)

Multi-level Marketing (MLM) is a marketing strategy in which the sales force is paid 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, pyramid selling/scheme and referral marketing.

Methods used for selling

While some direct sellers maybe employees of a direct sales company, authorized to act for

the company in business matters, most direct sellers are independent business operators or

self-employed. They enjoy the advantage of deciding when and how much time will be

devoted in selling the company’s products.

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Traditional Direct selling methods include:

• Person to Person Marketing

• Party Plan Groups.

Person to Person is the most popular amongst direct selling companies followed by Party

Plan Groups.

Person to Person (P2P)

Majority of the direct sales around the globe take place through person to person contact

making. This method is most widely used by direct selling companies.

Person to Person direct selling can be defined as a one on one interaction between the

salesperson and the customer in which a product is promoted for sale by the former to the

latter. This method of direct selling can use both single-level and multi-level marketing.

Party Plan Groups

The party plan is a method of direct selling in which social events are organised where

products and services are promoted and offered for sale.

Direct selling through party plan mostly uses multi-level marketing. Sales people approach

other people to host events during which the products are demonstrated. In return the host is

given a part of the revenue from the goods sold. The salesperson is paid a commission on the

sales or on the sales made by the sales people recruited by him/her.

Various forms of networking schemes

The Pyramid Scheme

A Pyramid Scheme is an unsustainable business model that involves promising participants’

payment or services, primarily for enrolling other peoples into the scheme, rather than

supplying any real investment or sales of products or services to the public. The main

characteristic of a pyramid scheme is that participant only makes money by recruiting more

members.

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Three major signs that a product is being used to disguise pyramid schemes are:

a. Large joining fee

b. Compensation paid for recruiting without regard to end sales (‘headhunting fee’)

c. No right of return, buy-back or cooling off period offered.

Chit Fund Scheme:

According to Section 2(b) of the Chit Fund Act, 1982

“Chit mean a transaction whether called chit fund, chitty, kuree or by any name by or under

which a person enters into an agreement with a specified number of persons that every one of

them shall subscribe a certain sum of money by the way of periodical installments over a

definite period and each such subscriber shall in his turn, as determined by lot or by auction

or by tender or in such other manner as may be specified in the chit agreement, be entitled to

the prize amount.”

A chit fund is a kind of savings scheme under which a person enters into an agreement with a

specified group of persons that every one of them shall subscribe a certain sum of money by

way of periodical installments over a definite period, and that each subscriber shall, in his

turn, as determined by lot or by auction or by tender or in such a manner as may be specified

in a chit agreement, be entitled to the prize amount.

Though often misused by promoters, chit fund schemes are not always fraudulent and may be

conducted by organised financial institutions within the letter of law.

Ponzi schemes

Popularly known as ‘Peter-to-Paul’ schemes, a Ponzi scheme is centered on continuous

recruiting and the promoter generally has no product to sell and pays no commission to

investors who recruit new members. Instead, the promoter collects payments from a stream of

people, promising all the same high rate of return on a short-term investment with no real

investment opportunity.

Scope of direct selling in the world

There is no universal definition of direct selling. Globally, countries, associations and

individuals have defined this sector differently.

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The World Federation of Direct Selling Associations (‘WFDSA’), is the global direct selling

body that has the membership of 60 national associations and one regional federation, defines

direct selling as “the marketing of products and services directly to consumers in a person-to-

person manner, away from permanent retail locations”

World Federation of Direct Selling Associations

WFDSA is a non-governmental, voluntary organization globally representing the direct

selling industry as a Federation of 60 national DSA’s and one regional DSA – Federation of

European DSA (Seldia). The “World Selling Code of Conduct” (‘the Code’) was published

by the WFDSA for National DSA members. This Code establishes a standard framework for

interaction between Direct Selling member companies, their direct sellers and consumers.

It is a mechanism that helps ensures independent salespeople and customers are treated fairly

and respectfully.

In order for a DSA to become a member of WFDSA, it must adopt the minimum standards

set up by the Code to the extent of the fact that the requirements are consistent with the law

in each particular country. Every DSA member company pledges to abide by the Code’s

standards and procedures

Broadly, the Code seeks to capture various aspects of a direct selling business which need to

be regulated including use of misleading testimonials, misrepresentation of actual or potential

earning claims or use of any exploitative and deceptive recruitment practices.

The entire Code has been classified into three sections containing regulations in respect of:

• Conduct for the Protection of Consumers

• Conduct Between Companies and Direct Sellers

• Conduct Between Companies.

India is also a member of the WFDSA and has drafted a standard code of ethics for

companies engaged in direct selling activities. In the ensuing paragraphs, we have discussed

in brief the self-regulatory authorities set-up to regulate the direct selling industry in India.

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Direct Selling in India:

In India, the industry came into existence in early 1980s, However, it started off in early

1990s soon after the country opened up to the global market.

The industry witnessed major growth post liberalisation with many global players entering

the Indian market. Amway was one of the first major global direct selling companies to enter

India in the year 1995. This was followed by companies like Oriflame, Avon, and

Tupperware in 1996. Around the same time Modicare was one the first few Indian companies

to adopt this channel of distribution.

Even though many of the Indian direct selling companies initially started in the southern part

of India, today several of them have pan India operations. In terms of revenue generated

Maharashtra, Tamil Nadu, Kerala and Andhra Pradesh have the highest shares. Recently, the

industry has witnessed greater growth in the eastern part of the country and in many Tier 2

and Tier 3 cities with direct selling companies trying to reach out to customers in markets

which have remain untapped thus far.

The direct selling market in India is a INR 72 billion market today and is dominated by the

organized players contributing 95 per cent to the market. The market has grown to become a

key channel for distribution of goods and services in the country, especially for health and

wellness products, cosmetics, consumer durables, water purifiers and vacuum cleaners.

However, it is still undeveloped as the global peers and the variety of brands and products

available in the country are lower than those in other economies.

Going forward, the growth of the industry is expected to be majorly driven by expanding

markets and a strong consumer base increasingly looking for quality products that add value,

and are willing to pay a premium.

However, currently the industry is facing many challenges in India. India lacks a systematic

policy that clearly defines the regulatory framework of the industry. There is no clear

definition for legitimate Direct Selling to differentiate it from Ponzi/ Pyramid Schemes

attempting to disguise themselves as Direct Selling structures. As a result of lack of clarity,

fraudulent activities in the industry have increased and legitimate Direct Selling is being

confused with Ponzi/Pyramid Schemes.

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Direct selling Market in the states of India

Scope of Direct Selling in the States of India

The trend of consumerism has seen growth in the recent years and demand for consumer

products has grown rapidly. With plenty of opportunities for growth, Indian states provide

abundant opportunity to the Direct Selling companies to prosper.

State Capital Key Cities Population(Millions)

Direct Selling Market

potential till 2025

Self-Employment Generation Potential till

2025

Tamil Nadu Chennai Coimbatore, Madurai, Tirucirapalli, Salem 72 Rs. 75-80 b 2.0-2.2 m

Uttar Pradesh Lucknow

Agra, Allahabad, Kanpur,

Varanasi, Meerut200 Rs. 70-75 b 1.9-2.0 m

Maharashtra Mumbai Pune, Nasik, Kolhapur, Nagpur, Thane 110 Rs. 65-70 b 1.8-1.9 m

Gujarat Gandhinagar Ahmedabad, Vadodara, Jamnagar, Surat, Rajkot 60 Rs. 40-45 b 1.2-1.3 m

Andhra Pradesh Hyderabad

Tirupati, Vijayawada, Visakhapatnam, Nagarjuna Sagar

85 Rs. 45-50 b 1.2-1.3 m

Rajasthan JaipurAjmer, Jaisalmer, Udaipur, Bikaner,

Jodhpur70 Rs. 45-50 b 1.2-1.3 m

Madhya Pradesh Bhopal Indore, Jabalpur,

Gwalior, Ujjain, Ratlam 70 Rs. 45-50 b 1.2-1.3 m

Karnataka BangaloreBangalore, Bellary, Mysore, Mangalore,

Belgaum, Hubli60 Rs. 35-40 b 0.9-1.0 m

Assam DispurGuwahati, Silchar, Dibrugarh, Digboi,

Jorhat30 Rs. 05-10 b 0.10-0.15 m

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CHAPTER-3AMWAY

Amway provides people with business opportunities across the globe. Direct Selling is not about ‘getting rich quick’ it is about creating rewards for efforts 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 ‘clean up’ the industry and provide a valuable and acceptable form of product distribution. In an improved fast-moving and acceptable form of product distribution. In an impersonal fast moving world driven by technology, Amway provides the personal touch.

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 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.

ALTERNATIVE DISTRIBUTION CHANNEL

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 products to reaching users and quickly in their homes.

CONSUMER CONSUMER

RETAILER INDEPENDENT BUSINESS OWNER

TRADITIONAL MANUFACTURER AMWAY MANUFACTURER WHOLESALER AMWAY

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MLM APPROACH:

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 is intended to drive home the point of a company being alert enough to modify its globally accepted prices to suit the local market’s needs.

This report has been made keeping in mind the benefits which can be be derived from my research.

BENEFITS TO CUSTOMERS :

Among the top five reasons people sell direct because they like and believe in the product , like being their own boss, and working their own hours, like the supplemental family income or making extra money for themselves. It can be beneficial from the seller’s point of view as it may give them the idea of exactly how they can go about creating their own businesses and benefit from the Amway’s unique business opportunity.

COMPANY HISTORY Amway began in 1959 with two young entrepreneurs in the United States Of America- Rich DeVos and Jay Van Andel. Their concept for an innovative business, centered around person to –person marketing, established itself as a leader among one of today’s fastest growing industries.

Today, more than 3.6million independent business owners distribute Amway products in more than 80 nations and territories. Amway is a part of the Alticor family of companies whose global sales is totaled $4.5 billion in its most recent fiscal year.

1950s- THE YEAR OF FRIENDSHIP

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 25cents a week.

After high school they entered the military, but 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- INITIAL YEARS

Amway quickly outgrew its original facilities in the basements of Rich DeVos and Jay Van Andel ‘s homes. In its full year of business, Amway 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 70’s began with sales of more than $100million 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 Scheme.

1980s- THE BILLION DOLLAR DECADE

The 80s will be remembered for the billion dollar decade at estimated retail in 1980s.

Building expansion at Amway World Headquarters continued to break neck 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 up the helm as carefully planned. Steve Van Andel and Dick DeVos succeeded their families with the second generation of many distributor families taking on important leadership roles.

2000-THE MILLENNIUM PHASE

In 2000, Amway became a wholly owned subsidiary of Alticor , Inc. chairman Steve Van Andel and President Doug DeVos share the office of the Chief Executive.

MANY WAYS TO RECEIVE INCOME :

Retail Profit Margin: Distributors buy Amway products at Distributor Acquisition Price

(DAP) and may resell products at a retail price, not to exceed the maximum retail price, as

published. In this case, the Distributor’s income would be the difference between the DAP

and retail price.

. Commission on Personal Purchases: In accordance with Amway’s performance Bonus

Schedule (6%-21%) a Distributor may earn commission on the volume of the Distributor may

earn commission on the volume of the Distributor’s individual purchases of Amway products

during the month.

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There are many other ways for distributors to earn income when they meet qualifications:

a) Leadership Commissions ( paid monthly)

b) Monthly depth commission ( paid monthly)

c) Ruby commission ( paid monthly)

d) Emerald commission( paid monthly)

e) Diamond commission ( paid yearly)

f) Diamond Plus commission ( paid yearly)

g) Double Diamond Payment( Rs.500,000 one-time cash award)

h) Triple Diamond Payment( Rs.10,00,000 .One time cash award)

i) Crown Payment (Rs.20, 00,000. One Time cash award)

j) Crown Ambassador Payment (Rs.30, 00,000. One time cash award)

Special Leadership programmes: As a member attains various levels of achievements,

he is also eligible for various Amway leadership programmes.

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CHAPTER-4

AMWAY’S MARKETING OBJECTIVE :

The objective involves matching consumer need 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

purchasing items with a good environmental positioning and offering consumer’s 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

wholesales 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 distributor he has

introduced to 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 foundation of retailing and sponsoring.

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

performances bonuses gained.

Sponsoring: the introduction of other individuals to establish and develop their own

independent Amway distributorships.

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

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distributors at one -to-one or group meetings provide the opportunity for

individuals to discuss strategies, difficulties, levels of involvement and

plans for the f u t u r e . T h e i n c o m e o b j e c t i v e s a n d i n d i v i d u a l

t a r g e t s m a y b e d e t e r m i n e d b y e a c h 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.

AMWAY’S STRATEGIES IN THE INDIAN MARKET

 When a company launches a new product it 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 that which market segment the product should be aimed at, to

figure out exactly what consumers in this target group want? And plan the

marketing strategy accordingly. The focus of brand image and product’s

positioning is of extreme importance.

TARGETS AND MARKET 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. Am wa y a l s o o f f e r s

r ange o f f a s t mov ing cons ume r goods t h rough i t s f i ve ma i n  product

Categories i.e.,

Domestic Care

Personal Care

Cosmetics

Nutrition and Wellness

But initially Amway was launched in India with only 8 products most of which

were home and personal care products.

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Target Audience:

Although it was recognized by Amway that groups such as children, men a nd

t ee nage r s a r e l i ke l y t o becom e t a rge t s i n t he fu tu r e , t he A mw ay’ s r a nge

o f products was aimed mainly at adult female between 3 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 takes 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 market. The image created would reflect a

great deal about the product and its customers. One of the most important challenges for

Amway was to develop an appropriate packaging for all its products to appeal to

the Indian consumer. P ackag i ng can be c ruc i a l t o t he suc ces s o f a new

P roduc t and A mw ay w en t t o g r ea t lengths to ensure that the packaging and design

appealed to the target audience. The colors 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 colors are designed to suggest cleanliness. This design was used to create a

brand image. The following objectives for the brand were set to i nc r e a s e d i s t r i bu t o r

p ro f i t a b i l i t y and p roduc t iv i t y by p rov id i ng a new and exciting business

opportunity t o o p t i m i z e c o n s u m e r c o n v e n i e n c e a n d v a l u e t h r o u g h

e n h a n c e d p r o d u c t 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 as guaranteed.Marketing Mix:

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PRODUCT : C onsidering the overwhelming success it’s receiving in the Indian market, Amway has introduced more products in each category. It is also planning to expand the product category by introducing Dome 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 Indian products and bottles are manufactured through a third party contract manufacturers using wor ld c l a s s t e chno l ogy and p ro ces s e s . The p ro duc t s m a t ch Am wa y’ s g l oba l qua l i t y s t a nda r ds . T he y ca r ry a t am per p roo f se a l a nd a cus to mer r e fund po l i cy ’ . I f no t completely satisfied with the product, the consumer can return it for a refund. Amway’s 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.

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 i t s p roduc t po r t fo l i o t h rough the l a unch o f s eve ra l new co re l i ne p roduc t s . Amway had initially started with 8 products for the Indian market in At present it has about 45-50 products in its various product categories which is about 11 percent of its total product category. PRICING: Amway products are priced 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. -n a cost per use basis, these products are priced very competitively from their local brands. The consumer is the u l t i ma t e " J udge o f p r i ce and va l ue , and A mw ay’ s sa l e s s ucces s ove r t he yea r s spe aks 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 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, Kolkata, Delhi and Mumbai that are serviced directly from the manufacturing units. The company today has 36offices 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’’.

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 optimize the business potential of participants. Recently Amway has a l s o s t a r t e d adv e r t i s i ng abou t i t s p ro duc t s i n va r ious

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Ne ws pape r s and Ma gaz ine s t o 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 MARKET EXPANSION STRATEGY: The 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 (IBO’S) M-MEMBERS C-CLIENTS(CUSTOMERS OF THE IBOS)

Members are allowed to purchase Amway products at a price equivalent to that paid by IBO(S), but do not participate in the Amway Sales and Marketing Plan. They are a new type of *customers* who deal directly with Amway.

TARGET MARKETS AND MARKET SEGMENTATION:

GEOGRAPHIC: Amway is now reaching people living in rural and remote areas by setting their offices in such places. Amway’s distributors are spread all across the country including the rural regions.

AGE :Amway’s products are meant for people from all walks of life. It includes a variety of soft toys that are meant for children to health and nutrition which can be consumed by an entire family. But to join Amway as an independent business owner a person must be at least 18.years of age.

INCOME: Amway Business opportunity is popular among people belonging to a middle income group or the middle class. It gives them an opportunity to increase their income by using the products as well as encouraging others to use them.

GENDER: Majority of Amway products cater to the need of Women i.e., Cosmetics, Home-care, personal care, etc. Amway is aiming to launch more products which will increase the choices for both men and women.

FAMILY –LIFE CYCLE: Majority of people who are joining Amway are mostly Young women and married couples due to its convenient form of business.

OCCUPATION: People involved in Amway are mostly small businessmen and professionals.

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CHAPTER-5RESEARCH METHODOLOGY

Area of Research :

Marketing

Research Objective:

The main objective is to make an in-depth study about Direct Selling with reference to Amway and its marketing Strategy.

Research Design :

The research design is descriptive in nature.

Data Collection:

The methodology adopted is a combination of:

Secondary Data Collection: The data has been collected from:

Internet Books Magazines published by Amway

o Achiever o You –Empowering Amway. o Amway opportunity Brochure

Seminar: Also attended a Seminar on Amway organized by Britt worldwide.

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CONCLUSION Positive Side:

Amway is the chance to make money. It is the chance to get oneself involved in a trade side business, especially, if one is trying to recover from a failed business or lost one’s job. To the extent that few people will surely make money, the system does work.

It has solved the problem of unemployment in the country and given a hope to earn higher than their other regular incomes through their independent business to millions of people in India.

Through Amway Motivational Organization , it has tried to reach a lot of handicap people and helped them by providing them free services anytime they need.It has also been involved in other activities like planting trees etc. Amway takes its duty of Social Responsibility seriously.

Offers wide range of good quality products to people at their doorstep.

Negative Side : Amway will make money even if we don’t. If 1 million people sign up, Amway will

receive Rs.4400million.According to a study, the only way to succeed in such a business is to sign a vast majority of people and make them use products for themselves. It makes people hand over their savings to buy a dream. It would have been no problem, if all that Amway did was door-to-door selling. But, in this case the choice of purchase is left in the hands of the individual. Also, asking for deposits every year of Rs.4,400 as a renewal fee, is enough to captivate a consumer base. So, the individual is anyway inclined to buy the product sold by Amway instead of the same product of any other brand.

Direct Selling has a risk of being fraudulent. Methods of Direct Selling like the Pyramid scheme has been proved to be fraudulent as it involves an unstable business which rewards people for enrolling others into a business that offers a non-existent or worthless product.

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BIBLIOGRAPHYThis Paper work is based on the information that has been collected and compiled from various sources. The information has been gathered from several websites, magazines, and journals to facilitate the preparation of this project.

Secondary Data: Amway company Planner Achievers –issue 03 Empowering You – Business starter Guide

Websites:www.amwayindia.comwww.getfacts.com E-Books-

Marketing Strategy of Amway – Abhishek Malhotra Be a Direct Selling Superstar- Mary Christensen

Also Attended a Seminar on Amway organized by Britt Worldwide at Hindi Bhawan, Hazratganj, Lucknow.