TERM PAPER GUIDE: Dr. M.Misra. SUBJECT: POM ORGANISATION: AMWAY STUDENT: Prakash Chand ROLL NO: MBA200530.

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Business Profile

Amway is part of the Alticor family of companies, which generated worldwide retail sales of US$6.4 billion in 2005*.

Over 40 years ago, Rich DeVos and Jay Van Andel, two young entrepreneurs from the USA, created a plan that enabled anyone to start their own business by selling quality products and giving other people the chance to do the same. This unique business opportunity has enabled Amway to grow into one of the world's leading direct-selling companies.

Today, Amway supports your business with over 450 exclusive products and services, a state-of-the-art global ordering and distribution network and over four decades of experience and advice to help you when you need it.

Amway's world headquarters in Ada, Michigan, USA, is over a mile (1.6km) long and is home to more than 300 research and development scientists, product development teams and global business support personnel. All these resources are dedicated towards helping you achieve business success. Ada is also one of the four global manufacturing centers, along with Buena Park, California, USA; Lakeview, California, USA; and Guangzhou, China. Alongside the manufacturing facility at Lakeview is one of four farming centers that use organic and natural practices to grow ingredients for our health and wellness products. Other farms are located in Trout Lake, Washington, USA; El Petacal, Mexico; and Tiangu, Ceara, Brazil.

The buzzwords for business in the 21st century are Think Local, Act Global. Amway has been doing just that for over 40 years. With operations in more than 80 countries and territories, and products tailored for local regulations and preferences, Amway is one of the largest local companies in the world.

Amway's business opportunity reaches people all around the globe, helping them to live better lives and realize their hopes for themselves and their families.

In the following series of short videos, Amway's President, Doug DeVos, talks about the philosophy behind the business opportunity, and Business Owners from Asia, Europe and Latin America give their perspective on how Amway helps them live better lives.

Amway - Doug DeVos Asia Europe Latin America

For the modern business organisation, developing goods or services is notenough. Goods must also be available in the right quantity and at the right location in order to reach the customer.For the organisations themselves, distribution strategies should never be underrated. Developing an effective way of reaching customers may be the cornerstone upon which their successes are founded. Take Reader’s Digest and the unique way in which it sells products to its customers. What about Vision Express and the revolutionary reforms it has prompted in the sale of glasses? One reason for their success is that they reach their customers in a better and more appropriate way than their competitors. Amway Founded in Ada, Michigan in 1959, Amway has become one of the world’s largest ‘Direct Selling’ companies. The company’s first product L.O.C. was one of the earliest biodegradable cleaners and is still marketed by Amway. Today, the company has developed into a global corporation selling more than 400 products and employing in excess of 13,000 people, in over 70 countries and territories around the world. It manufactures and markets products, which range from household cleaners, laundry products, toiletries, cosmetics and housewares to vitamins and food supplements. Amway also markets products on behalf of other manufacturers, such as Talkland, Bosch, Black & Decker, Kenwood, Pierre Cardin, Aiwa and Philips. Direct Selling The concept of direct selling is based upon person-to-person relationships. The seller goes to the consumer rather than the consumer to a shop. In today’s fast changing society, where more people work and shopping patterns have altered, this type of shopping not only provides consumers with accessibility to a wide range of products but is also convenient. An organization involved in direct selling cannot sell without a sales force! At the heart of Amway’s approach to direct selling is the critical relationship between Amway and the seller or distributor. There are more than 2.5 million renewed independent Amway distributors world-wide, around 37,000 of whom are in the UK. Each of these distributors is self-employed. Anyone over 18 can establish their own business as an Amway distributor, either on a part-time or full-time basis. Amway offers individuals the chance to set up their own business with little or no experience or capital investment. Working hours and flexibility can be adjusted to suit each individual. Individuals may have many different motives for starting their own businesses. Some individuals strive for achievement and may have tremendous energy and commitment to succeed. Others may want independence; to work their own hours and have the ability to make their own

decisions. However, for many others the financial incentive is usually reward enough to engage in activities, where they may measure their success by income and standard of living. The vast majority of new Amway distributors have no previous experience running a business of their own. Participating in the Amway business has helped them with their personal and professional development, acquiring skills in dealing with people and developing a wider business acumen. Amway products are sold person-toperson, 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. Amway Culture Amway’s co founders, Rich DeVos and Jay Van Andel, believe that people everywhere desire the opportunity to achieve and better their lives. Amway has developed a series of statements which outline its culture. As with many different types of statements of corporate purpose, these statements fall into a hierachy:

Through the partnering of Distributors, mployees, and the Founding amilies, and the support of quality products and service, we offer all people the opportunity to achieve their goals through the Amway Sales and Marketing Plan.

To be the best business opportunity in the world.

Everyone needs a guiding vision to help direct their future. A business is no different. At Amway, our vision is quite simple ”we work each and every day to Help People Live Better Lives. So how can we make a positive difference to you and to others around the world?

By helping people everywhere to discover their potential and achieve their goals, by offering better products and opportunities for the future, and by sharing generously with the global community.

Helping Consumers Live Better Lives

By providing products and services that offer superior quality and value - to better meet personal and household needs around the world.

By making the Amway shopping experience faster, easier, and more convenient.

Helping Business Owners Live Better Lives

By providing a business opportunity that empowers people to realize their dreams. By making that opportunity flexible enough to accommodate each person's individual goals, priorities and

interest.

Helping Employees Live Better Lives

By providing a stimulating work environment that encourages everyone to reach his or her full potential.

By creating opportunities that help all employees fulfill their personal and professional goals.

Helping Neighbors Live Better Lives

Through corporate contributions that help improve the quality of life in every community where we do business. By providing personal assistance to individuals in need—particularly children.

VALUES Partnership Amway is built on the concept of partnership, beginning with the partnership between our founders. The partnership that exists among the founding families, distributors, and employees is our most prized possession. We always try to do what is, in the long-term, in the best interest of our partners, in a manner which increases trust and confidence. The success of Amway will reward all who have contributed to its success. Integrity Integrity is essential to our business success. We do what is right, not just whatever ‘works’. Amway’s success is measured not only in economic terms, but by the respect, trust and credibility we earn. . Personal Worth We acknowledge the uniqueness created in each individual. Every person is worthy of respect, and deserves fair treatment and the opportunity to succeed to the fullest extent of his or her potential. Achievement We are builders and encouragers. We strive for excellence in all we do. Our focus is on continuous improvement, progress and achievement of individual and group goals. We anticipate change, respond swiftly to it, take action to get the job done and gain from our experiences. We encourage creativity and innovation. Personal Responsibility Each individual is responsible and accountable for achieving personal goals, as well as giving 100 per cent effort in helping achieve corporate or team goals. By helping people help themselves, we further the potential for individual and shared success. We also have a responsibility to be good citizens in the communities where we live and work. Free Enterprise We are proud advocates of freedom and free enterprise. Human economic advancement is clearly proven to be best achieved in a free market economy.

Founders' Fundamentals The way Amway does business was defined right at the outset by its founders, Jay Van Andel and Rich DeVos. They outlined the ethical and operational standards that continue to guide both the company and its Independent Business Owners in all their activities. Those founding principles are literally carved in stone outside the World Headquarters:

Amway will always offer HOPE to the individual, will support the fundamental FREEDOM of people to determine their own future, allowing them the time and resources to protect and nurture their FAMILY, and receive REWARD in proportion to their efforts.

Amway is as proud of these principles as it is of more than forty years of business success. In fact, the two go hand in hand. Amway wholeheartedly believes that the strength of its business is due in large measure to the importance it attaches to these founding principles.

The Leaders Amway’s global operations are guided by the Office of the Chief Executive working alongside our senior management around the world. Their work is overseen by Alticor Inc.'s Board of Directors.

Steve Van Andel

Chairman Steve is the eldest son of Amway's co-founder, Jay Van Andel. Steve began working for the business at an entry-level position when he was still in his teens. Today, he is a leading figure in the company and in the development of Amway's current global bsusiness strategies and its operations. He is responsible for managing the daily business of this US$6.4 billion company. Steve shares the Office of the Chief Executive with Doug DeVos. Both Steve and Doug are board members of Amway's parent company, Alticor Inc. Steve has extensive corporate experience both at Amway and as a former Chairman of the U.S. Chamber of Commerce. During his year's tenure with the Chamber, he traveled extensively throughout the United States and to 11 countries in Europe, Latin America and Asia. He remains a tireless and passionate advocate of free trade. Steve is currently an active member of the U.S. China Business Council.

Back in his hometown of Grand Rapids, Michigan, Steve is dedicated to a variety of urban renewal projects including the Van Andel Museum Center and the Van Andel Institute (VAI), a major health research center. Steve also serves on various boards, including Gerald R. Ford Foundation, Standard Federal Bank, Borgess Metro Health Alliance, Metropolitan Health Corporation and the Metropolitan Hospital Foundation. Steve earned his bachelor of economics degree at Hillsdale College, Michigan, and his M.B.A. in marketing from Miami University, Oxford, Ohio. Doug DeVos

President Doug is the youngest son of Amway co-founder, Rich DeVos. He has a strong and successful background in global sales and has held senior executive positions with Amway Asia Pacific, Amway Europe and Amway Americas. Doug shares the Office of Chief Executive with Steve Van Andel. Doug's work within Amway has been hugely influential. As Senior Vice President of Asia Pacific, he was responsible for the company's operations in Asia, where his work contributed to record sales and a high growth rate in this market. As Senior Vice President and Managing Director of Amway Americas, he was responsible for the critical link between Amway and its Business Owners in both North and Latin America. His role as Director for Amway Europe enabled him to work closely with leading European Business Owners. Doug is a major international figure within the direct selling industry and is Chairman of the U.S. Direct Selling Association. He is actively involved in community, business and education projects for non-profit organizations including the Gerald R. Ford Foundation. In his hometown of Grand Rapids, Michigan, Doug also serves on a number of boards including Grand Rapids Chamber of Commerce, Holland Home and Grand Rapids Student Advancement Foundation. Doug is a graduate of Purdue University's Krannert School of Management. Jim Payne

Executive Vice President Jim Payne serves as Executive Vice President and is responsible for Alticor direct selling markets in North America, Europe, Australia, New Zealand, India and Latin America. Alticor's direct-selling subsidiary in North America is Quixtar, Inc.; other affiliate markets are part of Amway Corporation. Before being named to his current position in April 2005, Payne was Senior Vice President of Amway, responsible for numerous international affiliates. From 1999 through 2000, Payne served as President & Representative Director of Amway Japan Ltd., and still serves on the Board of Directors for that affiliate. Since 1980, his Alticor career has taken him around the world with progressively more responsible positions, including Director and then Vice President of New Market Development, in which he was responsible for expanding Amway markets worldwide. Payne also served as General Manager of Amway Germany, Regional Manager for the Poland and Switzerland affiliates, and Managing Director of Amway Thailand. A native of Grand Rapids, Michigan, Payne earned a bachelor of science degree in business administration from Aquinas College in Grand Rapids. He is a member of the West Michigan World Affairs Council in Grand Rapids, and the Grand Rapids Economic Club. He is a member of the Board of Directors of the Van Andel Global Trade Center. He and his wife, Linda, serve on the Board of Operation Smile – Michigan Eva Cheng

Executive Vice President Eva Cheng serves as Executive Vice President, responsible for Amway markets in Greater China and Southeast Asia. Amway Greater China encompasses mainland China, Taiwan and Hong Kong SAR. Southeast Asia markets include Thailand, Malaysia, Singapore, Indonesia, and the Philippines. Before assuming additional responsibility for the Southeast Asian markets in April 2005, Cheng was best known for driving the growth and development of Amway’s business in Greater China. In its most recent fiscal year, Amway (China) Company Ltd. (ACCL) recorded sales of more than $US 2 billion. In addition, ACCL has regularly been

recognized by business magazines, surveys, and government agencies as one of China’s most admired companies and best employers. Cheng is a graduate of the University of Hong Kong with a bachelor of arts degree with honors and a master’s degree in business administration. She began her career with Amway in 1977. David Ussery

Vice President d Managing Director

nd managing director of Amway markets in Japan and Korea. apan Limited

mway Philippines from 1995 to 2000, successfully establishing

c., most recently as the Chairman of

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anDavid D. Ussery serves as vice president aWhen he was named to lead both markets in April 2005, Ussery was more than prepared: he ran Amway J(AJL) from 2002 until 2005, and Amway Korea Limited (AKL) from 1992-95 and 2000-02. Together, AJL and AKL recorded sales of more than $1.7 billion in fiscal 2004. He was also the president and general manager of AAmway in the Philippines and adapting the Amway business to the Filipino culture. Prior to joining Amway in 1992, Ussery was a 30-year veteran of Avon Products Inthe Board of Avon Japan. With Avon, he held many key management positions in Atlanta, New York City and Tokyo. Ussery graduated from Georgia State University while working full time at Avon in Atlanta.

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What does tAmway is an abbreviation for "AmericRichard DeVos. Short, unique and easy to remember, Amway has been registered as a corporate name and trademark ever since.

In the followibuilt 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 millionsin 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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Jay Van Andel and RSupplements. 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,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 isare laundry and cleaning products." - Jay Van Andel

The result of their search was Amway's first produc TM

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 AndelSales 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.

The Ea

As Amway's annual sales rapidlbasement office in Jay Van Andel's home. During this time, Amway moved to a larger facility and began developing new products, including SA8 TM 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.

1970s 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 TM Dietary Supplements becoming a best-selling line, and the PERSONAL SHOPPERS TM

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.

1980s 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 TM 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 TM brand name, continues to hold a top position in the marketplace today.

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.

1990s 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 Insititute.

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.

2000s 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.

History The World Headquarters

Move your mouse over the links to the left or scroll the page to explore the history of Amway World Headquarters in Ada, Michigan, USA. Click to make the text stay on screen even when you move your mouse away

First 20 Years

Amway was incorporated in 1959 and grew rapidly in the early years. Always based in Ada, Michigan, USA, Amway had to move to bigger premises twice within its first year of business. That final move in 1960 was to a location on Fulton Street which had been an abandoned gas station and garage. It was this site that grew to become the famous Amway, and now Alticor, World Headquarters.

From this humble site, Amway becan to create a headquarters that would develop, manufacture and package their new Home Care product range, L.O.C. TM Cleaner and SA8 TM Laundry Detergent. A massive fire at the Ada site in 1969 destroyed the aerosol plant but Amway, determined to be undaunted by the tragedy, rebuilt the factory and carried on.

1973 saw the opening of the Center of Free Enterprise, dedicated to the entrepreneurial spirit around the world.

By 1979 Ada World Headquarters had expanded to an amazing 2.5 million sq ft (230 thousand square metres) incorporating R&D, manufacturing, distribution and administration.

1980 to Present

1981 - Opening of the state-of-the-art Research and Development building.

1983 - Opening of the ARTISTRY TM Cosmetic production plant in Ada, Michigan, USA.

1989 - Awarded the United National Environmental Programme Achievement Award

1995 - Established the Rehnborg Center for Nutrition and Wellness in California, now called the NUTRILITE TM Health Institute.

1999 - Celebrated Amway's 40th Anniversary.

2000 - Created Alticor, Inc. and its family of businesses, including Amway Corporation, Quixtar, and Access Business Group.

Global Growth

Amway has grown enormously since it first started over forty years ago. Worldwide affiliates have continued to join the corporate family over those years. Here is an outline of our global launches.

United States - November 1959

Canada - October 1962

Australia - April 1971

Republic of Ireland - July 1973

United Kingdom - July 1973

Hong Kong - October 1974

Germany - September 1975

Malaysia - March 1976

France - February 1977

Netherlands - September 1978

Japan - May 1979

Switzerland - February 1980

Taiwan - November 1982

Belgium - May 1983

Austria - March 1985

Panama - July 1985

Italy - November 1985

New Zealand - November 1985

Spain - June 1986

Thailand - May 1987

Guatemala - September 1987

Mexico - June 1990

Korea - May 1991

Hungary - June 1991

Brazil - November 1991

Macau - November 1991

Portugal - April 1992

Indonesia - July 1992

Poland - November 1992

Argentina - March 1993

Brunei - May 1993

Czech Republic - March 1994

Turkey - July 1994

Slovakia - November 1994

El Salvador - Jan 1995

Honduras - Jan 1995

Chile - February 1995

People's Republic of China - April 1995

Slovenia - November 1995

Uruguay - November 1995

Costa Rica - February 1996

Greece - March 1996

Colombia - August 1996

Philippines - April 1997

South Africa - August 1997

Romania - November 1997

Dominican Republic - Jan 1998

India - May 1998

Venezuela - June 1998

Denmark - July 1999

Finland - July 1999

Norway - July 1999

Sweden - July 1999

Namibia - February 2001

Croatia - June 2001

Singapore - April 2002

Ukraine - November 2003

Russia - March 2005

Business Opportunity or Pyramid Scheme? The Facts Some people confuse the Amway business opportunity with disreputable pyramid schemes. However, there are major differences, which have been officially recognized by the US Federal Trade Commission. Multilevel or "network" marketing is a lawful and legitimate business method that uses a network of independent business owners to sell consumer products supplied by an established company. Business owners merchandise products to consumers, not in fixed retail stores, but through person-to-person relationships between business owner and customer. Business owners can also build and manage their own sales-force by recruiting, motivating, supplying and training others to sell those products. Compensation then includes a percentage of the sales of the business owner's entire sales group as well as earnings from their own sales to retail customers. Pyramid schemes are illegal scams in which participants invest a large amount of money in exchange for the promise of receiving profits by recruiting additional participants to make a similar investment. Pyramid promoters sometimes try to make their schemes resemble multilevel marketing methods by introducing a product line. However, little or no effort is made to actually market the products to consumers. Instead, compensation is paid for recruiting. The Amway Sales and Marketing Plan is based on retail sales to consumers, not empty "get rich quick" promises demanding that you hand over large sums of money. In fact, only a small fee is required to become an Amway business owner and that cost is refundable should you decide to leave the business for any reason. In 1979, the US Federal Trade Commission ruled that Amway is a legitimate business opportunity. Amway does not require its Business Owners to buy inventories of stock, and does not impose a minimum order value. While business owners can earn bonuses from sales made by people they recruit into the business, Amway does not pay bonuses for the mere act of sponsoring another person. The Amway Plan has been recognized and cited by federal and state courts as the example that multilevel marketing plans should follow. The Amway Sales Plan The Amway Sales and Marketing Plan is a low risk, low start-up cost 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 core of the Amway Sales and Marketing Plan's income opportunity is the sale of quality AMWAYTM products and services 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 Independent Business Owners. Rewards and Recognition The rewards are more than financial Everyone is familiar with the way shops and stores make their money. They buy at a wholesale price, and sell at a higher one. The mark-up is their profit. Amway products are no different ”you get the mark-up value on each product you sell at retail. But with Amway, the rewards don’t end there. Because of the way in which Amway works, with its network of independent business owners and sales representatives, Amway rewards every business owner with bonuses based on the volume of sales made by them and the people they sponsor. As your sales increase, so do your bonuses. And as your business grows, so do your rewards. By sponsoring other people to join the Amway business, you not only spread the benefits of the Amway opportunity, you also increase the base of sales on which your bonuses are calculated. This begins a range of increasing rewards and recognition that mark your growing business status. Financial rewards are only one of the benefits of the Amway opportunity. As millions of people across the world have discovered, a real sense of achievement and self-reliance, community and connection, greater control over your life and more time for family and friends are things that money just cannot buy. A Product-based Business Offer Your Customers Choice and Quality Your business can offer your customers both Amway exclusive brands and premium name-brand products, all backed by the Amway Satisfaction Guarantee. You can focus your business on the entire Amway product portfolio, or specialize in one of three market sectors—Health, Beauty or Home—all offering exclusive, world-class brands built on extensive research and development. Health – NUTRILITE TM the leading dietary supplement brand, featuring DOUBLE X™, one of the world's first multivitamin/multimineral products. Beauty – ARTISTRY™, one of the world's top 5 prestige beauty brands, featuring the revolutionary TIME DEFIANCE TM Anti-Aging skin care product range.

Home – L.O.C.™, one of the most versatile and trusted cleaning brands, offering exceptional performance with biodegradable formulations. These are products you can be proud of and recommend with confidence. Backed by over 40 years of experience and hundreds of patents, with Amway you have access to the most extensive direct sales product lineup in the world. Amway: A World of Products 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. Explore Amway's brands Click and drag in the image above to explore Amway's brands and product ranges. Or use the links on the left to scroll the page for information about each brand or product range. NUTRILITE™ NUTRILITE* is the world's leading brand of vitamins, minerals and dietary supplements (based on 2004 sales). NUTRILITE is the only global vitamin and mineral brand to grow, harvest and process plants on their own certified organic farms (based on independent review by international market research firm, Euromonitor Consultancy). NUTRILITE has made supplement products using natural plants and plant concentrates since 1934. The Nutrilite Health Institute (NHI) is a worldwide collaboration of scientists dedicated to furthering research and education in nutrition and to building the global NUTRILITE brand. ARTISTRY™ Since its launch in 1968, the ARTISTRY brand has become one of the world's leading, prestige brands of facial skin care products and colour cosmetics. With more than 250 unique products sold in over 50 countries 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 SATINIQUE™ The SATINIQUE hair care system is the first and only salon quality system with nature's exclusive renewing technology, Ceramide Infusion System, giving men and women healthy, attractive-looking hair in just one use. Endorsed by internationally renowned stylist John Gillespie, SATINIQUE products are available through Amway business owners. SATINIQUE products solve hair problems by working on both the health of the scalp and hair, making hair smoother, shinier and more resilient. Salon quality SATINIQUE products repair, strengthen and protect in one use. iCook™ Cook healthier. Live better. iCook Stainless Steel Cookware uses the unique iCook VITALOK™ cooking method to keep more of what the garden gives you, locking in over a third more essential vitamins and minerals than traditional cooking methods. With unique features such as the exclusive iCook DURAMIC™ nonstick coating system and the iCook OPTITEMP™ base that distributes heat evenly, find out how the iCook range can benefit both your kitchen and your business Home Care Everyone loves clean. Clean says you're 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.

Embracing New Technologies Amway and its affiliate companies in markets around the world are working hard to develop a global e-commerce business platform to support our business owners. There are now more than one million Web-based Amway businesses around the globe, all supported by local distribution and warehousing facilities that guarantee your customers' orders are processed and delivered accurately and on time. Amivo in Europe and Alive in Japan are exemplary e-business sites supporting hundreds of thousands of independent businesses. Offering online catalogues and product information, these sites give customers unparalleled ease of access to a unique range of world-class products. The advantage of e-business to our Business Owners is that customers can always get to the information or products they require, 24 hours a day, 7 days a week. They can order online and receive their goods by mail, special messenger, or personal delivery by their local business owner. Amway Business Owners can monitor all of this activity online, building more efficient and cost-effective businesses that can react to modern consumer demands with speed and efficiency.

Amway sales and marketing plan

The activities of each Amway distributor are determined by the Amway Sales and Marketing Plan. Amway practices direct selling which is 'A method of selling goods directly to the consumer by an independent Distributor. A Distributor can then introduce further Distributors and generate income from retail profits supplemented by bonus payments based upon the total sales of the group built by a Distributor'.

Income is generated by a distributor through:

• the retailing of goods to consumers. Retail margins (mark-ups) on the basic wholesale price represent income to the selling distributor.

• additional performance and leadership bonuses, paid on the volume of personal business of the distributor and the business volume of the distributors he has introduced to the business.

• various levels of leadership bonuses, dependent upon the overall size and shape of the business, paid on achieving different levels of business performance.

This plan, therefore, rests upon the twin foundations of retailing and sponsoring.

• Retailing - the selling of goods to consumers on which retail margins are earned and performance bonuses gained.

• Sponsoring - the introduction of other individuals to establish and develop their own independent Amway distributorships.

Retailing enables distributors to provide immediate financial incentive rewards. Sponsoring enables distributors to replicate the base with other people, thus allowing the organisation to grow. Direct selling involves sales people showing and demonstrating products to obtain orders.

The objective involves matching consumer needs with the product. The better the match, the more lasting the potential for the relationship between the seller and the buyer. The selling process is aided by Amway's retail strategy to provide high quality, readily purchasable items with a good environmental positioning, offering consumers good value for money.

As with all direct selling activities, the process involves two-way communication and this can be time-consuming. Business success and the resulting financial results are a direct consequence of effort, commitment and personal group motivation. Personal contact between distributors at one-to-one or group meetings provides the opportunity for individuals to discuss strategies, difficulties, levels of involvement and plans for the future. The income objectives and individual targets may be determined by each distributor based upon what he or she wants to earn. Distributors who develop direct selling businesses may come from widely different backgrounds, with vastly different levels of experience and knowledge - the common factor to their success is the desire to achieve.

Responsibility to Employees and customers

All organisations have a responsibility to serve their employees and customers, who are likely to be affected by the consequences of an organisation's activities. In today's business environment it is unacceptable for organisations to ignore the activities of consumers and individuals within the wider community. For Amway this means doing business ethically and taking a stance on key issues. (Ethics concern the moral principles or rules of conduct generally accepted by members of society. They constitute a guide as to what should or should not be done, and involve what one believes to be right or believes to be wrong).

Over the years there has been much criticism of illegal pyramid selling and chain letter investment schemes. These proliferated in the l970s. Hard sell tactics and techniques such as 'down loading' (where the person at the bottom of the illegal pyramid buys vast amounts of unwanted and over-priced stock which he/she cannot sell), gave the whole industry a bad name. Many people invested in such schemes and lost money in dubious schemes which collapsed.

Business awareness campaign

Amway is a member of the Direct Selling Association (DSA), the industry body representing forty direct selling companies. All member companies have to abide by its Code of Practice which is endorsed by the Office of Fair Trading.

In July 1992 Amway (UK) Ltd launched its Business Awareness Campaign to persuade the government to tighten up the current pyramid selling legislation.

The campaign had three aims:

• To upgrade the legislation and introduce further safeguards to protect both distributor and consumer.

• To ensure that the legislation clearly defines the differences between illegal pyramid selling and direct selling and to changethe name of the legislation, so that ethical companies no longer have the pernicious label 'legal pyramids'

• To educate the general public, as well as opinion forming bodies such as Trading Standards Departments and Citizens' Advice Bureaux, about the differences between reputable direct selling companies and unethical ones.

The results

"With the full support of the Direct Selling Association (DSA), the industry body representing direct selling companies, Amway has lobbied both MPs and opinion formers and achieved extensive media exposure, highlighting the need for the legislation to be amended.

As a result of these concerns, Sir Nicholas Scott MP introduced a Private Members Bill tightening legislation - The Trading Schemes Bill - which received Royal Assent on 4 July 1996.

This Act will come into force following consultation on the regulations required."

There are many differences between illegal pyramid selling and direct selling companies. For example, illegal pyramid selling may have the following characteristics:

• Payment of a recruitment fee Sellers receive a payment solely for the act of recruiting new participants.

• "Down loading" Participants sell stock on to the next person at a profit. The process continues until the final participants are left with stock which cannot be sold because of the inflated price of the product.

• Money matrix style structure These are often described as investment pyramids, with an absence of a realistic saleable product and where regular monthly payments are made with the promise of an accumulated sum at the end.

• Unusable stock People are encouraged to buy a large amount of stock which they cannot sell and cannot return to the company.

On the other hand ethical direct selling companies have the following features:

• There is no recruitment fee paid for the act of signing up another person.

• All distributors pay the same wholesale price for products and sell to their customers at a 'suggested retail price'.

• The product merchandise is of key importance, with emphasis on the regular sale of the product range. (The Amway Rules of Conduct recommend that every Amway distributor should have a minimum of 10 customers at any one time in order to receive a performance bonus).

• Customer return policy, Satisfaction Guarantee.

• Distributor return policy.

• The Prevention of stockpiling. Amway stipulates that 70of any product purchased in any given month by a distributor, must be sold in order for the distributor to be eligible to receive bonuses.

The personal touch

The success of every organisation depends upon the satisfaction of its customers. The Amway product range covers many consumable items which most people have in their homes. The quality of its products is considered to be the organisation's driving force. Amway is committed to ongoing research and development.

The direct selling industry has grown rapidly over recent years. Changing lifestyles, demographics and economic recession have all been factors influencing this growth. Amway provides people with business opportunities across the globe. Direct selling is not about 'getting rich quick' it is about creating rewards for effort and initiative. With low risk and low capital investment, Amway provides people with the opportunity to achieve and to improve their lives.

As a leading player in the world of direct selling, Amway is helping to 'clean up' the industry and provide a valuable and acceptable form of product distribution. In an impersonal fast-moving world driven by technology, Amway provides the personal touch.

Direct selling and supply chain

A supply chain contains a set of links that bring finished products to end consumers. As a direct selling company, selling consumable products directly to consumers and bypassing the traditional 'retail' or 'high street'. Amway has its own distinct chain, placing a strong emphasis on IBOs who are able to focus on individual customers and their needs.

Amway manufactures the majority of its own brand products at their manufacturing plant in Ada, Michican. It then distributes these directly to the IBOs through a centralised warehouse in Venlo, Netherlands. Having signed a contract to work within Amway's Rules of Conduct and Code of Ethics, IBOs are trusted to operate flexibly within a 'self regulatory' environment. They develop direct supply channels and sell products to friends and customers that they know or meet.

Amway's supply chain is different from a more conventional supply chain that normally sells goods to final consumers through retail outlets. Amway's way of working depends on building lasting connections with the end consumer. Feedback provided by consumers and IBOs helps to shape future changes in products and the service provided.

As a global company, Amway has built up a strong regional structure around regional affiliates such as Amway UK and the Republic of Ireland. Operating through the regional structure, affiliates are responsible for:

• forecasting (ensuring stocks are sufficient to meet demand)

• customer service

• efficient distribution: ensuring products reach IBOs on time and in top condition

• product promotion and IBO support e.g. supplying brochures to IBOs.

Getting the image right is vital in a business that relies on building relationships with individuals and the wider community. IBOs often sell directly to friends and it is essential to provide high quality, value for money products with a 100% satisfaction guarantee. Amway spends time, money and effort on creating an appropriate design and appearance for Amway products. It also develops campaigns that support the business and social aims of the company.

Using communications to develop business opportunities

The importance of communication

Clear communication is essential when managing activities. Amway needs to communicate regularly with its 35,000 distributors in order to help them prepare for their increasingly challenging role.

Communication is the passing on of ideas and information. In business, it is essential to have good clear channels of communication.

Communication is only successful when the intended result is achieved. This effectiveness is dependent on the choice of recipient, the clarity of the message and the choice of communication medium.

It would be inefficient and wasteful to send a message to every distributor regarding every single issue, particularly if some issues only concerned a few individuals. Similarly, members of an organisation should not be overburdened with communications. If there are too many messages, distributors may simply stop reading them. This could mean that they may miss the most important messages!

Effective communication at Amway, therefore, involves making prior decisions about who needs to receive the message.

Sometimes it is necessary to repeat a message. For example, in the classroom, a lecturer will attempt to explain a task in clear and simple terms, but if students are unsure about the message, he will rephrase it until the students understand. Repeating messages through a different communication channel can also aid the target market's understanding.

Messages to Amway's distributors should, therefore, be as clear and direct as possible, limiting areas in which misinterpretation could arise. A good understanding of the audience using terms and language they are familiar with is vital.

Choosing the communication channel

The choice of communication channel used by Amway depends on what needs to be communicated. The way in which a message is delivered has an important impact upon how it is received. For example, certain publications, specifically targeted at top distributors are used when Amway wishes to communicate very specialised information, of value only to this level

Amway's communication channels

There are five different communication channels:

Corporate Events

Corporate events include specially arranged functions, such as product fairs, conferences and seminars, which distributors at different levels are invited to attend. Face-to-face communication at a range of events helps Amway and its distributors to get to know each other. They also provide an opportunity for distributors to get to know each other and are useful for relaying messages, giving advice and generating personal discussion. Events include:

• Pace Setter - a reward incentive to help new and existing distributors reach the 6bonus level within three consecutive calendar months.

• It also encourages a balanced business, with equal amounts of retailing and sponsoring - essential for long-term success and profitability.

• Direct Distributor Seminar - allows newly qualified Direct Distributors to meet the Amway Management Team, tour the UK Headquarters, attend key informative, motivational business sessions and go to the New Direct Distributor Gala Dinner.

• Leadership Seminar - where distributor leaders who have achieved a target criteria set by Amway, travel for a seven day trip with compliments of Amway to some of the world's finest beach locations and hotels where they attend a number of business sessions and exchange thoughts and ideas with corporate staff.

• Launch into '98 - a major annual launch of new products and services presented by a road show of events.

Participation at these events enables distributors to contribute ideas and solutions to problems encountered. The relationship between Amway and its distributors can, therefore, take place in an atmosphere of mutual trust and respect.

Training

Training builds the skills and knowledge of distributors and therefore improves competence levels. For Amway, the starting point of the training process is to identify the skills and knowledge necessary for distributors to carry out their role. Acquiring product knowledge is an important aspect of training and preparation. As Amway relies upon the personal

service of its distributors and the quality of its products, it is essential that distributors are not just shown how to use products but also how to merchandise them to their best advantage.

Training may involve either Corporate or Group (Line of Sponsorship) Training on specific product brands. Distributor input into these sessions provides informative help for the management of independent businesses. Once a distributor has achieved an advanced knowledge of a specific brand, they can then receive the training and tools required via a 'Train a Trainer' session whereby they will be taught how to train their own group, therefore maximising their expertise.

Lines of sponsorship

Amway is essentially a people-based business - without people, the business cannot expand. The business of each distributor grows via new customers and through the sponsorship of new distributors.

Established distributors are involved in helping newly sponsored associates to merchandise Amway products. Distributor groups meet to discuss company procedures and their goals. The groups also discuss new product launches and promotions, the administration of their businesses and support new and existing distributors. These lines of sponsorship provide constant, face-to-face support from professional associates.

Publications

Written communication is useful as a permanent source of reference. Amway uses a range of written communications. These include:

• Amagram - This magazine is mailed directly to all Amway distributors in the UK, the Republic of Ireland and Channel Islands. Amagram is used to communicate information about new products, promotions, community news, distributor events and recognitions as well as news of other affiliates throughout the Amway world. Amagram shows how distributors can make more out of their business. It is also used to help distributors understand the philosophy by which the business operates and the legislation regulating the Direct Selling Industry. For example, The Trading Schemes Act 1997, widens controls over illegal 'pyramid selling' and provides basic standards of business practice for participants in legal Trading Schemes.

• Diamond & Leaders' News - This is used to communicate special information to leading distributors. It may involve providing them with information which they need to pass down to other distributors or it could provide top distributors with 'elite' information such as the previews of launches or any changes in policy which only applies to this group, at a particular time.

• Newsgram and WAD (Warehouse Authorised Distributor) Bulletin - Newsgram is sent from Amway to Direct Distributors. Although its purpose is similar to Diamond News, information is communicated in a format more suited to the target audience.

• Special Literature - Occasionally, Amway designs a brochure or leaflet which is used to address a particular change or launch, e.g. new car care product range.

Other communication channels

The circumstances under which a business communicates constantly change. Organisations have to constantly review their communication systems to ensure the correct messages are transmitted in the correct way to the required audiences. For Amway, this means that different communication media are required for a range of purposes. For example:

• Direct distributors are targeted via a monthly mail-out

• Packing slips have short messages printed on them

• A telephone team at the Amway Information Centre handles ongoing enquiries

• Amway has recently launched their first ever brand advertising campaign. In an ever-competitive market-place, it has been used to raise brand awareness.

• Perhaps the most rapidly developing global communication forum is the Internet. For a company like Amway, with distributors all over the world, the potential of the Internet, as a communication mechanism, is enormous. The Internet serves as an important information source and offers the Amway Corporation a platform to define 'Amway,' its opportunities, products and association. The Amway (UK) Limited web-site is interesting and informative, containing many different facts about the Amway Business in the UK, Republic of Ireland and Channel Islands. Pages in the Amway (UK) Limited web-site refer to:

• What is Amway (UK) Limited?

• Amway (UK) & the Community

• The Amway (UK) Product Range

• The Amway (UK) Business Opportunity

• Amway (UK) News.

Artistry products

Developing a new range of skin care and cosmetics products is a costly process. It is important to co-develop the distribution network, thus giving key advantages over other products in the market-place.

Amway created ARTISTRY* as a complete line of skin care and cosmetics, to make clients look and feel the best that they possibly can. Amway is one of the few cosmetics companies in the world with its own manufacturing plant, so the Company can retain control over quality and follow hygiene guidelines which are stricter than those required by the law. No product is launched until is has been rigorously tested - before, during and after manufacturing processes, Amway does not test on animals. Amway has also invested heavily in the development of the packaging of the ARTISTRY line.

The packaging features a signature gold band alongside the ARTISTRY diamond logo. Consequently, ARTISTRY products rival those sold in department stores, but with the added bonus that ARTISTRY products are sold with personalised, expert service - distributors can be trained to become ARTISTRY Consultants.

To become ARTISTRY Consultants, distributors attend a training course which covers:

• learning about the skin

• skin care products

• cosmetic application - basic techniques

• cosmetic products - application, co-ordination and advanced techniques

• merchandising session - how to build an ARTISTRY business.

The aim of this course is to allow distributors to develop their product knowledge so that they can deal professionally and confidently with customers.

At the course, Amway distributors are provided with a training manual. The ARTISTRY Learning Guide is the central part of a larger training and personal development programme known as the Amway Performance Learning System (APLS). APLS provides information about ARTISTRY products so that distributors can become successful and knowledgeable ARTISTRY Consultants. Also included with the ARTISTRY APLS is a video which co-ordinates with the Learning Guide.

Whilst training to become Beauty Consultants, Amway distributors can also use other usual communication channels to further develop and improve their product knowledge and obtain key information, such as product updates.

Clarifying business opportunities

Acceptable business procedures must be developed when a large number of distributors representing a single organisation, all work independently. It is important that communications from Amway provide a moral direction for its distributors but, at the same time, allows them to develop their own identity. The Amway Rules of Conduct and Code of Ethics conform to the DTI's requirements and define the rights, duties and responsibilities of Amway distributors. Other communications are also designed to reaffirm acceptable moral principles.

The manner in which a salesperson deals with an ethical issue can have far reaching consequences not just on that individual but also upon the organisation as a whole. For example, distributors must not mislead customers on the claims of a product in order to achieve a sale. Direct selling is about person-to-person marketing where the salesperson must have credibility and trust. The processes of communication at Amway are designed to help distributors become well trained and professional in all their dealings.

Trademark, Amway Corp. MI, Ada, USA.

Successful products - successful solutions Introducing a new product

New products are often successful if they provide better solutions to consumers' problems and needs. An effective solution is one which makes the consumer feel that the product is:

• better than anything else available on the market

• just what they are looking for.

We can all think of products and services which create successful solutions, for example:

• non-stick frying pans

• cordless kettles

• personal stereos.

The problem

There are many cleaning products on the market. Visit your local supermarket and you will quickly find the aisle which is filled with similar looking cleaning fluids, produced by a relatively small number of companies. However, most of these cleaning products are single purpose ones and are produced by manufacturers to standard specifications. Many cleaning products lack versatility, i.e. they can only be used for one particular task and in one particular way. Consumers, therefore, buy and store a whole range of inflexible products. You can check this out simply by examining the range of cleaning fluids that are stored in your own home. However, today's consumer does not want to spend valuable leisure time shopping for dozens of different cleaning products.

The solution

In September 1995, Amway launched the ultimate multi-purpose cleaner - the Amway Super Concentrated Cleaning System - a unique all-in-one product. The Super Concentrated Cleaning System is a three-in-one unit that saves time and money.

Unlike many cleaning products, this innovative system dilutes the cleaning product to suit the job. It is operated through a sprayer gun which locks onto one of three new super concentrated versions of Amway's top selling Home Care products - Liquid Organic Cleaner (LOC), See Spray Glass Cleaner and Zoom Spray Cleaner.

LOC Super Concentrate - cleans any household surface that water will not damage, e.g. walls, floors, appliances, woodwork, work surfaces, dishes and utensils. It can also be used for washing hands and to spot treat hand-washable, colour-fast fabrics.

See Spray Super Concentrate - for all glass surfaces, windows, mirrors, chrome, stainless steel, porcelain and ceramic tiles.

Zoom Super Concentrate - quickly removes tough grease stains and oily grime.

Each of these products comes in a new 250ml formulation which is four times the concentration of the litre-sized products. The sprayer holds a water bottle and dilution dial that enables the user to dilute the cleaning product to tackle every home cleaning problem - from floors, walls and windows to bathrooms and kitchens. The dial provides dilution levels from zero (all water) to five (all product) and the whole system fits in a lightweight caddy that is easy to carry around the house. The dilution control is quick and easy to use so that there is no messy measuring or pouring.

As with all Amway home cleaning products, the Super Concentrated Cleaning System uses only biodegradable surfactants. In addition, the new system uses 50less packaging than equivalent one litre products and all packaging is readily biodegradable.

The importance of providing consumer benefits

One of the most important lessons to learn about successful marketing is that consumers do not buy products, they buy benefits.

For example, when you buy a compact CD player, you may look for one which:

• is stylish

• gives good value for money

• has the latest technology

• will not get broken easily

• gives the best quality sound reproduction.

You are, therefore, seeking a CD player which includes a whole range of benefits. Some of these are sensory benefits, e.g. the colour and look of the CD player, some relate to value, e.g. the price in relation to the quality of the product, whilst others relate to convenience, e.g. the ease with which the player can be stored or carried around.

The same sorts of considerations can be related to cleaning products. The customer will want cleaning products that:

• are easy to use and control

• have desirable sensory qualities (i.e. look and smell nice)

• are easy to store

• give good value for money.

Outlined below is a range of benefits provided by the Super Concentrated Cleaning System:

1 Tote tray

• collapsible handle

• lightweight

• easy to carry.

2 Super Concentrated Cleaners

• powerful cleaners

• save shelf space

• non-spillable bottle plugs.

3 Water bottle

• refillable bottle which fits next to the product.

4 Sprayer

• no mess, no fuss, no waste

• guaranteed for two years with domestic use, giving lasting durability.

4a) Sprayer Dial

• lets you dilute the cleaner to suit the job

• easy to use settings from 0-5

• automatically dilutes the product with water to the concentration required for the job.

4b) Spray nozzle

• adjusts to spray or stream.

5 Trigger

• convenience at your fingertips.

6 Grip

• designed for control and comfort.

7 Lock tab

• locks bottles into place

• allows quick and easy change to another product.

Marketing strategy

A strategy is a plan of action designed to achieve the goals of the organisation. In creating a marketing strategy for the Super Concentrated Cleaning System, Amway needed to set out the key objectives it wanted to achieve. The following objectives for the brand were set:

• to increase distributor profitability and productivity by providing a new and exciting business opportunity

• to optimise consumer convenience and value through enhanced product differentiation with this exclusive and revolutionary cleaning system

• to provide innovative and unique products to enhance the image of Amway Home Care.

Positioning

In order to make this strategy work, it was essential to think very carefully about the position that the new product would take in the market-place. The chosen position was to be:

'A revolutionary product system that provides the ultimate in customer convenience and control by automatically diluting and delivering the cleaning concentrates with water, providing customised cleaning at your fingertips, according to the customer' needs.'

The product's success would depend, to a certain extent, on the ability of Amway's marketing department to get this message across to distributors and ultimately to consumers.

A winning situation

If the product was successful, it would create a winning situation for Amway, its distributors and consumers.

Amway would benefit from:

• environmental source reduction

• selling a quality product which would increase revenue and provide an ongoing contribution to business profits

• reduced shipping and storage costs with more value added. The small, concentrated nature of the product would make it easier to distribute and would yield higher returns.

Distributors would benefit from:

• selling a winning solution with world-wide exclusivity

• selling a product with a high return per unit sold

• repeat orders from satisfied customers.

Consumers would benefit from:

A range of innovative product features and benefits including:

• high value relative to price • convenience • high performance • environmental sustain

Launching the new product

Multinational organisations like Amway have to consider the best ways of launching products on a global scale. It may be possible to carry out some aspects of the launch in identical ways in a range of countries, e.g. by providing an almost identical product in all markets. Other aspects, however, such as choosing the right sort of media and the language in which videos and commercials are produced, will be specifically tailored to a local market.

When carrying out a major launch, it makes sense to start in your traditional home market (in this case the United States) before rolling out the launch in stages across the globe. Lessons can be learnt from the early launches which can then be built into ongoing launches.

The world-wide launches for Super Concentrates took place in the following order:

The UK launch

The UK launch involved a number of conferences for distributors at prime locations up and down the country, the creation of a short video highlighting key aspects of the product and the production of a wide range of merchandising material. A promotional price was set for distributors who attended launch conferences, providing them with a high margin on sales made in the period following the product launch.

A number of press releases were created which clearly set out the nature and purposes of the product.

The press releases and product samples were sent to many national magazines which were relevant to Amway's target market, including Good Housekeeping, Living, Perfect Home, House Beautiful, Homeflair and Woman and Home.

In launching the Super Concentrated System, Amway needed to focus on the competitive advantages that the product would offer when compared with rivals. The key areas of strength that needed to be projected to the consumers were:

The uniqueness of the product - for the first time, consumers would be able to purchase a flexible cleaning system, which they would be able to regulate and control.

The advantages of concentration - in effect, consumers were now able to purchase 'micro liquids'. The new breakthrough product added to the range of choice by breaking from the traditional one litre size product packaging and provided very real benefits to the consumer in terms of convenience and value for money.

Environmental positioning - at a time when many consumers are committed to making purchases which support the conservation of the environment, the new system clearly provides strong competitive advantage. As consumer standards and expectations continue to rise, no company can survive and prosper if it fails to pay full attention to the developing needs of the customer and to the increasingly insistent needs of the environment.

Strategy and tactics of the launch

In Business, there is an important distinction between strategy and tactics. A strategy is a plan or practical measure designed to achieve certain objectives, while the tactics are the actions taken to implement the strategy and achieve these objectives.

The strategy relating to the launch of the Super Concentrated Cleaning System involved three stages:

Stage 1: to build excitement

Stage 2: to create awareness

Stage 3: to build product knowledge.

Building excitement usually involves informing the consumer that a new product will shortly be available. However, suspense is created by providing very few details of what the product actually is. Then, nearer the launch, you start to give the public a clearer idea of the product and its attributes. Finally, after the launch, you need to carry out a lot of hard work to build up an understanding of the brand and its advantages so that you build up a solid base of consumers.

One of Amway's best communications vehicles is its regular magazine, Amagram, which provides product details to its distributors. The communications programme devised for the launch of the Super Concentrated Cleaning System began with individual quarter page teaser adverts in Amagram and then built up to a full page spread prior to launch.

In terms of communications literature Amway created:

• a customer brochure to create the contact and build product awareness among customers

• a solution guide for the proper use of the products

• a demonstration kit to help distributors create a professional image and effectively demonstrate the performance of the product.

Post launch analysis

Following a product launch, it is vitally important for an organisation to assess how well the product has been received by the consumer. Since the launch of the Super Concentrated Cleaning System, Amway has carried out some detailed research to assess the success of the product and highlight areas for building the brand.

The analysis has found that distributors have identified a number of strengths including:

• the innovative, unique nature of the product

• ease of use

• easy of carrying

• ease of changing between the different products

• automatic dilution

• clear bottles so that the product can be seen.

The weaknesses identified in the research are that it is difficult to compare usage with the old one litre bottles, that the multilingual label appears cluttered and that the tote tray is too small.

Developing competitive marketing strategies Introduction

All organisations face an external business environment that constantly changes. Sometimes these changes are slight eg minor amendments to regulations or a new firm entering the market as a 'small player'. At other times, however, changes in the environment may have important consequences for an organisation eg new technologies, changing consumer tastes or a merger between two large competitors.

Changes in the business environment create both opportunities and threats to an organisation's strategic development, and the organisation cannot risk remaining static. It must monitor its environment continually in order to:

• build the business

• develop strategic capabilities that move the organisation forward

• improve the ways in which it creates products and develops new and existing markets with a view to offering its customers better service.

Amway is an interesting example of a company that reviews its strategic capabilities and uses this review to develop its products and markets. More than 450 products carry the Amway name in the areas of nutrition, health, beauty and home. Amway also has a range of products that include other well known branded goods. The company also offers a variety of third party services.

Amway is different from the more traditional distribution channels in that the business has developed through direct selling. Amway has over three million Independent Business Owners (IBOs) worldwide. IBOs deal directly with Clients, build up personal relationships and deliver direct to Clients' homes. IBOs are highly motivated, selling to people they know or meet. The personal contact and care that they provide is an important element in direct selling. IBOs are self-employed and can introduce others to the business, and so form their own sales network.

Strategic analysis

The process of strategic analysis helps an organisation to understand more about its strategic position and to construct answers to questions such as:

• What is happening to our business environment?

• What do we need to know about our markets and customers?

• What new options should we consider?

• How can we develop our competences to meet all of the changes in the business environment?

By asking these questions of itself, a business looks to match its own objectives for growth and development with the reality of the business environment. Businesses need to be realistic. They must base decisions not upon wishful thinking or blind optimism but upon close and careful analysis of products and markets.

Amway was founded in the USA in 1959. Today it is a global business that, along with its parent and sister companies, directly employs 10,000 people worldwide. The business also operates strategically at a Global, European and National level. Amway (UK) began operations in 1973 and has its own distribution and Product Selection Centres.

Amway makes good use of market research. This has helped Amway to anticipate developments within markets and to introduce new ideas that exploit opportunities and reduce any associated problems to a minimum.

Competition analysis is a key factor within market research. It helps Amway to identify the nature and extent of competition at a number of levels. For example, it helps marketers within Amway to find out how well products are meeting consumer needs and what aspects of competitors' brands appeal to consumers.

Amway has helped millions of people around the world to start their own independent business, through which they engage in person-to-person marketing. This type of direct selling involves matching a consumer's needs with the goods and services on offer. The better the match, the more lasting the relationship between the seller and the buyer.

Direct selling, therefore, is a boundary role; it is at the boundary of a supplying organisation that is also in close and direct contact with customers. Feedback from IBOs about products and services, as well as feedback from an IBOs own Clients, is an important contributor to marketing analysis.

Within Amway, regular internal meetings provide an opportunity for the company to discuss and evaluate its performance. Gap analysis helps this planning process by comparing forecast performance with achieved figures. The 'gap' is the difference between the two, as the diagram below illustrates. Of course, this 'gap' may be either positive or negative. Whilst it is vital to seek to establish the reasons for 'worse than expected performance' it is also instructive for a company to analyse why its performance has been better than expected, as there could be lessons to learn from that too.

Ansoff's product/market matrix

Ansoff's product/market matrix is an accepted way of identifying and categorising market and product developments and opportunities. Amway makes good use of the technique.

The matrix identifies various strategies open to organisations, and splits them into four categories. For example, when selling existing products to existing markets, organisations can look to improve their penetration of that market, and so gain a larger market share.

Where a company introduces new products into its existing markets, this may give it competitive advantage over its rivals through product improvement.

Market development involves taking existing products into completely new markets eg finding new markets overseas. Better customer targeting, further research and market segmentation often help firms to identify these new markets.

Diversification, on the other hand, involves moving into new products and new markets at the same time. This may involve a complete shift away from core activities into some other form of related activity. It represents a step into less familiar, perhaps even unfamiliar territory.

Market penetration

Going for market penetration has involved Amway in making the most of current products and competences by 'stretching' them to improve Amway's competitive position within existing markets. One great benefit of direct selling is that it is an immediate channel to the marketplace that offers customers a good service, while at the same time providing business opportunities for individuals.

Special incentives enable IBOs and end consumers to take advantage of particular offers at certain times of the year and these incentives have also helped to increase market penetration. There are also special events such as Leadership Training Seminars. These enable IBOs to spend time with others involved in the business and to learn about 'best practice' from each other, whilst also sharing ideas.

Product development

Product development is a particularly appropriate strategy where an organisation is strong in research and development. Product development is highly important for products that have comparatively short life-cycles. Within Amway there are approximately 500 active research and development projects in progress at any one time. With around 575 staff involved in research processes, and with strong links to many universities, Amway formulates, designs and develops new products to meet customer needs and expectations within the global marketplace.

For example, based on a Euromonitor study of 1998 estimated global retail sales data, 'artistry is among the world' top five largest selling prestige brands of facial skin care and colour cosmetics. Others in this distinguished group include Clinique, Lanc™me, Estee Lauder and Sofina'. Amway currently holds more than 380 patents internationally and has approximately 430 patents pending. Within its product development programme, Amway's technical teams use the company's customer base to monitor and test new product ideas.

Market development

Market development involves taking existing products into completely new markets. One method used by Amway involves expanding the ways in which individuals can be involved with the Amway business. Amway has developed a structure known as the IMC model. This increases the number of ways through which people can become involved in the Amway business. Each of the letters IMC stands for a different type of involvement.

• I - Independent Business Owners (IBOs)

• M - Members

• C - Clients (customers) of the IBOs.

Members are allowed to purchase Amway products at a price equivalent to that paid by IBOs, but do not participate in the Amway Sales and Marketing Plan. They are a new type of 'customer' who deal directly with Amway.

Diversification

Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line. Diversification, however, usually requires a company to acquire new skills, new techniques and new facilities. This implies significant investment.

One way in which Amway have diversified its activities is through creating an on-line business opportunity called 'AMIVO' to support and enhance its traditional business. This makes use of the internet. The internet is a good example of a structure that no one firm has had to pay to construct, but which is available to all firms now that it has been constructed. The challenge to each business is to identify how to use the internet in ways that are advantageous to it and also profitable.

Amway has succeeded in doing just that. The European platform of AMIVO was first launched within the UK to provide a one-stop office for IBOs. IBOs can use AMIVO for:

• a means for Amway to communicate with IBOs quickly

• ordering products from their home 24 hours a day, 7 days a week

• a communication tool to promote their business

• keeping track of their business status

• a reference resource

• a medium to recognise IBO business achievement.

Combining an offline and online business Ordinary citizens may not suffer too much from failing to keep track of new technologies the moment that they appear, but it can be disastrous for a business not to notice what is taking place. In more recent times, the Internet has once again forced businesses to rethink how they operate. Some businesses carried out insufficient research regarding what the internet had to offer them. Others seriously underestimated the hazards of going online, to their own great cost. If organisations do not accumulate 'know-how' and if they fail to monitor, trial and introduce new technologies as they develop products and processes for their consumers, they may find that their alert, progressive competitors have given themselves a competitive advantage. This case study looks at how Amway has developed a strategy for taking full advantage of the opportunities that the Internet offers for e-commerce within the UK and the rest of Europe. Amway is not just a consumer goods business, it is also one of the world's largest direct sales companies with over 3.3 million Independent Business Owners in more than 80 countries and territories in Asia, Africa, Europe and the Americas. The main benefit of this form of selling is that it allows the Independent Business Owner to focus upon individual customers and their needs, with the Independent Business Owner sourcing the consumer rather than the consumer having to visit a shop. Because it focuses upon direct selling, Amway is different from more traditional distribution channels. The channel of distribution describes the stages of ownership that take place as a product moves from a manufacturer to a consumer.

With high levels of Internet use within the UK and Europe, market research showed that Independent Business Owners were Internet-ready, and that the time was right for Amway to develop e-commerce opportunities that would offer the 24-hour service its customers were wanting. Rather than go for a full launch, marketers within Amway decided to opt for a soft launch. Amway’s plan Amway’s plan was to provide websites for all of Europe in just two years. As far as it could, it grouped countries together to lower costs. Once the first sites were running, Amway could see that the direct sales model worked well on the web. Amway then took the best parts of the sites – the bits that worked the best – and used these in its new sites. The new site in the UK is called AMIVO. Over a third (and rising) of Amway’s UK sales are now made using this website. Amway uses the web to link to its 3.3 million IBO customers all over the world. The web helps with sales, advice, transport, distribution and production. The use of the web has helped Amway – with its direct sales model – to compete better with other businesses that use more traditional methods. The AMIVO website development has given UK-based IBOs an alternative, enhanced way of managing their businesses. The website rapidly attracted a significant number of IBOs keen to try the online service. Promotions helped to encourage repeat use of the site by demonstrating its unique benefits. Today, over one third of Amway’s UK business is transacted through the AMIVO UK website and it’s well on the way to reaching 50% by the end of 2004. The average value of orders is 25% larger online than offline, and this has resulted in more efficient handling of orders and lower freight costs per order. When organisations make strategic decisions they have to take into account many of the changes taking place in their business environment. This Case Study illustrates how, in a rapidly changing consumer goods industry, with IBOs facing significant competition from traditional channels of distribution, Amway has used emerging technology in a way that provides both it and its partners with a distinct advantage in the marketplace. Meeting global responsibilities by caring for communities Introduction Successful businesses do more than simply provide goods and services for customers. They also make a real contribution to the communities in which they operate.

Successful ethical enterprises:

• create employment and job security

• provide products that give consumers good value for money

• contribute to creating a more caring and cared for community and hence a better world.

Amway provides a good example of a business that recognises its wider responsibilities. It is one of the world's largest direct sales companies. Amway works with around 3 million Independent Business Owners (IBOs) in more than 80 countries. These IBOs are the link between Amway and the final consumer. They are also Amway's links with citizens and communities across the globe.

In the UK Amway distributes a variety of products, including:

As well as its business aims the company has a range of social aims that are part of a 'Global Cause Program'. These are outlined below.

The world's most respected companies recognise that being a good corporate citizen means supporting causes that matter to the communities in which they operate. This is why Amway Europe has created links with the United Nations Children's Fund (UNICEF). UNICEF is a global champion for children's rights. It seeks to make a lasting difference and improve children's lives.

The United Nations Convention on the Rights of the Child sets out the right of all children to reach their full potential. It is the foundation of UNICEF's work. Working with UNICEF, Amway has launched an exciting pan-European fundraising campaign for children. It recognises the importance of building good working relationships with UNICEF's National Committees in each market in order to roll-out fundraising programmes to Amway's IBOs and their customers.

Growth

Growth is a major driving force for global businesses. It has to be. Standing still is not a viable option in a world in which competitors are growing by building new links in new countries and markets. Growth brings advantages known as economies of scale. These advantages include being able to spread advertising and marketing costs over much greater volumes of output. This results in lower unit costs and more competitive prices.

Economies of scale include spreading costs over a larger output.

*the fixed cost of creating the advertisement is much the same, no matter how many markets it is used in.

By expanding globally, Amway can increase its scale of operations. This leads to:

• increased sales and profits for Amway

• increased sales and profits for IBOs

• better quality and a wider, cheaper product range for final customers.

To achieve these benefits Amway continues to expand into new markets such as Eastern Europe and the Ukraine. Amway regularly seeks to develop new products in line with market research aimed at finding out what customers want.

In order to attract IBOs and new affiliates, Amway needs a strong brand image. Corporate Social Responsibility (CSR) is vital to any company seeking to build its image. CSR refers to the role that a company plays in meeting its wider commitments as a citizen. Such commitments include supporting worthy causes and always acting in an ethical, honest way.

Because Amway operates in many different markets worldwide and with a range of affiliates and IBOs, it has to devise and communicate its plans for CSR activities very carefully.

Recently, Amway has produced its 'One by One - Global Cause Program'. The plan is clear and robust and is helping to maintain Amway's reputation with all its stakeholders.

Developing a global strategy

In the same way that Amway has a global strategy for producing, distributing and marketing its products worldwide, its strategy for promoting CSR is also global.

Amway defines a global cause as 'a social issue affecting many people around the world engaged in a struggle or a plight that warrants a charitable response.' The company recognises that as a successful enterprise it must build its business based on the principles of 'relevance, simplicity and humanity'.

Amway's vision is 'helping people live better lives'.

Developing the Global Cause Program:

• helps Amway to bring this vision to life

• declares what the organisation stands for

• builds trust and respect in Amway brands

• establishes Corporate Social Responsibility as a high priority.

Amway developed its Global Cause Program in 2002. It is the result of extensive research. This involved studying relevant issues and holding discussions with organisations involved in providing help to the needy and underprivileged in communities worldwide.

Some research was primary research e.g. interviewing potential partners. Other research was secondary e.g. examining published sources about global trends in poverty, lack of educational opportunities etc.

From the outset, Amway established some clear objectives. These were to:

• build loyalty and pride among IBOs and employees

• enhance Amway's reputation as a caring organisation

• make a real difference to human lives.

Further research indicated that people linked to Amway had a clear favourite area for the Global Cause Program to cover. They wanted it to develop initiatives concerned with children and the family. They felt that there are millions of compelling reasons to focus on helping children including. For example:

• Amway is a business owned by and operated by families.

• Children are the world's future.

• Children embody hope.

• With children it is possible to make a lifelong difference.

Research showed that:

• Half of the world's poor people are children.

• Every year 12 million children die before their fifth birthday.

• 540 million children live in crisis situations.

• Over 125 million children have no access to basic education.

• Even in the most developed countries some children are left behind.

Research also showed, however, that children's needs differ from one part of the world to another. Amway therefore recognises that if its Global Cause Program is to have maximum impact it will need to be tailored to the specific needs of particular regions and areas.

Developing a European strategy

Amway's global campaign for children is called 'OneBYOne'. This illustrates the idea of making a difference in children's lives one step at a time. The campaign is part of an umbrella cause to improve the wellbeing of children worldwide. The campaign name and logo are colourful, cheerful, optimistic and hopeful.

The European part of this strategy involves working with UNICEF which is already an existing partner. Because of its excellent work with children, UNICEF was the logical choice.

The campaign fits comfortably with Amway's global strategy but is also tailored to meet local needs. At the end of 2004 Amway's European businesses donated 500,000 euro to UNICEF for UNICEF projects. This money was raised through three initiatives:

• selling UNICEF Christmas and other greetings cards

• making donations in multiples of 69p (1 Euro), £3.45 (5 Euro), and £11.72 (17 Euro) when placing orders for goods

• direct donations.

In January 2004 Amway activated a three-year contract to sell an exclusive range of Christmas products through European affiliates. The programme includes a commitment to raise 500,000 euro for UNICEF by the end of August of each year.

Amway's 'OneBYOne' campaign provides a good example of the way in which businesses can make a difference in the communities in which they operate. Research showed that Amway's stakeholders are committed to activities which better the lives of families and children. The company has therefore been able to formulate a plan and a well targeted programme to harness the commitment of its people to help others and to create a more prosperous world. By working with UNICEF it is partnering one of the world's most highly regarded children's organisations. Together they are able to help children enjoy a better future.

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