Amway Online Retail Environment

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Introduction & reasons for participating in online marketing

Online retailing is a form of direct selling technique whereby sellers, manufacturers decide to approach consumers directly to convince them to buy their products; this technique of selling requires that sellers and manufacturers maintain a substantially large database that contains specific information about products and the prospective clientele (Kotler 33). More and more businesses are venturing into the online marketing industry and abandoning the traditional forms of marketing channels that involve a lot of middlemen. Therefore there is no doubt that new technologies and consumer-friendly websites are attracting more consumers to become a part of the online retail community. More businesses including the likes of Amway Global, Amazon.com, eBay, and Netflix are some of the companies that are part of this sales and marketing revolution. Companies have an incredible thirst for generating sales and meeting revenue targets, furthermore, consumers are becoming more aware of their consumer rights and therefore demand better delivery methods (Harris interactive 2007).

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Traditional methods of product distribution that involve many channels like manufacturer, distributor, wholesalers, retailers, and other parties are becoming more efficient and highly expensive due to the various redundancies that they present to channel members (Kotler 72). Consumers are preferring the simplicity and direct nature that e-commerce has presented them through the online marketing environment. Furthermore many individual companies such as Nike, Motorola, and other companies have initiated websites where consumers can put their orders directly and pay for them then have those products delivered to them in good condition and therefore reducing the hustle and bustle of going physically to buy products themselves in shopping malls (Harris interactive 2007).

Marketing of services is a discipline that suggests that products range from a continuum of pure goods to pure services and that those goods existing in between these extreme ends are a hybrid of the two. Normally using traditional marketing techniques the level of product delivery can either be low context or high context. High context marketing usually involves more resources and business people are required to meet physically and oversee the exchange. On the other hand low context product exchanges usually don’t require consumers and sellers to meet therefore saving costs and therefore highly convenient.

Amway

Amway is one of the most respected companies in the online retailing environment, the company is a direct selling company that has adopted contemporary and modern product distribution techniques that aim to sell home-based products, health products, and beauty products such as cosmetics, nutrition, gift collections, and beverages. In the year 1959 Amway was established by Jay van Andel and his partner Richard Devos who became friends in high school back In Michigan and has spread its wings and grown into a worldwide company serving people who come from many diverse cultural backgrounds by opening branches in Europe, Australia and Asia back in the 1970s, Latin America in the mid 80’s china and Africa in the ’90s and Russia in 2005 (Amway website 2010). The name Amway is an abbreviation of the word American Way the company is therefore currently operational in over 80 nations, the nice thing about Amway is that it offers a clean and honest business opportunity for aspiring business people and entrepreneurs to open their businesses and enjoy the benefits that arise out of multilevel marketing. The company is not publicly listed and therefore it is a privately owned company owned by the families of the 2 founders.

Currently, Amway employs over 12,000 staff and works together with a lot of distributors who are entrepreneurs in themselves. The number of these entrepreneurs is estimated to be over 2.9 million individuals worldwide (Amway website 2010). The leadership of Amway is divided between the two founding partners; Steve serves as the company’s chairman while on the other hand, Devos serves as the president of the company, while both families of the founders are closely related to the running and leadership of the company.

The vision is to work every day and help people to live better lives on earth. Amway has an ambition of helping individuals realize their potential and therefore go ahead and achieve their goals and targets by offering those products that will simply make a difference, in both the local community and the global community through sharing.

The founders of Amway also operate on very strong business and ethical fundamentals that aim to ensure that both the company its distributors and employees serve as a good example by allowing business decisions to be guided with strong ethical and operational standards that aim at improving the lives of individuals. The founders strongly emphasize the importance of maintaining the freedom to choose your future, family, continuous reward systems, and hope of better opportunities and a better future.

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Amway furthermore operates by certain values which include partnership whereby individuals who belong to their business networks will come together join hands to achieve the best and assist each other in the short and long run to achieve and be rewarded. Integrity for Amway’s success is not only financial and economic success but earning respect, operating with a degree of honesty and truthfulness is highly important for the company. The personal worth of all business partners simply implies that every partner of Amway is highly valued, unique and therefore deserves respect and opportunities for them to succeed and realize their potential. Achievement, Amway’s partners are encouraged to take hold of opportunities and focus on realizing their goals. Lastly, Amway believes that Free enterprise must be maintained so that human economic advancement is realized with the help of a free market.

Customer care philosophies

Amway believes that the reason for its huge global success is owed to its customers, With about 3 million distributors as part of Amway Amway must take good care of their needs, and this is therefore why Amway has come up with a good strategy that will handle any queries from its customers who consist both end-users, entrepreneurs also known as individual business owners (IBO’s), /Amway Business Owner (ABO), or Amway Independent Entrepreneur (AIE).

Many are times that consumers turn out to be challenging to the varied nature of responses and queries that they come up with concerning the business after purchasing products. Some consumers may exhibit anger, frustration, and other responses that must be handled with utmost care. The customer care department therefore must come up with top-notch strategies that can be used to make the process of customer care a more smooth process that will leave consumers more satisfied and happy with the company.

Amway is a company that has embraced the best theories in customer care and has with some degree of success applied them in its business model to ensure that consumers remain satisfied and happy. Amway has accepted that they owe their business success to their business partners especially customers and therefore understand that a customer is king and therefore treats them with the accorded respect. Front line representatives of Amway are the company and therefore are expected to carry themselves in such a way that they make the customers happy and full of hope when they talk face to face or use other media with the consumers of Amway.

Amway also insists that consumers must feel that valued. It is not enough to make it known in Amway’s customer service charter that consumers are valued, and therefore the management and top executives of Amway train staff to that it is their responsibility to go their extra mile and make their customers and business partners feel that they are appreciated and they feel that they belong somewhere that they are needed and valued consequently it is up to the customer care reps to acknowledge customers and clientele appropriately (Amway Website). The customer is always right and should be treated with respect therefore it is the duty of customer care officials to Amway to supply relevant information to the customers and avoid exaggerating facts so that consumers can make well-informed decisions that will enable them to carry out their business prospects with a sober mind that did not involve any misleading facts, therefore, giving sufficient information is highly necessary for consumers. Furthermore, the customer care principles of Amway stipulate that customer service personnel should always avoid using jargon and discussing issues that are not related to business. Jargon is considered dangerous for business and can consequently push away existing and prospective consumers.

Target Market

Target marketing is a process by which a company decides to market its products to a particular group of consumers. Therefore when a company decides to adopt a target marketing approach it creates a strategy that will govern its marketing mix (price, place, product, promotion) and goes ahead to sell its product to that market( Kotler 33-39). Experts in consumer behavior understand that target marketing can be achieved by using distinguishable and conspicuous characteristics that exist within a population. Some of these characteristics include geographic characteristics that are confined to location, demographic characteristics that are mostly socio-economic aspects, psychographic characteristics that use psychological parameters to determine target marketing criteria, and lastly behavioral segmentation that uses various degrees of existing loyalty to successfully initiate target marketing.

There are 5 strategies of target marketing which include Mass marketing, differentiated marketing, concentrated marketing, And micromarketing. Amway is a company that has taken a differentiated marketing approach. Differentiated marketing is an approach whereby a company chooses not to serve the mass market but chooses to serve varying consumers within a market and therefore manufactures products that will satisfy the needs of this market( Kotler 103). Amway has chosen to divide its market by selling nutrition products, beauty products, bath and body products, gift collections, beverages, and jewelry these are unique product lines but it doesn’t end there Amway goes a point further to form a deeper product depth of these existing product lines by manufacturing different and unique brands within each product line. Household goods such as laundry detergent can be divided into two unique brands LOC and SA8.SA8 is a premium highly differentiated product that retails at a very high price, therefore, going ahead to prove that Amway is a company that uses a differentiated marketing approach (Away website).

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According to Amway’s website, there are particular beauty and health products such as “Artistry, Beautycycle, Time Defiance, Artistry Essentials, Pure White, Satinique, Folsom, Body Series, Glister, Moiskin , Nutrilite, Nutriway , eSpring, Atmosphere’ iCook XL and XS Energy drinks”. Every product within this product line is therefore uniquely manufactured and differentiated so that it can fit the needs and desires of particular customers; in fact, some of these products are sold in some geographical regions while not sold in others. Differentiation gives a commercial enterprise like Amway the ability to apply pricing strategies more flexibly and maximize the sales of their products. Moreover, companies usually pride themselves especially when they can differentiate their products to satisfy consumer needs.

Location Evaluation

Traditional forms of business make it compulsory for entrepreneurs and businessmen to operate their businesses form a centralized location therefore making it hard for entrepreneurs who have no premises to conduct their businesses. But with the introduction of the online business environment the importance of place and location has drastically reduced. The only requirements to become Always IB0, ABE, AIE capital and networking becomes the key pillar of business. Multilevel marketing reduces the number of channels that a product has to go through before it reaches the hands of the final consumer, and furthermore it is the type of business that can be conducted from anywhere by independent business owners (Street 122). Amway usually uses agents who handle the importation and exportation of their products and ensure timely delivery of their products. Consequently this is why Amway is able to operate with its headquarters that are located in America and successfully distribute its products all over the world.

Amway has its business centers that have been established by worthy Independent business owners and entrepreneurs worldwide in many countries whereby there are numerous opportunities for selling their products, and therefore using existing IBO’s who serve as sponsors new aspiring independent business owners can order for their products online and have them delivered in time for them to sell them. It therefore becomes the duty of entrepreneurs to sell the products using their own effort; IBO’s can therefore sell these products by opening businesses enterprises or companies or alternatively operate from home so long as they have formed networks consisting of customers or other IBO’s that they have recruited (street 97).

Merchandise Mix/ Product mix

Merchandise/products are substances of value which are sold to consumers in order to satisfy their needs. Amway has numerous product lines that are as a result of high demand patterns that are a direct reflection of thee market needs. Besides having product lines that cover nutrition, bath and body, gifts collections, beverages, home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics and jewelry the same product lines have a deeper product depth (Alticor 2006). The term product depth is used in marketing to refer to the various variations that exist within a product line. A very good example of a product line or merchandise line is beauty products while beauty products represent a single product line they consist of other products representing the product depth such as Artistry cosmetics products consisting of skin care, cosmetics, and anti-aging creams and serums, each and every brand that exist under a product line are therefore part of the product depth.

Having a large product mix is very important in today’s highly competitive and volatile environment. Consumers prefer options and the more the options that they have the better the competitive advantage of a company (Kotler 2003).Therefore many commercial enterprises can easily increase their market share and also their revenue streams if they have a larger merchandise mix. Consequently everything that has an advantage also has a disadvantage and therefore when companies expect increased sales from having a larger merchandise mix they should also expect that incremental costs are usually incurred during the process of expanding a merchandising mix ( Wheelen and Hunger 175-188).. The costs involved in differentiation, research and development are usually high and therefore without careful marketing plan a company may be faced with numerous hurdles.

Many product lines and Brands belonging to Amway have won numerous awards due to the high quality of these products, in the year 2008 Amway’s Air Filtration system HEPA was able to be certified good and suitable from individual who suffer from allergy and asthma conditions. Furthermore e SPRING water filter has won numerous gold and platinum awards from numerous surveys such as the Readers Digest Most Trusted BRAND Asia Surveys.

Price Range

In the year 2008 consumer reports criticized the pricing strategy of Amway’s SA8, claiming that it was too high and somehow exploitative, for consumers however the company refuted such claims. Amway is known to charge high prices for its products which they claim are of high quality and very safe for people, For example Kleenex facial tissues go for $ 29, While Nutriplant 2 ½ gallon goes for $ 180, and a two ply bath tissue goes for $70. It is therefore evident that the company charges premium prices for its products. A premium pricing strategy is a strategy that charges high prices for products on the assumption that the prices are of high quality. This is normally the case when a company uses a lot of funds in thee process of production, especially in the process of research and design, and therefore consequently the company charges high prices for its products with an aim of recovering all costs that it incurred in order to produce these products that are of high quality.

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Furthermore it would be right to deduce that some companies which are part of the multilevel marketing and online world usually wish that their business partners who act as distributors of their products in this case IBO’s and ABE’s always enjoy comfortable profit margins. When IBO’s are satisfied and happy they will therefore be able to carry on business smoothly and sponsor other IBO’s to join the band wagon and become part of a business which is known to have high returns.

Promotional strategy

Marketing competition is a very important part of a company’s strategy. After all consumers may remain in the loop about a companies offering if promotional strategies are not but in place. The aim of marketing communication is often to inform, remind, and persuade consumers about a company’s product and service offering. Marketing communication has become an integral part of product and services ( Kotler 2003). The process of incoming current consumers and prospective consumers is among the key competencies’ of any company, a successful marketing communication mix will most likely contribute in boosting sales and revenues and furthermore other intangible assets that contribute to the brand equity of a company (Kotler 2003). A company’s communication mix may have a lot of elements that all gear effort towards delivering messages to consumers it is therefore important that different elements of the marketing mix work together and produce the same net effect that is in line with overall marketing and corporate objectives and therefore for this to happen the marketing department of any organization must work together and develop these messages carefully.

Nonetheless, it is very important that management of any company comes up with a comprehensive plan that will enable the company communicate product attributes effectively to the consumers. Some of the widely known marketing mix characteristics include.

Advertising, public relations, sales and promotion, direct marketing, personal selling, internet and word of mouth. Amway is a company that doesn’t spend a lot in conventional promotional techniques instead it relies on word of mouth that comes from its existing partners (Amway website 2010). In fact there are a lot of benefits in word of mouth promotional strategies because an individual whom hears something from another friend will most likely trust their word and believe them and most certainly react to the words. Besides the word of mouth Amway’s easy to navigate website also plays a big part in promoting the company’s products.

Competition

The level of competition between companies which are part of the online retail industry, such as Amway is getting stiffer and stiffer every day. Furthermore old companies are opening up online retail stores just because it has become a trend and consumers are demanding for it (Street 12-31). Revlon for example is also now selling its cosmetic and beauty products online just like Amway though not through a multi-level marketing platform. Apart from the stiff competition that Amway faces form existing established companies who are not part of the direct marketing and multilevel marketing the company also face stiff competition from other online marketing participants who are part of the multilevel marketing community such as GNLD, Tianshi and many more established organizations which are not necessarily multilevel marketing companies ( Alticor 2006). Furthermore auction sites like eBay and many others who sell the various products that Amway also sells.

Swot Analysis

Swot is an acronym that is used to describe particular Strengths, weaknesses that exist within a company and the opportunity and threats that emanate from the external environment (Wheelen & Hunger 177). Amway operates in a highly competitive environment’s he importance of conducting SWOT analysis is that it enables a company formulate and implement strategies that will go ahead and enable the company maximize the beneficial output that may arise out of exploiting strengths and opportunities and minimize the various threats and weaknesses that the business may be facing ( Porter 23-38).

The strengths of Amway include a large network of IBO’s that spread all over 80 countries and furthermore a large world market that Amway as a multinational can exploit (Amway website 2010). Furthermore the good leadership and sufficient staff of the company has enabled the country grow significantly. There exist lots of opportunities that are to be exploited and much larger markets to be conquered by Amway, especially in the developing world where employment levels are low Amway could launch products that would financially empower individuals through multilevel marketing. The biggest threats to Amway come from stiff competition from other companies which are also part of Multilevel marketing the likes of Tianshi, GNLD, and Unilever.

References

Alticor inc. 2006. Web.

Amway website 2011.

Harris Interactive. 2007. Web.

Kotler, Philip. Marketing Insights from A to Z: 80 concepts every manager needs to know, New Jersey: John Wiley & Sons Inc.2003.Print.

Porter, Michael. Competitive advantage, illustrated edn, Northampton, MA: Free Press.1990.Print.

Street, Jonathan. The Secrets to Succeeding in Networking Marketing Offline and Online. New York: Atlantic Publishing,2008.Print.

Wheelen, Thomas & Hunger David. Strategic Management and Business Policy. New Jersey: Prentice Hall, 2002.Print.

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