Amway's Indian Network Marketing

Experience: A Dream Gone Awry

MARKETING
PRESENTATION
GROUP-4
QUICK INTRODUCTION

• Privately held by the DeVos and Van Andel families of US, Amway, short for
American Way, was set up in 1959. Amway and its publicly traded sister
companies supported 53 affiliate operations worldwide. About 70% of
Amway's sales were outside North America.
• With over 12,000 employees around the world, Amway was renowned for its
strong R&D centre in Michigan, which had 24 laboratories. Amway was
present in over 80 countries and its manufacturing plants were located in US,
Hungary, Korea, China and India. The company had over 3 million distributors
across the world. Besides its direct selling portfolio of 450 products, Amway
promoted around 3,000 products through catalogue sales2 as well.
AMWAY INDIA

• Amway India, a wholly owned subsidiary of Amway Corporation, was established in

August 1995 after approval by India's Foreign Investment Promotion Board (FIPB).
Amway India commenced commercial operations on May 5, 1998 and is now the largest
Direct Selling FMCG Company. The Company is headquartered at the National Capital
Region of India - New Delhi.
• Amway has invested in excess of US $ 35 million ( Rs. 151 crore) in India of this; US $ 6
million ( Rs. 26 crore) is in the form of direct foreign investment. Amway India has 400 full
time employees and has generated indirect employment for 1,650 persons at all the contract
manufacturer locations.
• Amway India provides free and unlimited training to all its distributors to help them grow
their business. Amway India conducted over 34,000 training sessions during in the past 12-
months with an attendance of over 1.5 million Amway Business Owners and prospects.
MAKING OF A DREAM

• Amway had received permission from the Foreign Investment Promotion Board (FIPB)
in 1994, to invest $15 million in the Indian operations and to source products from India.
• Besides its extensive internal research efforts before entering India, Amway also
conducted market research through agencies such as Pathfinders and ORG-MARG.
• Though prior to its entry into India, Amway did recognize the need for a special India-
specific pricing strategy and eventually there were just a few marginal cuts in the prices,
which were still almost 20% higher than those of the competing FMCG products.
• Amway assisted its three manufacturing partners, the ISO 9001-certified Jejuplast at Pune,
Naisa Industries at Daman, and the Hyderabad-based Sarvotham Care, to achieve
benchmarking levels of product development, engineering and quality.
 Contd.

• Amway scientists and engineers at the India Technical Centre provided assistance in the
processes of technology transfer and quality control.
• Amway's domestic operations fell into five areas - personal care, homecare, nutrition,
cosmetics and home tech
• The company introduced India-specific products, in pursuance of its go 'glocal'
philosophy. Also, for the first time in its history, Amway utilized media advertising to
promote its products.
Different products of Amway in India

• Nutrilite
• Offering a wide variety of nutrition products that range from vitamins to dietary
supplements, the NUTRILITE brand is a renowned addition to a healthy lifestyle.

Nutrilite is the world’s leading selling Vitamins and dietary supplements brand*.
Different domestic products of Amway in India

• Artistry
• Setting standards in skin science and celebrating your beauty, a global leader in skincare
and makeup products.
Artistry is one of the world's top five largest-selling Premium Skincare brands*.
Different products categories of Amway in India

• SATINIQUE
• The SATINIQUE brand offers a wide array styling products for stronger,
healthier looking hair
Different domestic products of Amway in India

Household Cleaners
•    Dish Cleaners
•    Multipurpose Cleaners
•    Surface Cleaners
• Laundry
•    Detergents
•    Treatment…..
• Glister , Persona , etc…
Direct Selling Strategy

• The sale of a customer product and service , person to person , away from fixed
retail locations marketed through independent sales executives.
• Amway used direct selling marketing strategy . But media reports were quick to
point out Amway's failure to sell the basic concept of direct selling to the
Indians.
• Amway had to deal with the negative attitude of many Indians to direct selling.
Direct selling was typically seen as unwelcome, an intrusion into one's privacy.
This was true to a certain extent.
• Sales people often used a 'hardsell', the product quality was sometimes poor and
most importantly, the salespeople were poorly trained and lacking in motivation.
Picking up the pieces

• One of the first 'corrective' measures it took was putting stickers on its
products, which clearly indicated the number of usages very clearly.
• Amway realized that a complicated market such as India needed a focused
approach for each of the product categories. To strengthen its product focus,
Amway set up strategic business units.
• The gameplan was to reach consumer homes all over directly by making the
current distribution system more effective and decentralized
• The cost of making long-distance calls, the courier companies' refusal to accept
cash and the time taken to deliver products were the three major hurdles that
Amway faced.
Contd.

• In a bid to make its products more affordable, Amway introduced value-

for-money 'chota (small) packs' in December 1999.
• The sachets significantly boosted sales. Sachets had two advantages - they
helped Amway shake-off the 'super-premium-products-only' tag, and with
their lower prices invited consumers from lower income levels to try the
products.
SWOT Analysis

• STRENGTH :
• Strong Global Presence
• Amway has received many accolades
• Wide Product range
• Wide Range of consumers
SWOT

• WEAKNESS :
• Limited mode of availability
• Falling sales
• Costly Products
• Heavily dependent on word of mouth
• Multi level marketing
SWOT

• OPPURTUNITIES :
• Increasing availability
• Using different modes of communication
• Tie-ups with salons and health experts

• THREATS:
• Increasing competition
• Low Switching Cost
'Networking its Way into the Future

• By 2004, Amway planned to become a Rs 1000 crore company with a

physical presence in 198 centres across India. The company also revealed
that by 2002, it would be selling all the 450 Amway products that were
available abroad, in India.
• Once the marketing business in urban areas was strengthened, Amway
planned to turn its attention to untapped rural areas as well.
• The very concept of network marketing was being threatened by the
growing popularity of e-commerce and the Internet. This posed a major
threat to multilevel marketers. However, the real threat seemed to be the
merging of telecom networks with the cable television operators.
Contd.

• Given the pace of developments on the Indian telecommunications front,

network marketers could take it easy for least some more years. However,
Amway prepared to meet these challenges by taking initiatives to further
strengthen its online presence.
The Indian MLM Journey

• The MLM system utilizes a multi-tiered salesforce of independent distributors - none of

them employees - to sell products directly to consumers.
• These distributors earn commissions at two levels - at first, the difference between the
distributor's cost and selling prices, and secondly, a proportion of the commissions earned
by other distributors recruited.
• Besides Amway, Oriflame , Avon and Tupperware, other players included Lotus Learning
, all the direct selling companies were members of the Indian Direct Sellers' Association
(IDSA), and were bound by its code of conduct.4 While in international markets, a wide
range of products was successfully sold directly to homes, this was not the case in India.
• The direct selling industry in India was in its initial stages even in early 2001.
Decline in revenues
Reasons for declining sales of Amway :-

• Due to the premium segment pricing

• Direct selling was typically seen as unwelcome , an intrusion into one’s
privacy
• India had faced many  timeshare and plantation scams that plagued the
population in the 1990s
• Amway got classified under the above and multiple complaints were
lodged since people did not understand MLM strategy of AMWAY.
• September 2006: After a public complaint from the Reserve Bank of India,
the company’s business practices came into question.
Contd.

• Officials said Amway had violated the "

Prize Chits and Money Circulation Schemes (Banning) Act of 1979,"
which outlaws pyramid schemes and similar money circulation scams. 
• Distributor offices were shut down and the company’s Indian headquarters
were forced to cease operations.
• Kerala state police temporarily sealed Amway offices in major cities,
claiming that they had received multiple complaints about the company’s
practices and its distributors.
• CEO was arrested on a visit to India
THANKYOU

GROUP MEMBERS:-
NANDAN KAUSHIK
RAHUL RADHEY
VAMIKA
NAMRATA
NEHA
MADHAV REDDY
PUNEETH
VEDANT