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SUMMER TRAINING REPORT

ON
MARKETING STRATEGIES
AT

Submitted in partial fulfillment of the requirement
For the degree of
BACHELOR’S OF BUSINESS ASMINISTRATION
(GENERAL)
Session 2013-2016

SUBMITTED BY:
ROHAN SRIVASTAV
Enrollment No: 05021201713
BBA (GENERAL) 5th Semester

SUBMITTED TO
Dr VANDANA DESWAL
ASST PROFESSOR
MSI DELHI

MAHARAJA SURAJMAL INSTITUTE
BBA (General)
(2013-2016)

Recognized by UGC u/s 2(f)
Affiliated to Guru Gobind Singh Indraprastha University

C-4, Janakpuri, New Delhi

ACKNOWLEDGEMENT

I would like to take an opportunity to thank all the people who helped me in collecting
necessary information and making of the report. I am grateful to all of them for their
time, energy and wisdom.
I express my gratitude to MSI, New Delhi for providing me an opportunity to work on
this project as a part of the curriculum.
Getting a project ready requires the work and effort of many people. I would like all those
who have contributed in completing this project. First of all, I would like to send my
sincere thanks to Mr. Vikas Samania, Regional Sales Manager - Marketing, for his
helpful hand in the completion of my project.
I would also like to thank Dr Vandana Deswal for all the help and project guidance
extended to me by him in every stage during the project. Her inspiring suggestions and
timely guidance enabled me to perceive the various aspects of the project in a new light.
Lastly, I would express my grateful thanks to my family members and my friends who
inspired me to put in my best efforts for the preparation of the Project Report.

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DECLARATION
This is to certify that the Summer Training Project titled “A study on marketing
strategies of Amway.” is an academic work done by Rohan Srivastav Roll No.
(05021201713) submitted in the partial fulfillment of the requirement for the award of the
degree of “Bachelor of Business Administration” from “Maharaja Surajmal Institute” is
an authentic work carried out by him under my guidance. The matter embodied in this
project work has not been submitted earlier for the award of any degree to the best of my
knowledge and belief.

Dr Vandana Deswal
ASST PROFESSOR

3

.................................................CONTENT 1...................... BIBLIOGRAPHY.................................................. EXECUTIVE SUMMARY.................................. COPY OF QUESTIONNAIRE................ RECOMMENDATION.. RESEARCH OBJECTIVE & METHODOLOGY............70 8...................................................................72 9...........5 2........................................................................................................................................................................................................................................................................................ COMPANY PROFILE....................10 5.................75 4 ............. INTRODUCTION ...9 4.......... PRIMARY FINDING AND ANALYSIS................ LITERATURE REVIEW..............................74 10......... CONCLUSION & IMPLICATIONS..............60 7..................50 6..................6 3..................................................................................

I have finally concluded my research by providing a summarized conclusion and also suggested recommendations on the basis of the marketing mix. India with its rich reservoir of will. distributors. Amway continues to grow by offering new products and business opportunities to people from all cultures and walks of life. I have substantiated my research by conducting interviews to gain more insight about the corporation. 5 . An attempt has been made to study the company’s perspective in the new market and analyse on how the company plans its expansion in India. The focus of this project is based on studying a single organization i. Whether they are employees. In short it has made substantial value addition to India’s social economic life. Amway touches their lives for better. Amway has helped millions of people run their own independent business around the world. talent and enterprise is perhaps the most fertile ground for the Amway Corporation. Today.e The Amway Corporation. The data has been analysed on the basis of questionnaire which were conducted by me. This research has been conducted to study the marketing strategy adopted by Amway in the Indian market. It is defined by the fundamental philosophy of helping people help themselves. or citizens in the community.EXECUTIVE SUMMARY Amway is a unique company.

250 crores (the Amway Financial year runs from Sept. to Aug. through demonstration of usage.INTRODUCTION Direct Selling is a remarkable business model. Amway provides people with business opportunities across the globe. and a wide choice of products backed by Customer Satisfaction Guarantee. Amway India Corporation is the country's leading Direct Selling Company. In a little over two years of commercial launch Amway India has emerged as the country's largest Direct Selling Company. by an independent direct salesperson. Direct Selling can best be described as the selling of products and services directly to consumers in a face-to-face manner. The direct selling industry has grown rapidly over recent years. 1000 crore turnover much before its declared target of the year 2004. demographics and economic recession have all been factors influencing this growth.). Customers value the advantages of convenience. Amway provides the personal touch. It will reach its target of Rs. Direct Selling benefits consumer because it sells high quality products at the consumer's convenience. With low risk and low capital investment. It closed its financial year with a turnover close to Rs. demonstration of usage. personalised attention. 6 . Changing lifestyles. which brings the market to the customer and offers a unique business opportunity to anyone eager to adopt the spirit of enterprise. Amway provides people with the opportunity to achieve and to improve their lives. often at his/her home or workplace. As a leading player in the world of direct selling. One of the most tangible impacts of Direct Selling in its new advent has been the fact that it has touched the average man and women in a manner never experienced before. Amway is helping to 'clean up' the industry and provide a valuable and acceptable form of product distribution. It is perhaps the best example of the contribution Direct Selling is making to India. In an impersonal fast-moving world driven by technology. Direct selling is not about 'getting rich quick' it is about creating rewards for effort and initiative.

The increasing use of the Internet by consumers has created a real potential for developing different types of business models and for new approaches to reaching users directly and quickly in their homes. 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. These Independent Business Owners also have the ability to deliver Amway's products to their customers' homes. 7 . As the research progresses I have tried to analyse the companies marketing objective for India and how they set out to achieve them. Its Independent Business Owners own their own business. Amway in India. They are also self-employed and can introduce others to the business to form their own sales group of Independent Business Owners. with the flexibility to deal directly with their own clients and to build up personal relationships. Independent Business Owners sell to people they know or meet. This report examines in detail the marketing strategy of the leading global direct marketing major. This report also provides a brief introduction to the concept of multilevel marketing and tries to make the reader understand the difference between multilevel marketing and the traditional distribution setup in the FMCG sector. so as to give an idea as to how the system is being utilized by companies like Amway. The personal contact and care they provide is an important element in direct selling. In the initial stages of the report I have focused on Amway’s current position in the Indian market.Because it focuses upon direct selling.

and working their own hours.MLM -a definition Multilevel marketing allows sellers to build a business through their own sales efforts and by inviting others to become sellers. like the supplemental family income or making extra money for themselves. This report has been made keeping in mind the benefits which can be derived from my research. personalized attention. but do not have: considerable funds required to buy a franchise or start a new company. Among the top five reasons people sell direct because they like and believe in the product. It can be beneficial from the sellers point of view as it may give them the idea of exactly how they can go about creating their own business and benefit from the Amway’s unique business opportunity. and a good selection of quality products available at their door steps. Benefits to companies In this report I have deeply analyzed the marketing strategy for Amway through personal interviews by many IBOs and Amway customers who have helped in adding valuable data to this project which can be useful for the company. The suggested recommendations can be considered by the corporation for further expansion and increasing market share. Benefits to customers This report will be beneficial for consumers who prefer the marketing goods or services directly to them: at their own convenience often in his/her home either on a one-to-one basis. The story of Amway is intended to drive home the point of a company being alert enough to modify its globally accepted practices to suit the local market’s needs. Benefits to sellers Many people have chosen direct selling because they want to build their own business. 8 . like being their own boss. Remuneration is based on a seller's personal sales AND on the combined sales of those people they have sponsored. Through this the customers will get a better idea about the company’s product offerings and value the advantages of: convenience. trained and motivated. or in the context of a sales party.

I have focused my research in three main segments: A. In order to achieve this primary objective. Books 2. Where do they plan to go with their objectives for the Indian Market? C. Articles The total sample size would be 100 respondents The questionnaire’s response format would be close ended questions. 9 . The attitude of the respondents would be measured by itemized category scales. Where the Company stands at present? B. Magazines/ Project report 3. With a mix of question types varying from ranking. How do they plan to achieve the set targets? RESEARCH METHODOLOGY: Primary Data Collection:  Direct Interview with people who are associated with the Amway corporation in India  Questionnaire filled by a selected group of people. multiple choice to checklist questions. The secondary data would be collected from: 1.RESEARCH OBJECTIVE AND METHODOLOGY RESEARCH OBJECTIVE: The main objective is to carry out an in-depth study of Amway’s marketing strategies. Internet 4.

cosmetics. soap. FMCG products contrast with durable goods or major appliances such as kitchen appliances. FMCG may also include pharmaceuticals. are products that are sold quickly at relatively low cost. light bulbs. although these are often categorized separately. they generally sell in large quantities. paper products and plastic goods. In Britain. consumer electronics. shaving products and detergents. Smaller items such as TV sets and stereo systems are sometimes termed "brown goods". "white goods" in FMCG refers to large household electronic items such as refrigerators. as well as other non-durables such as glassware. Though the absolute profit made on FMCG products is relatively small. packaged food products and drinks.LITERATURE REVIEW Fast Moving Consumer Goods (FMCG). teeth cleaning products. so the cumulative profit on such products can be large. 10 . which are generally replaced less than once a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries. batteries.

watches. photography. plastic goods. production and general management. gifts. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. consumer electronics. detergents. purchasing. FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product (GDP). soaps etc.1 billion. FMCG Sector in India is estimated to grow 60% by 2010. 11 . household products. supply chain. The competition among FMCG manufacturers is also growing and as a result of this. investment in FMCG industry is also increasing. glassware. paper products.FMCG industry. where FMCG industry is regarded as the fourth largest sector with total market size of US$13. packaged food products. FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. Some of the prime activities of FMCG industry are selling. alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production. drinks etc. etc. printing and stationery. Some common FMCG product categories include food and dairy products. marketing. distribution and marketing of consumer packaged goods. and some of the examples of FMCG products are coffee. greeting cards. tea. specifically in India. The industry also engaged in operations. tobacco and cigarettes. dry cells. pharmaceuticals. financing.

Advantages of FDI in India: The Indian government made several reforms in the economic policy of the country in the early 1990s. Pepsi and Mars etc. product development. The increased flow of FDI in India has given a major boost to the country's economy and so measures must be taken in order to ensure that the flow of FDI in India continues to grow. general management. Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor. which made this industry as a potential one are low operational cost.Some of the merits of FMCG industry. strong distribution networks. Kleenex. operations. Some of the well known FMCG companies are Sara Lee. General Mills. finance. Foreign Direct Investment Foreign direct investment (FDI) in its classic definition. presence of renowned FMCG companies. Carlsberg. Procter & Gamble. diverse. Nestlé. Reckitt Benckiser. This industry is a stable. Unilever. supply chain. challenging and high profile industry providing a wide range of job categories like sales. marketing. human resources. This helped in the liberalization and deregulation of the Indian economy and also opened the country's markets to foreign direct investment. FDI in India has increased over the years due to the efforts that have been made by the Indian government. is defined as a company from one country making a physical investment into building a factory in another country. Population growth is another factor which is responsible behind the success of this industry FMCG industry creates a wide range of job opportunities. Coca-Cola. purchasing. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a Multinational corporation (MNC). 12 .

 Access to international markets. and various other foreign investors. Rural-urban profile 13 .  Improved technology.As a result of this. WHY INDIA Large domestic market India is one of the largest emerging markets. Major advantages of FDI in India have been in terms of  Increased capital flow. Now India has two major sectors where the market can be spotted. resident international companies.  Management expertise. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million. huge amounts of foreign direct investment came into India through non- Indians. Urban and Rural markets. with a population of over one billion. The growth of FDI in India boosted growth the of the economic country.

5 billion in 200102.3 Around 72 per cent of the total households in India (188 million) resides in the rural areas. India . 14 . this presents the largest potential market in the world.768 627.a large consumer goods spender An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products.Urban Rural Population 2001 – 02 (mn house hold) 53 135 Population 2009-10 (mn household) 69 153 % Distribution (2001-02) 28 72 Market (Towns/Villages) 3. the market potential is expected to expand further. With growing incomes at both the rural and the urban level.000 Universe of Outlets (mn) 1 3. The annual size of the rural FMCG market was estimated at around US$ 10. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makes India one of the largest FMCG markets. The total number of rural households is expected to rise from 135 million in 200102 to 153 million in 2009-10.

15 . total consumer expenditure on food in India at US$ 120 billion is amongst the largest in the emerging.Consumption pie EXPENDITURE Consumer Durables clothing vacations eating out footwear entertainment accessories books and music grocery personal care home textiles savings and investments Even on an international scale.

087 Population < 25 years of age 480 546 565 Urbanisation (%) 26 28 31 Rapid urbanisation. have all caused rapid growth and change in demand patterns. Aspiration levels in this age group have been fuelled by greater media exposure. This demand supply gap indicates an untapped opportunity in areas such as packaged form.Change in the Indian consumer profile Consumer Profile 1999 2001 2006 Population (millions) 846 1. only a small percentage of the raw materials in India are processed into value added products even as the demand for processed and convenience food is on the rise. convenience food and drinks. unleashing a latent demand with more money and a new mindset.012 1. the low penetration rate in both the rural and urban areas indicates a market potential. In the personal care segment. milk products etc. increased literacy and rising per capita income. Demand-supply gap Currently. leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further. FMCG CATEGORY AND PRODUCTS 16 .

bottled water. vegetables. floor cleaners. cakes). juices etc. dairy products. Personal care – Oral care. air fresheners. hair care. branded rice. bakery products (biscuits. feminine hygiene. Food and beverages – Health beverages.Health care – Fabric wash (laundry soaps and synthetic detergents). bread. paper products. soft drinks. metal polish and furniture polish). personal wash (soaps). toilet cleaners. branded flour. Indian Competitiveness and Comparison With The World 17 . cosmetics and toiletries. processed fruits. ice cream. skin care. deodorants. staples/cereals. snack food. household cleaners (dish/utensil cleaners. insecticides and mosquito repellents. tea. branded sugar. chocolates. perfumes. coffee. soft drinks.

one of the largest producers of synthetic soda ash in the world is located in India. coconut. sugarcane. spices and cashew and is the second largest producer of rice. milk. India is the largest producer of livestock. The availability of these raw materials gives India the locational advantage. Easy raw material availability and low labour costs have resulted in a lower cost of production.Materials availability India has a diverse agro-climatic condition due to which there exists a wide-ranging and large raw material base suitable for food processing industries. Tata Chemicals.6 million tonnes of caustic soda in 2003-04. existence of lowcost labour force also works in favour of India. India also has an ample supply of caustic soda and soda ash. Cost competitiveness Labour cost comparison Labor Cost 25000 20000 Labor Cost 15000 10000 5000 0 China Indonasia India Malasia Korea Singapore Apart from the advantage in terms of ample raw material availability. The FDI Policy (Foreign Direct Investment) 18 . Labour cost in India is amongst the lowest in Asian countries. the raw materials in the production of soaps and detergents – India produced 1. Many multi-nationals have set up large low cost production bases in India to outsource for domestic as well as exports market. wheat and fruits & vegetables.

Ex. as one of the two largest and fastest growing businesses outside North America. The company has set up 8 19 . By 1994. Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. Pepsi has 19 company owned factories while their Indian bottling partners own 21. The Indian government gave concessions to the company. soft drink concentrate. up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment. is allowed for most of the food processing sector except malted food. alcoholic beverages and those reserved for small scale industries (SSI). bottling and exports activities as Pepsi Foods Ltd. along with China. snack foods and vegetable and food processing are the key products of the company. This was followed by an introduction of Tropicana juice in the New Delhi and Bangalore markets in 1999. which is engaged in beverage manufacturing. a popular soft-drink brand in western India to consolidate its market share. a wholly owned subsidiary of PepsiCo International. Pepsi took advantage of the liberalised policies and took control of Pepsi Foods by making an offer to both Voltas and PAIC to buy their equity. Temporary approvals for imports for test marketing can also be obtained from the Director General of Foreign Trade. Pepsi considers India. PepsiCo's India experience After a not so successful attempt to enter the Indian market in 1985. The government also allowed PepsiCo to set up a new company in India called PepsiCo India Holdings Pvt Ltd. Pepsi was allowed to increase its turnover of beverages component to beyond 25 per cent and was no longer restricted by its commitment to export 50 per cent of its turnover. 24 per cent foreign equity is permitted in the small-scale sector. The evolution of a more liberal FDI policy environment in India is clearly supported by the successful operation of some of the global majors like PepsiCo in India.Automatic investment approval (including foreign technology agreements within specified norms). the company has bought over bottlers in different parts of India along with Dukes. Pepsi re-entered in 1988 with a joint venture of PepsiCo. The government approved more than US$ 400 million worth of investment of which over US$ 330 million has already been invested. Since then. Currently.

. The Himachal Pradesh government offers sales tax and power concessions. Many processed food items are totally exempt from excise duty. 20 . especially for export production. This has resulted in a boom in the FMCG market through market expansion and greater product opportunities. and items reserved for the exclusive manufacture in the small scale industry (SSI) sector. Customs duties have been substantially reduced on plant and equipment. Capital goods are also freely importable. PepsiCo intends to expand its operations and is planning an investment of approximately US$ 150 million in the next two – three years. Uttaranchal and Jammu & Kashmir have encouraged companies to set up manufacturing facilities in their regions through a package of fiscal incentives. Quantitative restrictions were removed in 2001 and Union Budget 2004-05 further identified 85 items that would be taken out of the reserved list. as well as on raw materials and intermediates.greenfield sites in backward regions of different states. Excise and import duty rates have been reduced substantially. Jammu and Kashmir offers incentives such as allotment of land at concessional rates.000. Wide-ranging fiscal policy changes have been introduced progressively. including second hand ones in the food-processing sector. 100 per cent subsidy on project reports and 30 per cent capital investment subsidy on fixed capital investment upto US$ 63. Central and state initiatives Various states governments like Himachal Pradesh. Removal of Quantitative Restrictions and Reservation Policy The Indian government has abolished licensing for almost all food and agro-processing industries except for some items like alcohol. Five-year tax holiday for new food processing units in fruits and vegetable processing have also been extended in the Union Budget 2004-05. cane sugar. capital subsidies and other incentives for setting up a plant in its tax free zones. hydrogenated animal fats and oils etc.

domestic and commodities. Worlds View and India The structure The Indian FMCG sector is the fourth largest sector in the economy and creates employment for three million people in downstream activities. 1954". which ensures new product launches in the Indian market from the parent's portfolio. the Indian food processing industry represented 6. • Majority of the product classes require very low investment in fixed assets • Existence of contract manufacturing • Marketing assumes a significant place in the brand building process 21 . Within the FMCG sector. Nestle).Food laws Consumer protection against adulterated food has been brought to the fore by "The Prevention of Food Adulteration Act (PFA). colour residues. packaging.3 per cent of GDP and accounted for 13 per cent of the country's exports in 2003-04. A distinct feature of the FMCG industry is the presence of most global players through their subsidiaries (HLL. which and applies to imported food encompassing food preservatives. Critical operating rules in Indian FMCG sector • Heavy launch costs on new products on launch advertisements. pesticide labelling and regulation of sales. P&G. free samples and product promotions.

• Extensive distribution networks and logistics are key to achieving a high level of penetration in both the urban and rural markets • Factors like low entry barriers in terms of low capital investment. Few examples as to where our country stands… Detergent per capita consumption 25 20 Detergent per capita consumption 15 10 5 0 West europe USA Philipines 22 India . fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganised sector • Providing good price points is the key to success. Here are a few breakups of what Indian standards look like when compared with the other similar or powerfull countries.

6 1.2 1 Toothpaste per capita consumption 0.2 0 UK Brazil Thialand India Tea Per capita consumption 3 2.4 0.Toothpaste per capita consumption 1.8 0.5 0 UK Pakistan India 23 .5 1 0.4 1.6 0.5 2 Tea Per capita consumption 1.

Skincare per capita consumption 1000 900 800 700 Skincare per capita consumption 600 500 400 300 200 100 0 UK USA Argentina India Ice Cream per capita consumption 25 20 Ice Cream per capita consumption 15 10 5 0 USA Pakistan India Indian 24 .

The total market has expanded from US$ 17. Rural demand constituted around 52.FMCG market in the Urban Sector Urban FMCG 12 10 8 6 Urban FMCG 4 2 0 Rural FMCG 14 12 10 8 Rural FMCG 6 4 2 0 Most Indian FMCG companies focus on urban markets for value and rural markets for volumes. As a result.6 billion in 1992-93 to US$ 22 billion in 1998-99 at current prices. rural marketing has become a critical factor in boosting bottomlines. Hence. most companies' have offered low price products in convenient 25 .5 per cent of the total demand in 1998-99.

aggressive advertising and increased penetration of washing machines.packaging. the urban elite consumes a proportionately higher value of FMCGs. In comparison. hair care products at US$ 831 million and oral care products at US$ 537 million. Local Kirana Shops Products Household care The size of the fabric wash market is estimated to be US$ 1 billion. but not volume. While the overall 26 . The urban market prefers washing powder and detergents to bars on account of convenience of usage. household cleaners to be US$ 239 million and the production of synthetic detergents at 2. The regional and smallunorganised players account for a major share of the total detergent market in volumes.6 million tonnes. Personal care The size of the personal wash products is estimated at US$ 989 million. increased purchasing power. These contribute the majority of the sales volume. The demand for detergents has been growing at an annual growth rate of 10 to 11 per cent during the past five years.

the size of the Indian food processing industry is around US$ 65. The leading players in this market are HLL. Large biscuits & confectionery units. The three largest consumed categories of packaged foods are packed tea. This segment has witnessed the entry of a number of international brands. Indian hot beverage market is a tea dominant market. especially toothpastes. the health beverage industry is valued at US$ 230 billion.6 billion including US$ 20. Coffee is consumed largely in the southern states. The oral care market. The industry is very competitive both for organised and smaller regional players. more than half of this is available in unpacked or loose form. The market for branded coconut oil is valued at approximately US$ 174 million. Dust tea is popular in southern India. chocolates at US$ 73 million and ice creams at US$ 188 million. Of this. remains under penetrated in India (with penetration level below 45 per cent) due to lack of hygiene awareness among rural markets. Nirma. the premium and middle-end soaps are growing at a rate of 10 per cent. Godrej Soaps and Reckitt & Colman. The urban-rural split of the tea market was 51:49 in 2000. However. Consumers in different parts of the country have heterogeneous tastes. like Oriflame.1 billion.6 billion of value added products. catering to domestic and international markets. The size of the total packaged coffee market is 19. soyaprocessing units and starch/glucose/sorbitol producing units have also come up. The size of the semi-processed/ready to eat food segment is over US$ 1. Marico (with Parachute) and Dabur are the leading players. bread and biscuits at US$ 1.personal wash market is growing at one per cent. while loose tea in preferred in western India. Food and Beverages Food According to the Ministry of Food Processing.600 tonnes or US$ 27 . The coconut oil market accounts for 72 per cent share in the hair oil market. Colgate Palmolive. In the branded coconut hair oil market. Gillette India and Godrej Soaps. Avon and Aviance leading to increased competition. Beverages The Indian beverage industry faces over supply in segments like coffee and tea. The Indian skin care and cosmetics market is valued at US$ 274 million and dominated by HLL. biscuits and soft drinks.7 billion.

The food-processing sector attracts the highest FDI. Middle East and the CIS countries because of the similar lifestyle and consumption habits between these countries and India.3 per cent of the total sectoral investment.3 per cent equity stake in BIL through AIBH Ltd (a 50:50 joint venture). Coca cola and Pepsi dominate the Indian soft drinks market. The total soft drink (carbonated beverages and juices) market is estimated at 284 million crates a year or US$ 1 billion. The market is highly seasonal in nature with consumption varying from 25 million crates per month during peak season to 15 million during offseason. Dabur and Vicco laboratories are amongst the top exporting companies. with major 28 . while the vegetable oils and vanaspati sector accounts for the highest domestic investment in the FMCG sector. Though the Indian companies are going global. The market is predominantly urban with 25 per cent contribution from rural areas. HLL. they are focusing more on the overseas markets like Bangladesh. National Players Domestic players Britannia India Ltd (BIL) Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently the Groupe Danone (GD) of France (a global major in the food processing business) and the Nusli Wadia Group hold a 45. The urban rural split in the coffee market was 61:39 in 2000 as against 59:41 in 1995. Total exports of food processing industry was US$ 2. Godrej Consumer.87 million. Nepal. Marico. Investment in the FMCG sector The FMCG sector accounts for around 3 per cent of the total FDI inflow and roughly 7. Exports India is one of the world's largest producers for a number of FMCG products but its exports are a very small proportion of the overall production.9 billion in 2001-02 and marine products accounted for 40 per cent of the total exports. BIL is a dominant player in the Indian biscuit industry. Pakistan.

Dabur India Ltd is the largest Indian FMCG and ayurvedic products company. Dabur India Ltd Established in 1884. Britannia Industries Ltd (BIL) plans to increase its manufacturing capacity through outsourced contract manufacturing and a greenfield plant in Uttaranchal to expand its share in the domestic biscuit and confectionery market. Dabur has firmed up plans to restructure its sales and distribution structure and focus on its core businesses of fastmoving consumer good products and over-the-counter drugs.brands such as Tiger glucose. Currently. it is rapidly gaining market share even in its nascent businesses of branded apparel.6 billion. the bakery product business accounts for 99. Dabur Chyawanprash. Indian Tobacco Corporation Ltd (ITCL) Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a 37 per cent stake. A roadmap is also being prepared to rationalise the stockists' network in different regions between various products and divisions. While ITC is an outstanding market leader in its traditional businesses of cigarettes. Dabur Overseas Ltd and Dabur International Ltd. greeting cards and packaged foods and confectionary. Under the restructured setup. ITC is one of India's foremost private sector companies with a turnover of US$ 2. Bourbon etc. Mariegold. The company holds a 40 per cent market share in the overall organised biscuit market and has a capacity of 300. Some of its leading brands are Dabur Amla.000 tonne per annum. Dabur Egypt Ltd. Fifty-Fifty. Pudin Hara and the Real range of fruit juices. hotels.1 per cent of BIL's turnover. packaging and agriexports. Good Day. The product portfolio of the company includes health care. food products. the company plans to increase direct coverage to gap outlets and gap towns where Dabur is not present. The company reported net sales of US$ 218 million in 200304. The group comprises Dabur Finance. After the merger of ITC Hotels with ITC 29 . Pure Magic. The company changed its name to ITC Limited in the mid seventies when it diversified into other businesses. Lal Dant Manjan. paperboards. pharma. Vatika. In 1910 the company's operations were restricted to trading in imported cigarettes. and veterinary products. natural gums & allied chemicals. Dabur Nepal Pvt Ltd. The company reported net sales of US$ 280 million in 2002-03. Hajmola.

Sweekar. Nirma is one of the most successful brands in the rural markets with extremely low priced offerings. Nirma has plants located in Gujarat. consolidation of market shares. International Travel House (ITH) also aims to launch new products and services by way of boutiques that will provide complete travel services. the company will ramp up its growth plans by strengthening its alliance with Sheraton and through focus on international projects in Dubai and the Far East. Madhya Pradesh and Uttar Pradesh. Nirma Soaps and Detergents and Nilnita Chemicals were merged with Nirma in 1996-1997. Saffola. The overseas sales franchise of Marico's branded FMCG products is one of the largest amongst Indian companies. It has six factories. promoted by Karsanbhai Patel. Its new LAB plant is located in Baroda and the soda ash complex is located in Gujarat. aesthetics services and global ayurvedic businesses. strengthening flagship brands and new product offerings (2-3 new product launches are expected in 2004-05). The company also markets food products and distributes third party products. Hair & Care. Nirma Limited Nirma Ltd. In 2003-04. fatty acid and glycerine. Revive. ITC's subsidiary. Nirma also makes alfa olefin. The company has also set up a wholly owned subsidiary Nirma Consumer Care Ltd. It also plans to expand its international business to Pakistan. Marico owns well-known brands such as Parachute. Shanti Amla. and sub-contract facilities for production. Shiva Soaps and Detergents. Marico Marico is a leading Indian Group incorporated in 1990 and operating in consumer products. is a homegrown FMCG major with a presence in the detergent and soap markets. It was incorporated in 1980 as a private company and was listed in fiscal 1994. It is also the largest Indian FMCG company in Bangladesh. Oil of Malabar and the Sil range of processed foods.Ltd. The company plans to capture growth through constant realignment of portfolio along higher margin lines and focus on volume growth. 30 . which is the sole marketing licensee of the Nirma brand in India. Associate companies' Nirma Detergents. Mediker. the company reported a turnover of US$ 200 million.

PUSH 31 . PULL This strategy may require little promotional efforts from the resellers except to stock input the product on shelves. that is the consumers are encouraged to demand the product from retailers who in torn place orders with wholesaler or manufacturer to meet the consumer demand.  There is reasonably highly brand loyalty and consumers make brand choice decision before they go to the store. The requirements to implement one strategy might be little more than to just stock the product by the retailers.  It is possible to differentiate the product on the basis of real or emotional features. coupons. etc are used. rebates. A pull strategy is appropriate when  The product demand as high. there are large advertising expenditures. marketing efforts are directed at the ultimate consumer and consumer promotions such as consumer contests and sweepstakes.Pull and Push Strategies Sales promotion decisions are significantly affected by whether the company decides to do to pull or push strategies to accomplish its objectives. free samples. The other strategy may demand more participation from resellers such as the ability to explain to the consumers as to how a product works. The objective of such promotional efforts would be to create sufficient consumer demand to pull the product through the channels. Such a decision may require a little or a lot of cooperation from resellers. In case of using a pull strategy. If this strategy is also chosen to include advertising. consumer premiums.  Brand consumers show high degree of involvement in the product purchase.

It may also be suitable for relatively new products or when the brand choice is often made in response to displays in the stores. PUSH Push strategies generally appropriate for product categories where there is low brand loyalty and many acceptable substitutes are available in the market.and get any 30 chocolates worth Rs. the resellers may be required to display. Manufacturers. demonstrate and offer discounts. the product purchase is unplanned or on impulse and the consumer is familiar and has reasonably adequate knowledge about the product. Retailer promotion: Buy Cadbury’s products worth Rs. Through this offer the company is pushing its product to the retailers and now that the retailer has enough incentive the retailer stocks more and thus it becomes essential for the retailer to push the product to the consumers.If a firm decides to use push strategy. Pull promotions Push promotions Push promotions (Manufacturer to consumer) (Offered to trade) (Offered by retailer) Sampling Discounts Price cut Coupons Display allowance Free goods Price packs Advertising allowance Premiums Rebates Free goods Displays Continuity programs Contests Feature advertising 32 . The promotional efforts are focused at pushing the product through the distribution channels. who cannot afford to engage in sustained mass advertising. its efforts are directed at resellers and the manufacturer becomes very dependent on their personal selling abilities and efforts. often use push strategy and offer effective incentives to dealers. The communication to resellers is generally through trade circulars or the sales force.3000/.5 each free. to sell the product.

Manufacturers can offer display allowances to resellers to make the product highly visible. it would be difficult to 33 . can be used.Contests Trade coupons Quantity discount Sweepstakes Quantity discounts Clearance sale Tie-in promotion Financing incentives Special events Premiums Bonus packs Exchange offers Product life cycle and pull or push strategies It is quite important for brand managers to analyze and identify the stage of a particular brand in its life cycle before deciding about using sales promotion. For most new products. To make the product available in distribution channels. Also important in the development of promotional strategy would be the target audience is towards whom the Introduction stage When the product is being introduced. during the product growth stage. to reassure the trader. For increasing trial sampling. Promotional strategies are also likely to be affected for different non-durable and durable products. the major objective is to increase the trial rate and distribution of the product. it may become necessary to use some kind of incentive scheme for the resellers to encourage them and minimise their risk associating stalking a new product. coupons. the sales promotion tactics required are likely to be quite different. There could be liberal guarantees to take back the stocks. These are all push promotions. its maturity and the decline stages. During the stage of product introductions. Likewise. if unsold. demonstration which are all pull promotions. a product requires different sales promotional tactics.

consumers often switched brands. Due to price discounts or other extra benefits. push promotions such as different types of discounts. For increasing trial.be successful without pull promotions. price discounts. can be used. To expand the distribution. To encourage repeat purchase by consumers. displays. Another tool of sales promotion that can be used is to offer bonus packs containing additional quantity at the same price as an incentive to encourage repeat purchase. In fact when new products are introduced. dealer contests. much more emphasis is given to pull rather than push promotions. Another important objective is to expand or at least maintain the distribution. feature advertising become important. Maturity stage When the product is in maturity stage. pull promotions are appropriate however as the trial rate increases free samples become quite an expensive proposition. Many tools of sales promotion such as premiums. reward and reinforce the loyalty of regular users and use more of push promotions to build inventories with resellers. the dominant objectives are to expand the market for increasing the number of new customers who would try the product for the first time and to encourage the repeat purchase by those who have already tried the product. in pack or on-pack coupons can be used. many similar brands are available to customers. The sales promotional strategy in this stage can focus on attracting maximum number of brand switchers. free goods that increase the profitability of the trade. Cadbury is introducing the new brand bytes having an introductory offer Rs5 off which will be available through the coupons that are distributed with newspapers like the Times of India. extra goods. This phenomenon of brand switching is more common if the product category happens to be one of low involvement. Growth stage In this stage. This would also help in converting those customers who have already tried the product into regular users of the product. 34 .

Techniques Of Sales Promotions Consumer market sales Trade sales promotions Sales force sales promotions promotions Price discounts Off-Invoice Allowance Sales contests Price pack deals Buying allowance Incentives Rebates/refunds Display and advertising Awards and prizes allowance Continuity programs Buy back allowance Premiums (gifts) Coupons Bill back allowance Sales meetings Samples Count and recount Training allowance Contests and sweepstakes Premiums and Slotting allowance advertising Merchandise allowance specialties Free trials POP displays Brand placement Cash rebate Event sponsorship Free goods Product warranties Trade coupons 35 Sales manuals etc. The market share of the brand is an important factor in gaining the support of resellers. .Generally a combination of pull and push promotions prove more effective during maturity stage of a product life cycle.

Exchange offers Dealer listing Internet promotions Dealer loaders Low interest financing Sales contests Free service camps SPIFFS (push money) Incentives Sales training programs Trade shows Consumer sales promotions Sales promotions directed at the end-user. whether by the manufacturer or the retailer. 36 . Their efforts have surely shown results. are called consumer sales promotions. Objectives of consumer market sales promotions The following basic objectives can be pursued with sales promotions in the consumer market. A reduced price or offer of a rebate may stimulate trail purchase. Stimulate trial purchase When a firm wants to attract new users sales promotions tools can reduce the consumer’s risk of trying something new. to stimulate trail purchase. with Pantene being one of the top selling brands in India today. Manufacturer announced promotions to consumers are based on ‘pull’ strategy of the manufacturer and retailer announced promotions to consumers constitute ‘push’ strategy of the retailer. Pantene when it was launched did a lot of sampling.

hotel stays. can keep consumers loyal to a particular brand. The most prominent frequency programs are found in the airline industry where competitors try to retain their most lucrative costumers by enrolling them for various perks such as frequent flyers can earn free travel. Stimulate larger purchases Price reductions or two-for-one sales can motivate consumers to stock up on a brand. When people generally come to buy soaps. they can be used to disrupt competitors marketing strategies. and see the offers like. Add to the original discount an in-package coupon for future purchases. a well-timed sales promotions offering deep discounts or extra quantity can disrupt the competitor strategy. it is commonly used for new brand introductions. If a firm knows that one of its competitors is launching a new brand or initiating a new advertising campaign. gifts etc. Introduce a new brand Because sales promotions can attract attention and motivate trial purchase. Many soaps brands are doing sales promotions to stimulate larger purchases. or the accumulation of points with repeat purchases. Contribute to Integrated Marketing Communications 37 .Stimulate repeat purchases In-package coupons good for the next purchase. and a marketer can severely compromise competitor’s efforts. thus allowing firms to reduce inventory or increase cash flow. Cadbury bytes was promoted with Rs 5 off Combat or disrupt competitors strategies Because sales promotions often motivate consumers to buy in large quantities or try new brands.

Sales promotions suggest an additional value. particularly at the point of purchase among similar brands and may also encourage unplanned or impulse buying. then the consumer may buy the higher end model. advertising in newspapers. Determining the quantum of discount depends on the consumer’s price perceptions and may be difficult to decide.In conjunction with advertising. sales promotions can add yet another type of communication to the mix. Techniques of consumer sales promotions Price discounts or price-off deals. or a chance to win a prize. Rs. direct marketing. Boost 500gm pack. public relations and other programs being carried out by a firm. 10 off on normal price. This is an additional and different message within the overall communication effort. with price reductions. Price offers are extremely flexible in the sense that the producer has total control on the number of units 38 . Such promotions work very well in gaining the attention of consumers. 90 only. If there are three different models of a product and because of the discount offered the price of the higher end model is appears. Price deals are probably the most commonly used promotional techniques. Price discounts are communicated through POP advertising. A price deal for a customer means a reduction in the price of the promoted product and the consumer saves money on purchase. sales people. not too high to the consumer as compared to the lesser priced model. premiums. now available at Rs. The main advantage of this tool is that it has a very Strong consumer response Such discounts offer immediate value and strong consumer response. magazines and TV ads. The Flexibility and convenience of implementation is another advantage. window displays.

This technique is often used to introduce a new large size of the product or to encourage continued usage and also to increase consumption. This is a method to “load” the consumer up with the product. A variation of this offer is when the marketer develops special packs of the product containing more quantity but the price is proportionately low. They can take any of the two forms: one is bonus pack and banded pack.” 39 . competitors are very likely to retaliate leading to the danger of triggering a promotion wall in which no one benefits except the consumer. A discount offer may rapidly lose its advantage if competitors announce a similar offer. Price pack deals Price pack deals are also called value packs. the marketer can choose the one size that is not selling well. If different packs of the same brand are available. And in the long run the sales would return to pre-promotion period level. In fact.  Cadbury temptation offers 10% extra free. In case of a bonus pack. it could be “same for less” or “more for the same. Another variation of this technique is “buy 1 get 1 free” or some similar offer. an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price. Such discounts are short term and are unlikely to produce any long-term gains because the incentive is to purchase now by creating sense of urgency. When the discount is withdrawn the sales may fall below the level of pre-promotion period.being promoted and the market area in which the offer will be given. The offer is termed as “banded pack” when 2 or more units of the products are sold at a reduced price compared to the regular price. 200gms+20gms  Boost 500grm jar gives 20% more free.

 Coupon A coupon entitles a buyer to a designated reduction in price for a product or service. Also among other similar brands. Coupons bear an expiry date and cannot be redeemed after the cut off date.  Refunds And Rebates Refund is the repayment of total money paid for purchase. Refunds and Rebates play an important role in the consumer durable segment because the product price is reduced to a great extent because of the rebate offer.The main advantage of this tool is that extra product may encourage increased usage and help sustain the habit. Coupons are the oldest and most widely used form of sales promotions. a bonus pack stands out at the point of sale. The main Advantages of coupons are:  Encourage brand switching  Stimulate trial for a product  Take off the attention from price 40 . while the rebate represents repayment of only part of the money paid for the purchase. Coupons can be of 3 types:  Direct to the consumer  Media distributed  Product distributed. Refund offers seems to work very well in guaranteeing the trial of a product or service since there is no risk involved for the customer because of the promise of total refund of the purchase amount.

But off lately. One problem is that the game itself may become the consumer’s primary focus. Contests and sweepstakes often create excitement and generate interest for a brand. while the brand becomes secondary. contests are becoming less and sweepstakes increasing. The technique thus fails to build long-term affinity for the brand. claims 41 . poems. Contests were very often used earlier where people have to write slogans. The offer was actually introduced during the last world cup and had shown phenomenal results. there was an increase in the sales by 25%.Many companies to create more product trials has coupons in the newspapers and magazines which avail you some rupees off on there products Contests And Sweepstakes Contests and sweepstakes can draw attention to a brand like no other sales promotions technique. Consumers need only to enter their names in the sweepstakes as a criterion for winning. People are more willing to play on luck rather than participate by showing their abilities. Sale increased tremendously. which has various gifts and the 100 world cup tickets. Winners in a contest are determined by a panel of judges or based on which contestant comes closest to a predetermined criterion for the contest. but the problems of administering these promotions are substantial. A contest has consumers compete for prizes based on skill or ability. generally “I like the product because …” and the best ones won prizes. A sweepstake is a promotion in which winners are determined purely by chance.  Britannia khao world cup jao campaign has taken the market by a swing. Some popular types of sweepstakes also use “scratch-off cards”. Under the offer you collect points available on Britannia biscuit packets and exchange 100 points for a scratch card. Contests tend to be somewhat expensive to administer because each entry must be judged against winning criteria. stories etc.

Techniques used in sampling:  In-store sampling  Door-to-Door sampling  Newspaper sampling  On-package sampling  Mobile sampling Trial offers Trial offers have the same goal as sampling – to induce consumer trial use of a brand. Segments chosen for this sales promotion technique must have high sales potential.  Sampling Getting consumers to simply try a brand can have a powerful effect on future decisionmaking. Sampling is a sales promotion technique designed to provide a consumer with an opportunity to use a brand on a trial basis with little or no risk. Sampling is particularly useful for new products. the expense to the firm of course can be formidable. It can be used successfully for established brands with weak market share in specific geographic areas.  Premiums and advertising specialties Premiums 42 . So it is being done this year too.but they are used for more expensive items. Ex: exercise equipment. appliances. This year too the contest is showing good results. consumer electronics. etc.the company. but should not be reserved for new products alone. Saying that sampling is a popular technique is an understatement.

calendars.  Pepsodent toothpaste 100gm pack get free dental insurance worth Rs. 2. mugs. 43 . toys. and given to consumers with no obligation. with. Premiums have become very common today. which may influence the customer. this is a very effective strategy because it is giving you’re the guarantee that nothing can happen to your teeth. Advertising specialties have 3 key elements: A message placed on a useful icon. pens. Many companies are offering lots and lots of premiums. the purchase of another item.1000. A self-liquidating premium requires a consumer to pay most of the cost of the item received as a premium. The main advantage of Premiums is that they offer not only that one product but also another product.They are items offered free or at a reduced price.  Buy a Cadbury Bournvita and get a dairymilk worth rs 10 free Advertising specialties Popular advertising specialties are caps. In this promotion offer the consumer is required to send a specified sum of money along with a proof of purchase to claim the premium.1000 insurance speaks a lot for its brand and its product thrust. There are 2 options available for the use of premiums: 1. t-shirts. A free premium provides consumers with an item at no cost. Also new products are given free with established brands to stimulate trial of the new brand. a lot to buy the product. mouse pads. the item is included in the package of the purchase item. Especially if the other product is worth it. Many firms offer a related product free. The Rs. etc.

 Rasna. much like advertising. if the brand name is spoken aloud the impact can be dramatic but less obvious placements.  Coke in Yaadein . Many other kids products are influence a lot by such specialties especially liked by the kids like tattoos. referred to as background placements are considered by some as a waste of money. hence products that have such offers sell more than the other brand available. The main objective of such Programmes is encouraging repeat purchases or repeated visits to particular retail shops. get free Prankies Continuity/frequency Programmes In recent years. one of the most popular sales promotion techniques among consumers has been “frequency Programmes”. as product placement is the sales promotions technique of getting a marketer’s brand featured in movies and television shows. Pepsi in Khushi 44 . masks. The use of a brand by actors and actresses or the mere association of the brand with a popular film/ television show can create a positive image and have a huge impact on the sales of a brand. get free Tazo. Brand placement has varying results. Brand placement Brand placement often referred to. Buy any Nestle chocolate and get tatoo free. tazo.  Ruffles lays. But recent brand placements have shown that the technique can have a sales impact like a traditional sales promotions. Frequency Programmes offer consumers discounts or free product rewards for repeat purchase or patronage of the same brand or company. cricket bats etc. Marketers and advertisers used to think that brand placements affected only consumers’ perceptions of a brand.

Washing Machines. the brand featured in an event immediately gains credibility with the event audience.  Coke and Pepsi keep sponsoring many events. It is becoming increasingly popular because of the large use of Internet. When this audience encounters a brand in this very favourable reception environment. The audience attending an event already has a positive attitude and affinity for the contest – they choose to attend. the brand benefits from the already favourable audience attitude. Marketing communications 45 . Refrigerators. etc. washing machines. etc.  Exchange offers If a family bought a refrigerator 10 years ago and the machine is still giving reasonable service then the family is unlikely to buy a newer and more advanced version of the refrigerator unless they get rid of the older one by selling it to someone. cars. Pass Pass in Yaadein  Event sponsorship When a firm sponsors or co-sponsors an event such as a rock concert. This segment of present owners is sizeable enough yet to sell new brands to those who already own a similar product is not easy. manufacturers regularly announce exchange offers.  Internet promotions They are the most recent form of sales promotions. To attract this segment. a cricket match. They are promotions that are done via the Internet. two-wheelers. Almost all the TVs. No one in our country is prepared to throw it as junk. computers. Consumer durables market is the one where exchange offers are used the most. But still it has a lot to develop. microwave ovens. etc. have exchange offers. Same thing is true for a number of products such as televisions.

Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in converting strangers to customers that govern the communication medium that should be used. 46 . Advertising  Paid form of public presentation and expressive promotion of ideas  Aimed at masses  Manufacturer may determine what goes into advertisement  Pervasive and impersonal medium  Functions and advantages of successful advertising  Task of the salesman made easier  Forces manufacturer to live up to conveyed image  Protects and warns customers against false claims and inferior products  Enables manufacturer to mass-produce product  Continuous reminder  Uninterrupted production a possibility  Increases goodwill  Raises standards of living (or perceptions thereof)  Prices decrease with increased popularity  Educates manufacturer and wholesaler about competitors' offerings as well as shortcomings in their own.

 Objectives  Maintain demand for well-known goods  Introduce new and unknown goods  Increase demand for well-known goods/products/services  Requirements of a good advertisement  Attract attention (awareness)  Stimulate interest  Create a desire  Bring about action  Eight steps in an advertising campaign  Market research  Setting out aims  Budgeting  Choice of media (television. radio)  Choice of actors (New Trend)  Design and wording  Co-ordination  Test results  Personal sales 47 . newspaper.

It cannot be used as a sustainable source of differentiation. interactive relationship  Personal interest  Attention and response  Interesting presentation  Sales promotion  Short-term incentives to encourage buying of products: An example of this is coupons or a sale. nor encourage repeat buys in the future. but it does not build customer loyalty.Oral presentation given by a salesman who approaches individuals or a group of potential customers:  Live.  Marketing Public Relations (MPR)  Stimulation of demand through press release giving a favourable report to a product  Higher degree of credibility  Effectively news  Boosts enterprise's image  Customer focus Many companies today have a customer focus (or customer orientation). A major drawback of sales promotion is that it is easily copied by competition. the sense of identifying 48 . This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach. People are given an incentive to buy.

The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. Every aspect of a market offering. 49 . No strategy is pursued until it passes the test of consumer research. is driven by the needs of potential consumers.market changes and the product innovation approach. History attests to many products that were commercial failures in spite of being technological breakthroughs. In the consumer-driven approach. consumer wants are the drivers of all strategic marketing decisions. including the nature of the product itself. The starting point is always the consumer.

2 billion Amway Corporation.The Decade of Growth 50 . Today. 1970s . Amway's sales were more than half a million dollars.6 million independent business owners distribute Amway products in more than 80 countries and territories. It has a presence in 80 countries & territories. 1960s . Their concept for an innovative business opportunity. USA.COMPANY PROFILE Amway began in 1959 with two young entrepreneurs in the United States -.Rich DeVos and Jay Van Andel. Amway India is a wholly owned subsidiary of US $ 7. more than 3. established itself as a leader among one of today's fastestgrowing industries.A Friendship Forms Rich DeVos and Jay Van Andel's friendship actually began with a business proposition. 1950s . Ada. when Rich struck a deal with Jay for a ride to school for 25 cents a week. centered around person-to-person marketing. Amway Corporation is one of the largest Direct Selling companies in the world. but they planned to start a business together after separate tours of duty. A friendship formed and became a business relationship that has lasted to this day. Michigan.The Early Years Amway quickly outgrew its original facilities in the basements of Rich DeVos's and Jay Van Andel's homes. After high school they entered the military. In its first full year of business.

2000s ." 1980s . Building expansion at Amway World Headquarters continued at breakneck speed as Amway scrambled to keep pace with demand. Many Ways to Receive Income 51 . AMWAY IN INDIA Amway India. Amway India commenced commercial operations on May 5.The Billion-Dollar Decade The '80s will be remembered for the first Billion Dollar Year at estimated retail in 1980. The focus was also on the introduction of new products and services that would be beneficial to both Independent Business Owners and consumers. was established in August 1995 after approval by India's Foreign Investment Promotion Board (FIPB). The company’s goals were beyond creating a business opportunity for people. the FTC verified that Amway is a genuine business opportunity and not a "pyramid. and kept going strong.As vowed by Jay Van Andel the night of the 1969 disaster. Chairman Steve Van Andel and President Doug DeVos share the Office of the Chief Executive.The Second Generation As carefully planned by Rich and Jay. Distributors witnessed a similar trend. 1998. The ' 70s began with sales of more than $100 million at estimated retail. with the second generation of many distributor families taking on important leadership roles. Inc. Amway Corporation became a wholly-owned subsidiary of Alticor. After a lengthy investigation.The New Millennium In 2000. 1990s . a wholly owned subsidiary of Amway Corporation. opening its new cosmetics plant in Ada. the second generation Van Andel and DeVos families took the helm during the ' 90s. Amway rebuilt the aerosol plant and went on. Steve Van Andel and Dick DeVos succeeded their fathers as Chairman and President.

One time cash award) Special Leadership Programmes As you attain various levels of achievement.00. (Paid monthly) (b) Monthly Depth Commission.000.Averages 20% + of Business Volume (BV) on products you sell.000. (Paid monthly) (d) Emerald Commission.20. 30. One time cash award) (i) Crown Payment. you may also be eligible for various AMWAY leadership programmes: 52 .000.In Amway the first two ways to receive income are:  Retail Profit . (Paid monthly) (c) Ruby Commission. (Paid yearly) (f) Diamond Plus Commission.000. (Rs.00. (Rs. (Paid yearly) (g) Double Diamond Payment.  Performance Incentive .10. One time cash award) (h) Triple Diamond Payment.00.Ranges from 3% to 21% and is paid monthly. These are: (a) Leadership Commission. (Rs.  There are many more ways for Direct Distributors to earn income when they meet qualifications. One time cash award) (j) Crown Ambassador Payment. (Rs.500. (Paid yearly) (e) Diamond Commission.

and you will notice quite a difference. and decide whether it meets your needs. the Amagram. The only cost for an AMWAY Business is that of a Business Kit. you should review all aspects. new Direct Distributors meet the AMWAY India management team. Successful merchandising is made easier by AMWAY's line of high quality products. a sound combination of upscale and consumable items that can mean profitable and repeat sales. such as your own special day at AMWAY. and honorable addition to the retail marketplace. or your name and picture added to the Distributor Hall of Achievements in India and World Headquarters. 4. Invitations are extended to AMWAY's top leaders to meet in a business-building atmosphere. As with any venture. Here are some essential points to consider about the AMWAY business opportunity: Start-Up Costs Compare the start-up costs of this opportunity with that of a conventional business. 53 .400 but now costs only Rs 995 which does not include the sample product basket. and receive an abundance of information to assist them as they build their growing businesses. Annual Leadership Conferences in countries around the world. AMWAY is a world leader in Direct Selling. Merchandising The first way you can make money with your AMWAY business is to sell products to retail customers. With all expenses paid by AMWAY. which used to cost Rs. A key element to this success is the recognition by governments that AMWAY is a model marketing system.Direct Distributor Seminar: A special two-day meeting for new Direct Distributors. A variety of special programmes. Business Considerations AMWAY CORPORATION has succeeded for almost four decades because it is a proper. ethical. your own success story in the Distributor magazine. weigh the advantages /disadvantages.

Business Support Materials As your business begins to grow. With an AMWAY business. Although it is not mandatory to sponsor people.Sponsoring You may increase your merchandising efforts through sponsoring. you may want to acquire training aids. 54 . the more time and effort you will need to put into your AMWAY business. depending on your own goals. 1961. It's all up to you. These are optional. Time and Effort The bigger your financial goal. you work as much or as little as you like. sponsoring may increase your income when the Distributors you sponsor begin to build their own AMWAY business. Deductions Your AMWAY business is not a tax shelter. You also may want to attend motivational and business-building meetings. but you are entitled to deduct your ordinary and necessary business expenses as defined by the Income Tax Act.

” AMWAY MISSION “Through the partnering of Distributors. 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. and the Founding Families. IBOs may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs themselves.AMWAY VISION “Helping people live better lives. Employees. Each IBO may earn income both from the retail markup on any products they sell personally.” Marketing strategies of amway corporations Business model: Amway combines direct selling with a network marketing strategy. businesses and social responsibility. In all aspects of our products. plus a performance bonus 55 . we strive to make a meaningful difference in the communities in which we operate.

and CEO William S Pinckney said. but it is recession resilient”. He was instrumental in setting up the company’s India operations from scratch. is refreshing at a time when many companies are announcing layoffs. The accent this year will be on the nutrition and the beauty products segments that account for almost 50% of the company’s revenues. the term "multi-level marketing" emphasizes the compensation plan more. relationship marketing and others. interactive distribution.based on the sales volume they and their downline (IBOs they have sponsored) have generated. variable price. But can it? Of course. But what is interesting is the way Amway tweaked both its portfolio and its pricing strategy to ensure that the value. Network Marketing tends to be modern preferred term. with sales of Rs 1. Talking to representatives of Amway India. Amway’s global model is based on fixed quantity. Indeed. 56 . a wholly-owned subsidiary of the 8. fast moving consumer goods.conscious Indian consumer took to its products like moths to a flame. and a subset of direct selling. the company will be home and dry. Amway’s mainstay. "Network Marketing" and "Multi-level Marketing" are generally considered to be synonyms. It has even launched sachets to encourage trials. and projecting flat growth at best for the year ahead. Amway India managing director. getting the pricing right was key to the company’s growth in this country. Pinckney says if it notches up 27-29% growth this year. While "direct selling" and "network marketing" refer primarily to the distribution system. however many other terms are also used. including word-of-mouth marketing.128 crore. Amway Corporation. 1. Growth projections for the category as a whole vary from 15% (Boston Consulting Group) to 25% (Associated Chambers of Commerce and Industry of India). reducing manufacturing and inventory numbers. People may also register as IBOs to buy products at discounted prices.000-crore direct selling market in India. company is within striking distance of owning 40% of the Rs 3.2billion dollar direct selling major. It has lined up at least six new products that will be launched during the course of the year when it hopes to increase its consumer touch points to 150 from the current 122. “The Company is not claiming to be recession proof. haven’t been too badly hurt by the current business slowdown. Today. DIRECT SELLING STRATEGY.

The company also introduces energy bars in the market under a joint venture with General Mills that has the manufacturing expertise. has put aside Rs 16 crore this year (up from Rs 12 crore in 2008)* for communication on television. 2. The Baddi plant manufactures 80% of Amway’s products in India. Amway sees the direct selling market opening up as consumers start to see the difference between direct selling and door-to-door sales. and that between the long haulers and the fly-by-night operators. with Amway backing up with its distribution muscle. and that between the long haulers and the fly-by-night operators. And its distribution muscle is awesome—on its rolls in India are 4. print and out of home advertising. though sample test runs are still carried out in the US. establishing India as an export hub to service some of the neighboring markets. while the remaining is made at six contract manufacturing facilities. the quality of Amway products made in India is hailed globally—they have found markets outside the country’s borders. a strong believer in brand building. Amway will throw its brandbuilding muscle behind the Nutrilite and Artestry brands in India. Amway sees the direct selling market opening up as consumers start to see the difference between direct selling and door-to-door sales. Traditionally. DIRECT MARKETING COMPANY. To cope with the surge in demand that Amway products expect.Pinckney claims that Amway design and equipment standards in India match those in the US.5 lakh of the approximately 15 lakh distributors or business owners as Amway calls them. For the time being. The model works on a business networking model. Today. The ABOs can build a team by recruiting a team 57 . Amway is one of the global leaders in direct marketing. direct selling companies do not use advertising in a big way. Amway is often used as an example of a direct marketing company. but Amway. The company sells its products using direct distributors called Amway Business Owners (ABO). Amway is trying to shake up the category with its new fruit flavoured energy drinks. the company plans to ramp up the capacity of its Baddi (Himachal Pradesh) plant this year by adding more manufacturing lines at an investment of around Rs 40 crore.

The products of Amway are excellent but very expensive. According to Business Line. Typically direct marketing firms faces issues of reach and cost. Another example is the range of cosmetics under the brands Attitude and Artistery. Hence the products become expensive resulting in lower sales. the company has to pay huge commission. Hence the sales are driven by the efforts of ABOs. Artistery is targeted at the premium class and Attitude at the middleclass. Since the company does not advertise its brands. That means the consumers will not get any Amway products from shops. It has more than 4. the only communication channel is through ABOs who visits households and make presentations. Amway is a 100 % direct marketing company. The ABO earns commission on the products sold. The success of Amway products is predominantly driven by the quality of the products. The Amway business model also divides the ABOs into different categories based on the sales performance of the team. Amway India has been reasonably successful. The products can be bought through ABO's. But the price of these brands makes the consumer think twice before buying it. the ABO also gets commission for the sales done by other ABOs recruited by him. Considering the nascent stage of Direct Marketing Industry in India. Further. the direct marketing Industry in India is estimated to be Rs 3150 crore. the Persona brand of soaps cost Rs 30 which is almost double the rate of an ordinary soap. Persona is one of the best soaps in terms of quality but price is definitely a dampener. Since the sales depend entirely on the independant distributors.5 lakh independent distributors and 117 offices across the country. Amways also faces this issue. For example. In a value conscious country like India. The payout varies with different levels. Amway India's products are mostly sourced from manufacturing units from India. It has outsourcing contracts with 5 major units in India. Hence the ABOs have a tough time convincing the value proposition. the expensive tag of Amway products is the singular reason for the lack of popularity of its products. The payout is decided by the point system. Understanding this issue. There are two tasks of a typical ABO: the first task is to sell Amway products and second task is to appoint new ABOs.of ABOs under him. This results in the increased cost of the product. Amway India in now a 800 crore company with its operation spanning across India. Amway launched its first corporate 58 .

Amway has understood that doing business in India will require a new business model. 3. Along with this. But here again the company will face certain issues. a person had to shell out Rs 5000 to join the firm. Now the company has introduced a starter pack for Rs 995 which does not have Amway products but brochures. Amway had introduced sachets for most of the products. For lower priced products. It had tried to rationalise prices 59 . the commission payout will be less and hence the ABO will have to sell more volume to get higher commission. Amway uses the slogan "We are listening". Many Indian companies are eying this segment and have serious plans to enter this segment. The company wants to build equity around the corporate brand which will enable the ABOs to tide over the initial customer resistance. The Indian nutraceauticals market is estimated to be around Rs 1500 crore and is rapidly growing. The idea revolves round the theme that Amway understands the Indian consumers and the products are derived from this understanding. The brand came out with a Television campaign highlighting the customer-centric approach. The purpose of the campaign is two fold: a. one of the best sellers for Amway is the Nutrilite brand. The brand virtually faces no competition so far. The cost was to buy the Amway business kit which consists of various Amway products and brochures. This will be a big relief for the existing ABO since the higher joining costs turned away most of the potential ABOs.b. The ABO can recover the money by selling these products. Earlier. Another significant change that the company made was rationalising the entry cost for new ABOs.branding initiative in India. Nutrilite is a nutraceautical supplement and this brand contributes around 50% of Amway's turnover. PRICING STRATEGIES. The company has started to take steps in the right direction. The enhanced corporate image will also attract people to join Amway as independent business owners. shaving creams. but the low commission payout for sachets has prompted ABOs to try and sell high value items. Among the 80 products. the company is also rationalising the pricing strategies. The company is launching a new range of value products like coconut oil.

But to balance the price. quality and higher commission is no easy task. 60 . cost.and bring in new value products. How did you come to know about AMWAY? As per our study suggested that the consumer awareness of the AMWAY increasing due to of the advertisement Through digital media as well as one aspect of the consumer awareness of the AMWAY also increases due to of its promotion though Newspaper and Magazine stalls. Increasing level of consumer awareness also help any organisation to retain more and more consumer base. PRIMARY FINDINGS AND ANALYSIS 1.

22% of the people purchasing AMWAY because they like the promotional strategy of the company while 20% of the people prefer AMWAY because of the content quality of the magazine. As we seen from the tabular graph and the data chart which is shown above of this interpretation. Since brand name of the AMWAY also making positive impact towards the sales promotion. Why do you prefer this brand? As per our study suggested that people prefer AMWAY because Sales promotion of the AMWAY is always has a top preference of the people which has very positive impact on the sales of AMWAY . as per out study suggested that 11% of the people like the brand of AMWAY so in this area AMWAY need to improve.2. As one of the objective of our study also to justify this term with the sales promotion. 61 .

Would you recommend company’s products to others? In this study my primary research result suggested that 98% of the people out of 100 will recommend to others for purchasing of the AMWAY while only 2% are those population area who is either don’t want to give this kind of recommendation due to of personal or other reason. This is good sign for the company to grow faster than the competitor with the help of word of mouth publicity.3. 62 .

while coupon & contest will help AMWAY to achieving its 88. 63 .4.2% sales then the others.2%. Which promotional activities influence your decision to go for AMWAY rank in a preference order? As this study suggested that if AMWAY gives discount and free gifts both for sales promotion it would give impact on the sales by 90% another scenario tells us that if AMWAY management allow coupons and extra Talktime that will increase AMWAY sales by 91.

39 people out of 100 people suggested that they want premium offers which gives extra leverage to the AMWAY customer. 64 . for the price off promotion 38 people are said they want good report on this as a price promotional strategies. Which promotional activities do you want in near future from AMWAY rank in a preference order? As per our study suggested that the in future people are very particular about the some of the promotional strategies.5.

6. Quality of Products & Packaging please rank in order of preference

65

AMWAY has excellent product range, 63 AMWAY managers suggested that company has
excellent product range to be offer to the customer and has unique value proposition than
the other company. As per our correlation test showing packaging and product range has
similarity of 86.8% which means that company has good packaging range with the
excellent product range but company need to improve the quality of the customer
grievances because when you increasing the product range your promptness towards
solving customer query should be in the higher side. As per 100 who is contributed in our
survey suggested that Packaging of the AMWAY give competitiveness of the firm as per
our correlation test suggested that these two are 95% of the correlated to the each other.
While almost 66% of the suggested that packaging of the AMWAY would be good.7.
Quality of Sales Promotion and schemes

As per our study suggested that the quality of sales scheme of the AMWAY is very
satisfactory while we analyze the data, Innovativeness and the Frequency of sales
promotion is the biggest factor which contributed to the sales promotion of the AMWAY
while this has been proved through the which we applying above 93.5% chances of the
getting best deal through these situation. While as per the correlation test also showing
the sufficient stock would necessarily to have when any new sale promotion launched by
the AMWAY these factor are highly correlated to each other which is about to 99.3%.

66

67

40% .e. Other signifies a junior level of employee in AMWAY. We taken this ratio because for change management decision mostly taken by the senior management and then after it adding on affect to the junior or middle management people to became a change management subject. 68 .8. What is your position within the company? Interpretation: Our survey result contributed out of 100 people 20 % people are working in cedar to Middle management also 25% respondent from AMWAY working as a senior management major chuck which contributed in our survey is executive i.

For how long do you work for your company? Interpretation: Out of 100 people for our survey 28% people responded that they serving to AMWAY are more than 3 years but there work tenure is less than of 5 years. 36% people are working with AMWAY is more than of 3 year which shows great stability among the employees. Adding to this 17% respondent working with AMWAY is more than of 3 months which is basically junior management also 16% said they working with AMWAY is more than with range of 3-6 Months.9.14% respondent said they working with AMWAY last 1-2 Years. While 8% respondent said they working with AMWAY more than 5 years AMWAY is very reach in terms of the work culture. 69 .

How was the initial training in your company? Training to the employee No Training. out of 100 people 20% respondent said they thing training which they got in AMWAY is above than expectation. 20% Interpretation: Asking this question means to judge the training need in AMWAY company.10. And n 28% respondent said training given by the AMWAY is meeting their requirement. 14% Below Expectations. 70 . 19% people said the training which they got is below the expectation and 14% respondent said they didn’t got any training in AMWAY. 19% Above Expectations. 19% Training in the company. 28% Meets Expectations.

71 .

Once someone has paid Rs. This is exactly where the Amway business strategy comes into play. If all Amway did was to manufacture and sell their products through door-to-door salespeople there would be no problem.RECOMMENDATION  Why Amway Will Make Money Even If You Don’t An interesting calculation: If 1 million people sign up. 4. They will have earned all this money without having sold a single one of their very expensive products but just by sponsoring people to this business. 72 .400 to Amway. The truth is that the market share for Amway is as limited as the market share for any other product.  How This Is Done At The Expense Of The Middle Class While doing this research. It makes people hand over their savings to Amway to buy them a dream. By involving their "distributors" in a complicated system of down-the-line commissions they are given the impression that there is a limitless market for Amway products. he is naturally disinclined to buy Nivea hand cream instead of Amway Gly-Honey hand lotion. The other way is to run around peddling soap from door to door after having bought it from Amway at a discount. the growth of that market is restricted to the very wealthy. Traditional retail trade is not about to collapse and because of the expensive price structure. 4400 million (Rs. 440 crores or US$ 206. By asking for deposits from buyers —in the beginning and again every year as a renewal fee— it looks like Amway seeks to build a captive consumer base. I have found that the only way to succeed in the business is to be able to sign up vast numbers of people and make them use the products for themselves.80 million) in up-front cash from this ‘cash rich’ country. The choice of purchase is left up to the individual. The element of personal choice is thus prejudiced. Amway will receive Rs.

73 .500 worth of Amway soaps every month seems laughable in a country where entire families lead their lives on less money. 25 lakhs an "opportunity".Calling this "an opportunity to use world class products" is a bit like calling the purchase of a Mercedes Benz for Rs. With all these constraints. when an efficient Maruti 800 for one-tenth of that price will do nicely. 1. telling people of profit mechanisms tied into several thousand people buying Rs.

With an Amway business. Amway is one of the oldest and largest direct selling companies in the world. The rewards are based directly on the distributor's accomplishments. priced affordably for nearly anyone with a desire to invest in their future. because Amway distributors deliver products to their doors. Rs4400 virtually anyone can own an Amway business. which is a $82 billion industry (Source: DSA 2002).CONCLUSION AND IMPLICATIONS Low start up cost With an Amway Business Kit being the only start-up cost. Direct selling fills this need nicely. In addition. Low risk Amway’s product-buy-back policy and no inventory requirement ensure a very low risk when starting an Amway business. the more time and effort a distributor will need to put into his or her business. The bigger the financial goal. Its “Satisfaction Guarantee” has always been a measure of confidence in the quality and value of AMWAY products. such as shopping for everyday needs. Compared to other business opportunities. one more way Amway supports the business opportunity for distributors. initial costs for starting an Amway business is intentionally low. As people become busier. a distributor can work as much or little as he or she likes. 74 . Performance based Amway is a performance-based business that rewards people in direct proportion to their effort. Direct selling is trend Thirty-four million people worldwide are engaged in direct selling. they are looking for ways to save time on routine tasks.

You have the flexibility of working part time while keeping a full-time job or building an Amway business into a full-time career. Amway has established a reputation for innovation in developing top quality products and packaging.Flexibility Goals and rewards are different for each distributor. The Amway opportunity has been imitated often. Equality of opportunity Anyone starting an Amway business gets in at the same level. Each new distributor has the same opportunity to surpass the most successful distributor. and the business opportunity is continually improved. Amway manufactures products in the United States. thousands of other brand-name products and services.000 square meters). You choose the time you invest in building your Amway business. but the level of support Amway provides its distributors is difficult to duplicate. Product support The Amway business opportunity is supported by a diverse line of hundreds of quality AMWAY products and. China and Korea and maintains product warehousing facilities around the globe. Corporate support More than 12.000 people worldwide are employed in Amway manufacturing. in many markets. administration. 75 . and distribution facilities totaling 10 million square feet (929.

BIBLIOGRAPHY  Books and Secondary data  Amway Company Planner  Amway Opportunity brochures  Websites  www.amway.onlinemlm.com  www.com  www.com 76 .com  Google.amwayindia.com  www.msn.getfacts.com  www.com  Wikipedia.

2. 3. How did you come to know about AMWAY ?  Friends/relatives  Newspapers/magazines stalls  Internet  Advertisement  Hoardings Why do you prefer this brand? Price Brand name Quality Sales promotion Easily available Schemes/offers Packaging Others Would you recommend company’s products to others? Yes 4. No Which promotional activities influence your decision to go for AMWAY rank in a preference order Discounts Coupons Extra talktime Free Gifts Contestv Others (Plz specify) 77 .COPY OF QUESTIONNAIRE Name: ___________________________ Age: _____________________ Address: _________________________ Status: ___________________ Occupation: ______________________ Sex: _____________________ 1.

Which promotional activities do you want in near future from AMWAY rank in a preference order? Price-off Promotion Premium offers Couponing Loyalty schemes Guarantees Welcome-Cocktail 6. Quality of Products & Packaging please rank in order of preference Range of products catering to all types of consumer preference Attractiveness of consumer packaging Competitiveness of the product in the market/Ease of selling Promptness in dealing with products complaints Proper labeling (way of using) 7.5. Quality of Sales Promotion and schemes Frequency of sales promotion/schemes Attractiveness of sales promotion/schemes Innovativeness of sales promotion Promptness of response to competitive sales schemes Sufficient supply of stocks provided with schemes/offers 78 .

For how long do you work for your company? Less than 3 months Between 3-6 months Between 6-12 months Between 1-2 years Between 3-5 years More than 5 years No answer Other How was the initial training in your company? Well below expectations Meets expectations Above expectations No training Other 79 . 10.) Senior Management(Above than General Manager) No answer Other Executive 9.8. General Manager. What is your position within the company? Middle Management (Manager. Senior Manager.