Eureka Forbes

Case Study On Amways Indian Network Marketing Experience

Prepared for
Abul Khair Jyote School of Business (ULAB)

Prepared by
axif m. onik Jubayar Hasan ID: 091011147 ID: 091011053

Letter of Transmittal
27 March 2011

To Abul Khair Jyote Department of Marketing Faculty of Business Studies University of Liberal Arts Bangladesh

Sub: Amways Indian Network Marketing Experience

Sir, We the undersigned students were assigned to prepare a report on Amways Indian Network Marketing Experience we have prepared this report. In preparing this report, we have followed your guidelines. As per your direction, we have added a lot of information from the mentioned topic. From this report we have achieved a lot of basic knowledge and we think ourselves that it will help us a lot in our future career. We sincerely hope this report will fulfill the requirements suggested by you under the course Marketing Management. We truly appreciated this report. We hope it will be accepted by you. If you have any question after reading this report, let us know.

Sincerely yours, axif m. onik

Executive Summary

Amway India is a wholly owned subsidiary of US $ 6.3 billion Amway Corporation; it has a presence in 88 countries & territories. Amway Corporation is one of the largest Direct Selling companies in the world. Established in 1995 but 1959 globally, Amway India commenced commercial operations in May 1998 and has emerged as the largest Direct Selling FMCG Company. The Company is headquartered at the National Capital Region of India New Delhi. Amway India still heavily depends on Hall Trainings, but went their new online store Quixtar's launching; we predict that Amway will have one of the best, if not the best, online training and support in the industry. Amway products, such as nutrition, cosmetics, personal care, skincare, homecare, as well as top name brand products and services. It's important to note here that Amway products are backed by the most impressive research and development department, not only in the network marketing industry, but in the world. Amway's Resource and Development (R&D) includes 57 laboratories, which includes 13 quality assurance laboratories, with hundreds of projects in process. Amway also currently holds over 200 patents and nearly 400 more with patents pending.

1. Comment on the concept of network or multilevel marketing. Do you think the model would be successful in India? Also compare and contract the MLM model with the traditional distribution system bringing out the merits and demerits of both.

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downlink of distributors and a hierarchy of multiple levels of compensation. Other terms for MLM include network marketing, direct selling and referral marketing.Network or multilevel marketing is a new and modern business concept in the world. The main themes are, there are no retailer between manufacturer and consumer. But there are some gaps between MLM company prices with the other company. Because MLM Company include distribution cost and sales commission, which paid to distributors. I think, MLM model was not fully successfully in India. Because people of India are not conscious with MLM marketing. They like to go retail shop and bargaining with seller. Amway is the first company, who are entering in to in India with MLM business strategy. But they changed their strategy day after day for dominating consumer market. After all they can survive but there growth rate was not expected. Traditional distribution system is Manufacturer + Distributor + Retailer = then customer. But in MLM model Manufacturer + Distributor = customer. Both systems have some merits and demerits also. In traditional distribution system has consumer should go to retailer for consumption any goods. So that consumer can justify market price and can get a better product. A buyer has also buying power to seller. But buyer may even pay more prices what they expected from market. Buyer cant claim against company when his product doesnt perform. Some times retailer also displays those products, which has no validity or more profit. In MLM model buyer can get product just a call or order. By this process buyer can avoid gathering in retailer. This process also helpful for time consuming. When buyer get product from company, he may paid less price then market and get a mind satisfaction. By getting those benefits, consumer has to pay some losses. Such as paid more when company is not domestic. If there are some defects in new product, company can be replaced but its a long run process. For servicing after sales buyer also face some critical problems.

2. Study the development that occurred after Amway launched its commercial operations in India. List the reasons which led to the below expectations performance of the company.

When Amway launched its commercial operation in India, then Amway developed some business strategy. Such as, company tap unemployment those city which they wants to business. They reached in urban or rural area which was undiscovered. They avoid traditional delivery system FNCG (those product which can replace or may replace within one year. such as, Shampoo, soup etc). Later they came in business with SBU which has around 450 products. They also lunched small pack for single user. In Uttar Prodesh they took a different strategy called operation Gaadi. Its was mount on a truck and made trip in different regions in different days. Another Operation called Operation Ghar which provides a better service then large family of distributors. After all Amway brought a new business concept in India. There were some reasons for company not performs best. Such as, people of India are not conscious about MLM marketing. They remained that, those types of products only for a specific section of people. In a first time Government, of India also cancelled there license. Because government also confused about MLM business strategy. But later, Amway entered into in India in different process. Distributors were not doing there best. Some times product is consumed by distributors (self consumption). They were not well trained and skilled, thats way they could not convince there consumer well. Some times strategic planning of company also wrong.

3. Critically examine the corrective measures adapted by Amways to the MLM model a success. What further measures can the company take in order to tackle the competition from FMGC majors like HLL and P&G.?

When Amway entered in first time in India with MLM business concept, India govt. didnt permission for doing there business. But later Amway permitted by govt. In beginning Amway faced some critical situation, such as- Distributors activity, Consumer expectation to MLM concept. After company have to changed or developed there business strategy. First they were putting stickers on its product. Which clearly indicates, the number of usages vary clearly. Amway setup there warehouse and specific distribution center in almost 160 cities through its 13 locations. They also developed there delivery system. They invited a delivery agency who delivered parcel to consumer within 48 hours. One of the important decision for company is, they subsidizing there entry fee for new starter. The company started printing Hindi slogan Hamara Apna Business and two operations launched called Operation Gaadi and Operation Ghar. Later Amway started premium payment system. As a competitor Hindustan Liver Ltd (HLL) and P & G always followed traditional distribution system. There products are available in consumer market. So that buyer can buy there product within a short period. If Amway wants to compete with HLL or P&G they must developed there current distribution system and stay always consumer touch point.

References

 MLM Network Marketing - How to Explain the Concept _ Network Marketing Now.htm The-multi-level-marketing-model-mlm-would-be-su.htm Home Based Businesses _ Blog _ Why MLM is a Better Business Model.htm Corporatefraudswatch.blogspot.com Amways Indian Network Marketing Experience 5.htm Analysis-of-Marketing-Communication-of-Amway-and-Tupper-Ware.htm MLM-Amway-Story.htm Case Amway in india.html