Amway Personal Selling

 A MARKET SURVEY   ON 

 AMWAY   SESSION: 2008-2009 

 SUBMITTED TO: Mr. Prabodh Gaur

 SUBMITTED BY: BBA ± IV Sem. Roll No.

C  CATE   ERTIFI CA  Name «««««.  Department«««  Date«««««« This is to certified that that mr«««««« is a regular regular student student of B.B.A IV  SEM

and

he

has

completed

the

market

survey

report

on

the

topic,´««««««««« Under my supervision.  It is certified that the whole market survey report is based on his individual  efforts and the analysis is found up to mark.   I therefore recommend that the market survey report preparer by the candidate be sent for evaluation. evaluation.  Faculty name««««.  Name «««««««  Department«««««  Date«««««««..

 P   REF  AC  E  ³Six essential qualities that are the key to Success: sincerity, personal integrity, humility, courtesy, wisdom, charity.´ 

³L 

IFE IS FU   LL OF SURPRISES... UNEXPECTED SOME BITTER SOME 

SWEET. OLLEGE  There are many Institutes in Bareilly but only students of  B A REILLY C OLLEGE   B A REILLY  are using internet & intranet so firstly we would thank Dr.A.K.

SAXENA Sir who is providing us this facility to reach that level from where we can see our destination. This project is a part of that success.   As everyone knows that is not an easy subject but  MR.  A  LOK S   EN  A never   AX  made us feel any difficulty in this particular subject.

 AC   KNOWLEDGEMENT 

 Nothing concrete can be achieved without an optimal combination inspiration and   perspiration. No work can be accompanied without taken the guidance of experts.   It is only critics from ingenious that help transform a product into a quality  product.  EN  A for his constant encouragement    For this, I am grateful to  MR. A  LOK S   AX 

and invaluable critical suggestions given during the review meetings. His timely advice and help proved his commitment and welfare of his students and the institute as a whole.

Last but not the least, our sincere thanks to all the members who were a vital thrust to our thoughts and needs throughout the functions assigned to group to get done and prove our best. Finally thanks to others at Lotus Institute of Management, who  put in numerous hours to make the intangible tangible«..

CONTENTS

Introduction to Amway Present state of affairs Plan and Policies Swot Analysis Finding Graphs Suggestion & Conclusion Bibliography Questionnaire

Amway is a direct selling company that uses multi-level marketing or 

network marketing to promote its products.

Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor  reported sales growth of 15%, reaching US$8.4 billion for the year ending December 31, 2008. Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water    purifiers, air purifiers, insurance and cosmetics. In 2004, Health & Beauty   products accounted for nearly 60% of worldwide sales. Amway conducts   business through a number of affiliated companies in more than ninety countries and territories around the world. It is ranked by Forbes as one of  the largest private companies in the United States and by Deloitte as one of  the largest retailers in the world.

History

Founding

Jay Van Andel and Richard DeVos, friends since school days, had been   business partners in various endeavors including a hamburger stand, air  charter service, and a sailing business. In 1949 they were introduced by Neil

Maaskant (Van Andel's second cousin) to the   Nutrilite Products Corporation. Nutrilite was a California-based direct sales company founded   by Dr. Carl Rhenborg, developer of the first multivitamin marketed in the United States. In August 1949, after a night-long talk, DeVos and Van Andel signed up to become distributors for Nutrilite food supplements. They sold their first box the next day for $19.50, but lost interest for the next two weeks. Shortly thereafter, at the urging of Maaskant, who had become their   sponsor , they traveled to Chicago to attend a Nutrilite seminar. The meeting

was at a downtown hotel, with over a hundred people in attendance. After  seeing promotional videos and listening to talks by company representatives and successful distributors, they decided to pursue the Nutrilite business opportunity with enthusiasm. They sold their second box of supplements on their return trip to Michigan, and rapidly proceeded to develop their new  business further.

In 1949, DeVos and Van Andel had formed

Ja-Ri

Corporation

(abbreviated from their respective first names) for importing wooden goods from South American countries; after their trip to the Nutrilite seminar, they dropped] this business and Ja-Ri became their Nutrilite distributorship. In addition to profits on each product sold, Nutrilite also offered commission on the sales of products by new distributors introduced to the company by

existing distributors²a system today known as multi-level marketing or  network marketing. By 1958, DeVos and Van Andel had built an organization of over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959 they and some of their top distributors formed The American Way Association to represent the distributors and look  for additional products to market.

Their first product was called  Frisk , a concentrated organic cleaner  developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Concentrate). They subsequently formed   Amway Sales Corporation to procure and inventory products and to handle the sales and

marketing plan, and  Amway Services Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation of American Way). In 1960 they purchased a 50% share in  Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to  Amway Manufacturing Corporation . In 1964 the Amway Sales Corporation,

Amway Services Corporation, and Amway Manufacturing Corporation merged to form a single entity,  Amway Corporation Amway bought control of Nutrilite in 1972 and full ownership in 1994.

International expansion

Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008. In 2008 two thirds of Amway's 58 markets reported sales increases, including strong growth in the China, Russia and India markets. Amway India sales grew 40% to 1128 crore (US$230million).

Amway China

Amway grew quickly in China from its market launch in 1995. In 1998, after  abuses of illegal pyramid schemes led to riots, the Chinese Government enacted a ban on all direct selling companies, including Amway. After  negotiations, some companies like Amway, Avon, and Mary Kay continued to operate through a network of retail stores promoted by an independent sales force. China introduced new direct selling laws in December 2005, and in December 2006 Amway was one of the first companies to receive a license to resume direct sales. At the time they had a reported 180,000 sales representatives, 140 stores, and $2 billion in annual sales. In 2007 Amway Greater China and South-east Asia Chief Executive Eva Cheng was ranked #88 by Forbes magazine in its list of the World's Most Powerful Women. In

2008 Amway Greater China was Amway's largest market, reporting 28% growth and sales of ¥17 billion (US$2.5billion).

Quixtar

In 1999 the founders of the Amway corporation established a new holding company, named Alticor, and launched three new companies, 1) a sister (and separate) Internet-focused company named Quixtar, 2) Access Business Group, and 3)  Pyxis Innovations . Pyxis, later replaced by Fulton Innovation,   pursued research and development and Access Business Group handled manufacturing and logistics, for Amway, Quixtar, and third party clients.

After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. The main difference was that all distributors could order directly, rather than from their upline "direct distributor". The Amway name continued being used in the rest of the world, and the home of the Orlando Magic was named the Amway Arena in 2005. The Orlando Magic is owned by Amway founder  Richard DeVos. In June 2007 it was announced that the Quixtar brand would   be phased out over an 18 to 24 month period in favor of a unified Amway  brand worldwide.

Products

Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and Artistry(1968). Today Amway manufactures over 450 products, with manufacturing facilities in Ada, Michigan, China, and India, as well as  Nutrilite organic farms in California, Washington State, Mexico, and Brazil. In addition Amway affiliates market products from hundreds of other  manufacturers offering everything from books (eg Barnes & Noble, North America) to wine (World of Wine, Europe).

Household cleaners

Amway is best known in North America for its original cleaning products, LOC, SA8 clothes washing products and  Dish Drops dish cleaning products. In the January 2007 issue of Consumer Reports, SA8 with Bioquest  was rated as the best performing laundry detergent, scoring 99 out of a possible 100. Consumer Reports did however criticise SA8's pricing, which was disputed   by Amway. In 2008, Amway's cleaning products were named  Favourite of   Experts by an independent consumer survey in Ukraine.

Health & beauty

The majority of Amway's sales today come from the Health & Beauty sector  and in North America the Amway Global/Quixtar website is ranked the #1 Health & Beauty website by Internet Retailer. In South Korea Amway is ranked one of the top two companies in tolietries and cosmetics. Amway's health & beauty brands include Artistry, Time Defiance, Satinique, Tolsom, Body Series, Glister,  Moiskin (South America), Nutrilite,  Nutriway (Scandinavia and Australia/New Zealand),eSpring,  Atmosphere and iCook as well as XS Energy drinks.

Artistry

Main article: Artistry (cosmetics)

Amway's Artistry products include skin care, cosmetics, and anti-aging creams and serums. Euromonitor International, an independent researcher  and publisher of market reports, business reference books and online information databases, ranks Artistry as one of the world's top 5 best selling   brands in the  prestige brand  category, alongside Clinique, Estee Lauder, Lancome, and Shiseido. Artistry is the only direct sales brand classifed in the "prestige" category.

Nutrilite

Main article: Nutrilite

Amway's largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded US$3billion globally Nutrilite products incorporate organically grown whole-plant concentrates. Euromonitor has for several years ranked  Nutrilite the world's best selling nutritional brand in tablet or capsule form. In 2001, five Nutrilite products were the first dietary supplements to be certified

by

NSF

International.

Surveys

by

independent

group

Consumerlab.com since 2002 have rated Nutrilite as having the highest customer satisfaction rating (96% in 2006). In 2006, 2007, and 2008 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia" survey. In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th  J ohn M. Kinney Award for Nutrition and Metabolism for their  research into the interaction between nutrition and genetics.

eSpring

Amway's eSpring water filter, introduced in 2000, was the first home water  treatment system to incorporate a carbon block filter and Ultraviolet disinfection unit, becoming the first home system to achieve certification for  ANSI/NSF Standards 42, 53 and 55. The unit was also the first commercial   product to include sister company Fulton Innovations eCoupled wireless  power induction technology. Fulton Innovation introduced the technology in other consumer electronic products at the 2007 International Consumer  Electronics Show. Companies licensing this technology include General Motors, Motorola and Visteon. In 2006 eSpring was named  Product of the Year by the Poland-based non-profit World Foundation of Health, Heart and   Mind . eSpring has won numerous Gold  and  Platinum awards in the  Reader's  Digest Most Trusted Brand Asia surveys.

Atmosphere

In 2008 Amway's HEPA air filtration system became the first air cleaner  certified asthma & allergy friendly by the Asthma and Allergy Foundation of  America.

Ditto Delivery

Amway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to specify an automatic monthly delivery of each  product. It has been called the most convenient shopping method that exists. In May, 2001, Ditto Delivery accounted for 30% of North American sales.

Business Model

Amway combines direct selling with multi-level marketing or network  marketing. IBOs may both market the products directly to potential customers and also recruit (sponsor) and train other people who become IBOs themselves and in turn have the same opportunity. Each IBO may earn income both from the retail markup on any products they sell personally,  plus a performance bonus based on the sales volume they and their downline have generated. People may also register as IBOs to buy products at a discounted rate.

Definitions

y

IBO/ABO/AIE ² Independent Business Owner/Amway

Owner/Amway

Business

Independent Entrepreneur is a business partner of 

Amway who is authorized to market and distribute products and

services available from Amway. Different names are used in different markets. - an older term for IBO

y

Distributor

y

PV ² Point Value is a value assigned to each product or service sold

 by Amway. An IBOs monthly performance bonus bracket depends on total PV in a month. y

BV ² Business Volume is typically the wholesale cost of the product

or service sold by Amway. Performance bonuses are multiplied by the groups total BV. y

Performance bonus is the monthly bonus paid by Amway to IBO's.

The higher the PV, the greater the percentage earned. In North America the Performance bonus ranges from 3% to 25%. In other  markets it ranges from 3% to 21%. y

Retail Profit is the markup earned by an IBO when they sell a

  product to a consumer, either personally or through an Amway website. Recommended retail markup ranges fro 20%-35%. y

Sponsor is an IBO who refers (sponsors) a new IBO to Amway.

y

Upline

is the term used to refer all the IBOs up in the line of 

sponsorship of an IBO.

y

Downline

is the term used to refer all the IBOs down in the line of 

sponsorship of an IBO. They are collectively also known as group refers to a personally sponsored IBO and all of their downline.

y

Leg

y

Silver Producer is an IBO who has reached the maximum bonus

level for one month. y

Gold Producer is an IBO who has reached the maximum bonus level

for three months. y

Platinum or  Direct is an IBO who has reached the maximum bonus

level for six months. Originally this was the first point at which a distributor could purchase products directly from Amway, and not from their sponsor or upline. In North America a  Platinum is generating a minimum of approximately $30,000 in sales volume per  month. y

Emerald a distributor with at least three legs generating Silver 

 Producer volume for at least 6 months of a year. y

Diamond

a distributor with at least six legs generating Silver 

 Producer volume for at least 6 months of a year. y

Q-12 is a  Platinum or higher IBO that qualifies every month for 12

months of a year.

Other

Interests

Radio

Amway bought the Mutual Broadcasting System radio network in 1977 and sold it in 1985.

Orlando

Arena naming rights

In December 2006, Alticor secured the naming rights for the 17,000-seat  basketball arena in Orlando, Florida - home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre, is now called Amway Arena.

San Jose Earthquakes

Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official  jersey sponsor.

A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's  Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.

The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and  provide soccer skills demonstrations at each event.

Los

Angeles Sol

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer.

Politics and culture

Commentators have identified Amway as supporting the U.S. Republican Party, and its founders contributed $4,000,000 to a conservative 527 group in the 2004 election cycle. Amway states that its business opportunity is open to people regardless of their religious and political beliefs.

 Rolling Stone's Bob Moser has contended that former Amway CEO and co-

founder Richard DeVos is connected with the dominionist political movement in the United States. Moser states that DeVos was a supporter of 

the late D. James Kennedy, giving more than $5 million to Kennedy's ministry.

Multiple high-ranking Amway leaders such as Richard DeVos and Dexter  Yager are also owners and members of the board of Gospel Films, a   producer of movies and books geared towards conservative Christians as well as co-owner (along with Salem Communications) of Gospel Communications.

One of Amway's most successful distributors, Dexter Yager, has criticized Democratic President Bill Clinton.  Mother  J ones reported that Yager stated in voice mail to his downline network of distributors, "If you analyze Bill Clinton's entire inaugural address, it is nothing but a New Age pagan ritual. If you go back and look at how it was arranged and how it was orchestrated, he talked about forcing the spring. So what they're trying to do is...force the emergence of deviant lifestyles, of a socialist agenda, and force that on us as American people." Yager also allowed Republican George W. Bush to send messages through that voicemail system to thousands of distributors.

Doug Wead, who was a Special Assistant to U.S. President George H. W. Bush, is a successful IBO who is a regular speaker at group rallies. In 2000, President George W. Bush appointed Timothy Muris, a former anti-trust

lawyer whose largest client was Amway to head the FTC, which has direct federal regulatory oversight over multi-level marketing plans.

Amway co-founder, the late Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were elected by the board of directors of the United States Chamber of Commerce as chairman of that organization.

In May 2005, former Amway President Dick DeVos, one of the wealthiest men in Michigan, announced that he would run against Governor Jennifer  Granholm in Michigan's 2006 gubernatorial election. DeVos, running as a Republican, won 42% of the popular vote, while Granholm won 56%.

Amway touts the environmental benefits of many of its products, and in June 1989 the United Nations Environmental Program's Regional Office for    North America recognized it for its contributions to the cause of the environment.

OBJECTIVE OF



THE SURVEY

To gain an insight into the functioning machinery of the marketing sector.



To know about the present potential market of AMWAY.



To know about the consumer demand and behavior towards the company



To view the competitiveness of the company products in the market



To look for the scope of betterment that can be done in this industry via company¶s contributions.

RESEAR CH METHODOLOGY

RESEAR CH

Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. Infact, research is an art of scientific investigation. Redman and Mory define research as a ³systematized effort to gain new knowledge´.

Research is an academic activity and as such the term should be used in a technical sense. According to Clifford Woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

TYPES OF RESEARCH The basic three types of research are as follows: 

Descriptive v/s Analytical



Applied v/s Fundamental



Quantitative v/s Qualitative

RESEAR CH METHODS

Research Methods may be understood as all those methods/ techniques that are used for conduction of research. Research Methods or techniques, thus, refer to the methods the researchers use in performing research operations. Thus, research methods can be put into following three categories: y

In the first group we include those methods which are concerned with the collection of data.

y

The second group consists of those statistical techniques which are used for establishing relationships between the data and the unknowns

y

The third group consists of the methods which are used to evaluate the accuracy of the results obtained.

RESEAR CH METHODOLOGY

Research Methodology is a way to systematically solve the research   problem. It may be understood as a science of how research is done scientifically. It helps in studying the various steps generally adopted by the

researcher in studying his research problem along with the logic behind them. Thus, the scope of Research Methodology is wider than that of the research methods. In other words, when we talk of Research Methodology we not only talk of  the research methods but also consider the logic behind the methods we use in the context of our research study and explain why we are using a  particular method or technique and why we are not using others so that the research results are capable of being evaluated either by the researcher  himself or by others.

RESEAR CH DESIGN

A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research  purpose with economy in procedure.

Infact, the research design is the conceptual structure within which research is conducted; it constitutes the blueprint for the collection, measurement and analysis of data.. as such the design includes an outline of what researcher 

will do from writing the hypothesis and its operational implications to the final analysis of data.

 NEED FOR RESEARCH DESIGN: y

Research design is needed because it facilitates the smooth sailing of  various research operations, thereby making research as efficient as   possible yielding maximal information with minimal expenditure of  effort, time and money.

y

Research design stands for advance planning of the methods to be adopted for collecting relevant data and the techniques to be used in their analysis, keeping in view the objective of the research and the availability of staff, time and money.

y

Research design has a great bearing on the reliability of the results arrived at and as such constitutes the firm foundation of the entire edifice of the research work.

y

The design helps the researcher to organize his ideas in a form whereby it will be possible for him to look for flaws and inadequacies. Such a design can ever be given to others for their comments and critical evaluation. In the absence of such a course of action, it will be

difficult for the critic to provide a comprehensive review of the  proposed study.

SAMPLING AND SAMPLE DESIGN

It is not possible to examine each and every item in the population hence interferences are drawn about a large number of items possessing a  particular attribute based on analysis of fraction of such items. It is called a sample. For developing a sample design following points need to be discussed with regard to the present study ± 

y

POPULATION: All items in any field of inquiry constitute a

³UNIVERSE´ or ³POPULATION´. A complete enumeration of all the items in the population is known as census enquiry. Thus,  population means the inclusion of all the items in the field of enquiry. Population can be finite if units can be counted or infinite. Since the  present study is done in Bareilly, the population is finite. y

SAMPLE: Sample means selection of few items as representatives of 

all the items. A part of the whole population is called ³SAMPLE´. Algebraically, let the population size be N and if a part of size

n(which is