Amway
Introduction
Amway is an American
company which involves multi level marketing techniques to sell a variety of
products, primarily in health, beauty, and home care markets. Amway was founded
on 1959 by Jay Van Andel and Richard Devos. Based in Ada, Michigan, the company
and family of companies under Alticor reported sales of USD$11.3 billion for
the year ending on December 31, 2012 the seventh consecutive year of growth for
the company.
Its product lines include
home care products, personal care products, jewelry, electronics, Nutrilite
dietary supplements, water purifiers, air purifiers, insurance and cosmetics. Amway
conducts business through a number of affiliated companies in more than a
hundred countries and territories around the world. Amway was ranked No.114
among the largest global retailers by Deloitte in 2006 and No.25 among the
largest private companies in the U.S. by Forbes on 2012.
Background of
Amway
Jay Van Andel and Rich Devos
are friends since school days and had been business partners in various
endeavors including a hamburger stand, air charter service, and a sailing
business. In 1949 they were introduced by Neil Maaskant (Van Andel's second
cousin) to the Nutrilite Products Corporation. Nutrilite was a California based
direct sales company founded by Dr. Carl Rehnborg, developer of the first
multivitamin marketed in the United States. In August 1949, after a night long
talk, Devos and Van Andel signed up to become distributors for Nutrilite food
supplements. They sold their first box the next day for $19.50, but lost
interest for the next two weeks.
Shortly thereafter, at the
urging of Maaskant, who had become their sponsor, they traveled to Chicago to
attend a Nutrilite seminar. The meeting was at a downtown hotel, with over a
hundred people in attendance. After seeing promotional filmstrips and listening
to talks by company representatives and successful distributors, they decided
to pursue the Nutrilite business opportunity with enthusiasm. They sold their
second box of supplements on their return trip to Michigan, and rapidly
proceeded to develop their new business further.
In 1949, Devos and Van
Andel had formed Ja-Ri Corporation (abbreviated from their respective first
names) for importing wooden goods from South American countries. After their
trip to the Nutrilite seminar, they droppedthis business and Ja-Ri became their
Nutrilite distributorship. In addition to profits on each product sold,
Nutrilite also offered commission on the sales of products by new distributors
introduced to the company by existing distributors system today known as
multi-level marketing or network marketing.
By 1958, Devos and Van Andel had built an
organization of over 5,000 distributors. However, following concerns about the
stability of Nutrilite, in April 1959 they and some of their top distributors
formed The American Way Association to represent the distributors and look for
additional products to market.
Their first product was
called Frisk, a concentrated organic cleaner developed by a scientist in Ohio. Devos
and Van Andel bought the rights to manufacture and distribute Frisk, and later
changed the name to LOC which known as Liquid Organic Cleaner. They
subsequently formed Amway Sales Corporation to procure and inventory products
and to handle the sales and marketing plan, and Amway Services Corporation to
handle insurance and other benefits for distributors. In 1960 they purchased a
50% share in Atco Manufacturing Company in Detroit, the original manufacturers of
LOC, and changed its name to Amway Manufacturing Corporation. In 1964 the Amway
Sales Corporation, Amway Services Corporation, and Amway Manufacturing
Corporation merged to form a single entity, Amway Corporation Amway bought
control of Nutrilite on 1972 and full ownership on 1994.
Amway expanded overseas to
Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in
1979, to Latin America in 1985, to Thailand in 1987, to China in 1995, to
Africa in 1997, to India and Scandinavia in 1998, to Ukraine in 2003, to Russia
in 2005, and to Vietnam in 2008.Amway Malaysia stands tall within the Amway
worldwide group as one of the top 10 performing affiliates backed by impressive
indicators, such as sales turnover, profitability, and an ever-expanding
Distributor force.
Since its humble inception
on 1976, Amway Malaysia has expanded to support the business of its
Distributors with an extensive network of Amway Retail Shops and Regional
Distribution Centers throughout Malaysia and Brunei.
In 1996, Amway Malaysia
became the first ever direct selling company to be listed on the Main Board of
the Kuala Lumpur Stock Exchange. Amway is also the first direct selling company
to be awarded a 10-year Direct Selling License by the Ministry of Domestic Trade
Cooperatives and Consumerism, MDTCC on 2010.
Vision
Amway
work each and every day to help people live better lives. It achieve company’s vision
by helping people everywhere discover their potential and achieve their goals
by offering better brands and opportunities for the future, and by sharing
generously with the global community. To be the best business opportunity in
the world, with the tagline “Helping people live better lives.”
Mission
Through
the partnering of Distributors now it known as Independent Business Owner (IBO),
employees, and the founding families, 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. The Amway business opportunity is still a great
way for people around the world to start a business of their own. The Quixtar
business opportunity is a great way for people in North America to start their
own I-commerce business powered by Quixtar Inc.
Nutrilite Amway
Background
Nutrilite is a brand of
mineral, vitamin, and dietary supplements. Carl F. Rehnborg created the first
multi vitamin on the 1930s. When he visit China between roughly 1917 and 1927
exposed him to experiences in which he realized the role vitamins and nutrients
impacted general health. He began selling his vitamins as the California
Vitamin company and renamed it in 1939 to Nutrilite. On 1945, he invented the
multi level marketing, door to door, selling system to distribute his vitamins.
Two men, Lee S. Mytinger and William S. Casselberry became exclusive national
distributor on 1945 and operated a company to distribute the vitamins.
The founders of Amway,
billionaires Jay Van Andel and Rich Devos, began as independent distributors
selling Nutrilite products in 1949, at a time when the product's previous
distributors (Mytinger and Casselberry, Inc.) were involved in a dispute with
the U.S. Food and Drug Administration (FDA), which accused them of false
advertising. They rose rapidly to being top selling distributors. Concerned
about the FDA dispute, Van Andel and Devos launched a new company, the American
Way and later known as Amway, to use the MLM system for other household
products. Mytinger-Cassleberry dispute, which was gone to the United States
Supreme Court, was resolved in favor of the FDA on 1960s.
Amway bought a controlling interest in the
company on 1972, and took over complete ownership on 1994. On 2001, five
Nutrilite products were the first dietary supplements to be certified by NSF
International. On 2007, the Simply Nutrilite which later renamed Nutrilite Trim
Advantage Body System line was introduced. The line includes health bars,
anti-oxidant, and vitamin supplements.
History of Amway
Malaysia
On
1976, Amway begin it business with just five staffs in a small office and
warehouse facility in Jalan Ipoh, Kuala Lumpur. Amway is the pioneer for direct
selling industry in that time. Amway Malaysia
stands tall within the Amway worldwide group as one of the top 10 performing
affiliates backed by impressive indicators, such as sales turnover,
profitability, and an ever-expanding Distributor force.
Since
its humble inception in 1976, Amway Malaysia has expanded to support the
business of its Distributors with an extensive network of Amway Retail Shops
and Regional Distribution Centers throughout Malaysia and Brunei.
On
1996, Amway Malaysia became the first ever direct selling company to be listed
on the Main Board of the Kuala Lumpur Stock Exchange. The sales of Amway
Malaysia are kept on increase each and every year. Now it will predicted that Amway
Malaysia become the billion dollar company.
Achievement
and awards of Amway
There
is a non-exhaustive list of awards and recognitions from year 1989 to 2012
received by Amway and affiliated companies. Achievements and awards enhanced
the reputation of Amway and public recognition. This is a list of achievements
achieved by Amway in year of 2012 up to date.
·
Amway
Achievement and Awards 2012
·
Amway
Nutrilite - Most trusted brand Asia
·
Amway
eSpring - Most trusted brand Asia
·
Amway
Nutrilite - Most trusted brand China
·
Amway
Nutrilite - Most trusted brand India
·
Amway
eSpring- Most trusted brand Malaysia
·
Amway
Nutrilite - Most trusted brand Malaysia
·
Amway
eSpring- Most trusted brand Singapore
·
Amway
Nutrilite - Most trusted brand Singapore
·
Amway
eSpring- Most trusted brand Taiwan
·
Amway
Nutrilite - Most trusted brand Taiwan
·
Amway
eSpring- Most trusted brand Thailand
·
Amway
Nutrilite - Most trusted brand Thailand
·
Amway
China awarded "most responsible enterprise"
·
Amway
China wins "Best Customer Service" Award
·
Amway
US wins "Corporate Community Leader" Award
·
Amway
Center named "Sports facility of the year"
·
Amway
India wins "The Aaj Tak Care award for Education"
·
Amway
Malaysia named "Health Supplements Company of the Year"
·
Amway
Artistry Intensive Skincare Renewing Peel wins Her World Malaysia Reader's
Choice Award
·
Amway
Artistry Hydrating Foundation wins Her World Malaysia Reader's Choice Award
·
Amway
US a finalist in Volunteer Match "Employee Volunteer Program of the
Year"
·
Amway's
Fulton Innovation wins Gold Edison Award for Innovation
·
Amway's
Artistry Lip Gloss wins Total Beauty "Reader's Choice" Award
Nutrilite tops Consumerlabs.com
"Customer Satisfaction" survey
SWOT
Analysis of Amway
The
SWOT analysis is a powerful tool to a company for understanding and to make
decision. SWOT analysis perfect for business planning, strategic planning,
competitor evaluation, marketing, business and product development and research
reports. The SWOT analysis helps companies to identify the positive and
negative influencing factors inside and outside of a company or the organization.
i.
Strengths
·
High Quality
The
product of Amway is high quality. The products are manufacture at United States
of America, Brazil, Mexico and also New Zealand. The following are procedure
followed to ensure the best quality:
Ø 65 R&D and QA labs
worldwide
Ø 2000 of global labs space
Ø More than 700 scientists,
engineers and technicians globally
Ø Worldwide range of scientific
background and expertise
Ø More than 240 technician
consultants
Ø More than 75 University
Associations
Ø More than 85 Trade
Associations
Ø Fulton innovation,
founding member of the wireless power consortium (WPC)
o Over 61 WPC members,
growing each week
Ø 500 products focused on
health, wellness and beauty
Ø Bio gradable and recycled
package material
Ø Analytical services and quality
assistant more than 10,000 bioassays per year
Ø 7441 raw material managed
·
Online Purchasing
Amway
Company offer very easy purchasing to their distributor. To run their
systematic operation, Amway provided many facilities to their members. They can
make online purchasing while there are working. Once they back from office they
can collect products at Amway head quarters and other ware house. Besides that,
Amway also offer door delivery to the distributor who in deeded. Other than
that, the member also can use their ATM card at counter. This enable the
distributor feel very comfort and easy for them to do the purchasing. Thus,
these conditions become one of the strength Amway Company.
·
No pyramid system
According
to direct selling association of Malaysia, they are over 500 Multi level
marketing company become the part of the association. Based on them, there is several
unregistered company also doing their Multi level marketing business in
Malaysia. Even though there is several illegal and unregistered companies
compared to them, Amway are one of the company which ensure the distributed
wellness. Amway Company is not structured with pyramid.
This
business truly deserve for the hard working distributors. There’s no cheating
or fraud in this business. For example some of the other MLM, the performance
of depth line or the down line distributor enable the sponsor or the up line
become the leader and ensure for their success. But in Amway, they will pay to
the distributor based on their performance. This enable the distributor in
bottom or depth line can succeed compare to their sponsor. Besides that, it
will prove those who really involve in this business conquered a great height.
For
example, Managers who involve in Amway on 2004 with a dedication towards the
business and after 10 years hard work enable him to become a Diamond direct
distributor. On the other hand, some of the distributor qualified diamond
within 4 years. It’s obviously shows that, this business is not having pyramid
system and anyone can change their life as per their wish. This is one of the
strength of Amway among other companies.
·
Establish direct selling
association of Malaysia
Even though there are many direct
selling company worldwide, Amway is the pioneer company to direct selling they
did they operation around 80 countries. In Malaysia, Amway was foot their steps
on 1976. It almost 38 years operate business successfully at Malaysia and 55
years around the world. Amway also very pioneer MLM Company in Malaysia. Even
though many other direct selling company in Malaysia, Amway is the only company
who put their effort to establish direct selling association. Besides that, not
only establish the association but Amway also become the leader of association
and also provide moral support to the other company. Establishment of the association enables the Amway
Company become very strong and it’s become one of their strengths.
ii.
Weaknesses
·
Unknown
Although
Amway is a pioneer to the direct selling, people are still not familiar with
the products. They think that the products are expensive and they need to
highly pay. Actually, people are not understood the product and the price. The
products of Amway, manufacture with the extraordinary quality and high concentration.
The product really cheap compare to the quality. Besides that, Amway product is
high concentration and the consumer can use it for long run. The product
customer needs to pay only once and they can use for long last. For example,
the glister of Amway cost around RM25 and it is equal to 6 tube of tooth paste
of other company’s products.
Besides
that, the Amway Nutrilite very cheap compare to the quality. Each tablets of
Daily Amway contain all the nutrition to a human being daily required. Each tablets cost around 60 cents. On the
other hand, the LOC of Amway is equal to 8 bottles of cleaning agent of other
company. The LOC also have multipurpose function and can use as a floor shine
toilet cleaner, car polish, window polish and kitchen cleaner. The customer
only needs to pay RM30 or that product and they truly deserve more quality and
benefits with long lasting. But unfortunately, people are often not use the Amway
product because of lacking knowledge and wrong interpretation.
·
Not have proper guidance
Amway
offer many course, rely and other classes to Amway distributor. But very few
distributor are attend the classes and the rest are not eager learn to earn.
This enable, the distributor is lack of knowledge and skills to succeed. Besides that, the leader also not brings
proper guidance to their down lines or depth lines. To provide the knowledge,
the leaders should provide meeting to their distributors. They have to invite
and make sure all their distributors are attend the meeting regularly. On the
other hand, the distributor also got business training and practice discipline.
This make they understand the business ethics and how to do business in a
professional manner. Most of the distributors are sign up their down line and
not bother about their product skills and ignore them. This make the
distributor not understand the membership of a great and solid business which
conquer the world compare to other competitor.
iii.
Opportunity
There
are many opportunities available in Amway such as own business to the
distributor. The distributor should be Malaysian with 18 years and they only
required RM90 to get the membership. Besides that, the distributor also not
required a big capital to start their business. Other than that, the
distributor also not required highly educated and experience. Moreover, this
business also not required any good location. The distributor purchases the
product from HQ or warehouse and they will distribute to their customer
directly. So, there’s not required a good location. Furthermore, the business
is not required good looking. Anyone with the age 18 above till old ages are able
to do this business. In addition, this business also not required workers. So
the distributor doesn’t have pressure to pay their workers like other business.
Other
than that, this business has royalty income. The income of the distributor can
generate to the next generation. The royalty income is only provided for the
great Hollywood’s star, fame singers and royal family members. But this
business gives a great opportunity. Whenever the distributor passed away, their
income pass to their family members even though they did nothing for the
business. This will enable the person life including the family is secured even
they are no more.
This
business also enables uncommon freedom to the distributor. When the distributor
achieved platinum level and above, they can resign their job and they can
concentrate on this business. This will make no need to work till retired. Through
this business the distributor can do early retirement as per their wish. The
companies also send the distributor to overseas to appreciate their hard work.
Through this the distributor can go around the world once in a year and also
twice in a year when qualified as a Diamond direct.
iv.
Threats
Amway
is a solid and pioneer business but unfortunately have some threats. The other
direct selling company becomes the competitor to this business. The low price
of other product, compare to Amway enable people to buy those products. Besides
that, the shop ownership only provided to authorize person from Amway. But in Cosway
the authority given to anyone paid for it. These enable more Cosway shop
available around most of the cities and towns.
Competitive Advantage
Product Development
Research
and development play a vital commercial role creating better products through
improving operational processes and helping the whole business focus upon its
customers. Artistry products are the result of years of research, development
and testing, supported by modern manufacturing principles. Amway's research is
proactive, taking the lead in a market by researching the newest ingredients in
the industry for continuing development of new formula using state of the art
manufacturing techniques.
Marketing
Amway
is a global organisation which markets products in international market places.
Planning for global markets is a much more complex process than for domestic
markets. It presents many more risks than operating in a domestic market where
goods are sold in only one local area. Global marketing involves recognising
that people from all over the world have different needs is values, customs,
languages rules and currencies.
Even though it is said that, consumer needs
around the world are converging, there are accepted needs and wants that go
beyond national barriers. The marketing mix consists of a complex set of
variables which an organisation combines together in order to ensure that both
global and local corporate objectives are achieved.
Universal Packaging
Packaging is particularly important as part
of the product surround in the cosmetics industry. The functions it serves
include:
- Protecting the product which it contains.
- Acting as a communication tool conveying messages about the image and ingredients of the product and the manufacturer.
·
Creating brand identity
between the numerous components.
More
than $2.5 million was invested by Amway in high quality packaging communicating
one theme, designed to position the cosmetics in the high quality premium
sector. Different languages and product information ensure that the message is
communicated to all targeted markets.
The Product Life Cycle
Markets are in a constant state of change. Over a period of time, tastes
and fashions alter and the technology used to produce goods and services moves
on. As a result, there will always be a demand for new products as old ones
become redundant. According to the product life-cycle concept, all products
move through four life cycle phases.
·
During the introductory
phase growth is slow and volume is low because of limited awareness of the
product's existence.
·
Sales rise during the
growth phase and profit per unit sold reaches a maximum.
·
As products reach
maturity, growth in sales starts to level off. Organisations have to invest heavily
to extend the life cycle while competition becomes stronger.
·
When sales start to
fall a product is said to be in decline.
In a global environment, managing and maintaining
the market share for fashion products is particularly demanding. Cosmetic manufacturers
are constantly challenged by different changes in the fashion industry. If
these changes are not properly managed, products could quickly move into
decline.
Strategic Planning
Creating the online presence
The
Amway project's starting point was to create a brand name for the site that was
truly pan-European and which would be acceptable across a range of European
markets. Developing a brand involves compiling for products with a range of
features that identify them as a group e.g. name, logo and other distinctive
elements. Marketers at Amway had to take into account the way in which the
brand they developed would be pronounced, written and interpreted.
For
Internet trading, a new brand would also require a unique domain name that
would not infringe any existing copyright. The development of the name involved
considerable research. It had to be available and sound appealing
Combining offline and online
Developing
a new process like Amway's European online business takes place in distinct
stages. The first phase was to construct a business analysis report that
focused upon how the Independent Business Owners were likely to respond to the
development of e-commerce opportunities.
The
market research involved running focus groups with Independent Business Owners
in Italy, Germany, Spain and the UK. These groups enabled marketers to find out
about the functions desired from an e-commerce site as well as giving an
insight into many other e-commerce opportunities.
Launching the website
The
purpose of the Amway site was to provide e-commerce support for Independent
Business Owners that would help them manage their businesses. It will available
for 24 hours a day and 7 days a week, the site was developed to help users to
find products, place orders, repeat previous orders and check all of the
information about their businesses. All the distributors needed were an
Internet-ready computer and access to the Internet.
The
day when a website is launched is also the day when it comes under the critical
scrutiny of others, including competitors, so it has to be in good shape from
the outset. That implies a large amount of testing and fine tuning at the
development stage. The challenge then is to stay on schedule.
Competitor of Amway (Cosway)
Background of Cosway
Cosway operations begin on December
1979 with a simple concept to make quality products at highly competitive
prices. Today, it was growing up to become the one of Asia’s largest Network
Marketing Company and the Cosway formula was helping thousands of members to
achieve the financial success. The company distributes were distribute wide
range of exclusive, quality products, from established manufacturers all over
the world such as Personal Care, Organic Food and others. The company operates
as a subsidiary of Berjaya Group Berhad. The company retails multi brand
consumer durables, ranging from household, beauty, health care and car care
products to audiovisual home entertainment, as well as children’s education
learning aid products.
Cosway 4Ps of Marketing
·
Product
Cosway
distributes a wide range of exclusive, quality products from established
manufacturer Cosway 4Ps of Marketing all over the world. These products
are readily in demand as they fulfill the everyday needs of customers. Many
possess unique features that distinguish them from other products in the
market. Together, they ensure repeat sales and growing customer base.
·
Price
Known
for providing great value for money products, Cosway pricing strategy allows
its quality products to be more affordable and appealing to a wider range of
people. Cosway achieves this by purchasing in large quantities directly from
manufacturers, and then passing on the big volume discounts to its members and
customers.
·
Promotion
All year round
excitement makes recruitment and selling easier Cosway believes in proactive,
aggressive, exciting promotions to help members recruit more members, attract
customers and retain customer loyalty. Other than that, for monthly promotions
members can look forward to exciting offers and bargain buys all year round. In
addition to Cosway regular products, these promotions also include gift, food
items and innovative products at lower than retail prices. For Great Redemption
Program, members simply love this. Hundreds of valuable gifts can be redeemed
for totally free or at below cost prices by collecting Redemption Coupons when
they purchase Cosway products. Redemption Point (RP) is special price
reductions on Cosway products for members. Training and Product Demonstrations conducted
regularly throughout the country to help members train their network of down
line members.
Physical Distribution
Cosway
products are available at hundreds of easily accessible sales centers located
throughout the country. This ensures that there will always be a centre close
to where the distributors or their down line members work or live. This gives
great advantages. The following are Cosway principles:
·
No keeping of stocks for the down line members. Buy only what
needed.
·
No delivery of products to the down line members because they
can buy directly from the sales centers too.
·
The distributor can recruit members anywhere and everywhere.
The sales centers are present at every part of the country, next to where the
distributor work or live and also in shopping complexes.
Conclusion
Amway work each and every day to
help people live better lives. They should achieve their vision by helping
people everywhere discover their potential and achieve their goals by offering
better brands and opportunities for the future, and by sharing generously with
the global community. Amway focus on continuous
improvement, progress and achievement of individual and group goals. Amway also
anticipate change, respond swiftly to it, take action to get the job done, and
gain from the experiences. Besides that, Amway also encourage creativity and
innovation. Finally, now Amway operates in hundred countries, Amway should
widen this business to all over the world so that more people gain Amway’s
benefit and upgrade their life.
