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Published by Becky Paul
Case Study on Amway
Case Study on Amway

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Published by: Becky Paul on May 24, 2012
Copyright:Attribution Non-commercial


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Amway is an abbreviation for "
 American Way
" and was coined in 1959 by company founders, Jay
Van Andel and Richard DeVos
.Amway India, a wholly owned subsidiary of Amway Corporation, was established in August 1995after approval by India's Foreign Investment Promotion Board (FIPB). Amway India commencedcommercial operations on May 5, 1998 and is now the largest Direct Selling FMCG Company. TheCompany is headquartered at the National Capital Region of India - New Delhi. Amway India has400 full time employees and has generated indirect employment for 1,650 persons at all thecontract manufacturer locations.At present, Amway India offers over 105 products in four categories. They are Personal carecategory, Home Care category, Nutrition & wellness category and Cosmetics category. With theexception of Cosmetics range (Artistry*) and some products in Nutrition and Amwayllnesscategory, all Amway India products and bottles are manufactured in India.
William S Pinckney is the Managing Director and CEO, Amway India.
Amway did recognize the need for a special India-specific pricing strategy and there were just a fewmarginal cuts in the prices, which were still almost 20% higher than its competitors. 
They roped in their Indian distributors through NRI’s living abroad.
They were given introductorykits which included samples of the products, sales material, information on the products etc. But these kits were used by the distributors themselves rather than using them to promote itsprospective consumers. Because of this volumes demanded after did not pick up.
The product quality was sometimes poor.
Problems like distributor attrition, a false 'premium' image had customer dissatisfaction surfacing.
Sales people often used a 'hard sell' for their products, moreover the sales people were poorly trainedand lacking in motivation.
Lack of networked banks, toll free phone lines and online shopping was another cause for Amway not doing well.
Since the sales depend entirely on the independent distributors , the company has to pay hugecommission. This results in the increased cost of the product. Hence the products become expensiveresulting in lower sales.
In a value conscious country like India, the expensive tag of Amway products is the singular reasonfor the lack of popularity of its products.
The Distribution Network was far from reach from common man.Amway used centralized marketingof all products worldwide never focused on the market in the smaller towns. 
Distributors and sales team did not know the value of the products they were selling, this aspect wasoverlooked by the company. 
Defining your target market is one of the most important steps of the marketing process which wasnot done by Amway. The target market should include the customers who are qualified to purchaseyour product.
Since the company was almost never involved directly with the end-consumers it lacked in customerservices with more complaining which lead to its downfall.
The company treated direct selling as 'just another' promotional tool, while it was mainly about motivation
SinceAmway targeted only the upper section customers due to its premium brand image it wasunable to push for sales resulting in higher attribution rate. 

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