This document provides an overview of Amway, a multi-level marketing company specializing in health, beauty, and home care products. Some key points: - Amway was founded in 1959 and is headquartered in Michigan. It conducts business in over 100 countries and reported $9.5 billion in sales in 2015. - Nutrilite is Amway's largest brand, accounting for 46% of sales in 2015. It is the top selling vitamins and dietary supplements brand worldwide. - Amway experienced early challenges breaking into the Indian market due to misunderstanding customer preferences for purchasing products. The company has since adapted its strategies to better suit the local market.

1. An
Assignment on
“AMWAY”
In partial fulfillment for the requirements of Understanding Business Strategy
course in the Full-time Integrated MBA Programme,
Submitted To:
Prof. Dhruti Pandya
Submitted by
1. MOUNIK PANCHAL (IM 15056)
2. JAYKUMAR PATEL (IM 15059)
3. LOKESH VAISHNAV(IM 15108)
4. KAIVAL VYAS (IM15111)
Submitted On: 17 / 7 / 2017
Faculty of Management, GLS University

3. INTRODUCTION TO COMPANY – AMWAY
 Amway (short for "American Way") is an American company specializing in the use of
multi-level marketing to sell health, beauty, and home care products. It was founded in
1959 by Jay Van Andel and Richard DeVos.
 Based in Ada, Michigan, Amway and its sister companies under Alticor reported sales of
$9.5 billion in 2015.It conducts business through a number of affiliated companies in
more than a hundred countries and territories. It was ranked No. 29 among the largest
private companies in the United States by Forbes in 2015, and No. 1 in multi-level
marketing by Direct Selling News.
 Jay Van Andel and Richard DeVos, friends since school days, had been business partners
in various endeavors, including a hamburger stand, an air charter service, and a sailing
business. In 1949, they were introduced by Neil Maaskant (Van Andel's second cousin)
to the Nutrilite Products Corporation, a California-based direct sales company founded by
Carl Rehnborg, the developer of the first multivitamin marketed in the United States.
 In August 1949, after a night-long talk, DeVos and Van Andel signed up to become
distributors for Nutrilite food supplements.They sold their first box the next day for
$19.50, but lost interest for the next two weeks. Shortly thereafter, at the urging of
Maaskant, who had become their sponsor, they traveled to Chicago to attend a Nutrilite
seminar. After seeing promotional filmstrips and listening to talks by company
representatives and successful distributors, they decided to pursue the Nutrilite business.
They sold their second box of supplements on their return trip to Michigan, and rapidly
proceeded to develop the business further.

4.  Earlier in 1949, DeVos and Van Andel had formed the Ja-Ri Corporation (abbreviated
from their respective first names) to import wooden goods from South American
countries. After the Chicago seminar, they turned Ja-Ri into a Nutrilite distributorship
instead.In addition to profits on each product sold, Nutrilite offered commissions on sales
made by new distributors introduced to the company by existing distributors—a system
known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel
had built an organization of more than 5,000 distributors. However, in response to
concerns about the stability of Nutrilite, they and some of their top distributors formed
the American Way Association, or Amway, in April 1959 to represent the distributors
and look for additional products to market.
 Their first product was called Frisk, a concentrated organic cleaner developed by a
scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute
Frisk, and later changed the name to LOC (Liquid Organic Cleaner). They subsequently
formed the Amway Sales Corporation to procure and inventory products and to handle
sales and marketing plans, and the Amway Services Corporation to handle insurance and
other benefits for distributors. In 1960, they purchased a 50% share in Atco
Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its
name to Amway Manufacturing Corporation.Amway bought control of Nutrilite in 1972
and full ownership in 1994.
 Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960,
and later the hair care product Satinique (1965) and the cosmetics line Artistry (1968).
Today Amway manufactures over 450 products, with manufacturing facilities in China,
India and the United States, as theyll as Nutrilite organic farms in Brazil, Mexico and the
United States (California and Washington State). Amway brands include Artistry,
Atmosphere, Body Blends, Bodykey, Body Works, Clear Now, eSpring, Glister, iCook,
Legacy of Clean, Nutrilite, Peter Island, Perfect Empowered Drinking Water, Personal
Accents, Ribbon, Satinique, Artistry Men and XS.
 In 2015, the vitamins and theyight management products accounted for 46 percent of
Alticor's sales. Beauty and personal care products represented 25 percent of sales while
durable products, such as eSpring water treatment systems and Atmosphere air treatment
systems, represented 16 percent of sales. Home care products generated 7 percent of
sales.According to Euromonitor International, Amway sells more products with a
satisfaction guarantee than any other direct seller.

5. NUTRILITE

6.  Amway's largest selling brand is the Nutrilite range of health supplements (marketed as
Nutriway in some countries), and in 2008 Nutrilite sales exceeded $3 billion globally. In
2001, five Nutrilite products were the first dietary supplements to be certified by NSF
International. In 2006, 2007, 2008, and 2009 in the nutrient and health food category,
Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and
Asia overall in the Reader's Digest "Trusted Brands of Asia" survey. In 2008 Nutrilite
scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th John
M. Kinney Award for Nutrition and Metabolism for their research into the interaction
bettheyen nutrition and genetics.
 In 2011, Nutrilite brand of vitamins and dietary supplements led Amway's sales, totaling
almost $4.7 billion. According to Euromonitor International, in 2014, Nutrilite was the
world's No. 1 selling vitamins and dietary supplements brand. In 2015, it was reported
that according to Euromonitor International, Amway was the largest vitamin and dietary
supplement vendor in China, with 11% of a market that generated 100 billion yuan ($15.6
billion) in annual sales.In 2015, it was reported that according to China Confidential
consumer brands survey, Amway Nutrilite was the most popular vitamin and dietary
supplement brand in China.
 In January 2009, Amway announced a voluntary recall of Nutrilite and XS Energy Bars
after learning that they had possibly been manufactured with Salmonella-contaminated
ingredients from Peanut Corporation of America. The company indicated that it had not
received any reports of illness in connection with the products.
 In 2012, the Center for Science in the Public Interest (CSPI), accused Amway of making
unsubstantiated and illegal claims about Nutrilite Fruits & Vegetables 2GO Twist Tubes
and threatened to launch a class action lawsuit against the company unless it took
remedial action. Amway countered that the claims made about the products were
properly substantiated and that they did not plan to change the product's labeling but
nevertheless would review the statements that CSPI has questioned. CSPI later reported
that Amway had agreed to changing product labels by the end of 2014.

7. REASONS FOR SUCCESS OF NUTRILITE
 The activities of each Amway distributor are determined by the Amway Sales and
Marketing Plan. Amway practices direct selling which is 'A method of selling goods
directly to the consumer by an independent Distributor. A Distributor can then introduce
further Distributors and generate income from retail profits supplemented by bonus
payments based upon the total sales of the group built by a Distributor'.
 Income is generated by a distributor through:
 The retailing of goods to consumers. Retail margins (mark-ups) on the basic wholesale
price represent income to the selling distributor additional performance and leadership
bonuses, paid on the volume of personal business of the distributor and the business
volume of the distributors he has introduced to the business.
 Various levels of leadership bonuses, dependent upon the overall size and shape of the
business, paid on achieving different levels of business performance
 Retailing - the selling of goods to consumers on which retail margins are earned and
performance bonuses gained.
 Sponsoring - the introduction of other individuals to establish and develop their own
independent Amway distributorships.
 Retailing enables distributors to provide immediate financial incentive rewards.
Sponsoring enables distributors to replicate the base with other people, thus allowing the
organisation to grow.Recently nutralite launched its new product knwn as bodykey as
replacement shake in the market.

8. ATTITUDE

9.  Amway's Attitude beauty products, formulated internationally but made in India, are
world class in quality and performance at affordable price. Skincare Beauty products of
Amway in Attitudecategory range comprises of basic Skin Care Products like Cleansers,
Toners, Moisturisers for different Skin types. Amway's Attitude Skincare &
Cosmeticrange also offers Sunscreen, Face Wash, Foot Cream, Hand & Body Cream, and
Face masque for all skin types.
 Human Skin is sensitive and thus easily gets affected by external stimuli like heat, cold,
pollution, dirt etc. So it is very important to take care of our skin. Cleansing, Toning and
Moisturising are the three basic must do's for all skin types and at all times of the
year. Cleansing, Toning and Moisturising must be done on daily basis i.e. twice a day
everyday and only by Amway's Attitude Cleansing, Toning & Moisturising product.
 All Amway Attitude beauty products contain the skin-vitalizing complex. This Skin
Vitalizing Complex contains three ingredients viz, Rosemary Extract, Coconut Water and
Mango Seed Butter that synergistically combine to cleanse, replenish, and moisturise the
Skin. These natural plant extracts are present in all products of attitude and help revitalize
the skin by making it soft and supple.

10. REASONS FOR THE FAILURE OF ATTITUDE
 Why did the ATTITUDE From Amway didnt hit the market?
 Availability of product is an issue
 Priced bit on higher side
 Not much of TV advertisement or brand ambassador, only mode of communication is
word of mouth.
 Increasing competition in both national and international markets
 Switching cost is low
 Replacement by local products
Seriously, though, a lot of our India strategy is based on our trial-and-error experiences here.Like
other multinationals, they've also been guilty of misjudging the Indian market at times. I came to
India in February 1998 and they launched Amway India with six products in May that year.
Initially, they set up a distribution system that was parallel to what Amway uses in other
countries. That means essentially home delivery of products that are ordered by customers either
through the Internet or on telephone.The products are reached to the customers' doorsteps within
24 to 48 hours of the order being placed.
They’re fairly confident that the same organisational set-up would work in India as well.
Accordingly, they began with just five offices, in the main metros.They assumed these would
work as pick-up centres, with just a few consumers coming in to pick up products. In fact, they
had factored that just 20 per cent of our sales would be through counter sales and 80 per cent
would be through the home delivery route.
It took just a couple of weeks to prove how wrong they were in our assumptions. They
discovered that people wanted to come into the stores, see the products, pick up and touch them
before they purchased anything. Home delivery just didn't interest them.

11. They now have 48 pick-up centres and close to 30 local ordering centres, which are located in
smaller towns. They've realised the importance customers place on having contact with people
from the company.
The other learning from that and subsequent experiences is that a 'one-size-fits-all' strategy won't
be successful in India. They have a portfolio of 450 products that are all available in one size
each.
Except in India, that is. They realised from our early experiences in India that customers want to
experience the products before they make a purchase decision -- hence the need for more stores.
Similarly, Indians don't like to economy-size packs until they've tried the product earlier.
Accordingly, they launched our cleaning and personal care products in various sizes -- big,
medium, small and even sachets.
That's a first for Amway worldwide, but the different price points encourage different types of
users. They've also been more aggressive promotionally in India than in other countries.
All of which are unlike our strategies in other markets across the world. As a 50-year-old
company, it is easy to become set in your ways. You end up trying to duplicate your other
successes in new markets as theyll.
But to believe that old successes will drive new ones and to not change your ways an attitude that
says "this is how they will do it because this is how they've always done it is wrong.
They have realised that you need to adapt to the market -- the market won't adapt to you.
But perhaps one of the biggest mistakes I made in my career was in significantly underestimating
the partnership bettheyen the corporation and Amway independent business owners (those who
directly sell the company's products).
In the corporate sense, they do everything a business does -- they manufacture products and sell
them. But the reality is that these products are sold by independent distributors. And they were
making too many important decisions without considering the viewpoints of these people.
They were trying to do what they thought would be good for them, without taking into
consideration what they knew would be good for them. And if a decision is not entrepreneurially
right, it cannot be right for the business. If you can't get your partners to buy into your vision,
you're doomed.
They learnt this the hard way about five years ago when Amway announced a promotional offer

12. where they reduced the price on one of our cleaning products. The promotion was hugely
successful, but after it ended there were some negative repercussions.
What happened was this: they reduced the price and even printed the lower price on the package.
But nowhere did they mention that this was a limited-period promotional offer. Existing buyers
would, naturally, be aware of the change in prices.
But after the promotion, when the distributors approached first-time buyers to resell the cleaning
product, they thought they'd hiked prices! If they had taken feedback from the distributors before
launching the product, they would have realised the need to emphasise the promotional nature of
the lowered prices in a way that would be clearly known and remembered.
They realised that they hadn't looked at the promotion from the point of view of the person who
actually sells the product.
The learning? It doesn't matter how smart you are and how many degrees you have. People
always see issues from their own perspective, not yours.