3rd Assignment of SM on Amway PDF

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JAIN UNIVERSITY INTERNAL ASSESSMENT – 3rd Sales management

Submitted by Group 1

Team Name

USN ID:

Neetu Sah

19mbaj0131

Archita

19mbaj0149

Rahul Sharraf Uday Preetam raj Kasayee

19mbaj0008 19mbaj0164 19mbaj0118 19mbaj0006

1.0 Introduction Amway (short for "American Way") is an American multi-level marketing company that sells health, beauty, and home care products. The company was founded in 1959 by Jay Van Andel and Richard DeVos and is based in Ada, Michigan. Amway and its sister companies under Alticor reported sales of $8.4 billion in 2019. It conducts business through a number of affiliated companies in more than a hundred countries and territories. Amway has been investigated in various countries and by institutions such as the Federal Trade Commission (FTC) for alleged pyramid scheme practices, but it has never been found guilt. Amway combines direct selling with a multi-level marketing strategy. Amway distributors, referred to as "independent business owners" (IBOs), may market products directly to potential customers and may also sponsor and mentor other people to become IBOs. IBOs 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 (IBOs they have sponsored) have generated. People may also register as IBOs to buy products at discounted prices. Harvard Business School, which described Amway as "one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos "accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors. • • •

Amway is the World’s No. 1 direct selling company with presence in over 100 countries and territories. Globally, Amway is 60 years old, USD 8.8 billion, manufacturer and direct seller of highquality consumer goods. Amway's innovation and industry-leading R&D has seen more than 800 patents granted and another 240 patents pending. Amway has close to 1,000 scientists across 100 research and development and quality assurance laboratories worldwide.

Amway India Enterprises: This is the largest direct selling company in India. It has presence in 23 cities and 2.5 lakh houses. It is expanding. It is a subsidiary of $ 6 billion Amway Corporation. Amway India started operations in 1998. It markets concentrated home care and personal care products. Selling concentrates is their core competency. LOC (liquid organic cleaners) costs Rs. 322 a litre. It can be diluted 164 times; the cost works out to Rs. 2 a litre. It has registered a turnover of Rs. 10 crore in July, 1999. In September 1999, they reached Rs. 90 crore. The parent company operates in 80 countries. It has more than 1 lakh active distributors. Most of them are women. Direct selling keeps distribution and advertising costs down. It has to incur expenses on training.

Amway in India: Amway started its operations in India in 1998. It has a presence in 80 cities across 10,000 postal codes, 145 offices and 65 warehouses. Its competitors include Oriflame, Herbalife, Avon and Modicare. The direct-selling market is estimated at Rs 7,200 crore, and is projected to grow to Rs 64,500 crore by 2025, showed a recent joint study by the Federation of Indian Chambers of

Commerce and Industry and global consulting firm KPMG. When the company began in India, it was importing all these. Today, 90 per cent of its products are made here, through contract manufacturing. It is also setting up its own factory at Nilakottal (near Madurai), with an investment of Rs 500 crore. Personal care and nutrition & wellness are the largest segments, with a little more than 70 per cent of revenue. Amway India’s net profit in the financial year that ended in March 2012 was Rs.344.08 crore, in 2013 it reduced to Rs.247.32 crore and 2014 stood at Rs.198.16 crore, according to its filings with the registrar of companies. During this period, revenue was shown to be Rs 2,110.91 crore in March 2011-12, Rs. 2,168.14 crore in 2012-13 to Rs 1,990.29 crore in 2013-14. • •

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Amway India is a wholly owned subsidiary of Amway with headquarters located in Ada, Michigan, USA. Established in 1995, Amway India commenced commercial operations in May 1998 and has emerged as the largest FMCG Direct Selling Company in the country. Amway India offers Indian citizens an unparalleled opportunity to own and operate their own business by selling more than 140 distinctive quality consumer products. Amway India has close to 2500 direct and indirect employees. The company was recently awarded the ‘Great Place to Work 2018’ in recognition for its outstanding workplace culture. Amway’s first manufacturing facility in India is located at Nilakottai in the Dindigul district of Tamil Nadu. India is one of two key global manufacturing hubs for Amway, along with China, in addition to the company’s U.S.-based manufacturing operations. Amway manufacturing facility has won the prestigious LEED Gold Certification from the U.S. Green Building Council for being one of the most environment friendly and sustainable manufacturing facilities in the country.

Amway offers world class products supported by money back guarantee for 100% satisfaction of use •

All Amway products are supported by a money back guarantee for 100% satisfaction of use. Any direct seller or customer can return products within 30 days from the date of purchase.

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Amway products are popular not just in India but across the world. Nutrilite is the world's No. 1 selling vitamins and dietary supplements brand, while Artistry is India’s No. 1 premium skin care brand.

Direct Selling Direct selling refers to selling products directly to the consumer in a non-retail environment. Direct selling allows a person to start a business with little overhead costs and with no experience required. Direct selling offers accessible entrepreneurship to anyone, where you can start a business with little start-up costs and no experience required. In direct selling, distributors earn income by selling exclusive products to customers, either in-person or online. Direct selling entrepreneurs can also recruit others to join their sales team, sell products and increase their income potential. Direct selling is characterized by low investments and high returns. It has the potential to fetch $ 1 billion plus by 2013; if it grows by 17 per cent per annum. The current Indian market for direct selling products is around US $600 million. It provides employments to around 1.8 million people, of which 1.2 million are women. It is a Rs. 3,300 crore industry today in India.

1.1 Selling Process of Amway Product Seller and the buyer it can also be between consumers and environment; they formulate their plans for marketing. Definition of consumer behaviour “Consumer behaviour can be defined as the decision-making process and physical activity involved in acquiring, evaluating, using and disposing of goods and services.” Today, network marketing is a multi-billion-dollar business. A number of companies have adopted this business model.

1.2 Sells plan The Amway Sales and Marketing Plan is a low risk, business opportunity that is open to everyone. It allows you to build your business through retailing products and sponsoring other people who, in turn, can retail products and offer the business opportunity to others. By passing your sales and marketing knowledge to your developing team, you not only build your own business

network

but

also

enable

others

to

build

one

of

their

own.

The Amway Sales and Marketing Plan have been operating for more than 60 years and is available

in

108

countries

&

territories

around

the

globe.

The core of the Amway Sales and Marketing Plan's income opportunity is the sale of quality Amway products to retail customers. As your Amway business grows, the rewards you earn grow in proportion. The Amway Sales and Marketing Plan does not compensate anybody for simply recruiting others as Amway Direct Seller.

1.3 Amway Business Opportunity More than 3 million people worldwide are already forging their own path to success. We offer opportunities, the support of a corporation that is family owned, that is financially stable and has been in business for over 60 years. Amway is a global community, operating in more than 100 countries and territories, ready to offer support and a compensation plan, that has paid out more bonuses than any other direct selling company.

1.4 Become an Amway Direct Seller / Retailer To start your own Amway business, you need to register with us as an Amway Direct Retailer, which enables you to begin earning income through our Compensation Plan. If you know an Amway Direct Seller, you should discuss with him or her how this business can help you achieve your personal goals. If you would like to connect with an Amway Direct Seller, we can help you find one to fit your interests and needs.

Introduction to the Business Model of Amway

There are so many businesses out there in the industry which have gained an immense amount of success in the world of businesses these days. All of that is possible with the help of the business models that they have, which proves to be a great help to them when they want to achieve certain success in their businesses. Derived from the Name ‘American Way,’ this company is known for providing a lot of services to the people out there. The company is known all over the world for the amazing products which are provided to the people with the help of the MLM (Multi-Level Marketing) services of the company. Based in Ada Michigan, Amway was formerly counted as one of the top-performing companies, and it was featured in the Forbes Magazine as well.

COMPARISON Network marketing/Multi-level marketing (MLM) in a short time Generally the commission structure is less up-front then the direct they usually offer reasonably priced products and services that people consume sales companies, but it has a benefit that most direct sales companies do not have and that is residual income. • It costs less to get involved with this form of business, a few hundred dollars. • Allows more people to become involved. • Builds Residual Income. Network marketing is about sales and distribution, but a different kind of sales. It’s more of a soft sale or recommendation then the hard closing type that your accustomed to with the typical salesman or saleswoman in the direct sales. Direct Sales Companies These companies are known as seller-based, they market higher priced, usually one time sales items. The benefits of these programs are you make higher commissions but they have very little if any residual income. Essentially if you stop working so does your income. You are paid directly on what you personally sell, so you have to sell lots and lots of merchandise. This also limits you to the type of people you can bring into your business as the

“salesperson” type. Direct sales cost more to get involved with usually in the thousands of dollar range, again limiting you on the number of people! 7 Benefits to sellers Many of these people have chosen direct selling because they want to own their own business, but do not have : considerable funds required to buy a franchise or start a new company training time education Among the top five reasons people sell direct are that they: like and believe in the product like being their own boss, and working their own hours like the supplemental family income or like making extra money for themselves feel that the harder they work, the more money they can make enjoy selling and meeting people Benefits to companies In today's world of rapid change, direct selling offers companies: a direct distribution channel that can be accessed immediately bypassing rigid and costly traditional distribution channels 1 HOW DOES NETWORK MARKETING WORK This is a business model whose time has come. It is literally the finest example of the free enterprise system. Today there are millions of people around the world building this unseen industry called network marketing. You do not see them but they are everywhere, some probably right in your own neighbourhood. It is a business in which common people can invest a Small sum of money and through sheer tenacity in determination rise to staggering levels of financial reward and personal freedom. But it requires education based on market tested results not the typical hype found out here on the internet today. Each and everyday millions of people report to work, where your employer leverages your time to build his or her business and financial future. In Network Marketing we help and assist others in building their business. We are also leveraging their time, with each of us is gathering customers along the way. Hence the name Network. We get paid for this because we are assisting, coaching and helping them to establish their business. helping them to reach their goals for their financial future. So Its only right that we also get paid for our time? Just like your employer leverages your time, through network marketing you can leverage the time of others. What does this mean? Let’s take a look at a typical employer in a service industry with 100 or more employees. That has a labour rate of 60 dollars per hour. The goal of our employer is to keep each employee active and busy for each hour paid. Out of this once all the costs of doing business are factored in such as wages paid, health insurance, unemployment insurance, federal taxes, state taxes, fica taxes, permits, maintenance, housekeeping, the list just goes on and on. The employer may get to keep 5 to 10 dollars per hour of that labor rate. In Network Marketing, we have our initial start up costs anywhere from just a few dollars to several hundred dollars. Where most network marketers fail is they feel that they don't need a marketing budget for advertising, they don't seek out the education required to succeed. One of the important things to remember is, you are in a real business, and you no longer have a boss holding you accountable. Your success or failure is dependent upon you and your actions. Your primary task will be to gathering customers for your products or services. To help and assist others get started in their own business partnered with you. You are looking at a business model that will take 3 to 5 years to produce the kind of results you’re looking for. So don’t give up your day job just yet. It will require 5 to 20 hours of consistent time and effort each week to build a successful Network Marketing Business. It will require a marketing budget; most people do not even consider this. Once again this is a real business this is your business, not a

get rich quick overnight program, although it has been hyped by a great many naive marketers and web sites. Network marketing is based on word of mouth advertising which is the most effective form of advertising. Think about it when you go out, watch a great movie, you will go out and tell people about it. When Sam’s club or Costco moved to your area, you joined their buying club and started telling everyone how much you saved. This is the power of word of mouth advertising.

1.5 Find More Than A Business Model. Experience Real Support. An Amway business rewards you for selling products and helping others you sponsor to do the same. Your rewards grow with your business. You earn income from retail profit, monthly performance bonuses, monthly and annual leadership bonuses, and other cash and business incentives based on personal and group performance. We support you by providing world-class business resources, such as customer support, business management, order management, training and motivation. From product-specific training, to business education, self-improvement training, and mentoring programs, you’ll have access to resources to help you build a successful Amway business. You'll also enjoy the confidence of working with a supportive and trusted company that has been in business for over 60 years, and a strong community of experienced Amway Direct Sellers who can help you every step of the way and support you in reaching your chosen goals. Amway offers outstanding training resources that can get you up to speed quickly. Choose from online or in-person training tailored to your specific learning preference. We provide the tools to help you start achieving your goals. Amway proactively raises public awareness of the company, business opportunity and our products. We support your independent business with national and local advertising, sponsorships, and events. You are never alone in the Amway business.

Amway Business Owners (ABOs) make money when their customers buy Amway products and when others in their organization sell products. Primarily, money can be made by: •

Retail Mark-up – ABOs are able to sell their products at a mark-up (the difference between cost and retail price) to earn retail margin on the sale. ABOs can set their own prices, but Amway does establish a suggested retail price for every product we sell.

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Bonuses – ABOs can receive monthly bonuses based on their personal sales volume – how many products and what types of products they sell.

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Growth Incentives – As their business grows and new members join their group, ABOs receive monthly bonuses based on the product sales volume of their team. ABOs

are awarded growth incentives for reaching key business building milestones, such as one-time cash awards and business trips. Obviously, the monthly compensation earned by ABOs varies widely, and is largely dependent on what their goals are and how much time and effort they consistently put into the business. Amway believes strongly in rewarding success.

2. Allocation of Territories and quotas in Amway

2.1 Selling process of Amway Company Amway products are sold person-to-person, rather than door-to-door or via party plan. Distributors earn their income through retail profit on the goods they sell. In addition, they receive a commission from Amway based on the volume of sales they generate personally, as well as those by their own distributor network.

2.2 Design by Territory

The Indianapolis territory leads the region in market share. Customers and prospects are getting plenty of service; even the smallest accounts are seen with high frequency. Yet, no salesperson has successfully earned much commission in the territory and as a result, the territory has high salesperson turnover. The last salesperson who left complained that there weren’t enough lucrative accounts in the territory to make a decent commission. When sales managers evaluate territory performance, they frequently focus on characteristics of the salesperson working the territory. For example, the salesperson in Chicago is perhaps not generating new business because she lacks probing skills and doesn’t spend enough time prospecting for new customers. The salesperson in Indianapolis who left the company perhaps was not earning high commissions because he did not work hard enough or spent too much time with small customers. While these explanations are compelling, there may be another solution for improving sales performance in Chicago and Indianapolis – change the sales territory alignment. The Chicago territory is abundant with customers and potential. The salesperson doesn’t have the time to cover it properly. She is earning high commissions just by skimming the business that is easy to get. T...