Amway Global now have a presence in over 88 countries
The matrix identifies various strategies open to organisations, and splits them into four categories. For example, when selling existing products to existing markets, organisations can look to improve their penetration of that market, and so gain a larger market share. Where a company introduces new products into its existing markets, this may give it competitive advantage over its rivals through product improvement. Market development involves taking existing products into completely new markets Diversification, on the other hand, involves moving into new products and new markets at the same time. This may involve a complete shift away from core activities into some other form of related activity. It represents a step into less familiar, perhaps even unfamiliar territory.
BACHELOR IN COMMERCE
SECTION : C
Amway Global was founded in Ada, Michigan, USA in 1959. Founded by Jay Van
Andel and Rich DeVos, Amway Corp is one of the largest Direct Selling FMCG
companies in the world offering over 450 products.
These products carry the Amway name in the areas of nutrition, health,
beauty and home.
Amway's innovation and industry-leading R&D has seen more than 1,100
patents granted and another 700 patents pending. Amway has more than 900
scientists across 75 research and development and quality assurance
Amway India is a wholly owned subsidiary of $10.8 billion Amway Corp.
Established in 1995, Amway India commenced commercial operations in
May 1998 and has emerged as the largest Direct Selling FMCG Company.
Amway India recorded a total turnover of over Rs. 2046 crores for the
financial year 2013-2014.
Amway India has 500 full time employees and was awarded for its
peerless work for the blind child in 2003. The Company has its
headquarters located in the New Delhi.
Amway India offers Indian citizens an unparalleled opportunity to own and
operate their own business selling more than 140 high quality consumer
products. These products in the areas of:
Nutrition and wellness,
Beauty and Personal care and
Products in its portfolio include some well known brands like Nutrilite,
Artistry, Attitude, Satinique, Dynamite and Persona.
ARTISTRY BEAUTY PRODUCTS
Artistry is a brand of skin care and color cosmetics marketed by Amway. It has been
ranked among the top five in sales in this category.
Amway is different from the more traditional distribution channels as
the business has developed through direct selling. Amway has over
three million Independent Business Owners (ABOs) worldwide.
ABOs deal directly with Clients, build up personal relationships and
deliver directly to Clients' homes. The personal contact and care that
they provide is an important element in direct selling.
It demonstrates the connection between Amway's own strategies and
the defining matrix of strategies developed by Ansoff in his article
'Strategies for Diversification' published by the Harvard Business
Review in 1957.
Competition analysis is a key factor within market research. It helps
Amway to identify the nature and extent of competition at a number
of levels. For example, it helps marketers within Amway to find out
how well products are meeting consumer needs and what aspects of
competitors' brands appeal to consumers.
Amway has helped millions of people around the world to start their
own independent business, through which they engage in person-to-
person marketing. This type of direct selling involves matching a
consumer's needs with the goods and services on offer. The better the
match, the more lasting the relationship between the seller and the
ANSOFF’S PRODUCT/MARKET MIX
Ansoff's product/market matrix is an accepted way of identifying and
categorising market and product developments and opportunities. Amway
makes good use of the technique.
EXISTING MARKET PENETRATION PRODUCT DEVELOPMENT
NEW MARKET DEVELOPMENT DIVERSIFICATION
Amway is what’s known as a multilevel marketing company. 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.
I – Independent (Amway) Business Owners (ABOS)
M - Members
C - Clients (customers) of the ABOs.
Members are allowed to purchase Amway products at a price equivalent to
that paid by ABOs, but do not participate in the Amway Sales and Marketing
Plan. They are a new type of 'customer' who deal directly with Amway.
The ABOs earns commission on the products sold. Further, the ABO also gets
commission for the sales done by other ABOs recruited by him. The payout varies
with different levels divided in different categories based on the sales performance
Amway is a 100 % direct marketing company, i.e. the consumers will not get any
Amway products from shops. Hence the sales are driven by the efforts of ABOs.
Since the company does not advertise its brands, the only communication channel is
through ABOs who visits households and make presentations. There are two tasks of
a typical ABOs:
to sell Amway products
to appoint new ABOs.
Going for market penetration has involved Amway in making the most of
current products and competences by 'stretching' them to improve Amway's
competitive position within existing markets.
One great benefit of direct selling is that it is an immediate channel to the
marketplace that offers customers a good service, while at the same time
providing business opportunities for individuals.
Special incentives enable ABOs and end consumers to take advantage of
particular offers at certain times of the year and these incentives have also
helped to increase market penetration.
Typically direct marketing firms faces issues of reach and cost. Since the sales
depend entirely on the independent distributors , the company has to pay
huge commission. This results in the increased cost of the product. Hence the
products become expensive resulting in lower sales.
In a value conscious country like India, the expensive tag of Amway products is
the singular reason for the lack of popularity of its products.
Understanding this issue, Amway launched its first corporate branding
initiative in India . The brand came out with a Television campaign highlighting
the customer-centric approach.
In today's highly competitive environment, an organisation has to develop
a business strategy that provides a strategic fit between its resources and
the changing business environment.
This case study illustrates how Amway India has continued to develop by
using a range of advertising strategies based upon Ansoff's
These strategies have enabled Amway to build its business by continuing
to broaden its customer base and enhance the service it offers. But to
balance the price, cost, quality and higher commission is no easy task.