Amway's Indian Network Marketing Experience

The Indian MLM Journey Contd...

Most Indian direct selling failures stemmed from the fact that they did not understand the concept thoroughly. Companies who opted for advertising in the media soon found that it had a negative impact. Advertising created a suspicion in the mind of the salesperson that the company was taking direct orders and thus, reducing commissions. In some cases, it also negated the impact of demonstrations. Eureka Forbes handled this carefully, when it advertised not its product, but the salesperson as a friend of the customer. Advertising went hand in hand with retail, as people ought to be told where to go and get the product.

In an MLM setup, advertising was not the best way to spend money. Though this did sometimes result in inadequate product exposure, the money which would have been spent on advertising was usually diverted into training and motivating the salesperson to contact as many customers as possible.

Though Oriflame and Avon did advertise, it was mainly attributed to their being prima-facie into cosmetics and personal care, thereby involving an image factor.

Amway, which was into home care products in a big way, had decided not to go in for advertising on a scale as large as adopted by Oriflame and Avon. Competition was intensifying in the industry in the early 21^st century.

Amway seemed to be faring better than competitors like Modicare - a fact attributed mainly to its premium brand image. Both Amway and Modicare were not the typical door-to-door selling companies, as they sold only to customers known to their distributors. While Amway targeted only the upper section customers, Modicare targeted the middle and the upper middle class customers. Some of Modicare's products were priced at one-fourth of the price of Amway's products. Modicare sources said this was because its products were priced for the Indian market, while Amway's pricing was more in tune with its global counterpart. Modicare was even willing to reduce its margins in certain cases. Also, Modicare offered 100% refund even when the product had been used, unlike the 75% refund offered by Amway. This could turn out to be a cause for concern for Amway in the long run.

Exhibits

Exhibit I: Amway Products Available in India (April 2001)

Case Details

Case Code : MKTG003
Themes: Direct Marketing
Case Length : 9 Pages
Period : 1994-2000
Organization : Amway Indian, Eureka Forbes
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Business Services & Equipment

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