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SUBMITTED BY :NIKHIL R. BANSOD (NIKHIL18N@GMAIL.COM)
Amway-Global Leader in Direct Selling Amway is a global leader in direct selling, with over three million Independent Business Owners (IBOs) in over 80 countries and territories around the world. No other direct selling company can compare with our longevity, stability, and global reach.
For more than 45 years, Amway Corporation has enabled people to have a business of their own. Originally known for direct selling of our household cleaning products, such as SA8 Laundry Detergent and L.O.C. Liquid Organic Concentrate, our business opportunity is now supported by an excellent portfolio of hundreds of high-quality products and brands that can only be purchased through our IBOs. Why People Choose the Amway Business Opportunity People join this business for a variety of reasons. Some become IBOs simply to be able to purchase products for their own personal use at a reduced cost. Others join in order to direct sell the products to others, earning a profit on each sale and additional financial benefits based on their sales volume. Business builders not only sell products; they also sponsor others to join the business. They are compensated for their own sales and well as the sales of those they sponsor, receiving incentive bonuses that increase as their own sales force increases. All IBOs have the identical opportunity to grow a successful business. Each business owner is compensated in direct proportion to his or her efforts.
We are proud of our products, which generally fit into the health and beauty categories. Our focus has been on developing products that outshine the competition so that we can give our IBOs the competitive edge they need to build strong, thriving businesses. ARTISTRY Cosmetics and Skin Care Our scientists and formulators have developed the complete line of ARTISTRY cosmetics, now ranked as one of the top five prestige cosmetic brands in the world. Along with the beautiful color products for eyes, cheeks, lips and nails, the ~4~
ARTISTRY line of skin care products offers entire skin care systems, customized for your own skin, as well as superior formulations to repair your skin, protect it, and prevent additional damage. Eddie Funkhouser Cosmetics And, the exclusive, E.Funkhouser New York line of trendy, high-fashion color cosmetics created by makeup artist Eddie Funkhouser will bring out your inner star qualities. NUTRILITE Nutritional Supplements NUTRILITE is the world's leading brand of vitamin, mineral and dietary supplements. (Based on 2006 sales). We are proud to be the only source of NUTRILITE nutritional products, a respected name in supplementation around the world. Our vitamin, mineral, and herbal supplements are made from plants grown on our own certified organic farms in California, Washington, Mexico, and Brazil and manufactured under the strictest of standards to ensure consistency, quality and safety. Our best known multivitamin, DOUBLE X (TRIPLE X in Japan) Multivitamin/Multimineral Supplement, provides the nutrients that might be missing from your diet. And, we combine natural phytonutrients, the beneficial nutrients found in plants, to create specific supplements targeted to address your individual needs, as well. We grow most of our raw materials on our own farms, and we only use raw materials grown on other farms if those farms adhere to our own strict standards. Amway Personal Care Products SATINIQUE and PROTIQUE haircare products, BODY SERIES and G&H soaps, lotions, and body shampoo, the TOLSOM line of men's skin care products, and the GLISTER oral care system manage your personal care from head to toe. Amway Home Care Products If it is cleaner laundry, easier dishwashing, and immaculate household surfaces you seek, the SA8, DISH DROPS, L.O.C. and PURSUE brands will do the job quickly and thoroughly, with stunning results. The eSpring Water Purifier, the ATMOSPHERE Air Treatment System, and the iCook cookware line round out our portfolio, providing cleaner air, cleaner water, and healthier meals for families worldwide. ~5~
What is Amway? Amway is a well-established company with a solid record of stability and growth that provides a Business Opportunity to individuals. That opportunity is supported by a comprehensive line of superb products sold exclusively by authorized Amway Independent Business Owners around the world.
Level of earnings of distributers
Independent Business Owners have pocketed $2.2 billion out of Amway's $6.8 billion in sales in the form of bonuses and incentives since 1999. IBOs earn income based on business volume resulting from their efforts, using Amway's proven Independent Business Owner Compensation Plan. Amway does not generate site traffic through advertising, instead rewarding IBOs who provide the “high-touch” element complementing Amway's “high-tech” infrastructure.
IBO STATISTICS IBOs earned $370.1 million in bonuses and incentives in fiscal 2006, bringing their seven-year total to more than $1.72 billion. More than 370,000 Independent Business Owners received a bonus in FY 05. The average bonus and cash payments earned by a Diamond IBO in 2005 were $146,995. ~6~
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The average bonus and cash payments earned by an Emerald in 2005 were $72,241. The average bonus and cash payments earned by a Q12 Platinum, an IBO who qualifies at the Platinum level all 12 months of the year, were $47,472. The largest annual bonus earned by a Diamond IBO in 2005 was $1,083,421. The largest annual bonus earned by an Emerald IBO in 2005 was $688,869.
Financial rewards in the Amway business are based on effort, time and talent. Individual success varies, but Amway wants you to know the average earnings. The Average Monthly Gross Income for “Active” IBOs was $115. Approximately 66% of all IBOs of record were found to be “active”
Social responsibilities performed by AMWAY
One by One Campaign for Children One By One – is Amway’s Global Campaign for Children. In each of the 80 countries and territories that Amway is present it takes up and supports these Children of Hope. In India, this work is carried out under the banner of Amway Opportunity Foundation (AOF) a registered non profit organization. All Amway employees and distributors are volunteers of AOF.
Amway Opportunity Foundation (AOF) A Corporate Social Responsibility Initiative of India’s Leading Direct Selling FMCG Company ~7~
Former President, Dr Abdul Kalam, has recently been quoted saying that instead of addressing (them as) ‘street children’, it would be better to refer to them as ‘children of hope’. If we stretch this definition a bit, that is what we are all about – reaching out to all Children of Hope in the best manner at our disposal: One By One – is Amway’s Global Campaign for Children. In each of the 80 countries and territories that Amway is present it takes up and supports these Children of Hope. In India, this work is carried out under the banner of Amway Opportunity Foundation (AOF) a registered non profit organization. All Amway employees and distributors are volunteers of AOF. And why work for children? Half of the world’s poor are children. Every year, 10 million children do not live to see their fifth birthday. More than 115 million children don’t have access to the most basic education. With presence in most of the countries across the globe, Amway finds itself in a position to focuses its philanthropic efforts so as to maximize a positive and sustainable impact on society. The program pulls together all of our resources – Business Owners, employees, affiliates and customers – to make this happen. Each of Amway’s markets is free to decide in which sphere it would like to concentrate its resources. But in essence, One by One program is designed to build local partnerships, addressing issues specific to children in their community – Live, Achieve, Learn, and Play. As of December 31, 2006, we have provided hope and opportunity to 5 million children. Donated more than 600,000 volunteer hours to children’s programs. Contributed more than $39 million to children’s causes. In each country, success is measured by impact – whether it is the 250,000 children in West Michigan whose lives have been changed through the campaign, the 85,000 blind children who received Braille textbooks in India, the 1,135 children who received cleft palate surgery in Thailand, the 170,000 children in China who were given the opportunity to attend school, or the 90,000 boys and ~8~
girls in developing countries who received vaccines that are giving them a fighting chance.
National Project for the Blind In India, this work is carried out under the banner Amway Opportunity Foundation (AOF). Under its National Project for the Blind, AOF has: Ensured that around 85,000 visually challenged school-going children have had access to Braille textbooks. This project has covered the following states: Rajasthan, Delhi, Maharashtra, Haryana, Uttar Pradesh, Punjab, Bihar, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka and Madhya Pradesh. This work had been carried out in partnership with the Delhi-based All India Confederation of the Blind (AICB) and the Mumbai-based National Association for the Blind (NAB). · Set up computer centres for visually challenged at · All India Confederation of the Blind – New Delhi Antarjyoti Balika Vidyalaya – Patna, Bihar • Ramakrishna Mission Blind Boy’s Academy – Kolkata, West Bengal • Rajasthan Netraheen Kendra Sangh – Jaipur, Rajasthan • National Association of Blind – Trivandrum, Kerala
Celebrated Louis Braille day for four years running, and also the International White Cane Day for six years running along with AICB. Donated Audio textbooks for Bangalore University and extended support to the Karnataka Welfare Association for the Blind (KWAB) in conducting a cultural event in Bangalore in 2001 Presented a 20-volume Braille set of the Webster’s Dictionary in English, to the Delhi Blind School and donated a Braillon machine to the Indian Blind School at Madurai. Supported Dr. Shroff's Charity Eye Hospital in conducting communications workshops for the blind in 2002, and a Car rally for blind children at Surat. ~9~
Distributed 1000 Braille kits for blind children in Kerala, and enabled the statelevel chess tournament for the blind, in Tamil Nadu. Organized cataract operation camp at Surat, and free eye camps at Erode, Balasore, Delhi and Siliguri - over 25,000 persons had free eye check ups and around 500 free operations were carried out. For this work towards the visually challenged, AOF has received a citation and award from the World Blind Union (WBU), in Dec 03. AOF is the only Indian NGO to be so recognized by WBU.
Project Sunrise The objective is to identify one orphanage/institution at each location where Amway has a modestly-large office (52 cities). On-going assistance to be provided in education, healthcare and vocational training under the following heads:
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Health care Education and vocational training Safe drinking water Children’s Day and AOF Day celebration with Amway staff & Amway Business Owners Donation of clothes, books etc. on voluntary basis
The aim is to combine available resources and concentrate on building long term relationships with one. Awards and Recognition ~ 10 ~
Presented the Millenium Outstanding Service Award 2000, by the All India Confederation for the Blind (AICB), in recognition for work carried out for the visually challenged.
The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for conducting a mega-Blood Donation camp of 816 units on 4th May, 2003. The Surat Raktdaan Kendra felicitated Amway India at their annual function on 5th Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC) held by any financial and commercial institution and industry. The Mayor of Surat - Snehlata Chouhan - presented a trophy and a certificate of appreciation. Amway also received the Hajee Sulaiman Omar Memorial Ever Rolling Shield, by the Madurai Medical College. Amway was the ONLY corporate entity to conduct a BDC on such a scale - rest of the camps are held by educational institutions. Presented an award by the World Blind Union (WBU), for sterling contribution to improve and elevate the quality of life of visually impaired children', at a function in Delhi on Dec 2nd 2004. The award included a citation and a large-sized statue of Saraswati, the Goddess of Knowledge, was presented by the Lt Governor of Delhi, Shri Vijai Kapoor. WBU is an apex body for the visually impaired that enjoys consultative status with the United Nations. The Central Red Cross Bank, Cuttack awarded Amway Opportunity Foundation with a trophy and Certificate for contributing the highest number 400 units to their Blood Bank.
Contact Corporate Social Responsibility
Head Office Amway Opportunity Foundation ~ 11 ~
9th Floor, Express Trade Towers 1, Plot 15-16, Sector 16A, Noida, NCR Delhi 201301 Tel.: + 91-120-309 6601 Fax: 91-120-309 6555 Contact Person: Mr. Raj Narain Regional Office - North Amway Opportunity Foundation 5, DDA Local Shopping Centre, Okhla Commercial Complex, Phase II, New Delhi 110020 Tel.: +91-11-422 95 900 Fax: +91-11-26 38 81 41 Contact Person: Mr. Shivam Lall Regional Office - East Amway Opportunity Foundation, The Legacy, First Floor, 25 A Shakespeare Sarani, Kolkata700017 Tel.: 91-33-30215666, 30215500 Fax: 91-33-30215557 Contact Person: Ms. Sarbani Bhattacharya Regional Office -West Amway Opportunity Foundation ~ 12 ~
"Landmark", A-Wing, Ground Floor, Andheri-Kurla Road & Suren Road, Junction Of Western Express Highway, Andheri East, Mumbai 400093 Tel.: 91-22-66681600 Fax: 91-22-66681555 Contact Person: Mr. Jignesh Mehta Regional Office -South Amway Opportunity Foundation # 243, "Aisshwarya Ambassador" 80 Feet Road, Defence Colony, Indiranagar, Bangalore 560038 Tel.: 91-80-30561900 Fax: 91-80-25271999 Contact Person: Mr. S. Viswanath
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The History of Amway
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The History of Amway
What does the word Amway mean? Amway is an abbreviation for "American Way" and was coined in 1959 by company founders, Jay Van Andel and Richard DeVos. Short, unique and easy to remember, Amway has been registered as a corporate name and trademark ever since.
Jay Van Andel and Richard DeVos, founders of Amway
In the following decades, Amway Corporation successfully established itself as a leading multilevel marketing business, built on strong values and founding principles that continue to sustain our company today. The business is built on the simple integrity of helping people lead better lives. We have long had a tradition of opportunity and success. Today, Amway is a multibillion-dollar international business representing freedom and opportunity to millions of people in more than 80 countries and territories around the world. We offer over 3 million Business Owners the inspiration to grow those businesses, and we work hard to provide new and better ways for them to achieve their life goals.
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A Solid Foundation
Jay Van Andel and Rich DeVos began their business in the 1950s using direct selling to market NUTRILITE Dietary Supplements. What they discovered more than 40 years ago still remains true today―that people and relationships are at the core of any successful business. Always searching for new opportunities, in 1959 Rich, Jay and their associates looked for new product ideas to expand their business. They realized they wanted products that everyone needs, all of the time―products whose features and benefits anyone could understand and communicate easily. "The products we want must be ones that just about anyone is familiar with and can sell. The examples that come to mind are laundry and cleaning products." - Jay Van Andel The result of their search was Amway's first product, which today is called L.O.C. Multi-Purpose Cleaner. It was an instant sales success story, opening up a whole new world of opportunity. With a strong belief in the power of initiative and free enterprise, Jay Van Andel and Rich DeVos created the Amway Sales and Marketing Plan. They knew that anyone who was willing to work hard could succeed using the same business methods. This simple idea quickly gained popularity throughout the US, and then Canada, as more and more people discovered what a real opportunity the Amway business offered.
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The Early Years As Amway's annual sales rapidly expanded, exceeding US$500,000 for the first time, the company soon outgrew its basement office in Jay Van Andel's home. During this time, Amway moved to a larger facility and began developing new products, including SA8™ Laundry Detergent, which was launched in 1961. These Home Care products became big sellers for distributors and led to incredible growth for the company. Within a few short years, the company had more than 700 employees, over 200 exclusive products and more than 100,000 Distributors. Rich and Jay knew that the best way to interest people in the Amway business was to bring the opportunity to them. So, in 1963, the famous "Showcase Bus" began touring many cities throughout the US. Stocked with products and literature, it helped distributors introduce Amway's growing product line and unique opportunities to people all over the country. In the 1960s, the achievement and enterprise of successful Distributors was recognized with the introduction of Direct Distributor status. It became a model for reward and recognition programs that continue to be developed in Amway markets around the world. In the midst of all this success and growth, however, tragedy struck as Amway's aerosol factory was completely destroyed by fire in 1969.
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A Decade of Growth After the fire, Jay Van Andel vowed to reconstruct the aerosol factory and to salvage the business. The factory was rebuilt and sales reached an estimated retail figure of US$100 million. The Amway product line was also greatly expanded with NUTRILITE™ Dietary Supplements becoming a best-selling line, and the PERSONAL SHOPPERS™ catalogs continued this growth and diversification. By the mid '70s Amway trucks travelled more than 3.25 million miles (approx 5.23 million kilometres) shipping products to millions of Distributors. At the same time, the company expanded overseas, opening markets in eight countries on three continents. Amway launched its second international affiliate half a world away in Australia, swiftly followed by the UK, Hong Kong and Malaysia. Amway Japan Limited (AJL), founded in Tokyo in 1979, quickly became one of Amway's largest markets in terms of product sales. As challenging as it was to enter new markets―faced with everything from different languages and laws to difficult distribution channels―Amway continued to grow globally. At home, in Ada, Michigan, the Amway World Headquarters complex grew rapidly to keep up with the exploding business. Amway's manufacturing facility grew to more than a mile long, and really became a self-contained city, with its own power generator, water treatment plant, recycling facility, shuttle bus service and fire department.
The Billion-Dollar Decade Estimated annual retail sales exceeded $1 billion for the first time. Pressed by the demands of increased growth, Amway expanded its US headquarters in Ada, Michigan and built a new cosmetic plant where ARTISTRY products are developed and manufactured. It also pioneered an entirely new product category, water treatment systems, with very successful results. In fact, Amway's water treatment product line, under the eSpring brand name, continues to hold a top position in the marketplace today. ~ 18 ~
In the meantime, the Distributor incentive program was enhanced to provide more rewards to those Distributors who put greater efforts into growing their Amway businesses. Always concerned with the environment, Amway was recognized as a corporate environmental leader and promoter of environmental education when it won the prestigious United Nations Environmental Programme Achievement Award in 1989.
The Next Generation Following in their fathers' footsteps, Steve Van Andel and Dick DeVos succeeded Jay and Rich as Chairman and President of Amway. At the same time, a new generation of leaders also began to emerge within Distributor families, building upon and continuing the successes of their parents. The 1990s saw continued expansion with estimated retail sales volumes reaching US$5 billion. In California, Nutrilite's research into the links between diet and health was given a public face with the inauguration of the Rehnborg Center for Nutrition and Wellness, which gained world renown and was later renamed the Nutrilite Health Institute. Amway's growing role in Asia led Amway Japan to sponsor the 1995 Nagano Winter Olympic Games in Japan. Around the world, Amway's regional and country affiliates continued to support their Distributors with the launch of e-commerce sites that extend the Amway opportunity into cyberspace. This remarkable decade culminated in the 40th anniversary of the organization in 1999.
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New Horizons In 2000, Amway prepared for a new century and a new exciting era. Almost 50 years after Amway began, the DeVos and Van Andel families created a new structure to meet the challenges of this new century. A parent company, Alticor, was established with subsidiaries Amway, Quixtar and Access Business Group— the latter to consolidate manufacturing and distribution for the enterprise. At the helm of Alticor are Steve Van Andel (Chairman) and Doug DeVos (President), jointly holding the Office of the Chief Executive. Today each area of the business, including Amway, has the freedom to build on its strengths. Amway continues to be a leading company in the multilevel marketing industry. Its fundamental principles—freedom, family, hope and reward—hold as true today as they did in the very beginning.
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PRODUCTS OF AMWAY
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1950s and 1960s
• 1959 L.O.C Liquid Organic Cleaner becomes first Amway product • 1961 SA8 Laundry Detergent introduced AMWAY Shoe Spray and Car Care introduced • 1963 DISH DROPS Liquid Detergent introduced AMWAY QUEEN Cookware introduced • 1965 First of the SATINIQUE product range introduced • 1968 SWEET SHOT Breath Freshener introduced ARTISTRY cosmetic products introduced
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PRODUCTS OF AMWAY Amway: A World of Product
Amway offers a range of exclusive, competitive brands that meet proven customer needs around the world. From nutritional supplements to water treatment, cosmetics to cleaning products, these brands are the solid foundation for a successful, independent retail business.
Amway and Direct Selling
Amway products are sold directly to consumers by Independent Business Owners (IBOs) or sales representatives through one-on-one, in-person selling or via the internet
NUTRILITE is the world's leading brand of vitamin, mineral and dietary supplements (based on 2006 sales). Nutrilite is the only global vitamin and mineral brand to grow, harvest and process plants on their own certified organic farms. Nutrilite has made supplement products using natural plants and plant concentrates since 1934.The same high quality products produced by Nutrilite are sold under the NUTRIWAY brand in certain coun~ 23 ~
Nutrilite Health Institute
The Nutrilite Health Institute (NHI) is a worldwide collaboration of scientists dedicated to helping people achieve optimal health - through research, education, and practical, personalized solutions.
Center for Optimal Health
The Center for Optimal Health is a world class teaching and training facility within the Nutrilite Health Institute. Science, nutrition, fitness, research and people are brought together for a one-of-a-kind experience focused on optimal health and the NUTRILITE brand. There are products for kids also, at the early age of a person (childhood) needs some proteins and vitamins for a proper growth.
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The spring Water Purifier is the first in-home system to combine ultraviolet light technology with a patented multistage carbon-block filter to provide the quality drinking water your family deserves. The spring Water Purifier destroys more than 99.99% of waterbourne disease-causing bacteria and effectively removes more than 140 contaminants. Other systems treat water spring purifies it.
spring Water Purifier Technology
spring products are the result of nearly 20 years of research and technological breakthroughs. Beginning in 1996, a significant investment was made in emerging water-related technologies that led to the innovative spring system. The research was time-consuming and costly but let to a spectacular end result-a product that is like no other in the marketplace.
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iCook Cookware is the healthiest way to cook anywhere in the world. Trends indicate that consumers are becoming more focused on healthy and safe foods. The iCook Cookware brand delivers on its promise of quality and nutrition.
VITALOK cooking method - compared to traditional cooking methods, the iCook VITALOK cooking method locks in over a third more essential vitamins and minerals. DURAMIC nonstick coating system - is the toughest, longest lasting nonstick coating in the world. OPTITEMP base- the base improves heat distribution and retention so foods and sauces cook evenly. The OPTITEMP base is universally compatible with any cook top.
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Home Care Products
Everyone loves clean. Clean says you are in control of your life and your surroundings. Amway's Home Care brands provide complete cleaning systems that fit with everyone's needs. Their versatile, effective product systems offer the features and benefits consumers want. No matter what your lifestyle, Amway's Home Care products make light work of your cleaning chores with the SA8, LOC and Dish Drops brands.
COSMETIC PRODUCTS – ARTISTRY
Since its launch in 1968, the ARTISTRY brand has become a global leader in prestige beauty. ARTISTRY sets standards in skin science and research and is committed to the synergy of health and beauty.
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ARTISTRY and Direct Selling
ARTISTRY is the only direct-sell brand classified in the prestige category, with over US $1 billion in annual sales. ARTISTRY Science ARTISTRY has researched, acquired and developed the most advanced technology and tools to evaluate skin and the performance of the brand products. ARTISTRY skin science and research is conducted in 89 Research and Development facilities around the world, representing over 4,500 collective years of research and development experience. ARTISTRY Brand Worldwide With more than 250 unique products sold in over 50 markets around the world, the ARTISTRY brand has attained an international following of loyal users. Superb quality and devotion to excellence have earned the ARTISTRY brand a reputation as one of the most admired companies in the skin care and cosmetics industry.
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The Product Life-Cycle
The Product Life - Cycle
Markets are in a constant state of change. Over a period of time, tastes and fashions alter and the technology used to produce goods and services moves on. As a result, there will always be a demand for new products as old ones become redundant.
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According to the product life-cycle concept, all products move through four lifecycle phases. During the introductory phase growth is slow and volume is low because of limited awareness of the product's existence. Sales rise during the growth phase and profit per unit sold reaches a maximum. As products reach maturity, growth in sales starts to level off. Organisations have to invest heavily to extend the life-cycle while competition becomes stronger. When sales start to fall a product is said to be in decline. In a global environment, managing and maintaining the market share for fashion products is particularly demanding. Cosmetic manufacturers are constantly challenged by different changes in the fashion industry. If these changes are not properly managed, products could quickly move into decline. Injecting New Life into the Artistry Life - Cycle To prolong the life-cycle of a brand or product range, an organisation must inject new life into the growth period through readjusting the ingredients of the marketing mix. In 1996, to ensure the Artistry range would stay in line with evolving market trends and tastes, Amway set about upgrading its brand with the additional objective of increasing its global competitiveness. Amway engaged in world wide market research to gain a comprehensive understanding of the needs and wants of target markets. Market research is the systematic gathering, recording and analysing of data about positives and negatives relating to the marketing of goods and services. Through acquiring a substantial know-ledge of each marketplace, the marketers could identify elements of the marketing mix which could be standardised, in addition to elements requiring change.
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CHAPTER 5 DIRECT SELLING IN INDIA
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Direct selling catching up in India
HYDERABAD, MARCH 18. Turnover and growth trends in direct selling in India have been impressive, a pointer to the tremendous potential this concept has. More importantly, that the trend is fast catching up here too. Though the direct selling industry has existed for over 15 years in India, the entry of international companies and their activities in the last five years has given greater visibility to the industry, which is still considered to be at a nascent stage in India. Yet during the last two years, the trends have been encouraging to the supporters of direct selling, whose basic philosophy is to eliminate middlemen in the sale of commodities, and instead provide employment to a large number of trained sales staff, who sell products directly to consumers either through group meetings or by hosting tea gatherings at their homes. According to the Indian Direct Selling Association (IDSA), the total turnover through direct selling in India in 1998-99 was $140 million. As against the expected growth of anywhere between 30 and 50 per cent, it registered a growth of 38.5 per cent for a turnover of $200 million in 1999-2000. For 2000-01, the growth is projected at 40 to 60 per cent. Similarly, the growth in the number of sales people has been impressive during 1998-2000. From a five lakh strong direct selling force in 1998-99, it has grown to seven lakhs in 1999- 2000, a clear 40 per cent. For 2000-01 this is projected to grow by 50 to 60 per cent. Does this indicate that the traditional industry is losing its market share to the new philosophy of taking goods directly from the manufacturer to the consumer? While it may not be so large as to create panic or alarm the well-established traditional players, it has created a place for itself in the hearts of the people.Interestingly, the IDSA says during 1999-2000, it received as many as 27 queries from national and international companies expressing interest in opening a direct selling business, or to start a new division for direct selling within their existing businesses in India. Set up in 1992, the IDSA is an association for companies that sell products directly. It was started by two companies `Lotus Learning (exclusive distributors of World ~ 32 ~
Book)', and `LB Publishers and Distributors (exclusive distributors for Time Life Books)'. In 1995 multinational companies such as Avon, Amway and Oriflame joined the association. Since then, some more like the Tupperware, Herbalife, Modicare and Sunrider have joined the association. Of its nine members, three are fully Indian companies owned and run by Indians and three are wholly owned subsidiaries of foreign companies. All of them manufacture in India either through their own facilities or through contract manufacturers. Another significant development is the emergence of direct selling as a women's bastion. The direct selling industry in India comprises 72 per cent women, 24 per cent couples, and four per cent men. In the U.S., this is 69.7 per cent women, 10.4 per cent couples, and 19.9 per cent men. In two years, Amway, has emerged as India's leading direct selling company and registered a turnover of about Rs. 250 crores (September-August). It has ambitious plans of reaching a target turnover of Rs. 1,000 crores, much before its originally targeted year 2004. The company has invested over $35 million in India of which $6 million is in the form of direct foreign investment, and $4 million is for transferring technology, free of cost, to contract manufacturers. It has over 32 offices and a reach of 352 locations, and by 2001-end it envisages an office in every city with a population of 10 lakhs and above. It has trained 3.60 lakh distributors last year, overwhelming majority of whom were women. Against this background the industry expects to grow at 50 to 100 per cent rate for the next 3-5 years. Given the socio-economic conditions, the fact that a large proportion of the country's women are housewives, who can spare some time to take up concepts such as direct selling, and the growing need and realisation to supplement family incomes, are seen as encouraging factors for its growth potential. Viewed against the backdrop of a $80 billion global direct sales turnover already achieved last year, the future appears bright. Direct selling industry seeks legal framework
COIMBATORE, June 6 THE multi-layer marketing (MLM) companies are worried that their legitimate businesses are hampered because their direct selling methodology is confused with ~ 33 ~
the money rolling schemes or the prize chit fund schemes. This misconception has arisen partly due to lack of information/awareness on the functioning of the MLM and largely for want of a legal framework that checks the abuse of direct selling mechanism by unscrupulous elements. The latter factor is a major issue confronting the genuine MLM companies, according to Mr Rathin Mathur, General Manager, Sales of the Rs 130-crore Modicare Ltd, the Delhi-based MLM company. Pressed against this background, the nascent MLMs coming under the Indian Direct Selling Association (IDSA) were moving with the Government to put in place a legislation that would prevent the misuse/abuse of the MLM system by the unscrupulous operators who had sought to fleece the consumers through `Pyramid schemes' in the garb of direct selling, said Mr Mathur, who was here on a marketing binge for Modicare's direct selling of consumer goods, including the personal care products. Mr Mathur told newspersons that IDSA had been working with the FICCI in evolving a legal mechanism and with the support of the FICCI, the association had already put up a draft legislation to the Government. Now the Government was to suitably come out with its legislation, which had to be put in place in time; otherwise, the consumers' faith in this nascent but potential industry would be lost, he added. The main strength and the ethics of direct selling business, said Mr Mathur, stood quite distinctively apart from that of the `Pyramid selling systems'. While the direct selling offers a business opportunity based on the sale of products as well recruitment of `consultants' or agents, the rewards of `Pyramid system' emanates from the addition of new participants and their investments not necessarily from the sale and distribution of real products and the latter schemes need not have commercially viable products. The IDSA consists of 13 member-MLM companies of both Indian and MNCs and, according to Mr Mathur, in the absence of any set code of conduct evolved for direct selling in India, these IDSA members' business practices are largely governed by the norms fixed by the world federation of direct selling associations formed in 1992. Though the MLM concept in India made its way some 15 years ago, the direct selling took off strongly from 1996 only and the business volume too steadily kept ~ 34 ~
raising from Rs 300 crore six years ago to Rs 2,000 crore now. The potential for direct selling is huge (given the vast manpower and human resource available in teeming unemployed/ underemployed numbers) but it is yet to be fully exploited, as this system would understand the consumers' needs better. Indian companies entering into direct selling have understood the needs of the consumers and their interests better and accordingly, the members taken in as consultant-recruits are given focussed training. Modicare currently has about 9.5 lakh persons as `Modicare consultants propagating its consumer goods ranging from personal care, home care, auto-care products and these persons are backed up by 52 `Modicare Success' centres that supply the products and serve as training centres. In Tamil Nadu, it has product centres in Chennai, Madurai and Coimbatore and will soon locate one in Tirunelveli.
Direct selling fits into Indian psyche The great Indian middle class, with little inheritance, is the major ambassador of direct selling. Though direct selling is a concept considered alien to Indian culture, the sense of financial insecurity of Indians, especially regarding their post-retirement life, makes them the ideal candidates to undertake this innovative method, Stephen Beddoe, Director, Distributor Relations and Marketing, Amway India Enterprises, tells G. Satyamurty. In Europe, 80 per cent of the last drawn salary gets back to the employees as pension after their retirement. But the situation in India is not rosy. Most of the people are at the mercy of their children or kith and kin. Earning something substantial for the old age is almost in every Indian's mind. This has offered us the greatest opportunity. China is the biggest direct selling market in the world as a similar sense of insecurity prevails. It is way ahead of India because it took to this concept 15 years ago. "In 1959 we introduced this method in the United States and grandsons and great grandsons of many of the early distributors are now our proud ambassadors This has almost become a legacy. In India, it is so fast catching up, with 4.5 lakh direct selling agents, that we have ambitious plans of opening an office almost once in ~ 35 ~
three days and have a sales target of Rs. 3,000 crore by 2012 from the current Rs. 738 crore," says Mr.Beddoe. After all, every entrepreneur is also a consumer and all of us would like to bargain like hell to get the best price. We want value for the price and we are very careful with the money. Very few splurge. Direct selling gives an opportunity to make additional income as consumers. Our mantra has been "self-reliance and enterprise" and this firmly fits the bill among Indians .Women, especially unemployed and hail from middle class, are our best entrepreneurs. These women want to supplement their family income. And they have a vision and a long-term plan. Can I help the family buy a house? Send my children to better school and provide them better education? Many middle class people have already been supplementing their income by becoming insurance agents and Peerless agents as direct selling is nothing but a parttime avocation. They want to leave something for their children and this direct selling business itself becomes an asset for them to leave for posterity. Of course, Mr. Beddoe is not so sure of their enterprise. It depends upon their individual needs. He considers Coimbatore and Surat as "two islands" of enterprise. And they have the highest per capita income in the country. Adverting to the spread of direct selling, he compares it with other markets. Take for instance, market for the Fast Moving Consumer Goods (FMCG). While north accounts for lion's share of 30 per cent followed by the west, south is only the third with 20 per cent to 22 per cent share. East is the hardest market with just 11 per cent. The survey with regard to direct selling has revealed that all the four regions are "exactly the same." There is almost an equitable balance and it looks that direct selling has been accepted all over the country. On the great urban-rural divide, Mr.Beddoe observes that there seems to be a greater need for direct selling in B1 cities and smaller towns. There is willingness to work harder in these places. In villages and small towns there is more time whereas metros do not have the same leisurely lifestyle.
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He considers that the sense of security among the people in metros is comparatively much higher than the other parts of the country. Metros have lesser needs. The future of direct selling lies in small locations. The Amway India Enterprises franchise is a global leader in multilevel marketing. The direct sales franchise is a part of the US-based Amway Corporation which brought about the concept of direct selling at the convenience of the customer. From the past 45 years, Amway Corporation has enabled people to have a business of their own, providing home care and health care products of repute. Originally, the multilevel marketing franchise was known for direct selling of its household cleaning products; but as time went on hundreds of high-quality products and brands were introduced to make the Amway India Enterprises Franchise what it is today. The Amway Corporation created a business opportunity for direct sale of products to others and later started the concept of sponsoring people to join the business. The Amway India Enterprises franchise, a wholly owned subsidiary the USAbased Amway Corporation, was established in 1995, and commenced commercial operations in May 1998. Today it has become the largest direct selling FMCG Company in India. With over 4,50,000 active independent Amway Business Owners, the Amway India Enterprises Franchise has grown to its present number of 74 offices and 55 city warehouses. Servicing over 2000 cities & towns of India, this direct sales franchise provides a 100 per cent money back guarantee if the product ids found unsatisfactory. Today, Amway India Enterprises franchise promotes individual entrepreneurship through its novel direct selling approach of world class consumer products. Amway supplies all its products from within India, thereby providing motivation to the local manufacturing industry.
A Bright Future for Direct Selling by Neil Offen Recently, Direct Selling News talked with Direct Selling Association President Neil Offen about the opportunities and challenges facing the direct selling industry. We're pleased to bring you this excerpt of our conversation:
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Direct Selling News: Over the last few years, we have seen some very prominent brands begin to utilize a direct selling channel of distribution. Will these new entries change the competitive landscape? Neil Offen: The last few years have shown a remarkable interest from investment firms, retailers, non-direct selling firms and non-direct marketing firms in the viability of our business distribution. This is a whole new group of companies that are thinking about direct selling. Our membership roster is at a record high, with nearly 200 active direct selling companies, 75 pending and close to another 70 in the subscriber category. In addition, we have more than 200 supplier companies in membership. The growth of the last couple of years is remarkable. The success of these companies that are coming from the outside will not change the industry; it will change those companies. They have to adjust to direct selling, not bring retailing concepts, direct mail concepts and telemarketing concepts to our industry to see if they work. We know the core element of direct selling has not changed-the simple element of a person-to-person approach. Direct selling seems easy from the outside looking in, but it is anything but easy to manage a direct selling company. Direct Selling News: Despite the continuing efforts of the DSA, direct selling still struggles with negative consumer perceptions. What is currently being done to address this? Neil Offen: We know that we have had image problems and these problems have manifested themselves over the last few decades. The association has implemented an Image Enhancement Program to tell the wonderful story about industry people from all walks of life who are coming into our business. Direct selling is keeping the American Dream alive for people who otherwise might not realize their dreams. The Image Enhancement Program is being rolled out globally and we have a program coming up in New York in a couple of weeks to roll out the social economic impact study that Ernst and Young has done for us. We're going to let the Wall Street people know that the contributions this industry makes go far beyond the estimated sales volume that we report each year. Direct Selling News: What is your assessment of global potential for the direct selling channel of distribution? Neil Offen: Growth is still occurring dramatically internationally. The opportunities and challenges in China are huge and I predict that you will see incremental ~ 38 ~
growth in China, as we can prove to the Chinese that we can control our sales organizations and that we are a source of stability. We are creating supplemental income and career opportunities for people who desperately need them there. India is taking off now and is growing at 15 to 20 percent a year. We did over $630 million in sales in India last year, and it is going to be in the billion-dollar range very shortly. Russia is performing incredibly well. Japan, after 15 years in the doldrums, is coming back. Korea is booming and is the third largest direct selling market in the world. Eastern Europe is doing particularly well, though Western Europe has been difficult. Mexico, Brazil and Colombia are strong, and with 70 or 80 million people Viet Nam has the potential to become an excellent direct selling market. The international arena is experiencing tremendous growth and I think we are at the right place at the right time as a method of distribution. Direct Selling News: Is there anything else you'd like to mention? Neil Offen: We don't have data yet for 2005, but I predict it will be flat. I believe the war in Iraq has had an impact, especially in those states where a lot of the troops have been drawn out of the National Guard and Reserves-the husbands of folks in our business. Counter-intuitively, the rise in gasoline prices-which you would think would get more people into the business to earn extra money-keeps people away from the business, because they don't want to spend the money on gasoline. Catch-22. Also consumer debt has risen and it seems like a malaise is growing. This undercuts people's energy and willingness and spirit to go out and start a direct selling business.
Marketing is a business term referring to the promotion of products, advertising, pricing, distribution channels, and branding. The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to sell goods or services. The American Marketing Association (AMA) states, "Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders." Marketing practice tends to be seen as a creative industry, which includes advertising, distribution and selling. It is also concerned with anticipating the customers' future needs and wants, which are often discovered through market research. ~ 39 ~
Marketing is influenced by many of the social sciences, particularly psychology, sociology, and economics. Anthropology is also a small, but growing influence. Market research underpins these activities. Through advertising, it is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture.
n the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.
Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support. Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Promotion: This includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company. Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan.
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THE CONCEPT OF DIRECT- MARKETING
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THE CONCEPT OF DIRECT- MARKETING
HOW DOES AN AMWAY DISTRIBUTER EARNS? WHATEVER A PERSON EARNS, HE GOES TO SPEND IT TO THE MARKET, FOR EXAMPLE IF A PERSON GOES TO A MARKET WITH Rs. 4000 WITH HIM, THERE HE PURCHASE PRODUCTS OF DAY-TO-DAY USES. THE COST PRICE OF THAT PRODUCT IS Rs.1600 IN THE FACTORY, BUT HE GETS IT @ Rs.4000 BECAUSE OF THE MIDDLEMEN (ADVERTISERS, WHOLESALERS & RETAILERS). 60% OF THE MONEY IS DISTRIBUTED AMONG THE MIDDLEMEN. BACK TO 45 YEARS, THERE WERE TWO FRIENDS WITH A DREAM TO GIVE EVERY INDIVIDUAL A CHANCE TO DO A BUSINESS, WHICH WILL BE TENSION FREE AND IN THE SAME WAY MAKE RICH. TODAY THEY HAVE ACHIEVED THEIR DREAM. I. BENEFITS FOR DISTRIBUTER.
The company provides world class products to the distributers. They also gets profit from the sales model of the company which is beyond their imagination that’s because it is fully acceptable and honest so that you can believe and have full trust and confidence on it. The products are of world class. The distributers get help from the easy marketing plan. There are demonstration lectures on each type of product 1. Full information about the product. 2. Full instruction on how to use the product properly and get 100% advantages of it. 3. Qualities of products. Guarantee of full satisfaction from the use of the product by the company is one of the most important attractions of this business. These benefits of distributers are kept reserved by the company’s “CUSTOMER PRODUCT REFUND POLICY”.
Some important attractions/ benefits for the distributers.
With the help of this business after being a distributer can establish his own (independent) business all over the INDIA. ~ 42 ~
To be successful in this business one need “VERY LESS AMOUNT” and “DESIRE TO BE SUCCESSFUL”. If any distributer wants to leave the business can leave get the money back by returning the BUSINESS KIT within 90 days of joining.
TO STUDY THE EARNING OF THE DISTRIBUTER
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M AR KE T
AD VE RTISE WH OL ESA LE RS RETAI LER S
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THE CONCEPT OF DIRECT- MARKETING
F ACT OR HOW DOES AN AMWAY DISTRIBUTER EARNS? Y
WHATEVER A PERSON EARNS, HE GOES TO SPEND IT TO THE MARKET, FOR EXAMPLE IF A PERSON GOES TO A MARKET WITH Rs. 4000 WITH HIM, THERE HE PURCHASE PRODUCTS OF DAY-TO-DAY USES. THE COST PRICE OF THAT PRODUCT CU Rs.1600 IN THE FACTORY, BUT HE GETS IT @ Rs.4000 BECAUSE OF THE IS SMIDDLEMEN (ADVERTISERS, WHOLESALERS & RETAILERS). 60% OF THE MONEY TO DISTRIBUTED AMONG THE MIDDLEMEN. IS
BACK TO 45 YEARS, THERE WERE TWO FRIENDS WITH A DREAM TO GIVE EVERY INDIVIDUAL A CHANCE TO DO A BUSINESS, WHICH WILL BE TENSION FREE AND IN THE SAME WAY MAKE RICH. TODAY THEY HAVE ACHIEVED THEIR DREAM. BENEFITS FOR DISTRIBUTER.
3-4 III. Rs.
The company provides world class products to the distributers. They also gets profit from the sales model of the company which is beyond their imagination that’s because it is fully acceptable and honest so that you can believe and have full trust and confidence on it. The products are of world class. The distributers get help from the easy marketing plan. There are demonstration lectures on each type of product 4. Full information about the product. 5. Full instruction on how to use the product properly and get 100% advantages of it. 6. Qualities of products. Guarantee of full satisfaction from the use of the product by the company is one of the most important attractions of this business. These benefits of distributers are kept reserved by the company’s “CUSTOMER PRODUCT REFUND POLICY”.
DI REC T
Some important attractions/ benefits for the distributers.
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With the help of this business after being a distributer can establish his own (independent) business all over the INDIA. To be successful in this business one need “VERY LESS AMOUNT” and “DESIRE TO BE SUCCESSFUL”. If any distributer wants to leave the business can leave get the money back by returning the BUSINESS KIT within 90 days of joining.
MARKETING STRATEGIES ADOPTED BY AMWAY FOR DISTRIBURTERS
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MARKETING STRATEGIES ADOPTED BY AMWAY FOR DISTRIBUTERS
How to Join? Starting your own business To start the Amway Business one needs to buy the Amway Business Kit and be sponsored in the business by an already existing Amway Business Owner. Despite what you may have heard, starting an Amway business doesn't involve handing over large amounts of cash. With your efforts and our knowledge, the Amway opportunity can become everything from a means of earning a little extra cash to building an international business. Where do you want to go?
Priced at Rs995 only ~ 47 ~
Contents of the kit 1. All Product Handbook. This is an attractive book with a size customized to fit the business kit. It gives information on the entire product range including colours and will play an important role in retailing.
2. Unique Opportunity Unmatched Products A set of 2 CDs:1. Opportunity CD
Available in English & Hindi Gives information on all the important business aspects that a new ABO needs to know to start his Amway business.
2. Product CD First Purchase Offer Amway brings an EXCITING NEW FIRST PURCHASE OFFER for new Amway Business Owners The first few days of joining are the most important period for a new Amway Business Owner and keeping this in mind we have designed this program to guide and motivate a new Amway Business Owner and help him in building his Amway business.
Offer 1- Purchase products worth 100PV in a single invoice and avail discount of Rs. 995 on the order value. Offer 2- Buy Products worth 60PV and get Nutrilite Cal Mag Re.1 only.
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What do you want out of life? There are as many different reasons to be in this business as there are Quixtar Independent Business Owners (IBOs). A Quixtar business can help with those tuition bills. It can help reshape your work week. It can help you build a future for your family. It's your life, and Quixtar can help you build your own business - the way you want it.
An Industry Leader
Back in the 1950s, Rich DeVos and Jay Van Andel were sales reps for a vitamin company called NUTRILITE. They envisioned an even better sales and marketing plan, however, and created a little company called Amway to set it into motion. Working with a core group of Independent Business Owners (IBOs), they provided a new opportunity to people in the U.S., Canada, and, today, more than 3 million entrepreneurs around the world. In 1999, Quixtar was launched to combine the best aspects of Amway with the power and convenience of the internet. Three years later it became the company’s exclusive opportunity in those markets. Now, Quixtar North America is making a transition to the AMWAY GLOBAL brand to leverage the power of the $6.8-billion business Rich and Jay built. The business opportunity we support features:
• • • •
An industry-leading compensation plan. High-quality products. Experienced support from an industry leader. The community and support you receive from other IBOs.
At Amway Global, we believe that the proper use and management of the earth’s resources are the responsibilities of industry and individuals alike. After all, alone we can do so little – together, we can do so much. QUIXTAR is the number-one online retailer in the Health & Beauty category based on sales, and 22nd among all e-commerce sites, according to Internet Retailer magazine’s “Top 500 Guide.” As of Sept. 1, 2008, people who join AMWAY GLOBAL become AMWAY GLOBAL IBOs. Quixtar North America joins the Amway Global family in 2008-2009.
Quality Products That Inspire Confidence
Amway Global Independent Business Owners (IBOs) enjoy access to a great portfolio of products they can retail and use. In addition to a wide range of products providing solutions to your home and personal care needs, Amway Global is known for its Health and Beauty brands. In fact, some IBOs choose to specialize their retail efforts in health, beauty, or even our innovative Ribbon gift program. Exclusive Amway Global brands include:
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• • • • •
Nutrilite, the world's leading brand of vitamin, mineral and nutritional supplements (based on 2006 sales). Artistry, the billion-dollar prestige brand of skin care and colour cosmetics. Ribbon, our gift and incentive program that makes gift-giving a snap More: From XS sports nutrition and eSpring water purifiers to home cleaners and personal care, Quixtar has it. Our exclusive brands are backed by extensive research, more than 516 patents, and a 180day money-back Satisfaction Guarantee. You can be confident in our products as you build your business.
Making Money with Your Amway Global Business
You wouldn't consider your very own business unless it rewarded you for your time and effort. Put simply, the Amway Global Independent Business Owner (IBO) Compensation Plan rewards you for selling products and for sponsoring others as IBOs who will do the same. You earn income from:
• • •
Retail markup* on product sales to customers Monthly performance bonuses ranging from 3% to 25% of business volume depending on your monthly productivity Monthly and annual leadership bonuses and other cash awards and business incentives based on group performance.
Simple Steps to Success IBOs who grow the most successful businesses sell to non-IBO customers and sponsor, while experiencing the products by purchasing them for their own use. Step 1: Learn. The only way to truly understand your products is to use them. Knowing what our products can do for you is important when presenting them as ~ 50 ~
solutions for your customers. You'll also want to fully understand the compensation plan and Amway Global's business rules. Check out Amway Global University to see other training options we provide. Step 2: Sell. As your product knowledge increases, you will discover people all around you who need what you have through your Amway Global business. Retail selling is the easiest way to make quick money through your Amway Global business. Step 3: Sponsor. For some of your friends, products provide the solution they seek. For others, the Amway Global business opportunity will have strong appeal as they seek a business that can help them achieve their goals. When you sponsor them, you can be rewarded for the business volume they generate. *Retail margins on health, beauty, and home care products average about 29% when these products are sold at suggested retail price. You have the freedom to determine independently the prices at which you sell products to customers, so you decide your retail margins. The Amway Global opportunity is unlimited, but individual results vary. The average monthly gross income for IBOs who are "active" in the business was $115 based on the most recent independent survey. Some earn less while others earn much more. In 2006, IBOs earned more than $370 million in bonuses and incentives on $1.12 billion in sales. Approximately 66% of all IBOs of record were found to be "active." An "active" IBO is one who attempted to make a retail sale, or presented the Amway Global IBO Compensation Plan, or received bonus money, or attended a company or IBO meeting during the year.
In Business For Yourself, Not By Yourself
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Whether you're a new Independent Business Owner (IBO) or someone who's been in the business for 20 years, you'll be supported at all levels by the IBO organization you were sponsored into as well as by Amway Global. Together, we have the infrastructure and resources to help. Amway Global provides you with support like:
Customer care: If you have a question about anything - like registration, renewal, business, or product information - our Customer Care Associates can help you. Business management: You can manage your business, check customer volume, order products, and renew your business, all at Amway Global.com. Order management: You sell the products, and we'll do the rest, like process the order, manage your customer accounts, and handle the shipping details. Training: Online, video, and instructor-led training are some of the ways we can share with you the knowledge to grow a successful independent business. Marketing: We support your sales efforts with DVDs, online sites, magazines, brochures, and free websites you can personalize. And we help build awareness of your products and brands with national advertising, promotions, and event sponsorship.
PLUS: The IBO organization you may become involved in also provides training and motivation in the field. You may be offered Business Support Materials (BSMs) that are independent of Amway Global, including DVDs, CDs, books, websites, seminars and business conventions. Many IBOs find these BSMs useful as they build their businesses, but they are completely optional, so it's your decision. Just so you know, some IBOs earn income from the sale of these BSMs apart from their earnings through the Amway Global IBO Compensation Plan.
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No one may pressure you to buy or use BSMs. Whether or not you purchase these materials, your sponsoring IBO is still obliged to provide you with training and support. Your own good judgment should guide you in deciding what is best for your independent business, considering among other things the cost, benefit, and time commitment associated with the purchase and use of BSMs.
A Community of Entrepreneurs
When you join the Amway Global business, you join a community of other Independent Business Owners (IBOs) who share your desire to achieve personal goals through a business of your own. This group of IBOs will provide business guidance based on personal experiences. A compelling aspect of the Amway Global business is the Line of Sponsorship (LOS). When you register a new IBO, you are their sponsor. The person who introduced you to Amway Global is your sponsor. This Line of Sponsorship is important to the calculation of bonuses based on business volume generated by IBOs in the LOS. Success as an IBO can help others in your LOS achieve their goals, too, since they may earn bonuses based on your volume, just as you will be rewarded for helping others generate product sales. Amway Global IBOs achieve when they help others achieve. So, while you might be in business for yourself, you're not in business by yourself. You've got help right in your LOS.
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Amway Sales and Marketing Plan
The gross income of your AMWAY business is based on immediate income or profit from retail sales, discounts on purchases for own use plus a commission on group sales.
∝ This Commission is calculated from two sets of numbers – PV and BV assigned to AMWAY products. You earn PV and BV on products sold to customers or consumed by yourself, as well as products purchased by Distributers in your Business Group. PV (Point value) is a unit amount assigned to each product; it determines your Performance Incentives bracket. BV (Business Volume) is a monetary (Rs.) figure for each product. BV is used for calculating of monthly commission and annual incentives. D.A.P. (Distributer Acquisition Price) is the cost at which a Distributor buys products from Amway inclusive of sales tax.
Your PV/BV & Performance Initiatives
PV/BV M.R.P. D.A.P. B.V. P.V. Maximum Retail Price Distributor Cost Business Volume Point Value
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Ratio between PV & BV 1:45 i.e 1PV= 45 BV or 100 PV= 4500 BV Example: Product Amway Car wash E-4111-ID D.A.P. Rs.175 B.V. = 155 P.V. = B.V. /45= 155/45= 3.44
Discounts: Performance incentive percentage applied to the BV of your own purchases for the month. Commission Earned: Difference between Group Commission earned and commissions Paid out to your Downlines.
YOU GET THE OPPORTUNITY TO START YOUR OWN BUSINESS
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Case 1: self example
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ASSUMPTION: 1. You sell products worth 100 point value (PV) 2. PV/BV ratio is 1:45
PROFITS: Total PV = 100 Total BV= 4,500 Retail Profits#: Generally 20%. Therefore, (20/100*4,500) = Rs. 900 Commississions: No Downlines = Nil Discounts : 100 PV means 3% level = (3/100) * 4,500 = Rs. 135 Gross Monthly Earnings =Rs.900 + Rs.135 = Rs. 1,035 Gross Annual Earnings =Rs. 1,035*12 = Rs.12,420 Case 2
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you sponsor 6 people
1. You personally sponsor a total of 6 people 2. All Distributors including you do only 100 PV 3. For retail profit %, we take an average 20% GAINS: Total Group PV Total Group BV Retail Profit PV you are at 6% level = (6/100)*31500 = Rs. 1,890 Commission paid out to Downlines = (100*45) * (3/100) * 6 =Rs. 810 Gross Annual Earnings Gross Monthly Earnings =Total Commission – Payouts + Retail Profit =Rs. 1,890-Rs.810+900 =Rs. 1,980 =Rs. 1,980*12 =23,760 = Your PV+ 6 Distributors PVs =100+ (6*100) =100+600 = Group PV*45 =700*45
= (20/100)*your BV = (20/100)*4,500 =900 Total Commissions =At 700
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ASSUMPTIONS: Same as previous case, and each of your Downlines sponsor 4 more people each. GAINS: Total Group PV =Self generated PV + Those generated by your personally sponsored Downlines + Those generated by their Downlines. =100 + (6X100) + (6X4X100) =100 + 600 + 2400 =3100 =45 X 3100 =139500 =20% on an average of the sale price = (20/100) X Group BV = (20/100) X 4500 =Rs.900 =At 3100 PV ypu qualify at 12% level ~ 59 ~
Total Group BV Retail Profits Total Commissions
=(12/100) X Group BV =(12/100) X 139500 = Rs. 16740 Commissions paid out to Downlines Total Commissions paid out Gross Monthly Earning Gross Annual Earning =Your immediate Downlines have 500 PV i.e. 6% level =6 X(6/100) X 500 X45 =Rs.8100 =Total Commissions - Payouts + Retail Profit =16740 – 8100 + 900 =Rs. 9540 =Rs. 9540 X 12 =Rs. 114480
Case 4: 6-4-3 Principle
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ASSUMPTIONS: • Each 6 Distributors sponsor 3 each further expanding the group. • Rest of the assumption same as earlier.
GAINS: Total Group PV
=Your PV + Your personally sponsored Downlines’ PV +Their personally sponsored Downlines =100 + (6X100) + (6X4X100)+(6X4X3X100) =100 + 600 + 2400 + 7200 ~ 61 ~
=10300 PV Total Group BV =Total Group PV X45 =463500 Retail Profits =20% on an average of the sale price = (21/100) X Your PV =(20/100) X 4500 = Rs.900 Total Commissions =At 10300 PV you qualify at 21% level =(21/100) X 463500 =Rs. 97335 Commission paid out to Downlines =Your immediate Downlines have 6 X 100 i.e. 9% level Total Commissions paid out Gross Monthly Earning Gross Annual Earning =(9/100) X 6 X 45 X 1700 =Rs. 41310 =Total Commissions – Payouts + Retail Profit =Rs. 67335 – Rs. 41310 + Rs. 900 =Rs. 56925 = Rs. 56925 X 12 =Rs. 683100
Silver Producers Gold Producers Platinum Ruby Founders Platinum Founders Ruby Sapphire Founders Sapphire
Emerald Founders Emerald Diamond
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Founders Diamond Executive Diamond Founders Executive Diamond
What are awards? Awards are the non-monetary benefits that Amway Distributers receive for their dedication & commitment in building the Amway business. Distributors are eligible to receive ∝ Personal letters of recognition from Amway ∝ Personal recognition, awards including Pins (Silver Producer onwards)
∝ Certificates and Plaques (Platinum onwards) ∝ Recognition in Amagram* ∝ Amway sponsored trips and seminars
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CHAPTER 8 OBJECTIVES
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IDENTIFICATION OF REASONS Amway is a global organization which markets products in international market places. Planning for global markets is a much more complex process than for domestic markets. It presents many more risks than operating in a domestic market where goods are sold in only one local area. Global marketing involves recognising that people from all over the world have different needs, i.e. values; customs; languages; rules and currencies. Though it is said that consumer needs around the world are converging, there are commonly accepted needs and wants that go beyond national barriers. The marketing mix consists of a complex set of variables which an organisation combines together in order to ensure that both global and local corporate objectives are achieved. Standardising elements of the marketing mix is key to operating successfully in the global marketplace. As a result, common needs and wants are identified across countries. At the same time, parts of the marketing mix requiring adaptation are identified so that it can be developed to cater for local differences. This requires a thorough understanding of every market in which Amway operates. Many advantages arise from competing in a global marketplace, including:
Economies of scale - over a larger output, costs per unit are decreased to provide the supplier with a competitive advantage. Amway is able to spread its research, development, technology and distribution costs so that it can maximise its production efficiency. The development of new business opportunities - in numerous countries, markets are growing faster than in Europe and America. Overseas markets offer the opportunity to compete in different marketplaces and extend the life-cycle of products.
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To meet the tastes of consumers from different nations - over recent years there has been a convergence of tastes resulting in a more global marketplace.
Founded in Ada, Michigan in 1959, Amway has become one of the largest 'Direct Selling' companies in the world with nearly three million Independent Distributors. Direct selling involves dealing with customers 'Face-to-face' so that personal attention can be given to each of their requirements. Direct selling differs from traditional retailing as it often involves selling to consumers on a one-to-one basis, usually in the comfort of their own homes. The industry has grown rapidly over recent years and is currently estimated to be worth £40 billion a year world wide. This case study examines this growth which has helped Amway to become one of the industry's market-leaders influenced by changing lifestyles, demographics and economic recession. Direct selling for Amway is undertaken by its own independent distributors. Their own income is based on the goods they sell, bonuses paid by Amway and the volume of sales generated through their own distributor network. These distributors sell to people they know or meet. Amway distributors operate as their own independent businesses. Amway is a long-standing member of the Direct Selling Association (DSA) in the UK and Republic of Ireland. The DSA regulates the industry by providing a Code of Conduct endorsed by the Office of Fair Trading (OFT). Amway has developed into a global corporation manufacturing over 450 products and employing more than 12,000 people in over 80 countries and territories around the world. To supply a global base of customers, Amway manufactures products ranging from household cleaners to cosmetics, food supplements to housewares. It also markets products on behalf of other leading manufacturers, such as Kenwood, Aiwa and Philips.
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CHAPTER 9 CASE STUDY
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This is the case study of Mr. Surendra Sharma:Mr. Surendra Sharma is a Businessman, He owns a soap and chemical industry at Wardha. He is a 57yrs old person and an Independent Amway Business owner from the last 7yrs. He was introduced to amway business by Mr. Mohinder Singh Bhraich seven years ago. At that time Mr. Sharma was strugging with his business. He had no time for his family. He was searching for a business which can provide him with time for family, financial security, freedom etc. which he was not able to get from his Traditional business. His search came to an end with amway business, he took it as an opportunity and started working over it. And now he has earned a recognition for him as a Founder Platinum in amway business & today he is earning a monthly income of Rs.50000 +. He is interested in selling mainly health related products. Whenever he meets any person whom he wants to show the plan, he starts with the health care products and if the person is interested, he starts encouraging them to join the business.
This is the case study of Mrs.Vijaya Borkar:Mrs. Borkar is a house wife. She is an amway distributer from the last 5yrs. She has two downlines under her. But at present she is not an active amway business owner, she purchases amway products for personal use and she tries to sell the products to relatives and friends
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Jay and Hani Lee Orangeburg, New York Jay Lee was working at a store from 3 a.m. until 8 p.m. when he first saw the Amway business plan. He was looking for a way out of these kinds of long hours and immediately saw the business as his opportunity to make a change. Hani admits that they both felt like they didn't know what they were doing when they first started. But they gradually began to achieve small successes and soon she was able to stay home with her children. Jay believes their success with Amway is largely due to a combination of their desire and determination to succeed, mixed with a focused concentration on their goals. He believes that anyone, especially Korean immigrants who come to America, could start a Amway business without restrictions or conditions. He also feels that anyone who approaches this business with a desire to work hard can achieve success.
Raj and Sangita Shah Atlanta, Georgia By setting small goals one at a time, Raj and Sangita have moved far beyond their original vision for their Amway business. Their plan was to build a small business that would allow Sangita to stay at home with their children. The Shahs now work together full time on their Amway business and have the income to support their family and more than 350 schoolchildren in India. The couple feels blessed to provide education, food, clothes, and housing to children in need while being able to spend quality time with their own children and teach them through example. The Shahs look forward to a bright future with Amway but feel they are just getting started.
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Michael Palmer Toronto, Ontario Michael plays football for the Canadian Football League’s Toronto Argonauts and had just graduated from college with an honors philosophy degree when he was first introduced to the business opportunity. Michael finds that owning a Amway business has developed his character, not just as a business owner, but also as a son, father, and friend. He appreciates that developing a Amway business requires developing people, which puts an emphasis on the quality of the relationships in one’s life. Michael believes that this business can meet the needs of different people with different goals and dreams by giving them greater control of their time and finances. His goals include improving the lives of inner city children through sports. Michael believes that his Amway business will help make it possible for him to achieve that dream.
*The following are approximate percentages of Direct Fulfillment IBOs of record in North America who achieved the illustrated levels of success in the calendar year ending August 31, 2005: Diamond .0120%; Emerald .0320%; Q-12 Platinum .1683%. **Based on an independent survey during 2001. “Active” means an IBO attempted to make a retail sale, or presented the Independent Business Ownership Plan, or received bonus money, or attended a company or IBO meeting in the year 2000. “Gross Income” means the amount received from retail sales, minus the cost of goods sold, plus the amount of Performance Bonus retained. There may be significant business expenses, mostly discretionary, that may be greater in relation to income in the first year of operation.
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Amway Inc. was created in 1999 by the families of Rich DeVos and the late Jay Van Andel, founders of Amway Corp. and numerous other successful ventures involving lodging and dining, sports entertainment, real estate, health, and other business sectors. Amway offered a new kind of web-based business opportunity to people intrigued by the web and interested in a business of their own offering exclusive products. In Amway's first seven years, Independent Business Owners (IBOs) generated more than $6.8 billion in sales for Amway, plus more than $500 million for its affiliated Partner Stores, earning in excess of $2.2 billion in bonuses and other incentives. Their efforts have made Amway the number one online retailer in the Health & Beauty category, and 22nd among all e-commerce sites, according to Internet Retailer's "Top 500 Guide.” Based near Grand Rapids, Michigan, Amway's nearly 900 employees support the efforts of several hundred thousand IBOs in the U.S., Canada, Puerto Rico, and various trust territories and independent island nations in the Pacific, Atlantic, and Caribbean. Amway Canada Corp. headquarters are located in London, Ontario. Amway - Subsidiary of Alticor Amway is a subsidiary of Alticor, which reported sales of $7.1 billion for its 2007 performance year. Other Alticor subsidiaries include Amway, which operates outside the U.S. in more than 80 countries and territories, and Access Business Group, a manufacturing and logistics company. Alticor is headquartered in Ada, Michigan, where nearly 4,000 employees operate out of more than a million square feet of facilities. Alticor's support to Amway includes research and development, manufacturing, logistics, and more. Independent Business Owners powered by Amway also benefit from access to international business development opportunities through Alticor's global direct selling operations. Jim Payne Executive Vice President, Amway Inc. Amway is a business opportunity company that offers entrepreneurs the ability to have a web-based business of their own. Through Amway's Independent Business Owner Compensation Plan, individuals are rewarded for product sales resulting from their business-building efforts. Amway does not generate site traffic through ~ 71 ~
advertising, instead rewarding IBOs, who earned $370.1 million in bonuses and incentives in fiscal 2006. The beauty of a business powered by Amway is that it allows one to be in business for themselves, but not by themselves. Amway and other IBOs are there to help and support IBOs every step of the way. In addition to the resources provided by Amway, there may also be a proven training and motivation system available to help IBOs learn from the success of others. This combination of support makes a business powered by Amway unlike any other. IBOs and Customers Amway services the needs of both Independent Business Owners and customers. IBOs build businesses that allow them to earn income based on sales made at www.Amway.com resulting from their efforts. To launch an Amway-powered business, individuals must register with an existing IBO. Customers pay no fee to shop from a large selection of products and learn from expert advice on health, beauty, home care, and other topics. Products are shipped to their homes and covered by Amway's Customer Satisfaction Guarantee. Customers must register with the identification number of their servicing IBO. If a new registrant does not have a servicing IBO, Amway will assign them one. Personal Referrals Unlike most other companies, Amway's sales are not the result of advertising. The biggest chunk of Amway's marketing budget goes directly to rewarding IBOs for sales volume resulting from their efforts. Those efforts include registration of new IBOs, Members, and Clients, resulting in product sales. Amway's tiered compensation plan rewards the movement of product through an IBO's sales organization and their ability to train others to create their own successful organizations. When people visit Amway's site, it is the result of a personal referral by an IBO not as a result of some advertisement they saw on TV. Personal referrals have proven to be much more effective. Only 8% of respondents in the Edelman 2005 Annual Trust Barometer study indicated that information obtained in advertising was credible, while 42% trusted information obtained from family, friends, and colleagues. Buzz Marketing Alticor pioneered buzz marketing through its person-to-person referral model. Some companies spend millions on strategies intended to get people to spread the word about their products. Through its Independent Business Ownership Plan, Am~ 72 ~
way does the same by rewarding IBOs for spreading the word about the business opportunity and the exclusive products available through Amway. This is a much targeted market spend, since IBOs are rewarded only when their efforts actually result in product sales. Business Systems IBOs employ many different approaches to build their businesses, typically involving training systems, motivational meetings and tools, and time-tested tactics to approach people and interest them in the business opportunity and products. When a person registers with Amway, it typically is the result of having been approached by an IBO already involved in one of several large organizations that provide training and support to IBOs. Often, a new IBO also will choose to attend optional and voluntary training sessions or purchase professional development materials provided by that organization - all covered by a money-back guarantee. Independence The beauty of Amway's business model is that there can be as many ways of pursuing the business as there are IBOs. If you're into health, you can focus on Nutrilite supplements and XS Energy Drinks. Beauty? Try Artistry skin care and color cosmetics products, and the new NAO never accept ordinary line of cosmetics. Larger ticket items like the eSpring Water Purifier and Atmosphere Air Treatment System are appealing to many retailing IBOs because of their larger margins. Some IBOs focus more of their efforts on building large organizations of downline IBOs who each will commit to smaller monthly sales volumes, knowing that Amway's compensation plan rewards both the movement of product by the IBO as well as the movement of product by those he or she develops.
STARTING A BUSINESS
To start your own Amway Global business, you must sign a registration contract with an existing IBO. The contract enables IBOs to earn income through the Amway Global Independent Business Owner Compensation Plan and binds IBOs to abide by the Amway Global Rules of Conduct in the Business Reference Guide. If you know an Independent Business Owner (IBO), you should discuss with him or her how this business can help you achieve your personal goals. If you aren't interested in working with a particular IBO, or don't know one and are interested in being sponsored, let us know and we'll introduce you to an IBO near you. After ~ 73 ~
all, this is all about your life, your business, your way. Let us help you get started!
Back in the 1950s, Rich DeVos and Jay Van Andel were sales reps for a vitamin company called Nutrilite. They envisioned an even better sales and marketing plan, however, and created a little company called Amway to set it into motion. Working with a core group of Independent Business Owners (IBOs), they provided a new opportunity to people in the U.S., Canada, and, today, more than 3 million entrepreneurs around the world. In 1999, Amway was launched to combine the best aspects of Amway with the power and convenience of the internet. Three years later it became the company’s exclusive opportunity in those markets. Now, Amway North America is making a transition to the Amway Global brand to leverage the power of the $6.8-billion business Rich and Jay built Back in the 1950s, Rich DeVos and Jay Van Andel were sales reps for a vitamin company called Nutrilite. They envisioned an even better sales and marketing plan, however, and created a little company called Amway to set it into motion. Working with a core group of Independent Business Owners (IBOs), they provided a new opportunity to people in the U.S., Canada, and, today, more than 3 million entrepreneurs around the world. In 1999, Amway was launched to combine the best aspects of Amway with the power and convenience combine the best aspects of Amway with the power and convenience Back in the 1950s, Rich DeVos and Jay Van Andel were sales reps for a vitamin company called Nutrilite. They envisioned an even better sales and marketing plan, however, and created a little company called Amway to set it into motion. Working with a core group of Independent Business Owners (IBOs), they provided a new opportunity to people in the U.S., Canada, and, today, more than 3 million entrepreneurs around the world. In 1999, Amway was launched to combine the best.
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AMWAY IS A DIRECT SELLING COMPANY. THE MAIN OBJECTIVE OF ~ 75 ~
AMWAY IS TO PROFIT THEIR DISTRIBUTERS BY ELIMINATING THE MIDDLEMEN AND PROVIDE THE PRODUCTS TO THE DISTRIBUTERS IN A CHEAPER PRICE. AMWAY IS ONE OF THE LARGEST DIRECT SELLING COMPANY IN THE WORLD. • THE PRODUCTS ARE OF THE WORLD CLASS QUALITY. THEY ARE MADE UP OF NATURAL THINGS THATS WHY ARE VERY GOOD FOR THE HEALTH AND ENVIRONMENT. • AMWAY COVERS A WIDE RANGE OF PRODUCTS FROM BEAUTY CARE, HEALTH CARE, SKIN CARE, HOME CARE TO CLOTHING, UTENCILES AND DAILY USE PRODUCTS ETC. • THE PRODUCTS ARE COSTLY AS COMPARED TO OTHER BRANDED PRODUCTS AVAILABLE IN MARKET, BUT IF WE COMPARE THE QUANTITY WHILE USING THESE PRODUCTS REQUIRE LESS AMOUNT AND THUS CAN BE USED FOR A LONGER PERIOD.
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CHAPTER 11 SUGGESTIONS
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• TRAIL PACKS SHOULD BE USED. • THE PRODUCTS SHOULD BE CHEAPER. • THE HOME DELIVERY SYSTEM TAKES ATLEAST TWO DAYS TO DELIVER THE PRODUCTS, THE DELIVERY SHOULD BE INSTANT. • THERE MUST BE MULTIPLE OPTIONS FOR PURCHASING THE PRODUCTS FOR DISTRIBUTERS LIKE ONLINE, TELE AND INSTANT PURCHASING. • IN EVERY CITY OFFICE SHOULD BE SITUATED IN SUCH A LOCATION SO THAT IT IS IN REACH OF ALL THE DISTRIBUTERS.
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