Project Report on experiential perspective to Direct Marketing case of Amway

Submitted to:Mr. Devang Patel

Submitted byGroup Members:

Name Roll No.Jay Ajudia………………………………………………………….. 1Nitin Agrawal………………………………………………………. 2Mohit Agrawal……………………………………………………… 3Pranay Chauhan………………………………………………….. 11Mahipal Chauhan………………………………………………… 12Kaushal Dhakan…………………………………………………… 19Het Gandhi………………………………………………………….. 35Nikunj Patel………………………………………………………… 45Bhavin Patoliya……………………………………………………. 47Ankur Thacker…………………………………………………….. 62

Introduction

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Amway is one of the world’s largest direct sales companies. It is a global enterprise and is privately owned by the families that started the company in 1959. Amway manufactures, markets and distributes more than 450 consumer products. In the UK Amway distributes a variety of products, including:

• Personal Care - fragrances, body care and hair care products• Skin Care and Colour Cosmetics• Durables - cookware and water treatment systems• Nutrition and Wellness - food supplements, food and drinks• Catalogue Items - third party electrical goods• Home Care - laundry, cleaning and car care products.

Amway employs 14,000 people worldwide in its offices, manufacturing centres, warehouses, call centres or stores. It also works with around three million Amway Business Owners (ABOs) in more than 80 countries. These ABOs are the link between Amway and its products and the consumer. They also link Amway with communities across the globe. For more than 45 years, Amway Corporation has enabled people to have a business of their own.

Amway has built up a strong regional structure around regional affiliates, for example, Amway UK and the Republic of Ireland. Operating through the regional structure, affiliate companies are responsible for:

• forecasting (ensuring enough stocks are available to meet demand)• managing customer service and contact with customers• efficient distribution to ensure products reach ABOs on time and in top condition• product promotion and ABO support, for example, supplying brochures to ABOs.

Amway is an example of a business that recognises its wider responsibilities. It recognises that to be a good corporate citizen, it needs to support causes that matter to the communities in which it operates. As well as its business aims, the company has a range of social and ethical aims that are part of a ‘Global Cause Program’.

Amway’s global vision is to help people live better lives. At the heart of this commitment is the One by One Campaign for Children that helps disadvantaged children from around the world. This programme aims to support Amway’s employees, ABOs and customers in putting time and money into helping disadvantaged children get access to medicine and education. Amway works with many different groups of people to carry out its business. This case study explores the relationship between Amway and its stakeholders.

Amway Concept

“A great Business Plan gives good results. Amway business has some good plan tips which can be followed step by step to achieve your goal of building network. Below are some important Amway business plan tips to be followed..”

Step 1. Set at Ease

Step 2. Explain Business Concepts and Interactive marketing.

Step 3. Show them the Franchising concept of McDonald’s etc and Tell them about private franchising system of Amway sales marketing plan.

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Step 4. Explain them the difference between Traditional business and Direct Selling business of how products moves from Manufacturer to Jobber to Whole seller to Retailer to Customer. Now show how products are moved in MLM business from manufacturer to consumer directly and what are the benefits and retails profits selling same.

Step 5. Now clear there doubts about Huge Investments, Risk factors, Expertise and Time challenges during such Home based business.

Step 6. Show them benefits like How he can develop an extra income without disturbing the current job or profession, Explain about residual income concepts which is and ongoing income. Give some royalty examples of singers, authors etc. Explain him how this is and International business opportunity at around 80 countries spread worldwide. Show him how easy it is with support system like Britt World Wide and mentor ship program.

Step 7: Show him the retail selling and business income margins and how one gets upto 20% discounts on every Amway products being a distributor and ABO’s of business.

Step 8: Explain him the LEVERAGE factor which is not present in traditional businesses and How one can balance TIME, MONEY and SECURITY in life to fulfil their dreams and get FINANCIALLY FREE.

Step 9: Finally use the FEEL, FELT, FOUND and give message to prospect of how you have seen the business plan for first time and FELT about and after doing it FOUND the great difference earning profits of business

Direct Marketing

Amway is a direct selling company and manufacturer that uses multi-level marketing to sell a variety of products, primarily in the health, beauty and home care markets. Its product lines include home care products, personal

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care products, jewellery, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health & Beauty products accounted for nearly 60% of worldwide sales.

Amway conducts business through a number of affiliated companies in more than ninety countries and territories around the world. It is ranked by Forbes as one of the largest private companies in the United States and by Deloitte as one of the largest retailers in the world.

It entered in India and established in Sept, 1998 with 5 products. In the first year the turnover was 100 Crores, and the current turnover is over 1100 Crores.

Total numbers of SKU’s (stock keeping units) are 350 in spread in 5 different categories.

1. Health care

2. Personal Care

3. Home Care

4. Skin care

5. Agriculture

Multi-level Marketing (MLM)

Also called network marketing (NM) - is a business model which utilizes a combination of direct marketing and franchising. Typically, individuals become associated with a parent company in an independent contractor relationship. Sellers are compensated based on their sales of a product or service, as well as the sales of those they bring into the business.

Business model

Amway combines direct selling with a multi-level marketing strategy. ABOs may both market the products directly to potential customers and also recruit (sponsor) and train other people who become Amway Business Owners(ABOs) themselves and in turn have the same opportunity. Each ABO may earn income both from the retail mark-up 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 ABOs to buy products at a discounted rate.

Change Management

When the Amway entered into India they soon realised that the business is not usual here and they will have to go under some changes for business to be fit for locals. So they brought in the following changes especially for India.

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1. Small Size packaging.

2. Low range products launched, like Attitude and dynamite.

3. Special product training sessions which guide how to use the product. (Since Amway has concentrated prducts and per use cost will be less if used properly)

4. Sale once in year.(Diwali)

5. TV Commercial and marketing activities.

6. CSR(Corporate Social Responcibility) activities:

Amway opportunity Foundation

National projects for the blind

Red Cross help

Amway CRM Project Overview

CRM (customer relationship management) web system for trading systems to manage client’s debts, complaints, comments and documents. The CRM user intarface is web think client which uses internet browser to access this system. The server side provides role-based functionality for different users types.

Stations Of Experience

1.) Up‐Line Interface

POSITIVES

• Help, Guidance

• Mentorship

NEGATIVES

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•MIS‐Guidance

•Over‐Promises

2.) Product Knowledge & Assistance

POSITIVES

•Complete product knowledge, Usage

•Last mile availability

NEGATIVES

•Product training lacks reach

•ADC’s focused

3.) Business Support

POSITIVES

•BWW support mentoring

• Structured easy financing

NEGATIVES

•Expenses incurred ABO’s

Interactive Marketing Of Amway:-

The electronic way of communicating and selling directly to customers is interactive marketing. The Internet provides marketers and consumers with opportunities for much greater interaction and individualization.There are some type of online component which are used by Amway.

Web sites : Amway designed their websites that embody or express their purpose, history , products and vision. Amway is designed a site that is attractive on first viewing and interesting enough repeat visits. This website is containing all 7Cs of site. (a) Context: Layout and Design(b) Content: Text, picture, sound and video the site contains

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(c) Community: How the site enables user to user communication(d) Customization: Site’s ability to tailor itself to different users(e) Communication: How the site enables site to user , or user to site(f ) Connection : Degree that the site is linked to other sites(g) Commerce: Site’s capabilities to enable commercial transactions.

This site is easy to use and physical attractiveness. This site has good colour of use. Their typefaces and font sizes are very readable. Individual pages are clean and not crammed with content.The site is quickly downloads. The first page is easy to understand. It is easy to navigate to other pages that open quickly.

This website contains different information like,

o Amway Corporationo The History of Amwayo Founder's Fundamentalo Amway India Factsheeto Our Valueso Start A Businesso Amway Business Opportunityo Sales and Marketing Plano How to Joino Business Kito First Purchase Offero Levels of Recognitiono Institutional Customer Programmeo Rules of Conducto Amway In Newso AmOne by One o Amway Opportunity Foundation o National Project for the Blind o Project Sunrise o Volunteerism o CSR in News o Awards and Recognition o Contact CSR o Support CSRo Nutrilite Daily 120 Promo o Attitude New Colors Launch o Attitude CTM PROMO o Watch new Nutrilite TVC o Get-Set-Go Kit o Amway Mobile Website o Colour Your Diet o Launching Fast Applicationo Termso FAQs

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o Privacy Policyo Contact Uso Site Mapo Quixtar Inc.o Alticor Inc.o Amway Global Affiliateso Nutriliteo Artistryo AOF Donation

Microsites :It is a limited area on the web managed and paid for by an external advertiser company. Amway is used microsites for excess their products from other sites like Micrsoft , Googles, Yahooo and other web sites which are related to other groups. Search Ads :

It is paid search or pay per click . The search terms serve as a proxy for the consumer’s consumption interest and trigger relevant link to product or service offering alongside search results from Google , MSN , and Yahoo! . Amway pay only if people click on the links , but marketers believe consumers who have already expressed interest by virtue of the search are prime prospectus.At an average of 35 cents, paid search is a lot cheaper than the $ 1 per lead for Yellow pages listings. Display Ads :

These are small , rectangular boxes containing text and a picture that companies pay to place on relevant web sites.Amway gave Display ads on different websites like Amazon , Google , MSN, Yahoo.Some banners are accepted on a barter basis by Amway. Interstitials :

These type of advertisement with video and animation , that pop up between changes on a website. Amway company used animation and video during accessing website. Internet specific Ads and Videos :

Amway company produces Video and animation for their marketing of their products and services. You tube , MySpace Video, Google video , Amway and consumers and advertising company upload ads and video to be shared virtually by millions of people.

Sponsorships :Amway company get their name on the internet by sponsoring special content on websites that carry news , financial information . The Amway company pays for showing the content and in turn receives acknowledgment as the Amway suggested. Alliances :

When one Internet company works with another , they end up advertising each other through alliances and affiliate programs.Amway used this type of alliances. Online communities :

Amway sponsor online communities whose members communicate through postings , instant messaging and chat discussions about special interests related to the company ‘s products and services. Online communities for Amway are Facebook, Gmail , Yahoo, Redifmail Amazon etc. E-mail :

E-mail uses only a fraction of the cost of direct mail campaign. Amway company uses e-mail for their distribution channels and customer to aware their products and services of Amway company. Mobile marketing :

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Amway company uses mobile marketing for their products on to mobile for instant checking products and services.

Amway starts Advertising

Amway is changing its way. The largest direct selling company in the world, which has emerged a global retail giant over the last 50 years with minimal advertising. The US-based wellness and personal care products firm is part of an army of direct sellers in India that has woken up to the need for complete brand-building exercise through mass media. Oriflame, Tupperware and Modicare have all started spending more on advertising and even tying up with retailers as India’s Rs 3,300-crore direct selling industry is bracing up for increased competition from traditional players who have added direct selling to widen their reach to rural and semi-urban areas. Amway has seen its spend on advertisement rise from about Rs 4crore in 2005 to close to Rs 20crore in 2009. “Amway does not traditionally advertise but we realised that India was a different market and that we would need to supplement sales force’s efforts with brand campaigns in mainstream media,” says Bill Pinckney, CEO and MD, Amway India

Buzz Marketing

Buzz marketing is a viral marketing technique that attempts to make each encounter with a consumer appear to be a unique, spontaneous personal exchange of information instead of a calculated marketing pitch choreographed by a professional advertiser.

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Buzz marketing is not new; Internet technology has changed the way it's being used. Buzz campaigns are now being initiated in chat rooms, where marketing representatives assume an identity appropriate to their target audience and pitch their product.

The member of company creating a buzz in many ways. Our group were visited, commerce six road, Ahmedabad branch of Amway. I (Bhavin Patoliya) have experience of network marketing in Dewsoft overseas pvt ltd with network of 150 and above. So, one meeting experience about Amway was very good because one joint member (Lady) in company’s direct marketing business was explained us company’s plan. But when we asked questions like

1. How company do marketing?2. How company sale their products?3. How company do direct selling?

Then she was interested to explain the plan only.

Following are the activities which might created buzz for Amway .

Daily meeting creating a buzz for new for not joint person.

Only training given to new joining person creating buzz that they are come in that company which gives you a opportunity to be Financially free, gives you security, gives you additional income.

All company seminar creates buzz as telling that company is registered at FICCI and it’s 1st company among all networking companies.

Company’s advertisement and product also creating buzz for costumers.

Amway India Enterprises, the multilevel direct marketing company, which has grown into a global multibillion corporation exclusively by creating buzz through word of mouth publicity.

The campaign, with the tagline "The Power of Positive," is supposed to help the company to create more buzz and attract more distributors at a time when many people are unemployed--or tired of the jobs they still have.

It has created new corporate logo which has a few circles and semi-circles in three different colors (red, green and grayish blue), overlapping each other. They reflect three focus areas of the company -- home, beauty and nutrition ranges

“More importantly, ads mention very distinctly about one of its important unique selling points, which is the 100-per cent customer satisfaction or money-refund policy commitment towards India.

Amway as a benevolent company has created a tag line such as. "We help people build better lives, build their own businesses, and together, build better communities," a voiceover says in one spot that breaks Monday.

Company is set to roll out its maiden product campaign for its Nutrilite brand.

The company has adopted the strategies of direct selling their product in the market.

The product specific ad campaigns have been designed by ad agency Rediffusion and will be rolled out in the print media and on television this help in creating buzz.Throughout 2010, you (and many others!) will also spot ads in 17magazines and newspapers,Including Today, People, Sports Illustrated, BusinessWeek, Newsweek,and Time.

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Designing the Sales Force

Amway is using a direct-selling force for selling their various types of product that they are providing. It uses a contractual sales force, it consist of sales agents who earn a commission based on sales.

Amway is following multi level chain model. With an initial start up cost of Rs.995 people sign contracts with the company to become Amway Business Owners (ABO). When they become ABO they gets start up kit consist of product details and free training sessions’ CD. They can choose to either sell products to other customers of sign on their friends and relatives to become Amway business owners, who again can choose to sell products to other people or sign on other people to the Amway network. In this way ABO makes money on his own sales and commission on the sales made by the people he has signed on to the network. ABO earn commission only on the bases of sale of products by him and his network not on the basis of number of people that ABO makes on his down line.

The Amway opportunity works in twofold: Giving you a chance to build your own business at your pace & achieve the rewards and recognition linked to the plan and at the same time helping other people do the same.

Sales-Force Compensation

Amway has developed attractive sales force compensation by providing commission on the basis of sales turnover generated by ABOs and their group. Amway’s performance bonus and award schedule is based on selling of Amway products which is as under:

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Business Volume(Business Volume is equal to the Distributor Acquision Price of Amway Products minus

Taxes)

16,500

55,500

1,10,000

2,20,000

3,85,000

5,50,000

Commission on Business volume(% of business volume)

6%

9%

12%

15%

18%

21%

E.g.

Let us assume Mr. X is an Amway business owner has three people in his network that is A, B & C

- Mr. X sales products worth 1,00,000BV- Mr. A & his group sales products worth 70,000BV- Mr. B & his group sales products worth 50,000BV- Mr. c & his group sales products worth 40,000BV

Total sales turnover by X and group 2,60,000BVTotal group commission @ 18% Rs.46,800(X)Commission earned by Mr. A @ 12% Rs.8,400(A)Commission earned by Mr. B @ 9% Rs.4,500(B)Commission earned by Mr. C @ 9% Rs.3,600(C)Net commission earned by Mr. X =X-A-B-C Rs.30,300Retail profit margin on Mr.X’s personal business 20% of 100000 Rs.20,000X’ Total earnings(30300+20000) Rs.50,300

The Amway sales and marketing plan is a low risk, low start-up cost business opportunity that is open to everyone. It provides a flexible opportunity to build your business through retailing of products and building a network of other people who are engaged in the same activities. The core of the Amway sales and marketing plan’s income opportunity comes from retailing quality Amway products by you to your customers. As your Amway business grows, the rewards you earn will grow in proportion.

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Managing the Sales Force Recruiting and selecting representatives

Amway recruit people in less numbers because it doesn’t require more salary based employee as they makes sales with the help of multi level marketing model.

They make ABOs by convincing them that Amway will make their life time free and provide opportunity to earn money and provide security which is the basic desire of human beings.

Training and supervising sales representative

Amway provides training sessions’ CD with the start up kit when any person becomes ABO. And then after they provide training to ABOs about how to convince people and make them buy the Amway product and become ABO. By this process of training it helps people to spread their network and earn more commission by increasing the sales turnover of their group.

Amway – Ahmedabad organises seminar for all new potential prospects as well as for current ABOs near Natraj Cinema every Wednesday, and they charge Rs.35 as an entry fee for attending the seminar. In such seminar they train ABOs about how to sell Amway products and to widening the network.

Motivating factor that motivates Amway’s ABO is the commission that they earn on the basis of sales turnover of Amway product.

Evaluating Sales Representative

Evaluation parameter for Amway Business Owners is number of down line members i.e. network and sales turnover made by him and his group.

Customer experience

We meet Kuldip Champavat as he is the regular customer of Amway. He purchases Glister tooth paste, Persona soap etc. on regular basis. As per his experience of using Amway product, It’s product are good in quality. But at he also feels that some of the products’ prices are high. Once he had purchased Amway’s perfume but as it was high price perfume he had stopped to purchase it.

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Analysis Amway is providing world class quality product which is the main reason that it has been succeeded

from last fifty years.

It is totally cash based business and nothing is sold on debt.

Money back guarantee gives huge competitive advantage to Amway.

CSR activity doing by Amway leads it to spread awareness and widening the network of ABOs.

One of the strength point for Amway is that it provides diversified products like for health care, personal

care, home care, skin care, Agriculture etc.

Suggestions

Awareness about Amway product is still less in certain region so they have to focus on spreading

awareness about its’ product. It can be done by advertisement.

Prices of certain Amway products are much higher then what customers expect so it should be

decrease to increase sales volume of products.

Computation of commission which ABOs gets on turnover of products sold by his group is complicated

so it should be make easy to calculate.

Photo evidence

Ms. Rupal Pankh (ABO)

Mr. Kuldip Champavat (Customer)

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Mr. Alpesh Karena (Distributor)

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