Summary• Strategic Objective: – Increase Sales• Strategic Options – Sponsoring and retention – Enhancement of current distributors – Aggressive growth strategy (Both)• Group Recommendation – Sponsoring and retention (70% of Sales come through them) – Price parity across geography
• Vision – To be the best business opportunity in the world• Mission – Through the partnering of Distributors, Employees, and the Founding Families, and the support of quality products and service, we offer all people the opportunity to achieve their goals through the Amway Sales and Marketing Plan• Values – Partnership, Integrity and Personal Worth
SWOT AnalysisStrength :1. Market Leader2. Global brand3. Direct interaction with distributors and customers4. Customized product development or large portfolio of products5. Partnership of distributors in every sale made increases reliability of distributors and hence motivate them to increase sale with 70% retention as compared to Industry average of 50%
SWOT Contd…• Weakness :1. High Prices of products (Growing Dissatisfaction)2. Exchange rate fluctuations since all the products imported to Japan3. Difficulty in Controlling Distributor network
SWOT Contd…Opportunity :1. Changing Demography and Macro Economic conditionsThreats :1. Regulation – Complex Door to Door selling law2. Price Sensitivity – Price slashing in Japanese market , customers started preferring low pricing products3. Failure of pyramid schemes
Company Products• 140 Product items• 4 Categories – Personal Care (32.4%) – Housewares (29.5%) – Nutrition (23.8%) – Homecare (10.2%)
Company –External Analysis• Political – Frequently Changing regulation without any clarity• Economical – As mentioned in case also customers are becoming price sensitive while products offered by company are costly.• Socio-cultural – Decreasing growth in Japan leading to unemployment, More number of people in higher age bracket, changing lifestyle• Legal – As mentioned in case new door to door selling law is not properly understood by company
Competition Analysis• Porter’s 5 Forces :To analyze the competition in the market for the company porter’s 5 forces has been studied .Threat of Substitutes : If we consider it as product company, where in most of the products are of daily use and more of the offerings are generally same with slight differentiation so, threat of substitutes is relatively high. If we consider it as Opportunity provider, then threat of substitute is moderate as unemployment rate is low in JapanThreat of New entry :As entry barriers is low as there are 23 companies using MLM, threat of new entrants is moderate
Contd..• Power of suppliers : Low, as suppliers are many and distributed• Power of buyers : As buyers have multiple choice and switching cost is low, hence power of buyer is high• Internal Competition : Internal competition is intense and price is the factor in which all the companies compete while Amway is following differentiated product strategy. Analyzing all the forces the resultant which comes out is pointed in buyer and new entrant quadrant with more focus on internal competition i.e. company should continue differentiated product development which will hinder threat of new entrants and more customized products will cope up the buyers power all this strategy company is already pursuing but for internal competition company should start focusing on low price products.
Porter’s 5 Forces analysis H New Entrant H HSuppliers L Buyers H Substitutes
SEGMENTATION• AMWAY JAPAN was an part of Direct selling Industry.• “AMWAY`s distribution policy was to promote the existing costumers to make further new consumers and share profit on every product sold through them.• Once a new customer added in to the chain, the preceding customer will start acting like an distributor and earns commission of product sold to new consumer.• The whole customer base consists of : Major distributors- distributors(1) – distributors(2) – distributor(up to ‘n’) – customer (who would also act like an distributor for proceeding link)
Segmentation continues…• The Target market can be segmented as : • 1 : Customers (Major Distributors)- Taking it purely on commercial basis to generate profit. • 2: Customers (small distributors) who are consumers but also like to earn some side income through making further customers. • 3: Persons who buys the products solely for their own consumption. Not intended to be part of chain to earn profit by lengthening the chain.
Marketing Challenges• Distributor Motivation – Vary from high to low depending on schemes• Growing Dissatisfaction with Products – High Price • Low perceive value • Parity in Price• Controlling Distributor – Bad practice because of revenue or peer pressure• Changing Market Environment – Price Sensitivity – Regulation
Strategy Choice• Penetration Growth – Increase number of distributors – Retention of Distributors• Productivity Growth – Increase sales from existing distribution• Mix
Group Recommendation• Penetration growth – Increase number of distributor • Low Churn (70% retention as compared to global 50%) • 70% of sales is by distributors themselves • By appointing more distributors, it will decrease competition • Low Sales Pressure• Bring price parity as compared to competition and Geography – Lead to Distributor / Customer satisfaction• Enhance Public relation and External Affairs – Increase CRM – Business model to decrease negativity towards comparison with Pyramid model