This paper explores the marketing and management of Amway Corporation in Australia, with a focus on its capability to introduce a new product. It covers the SWOT analysis, segmentation, targeting and positioning, marketing mix, and conclusion.
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Running Head:AMWAY COMPANY MARKETING AND MANGEMENT Amway Company Marketing and Management Name: Academic Affiliation: Date:
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AMWAY COMPANY MARKETING AND MANGEMENT2 Executive Summary Amway Company has managed to attract the attention of the Australia Home Care as well as Global market while launching its new product; Nutrilite . The current paper thus covers the SWOT analysis of the company, Segmentation, targeting and positioning as well as the marketing mix, to determine the position of the company and the capability of launching a new product. From the exploration, it is evidential that Amway has a strong brand name, a wide range of products and customers, as well as string multi-level marketing strategy. Amway has different opportunities to grow resulting from the current emerging markets and the rapid development of technology. Consequently, Amway faces threats such as stiff completion and the high rate of falling prices that if not addressed might negatively affect the company. Therefore, it is imperative for the company to venture into the production of products that are affordable to both the medium and low class.
AMWAY COMPANY MARKETING AND MANGEMENT5 1.0 Introduction Products and service marketing is significant to every organisation, as it enhances the organisations’ performance as well as the satisfaction of the stakeholders: customers, and society at large. Marketing refers to the combination of different activities that focuses on analysing customers need, securing information, and producing goods according to customer needs. Through marketing, organisations create utility; want-satisfying power of goods and services and are categorised into four: form, place, ownership and time utility, and all are obtained through marketing. Marketing and management are always essential when a new product is being introduced,oraneworganisationentersintoanewmarket.Effectivemarketingand management thus ensure success or failure of an organisation since it ensures the achievement of the desired outcome over a specified period. The current paper explores the marketing and management of Amway Corporation in Australia, with a focus on its capability to introduce a new product(Drescher, 2017). The paper entails company introduction, an overview of the industry,SWOTanalysis,segmentation,targetingandpositioning,marketingmixand conclusion of the paper. Company Introduction Amway Corporation is a direct retailer, manufacturer, and marketer of cosmetics and related products such as household, cosmetics, beauty, skin care, and home care (Roth, 2014).
AMWAY COMPANY MARKETING AND MANGEMENT6 The USA based company created in 1952 by Rich De Vos and Jay Van Andel is currently a global organisation operating in more than 80 countries such as China, Europe, Japan, America, Korea, Australia, and SE Asia. Amway Corporation is one of the most appreciated companies with multi-level marketing strategies; through this, thousands of distributors signed each month leading to the global expansion of the company. Over the years the company grew its products lines from LOC, laundry detergents, cosmetics, Artistry among many many others resulting in more than 450 products across the world. 3.0 Brief Industry Overview Amway Company is categorised under Homecare Industry that focuses on different products such as fabric Cleansing, Care, Dishwashing agents, and water purifications among many others. Global homecare industry experiences robust growth over the past decade with a rate of 4.6%.The high rate of growth in Homecare is associated with a high rate of global population growth as well as the continuous changing lifestyle creating demand for both existing and new products. In Australian too, Homecare industry is experience rapid growth to 1.5% in 2016 and 2% in 2018. The rapid growth rate is associated with the availability of innovativeness and strong marketing of numerous products by different companies in effect to capture the attention of greater audience Euromonitor International’s Home Care. 4.0 SWOT Analysis SWOT Analysis aims at providing provides a comprehensive report on the company’s strategic business culture, key competitors, products and services (Ingaldi & Škůrková, 2014).
AMWAY COMPANY MARKETING AND MANGEMENT7 Figure 1: Shows SWOT Analysis Framework, obtained from (Ingaldi & Škůrková, 2014). Factors StrengthsStrongGlobal Presenceand procurement Amway has a wide range of products that are used by numerous people across the world. These products range from the health, nutrition to household items thus in one way or the other, 8 out of 10 people purchasethecompany’sproductinadaythus controls more than $ 2 billion in the global annual spending. This led to the award to the company as the bets Global Supply Chain Excellence by the Supply Chain Council Award in 2006. Strongmarketing strategy Amway has a strong marketing strategy that enables the company to capture the attention of numerous customers’acrosstheworld.Themulti-level marketing strategy refers to the referral marketing that encourages the existing distributes to recruit new
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AMWAY COMPANY MARKETING AND MANGEMENT8 distributes who earn through their respective recruits' sales (Lindgreen & Anthony, 2018).The marketing system is of great importance since it has numerous advantages that enhance the growth of the business: Lowrisk-theMLMhaslowrisktobusiness especially to the start-ups- and new products since it reduces the probability of losing money, time and resourcessuchasinfrastructuresinceeach distributor’s works as individuals to increases their sales and they are no financial commitment like the traditionalversions.(Palmisano&Pannofino,N. (2013) Thus this offers good environs for any start- up. Huge potentialincome- MLM hashuge potential income since each of the distributors are not held back by the company as each wants to earn more thus muststrivetosellmore.Unlikethetraditional marketing versions, MLM encourages one to earn depending on the workloads or fix monthly salary irrespective of the sales. Lowoperatingcost-Multi-levelmarketingstrategy has low operating cost since it does not require the installation of various infrastructure, recruitment and
AMWAY COMPANY MARKETING AND MANGEMENT9 training of marketing staff as well as no investments. The existing distributor’s recruit new distributors to earn more money depending on their sales. Thus the costdoesnotlandintothecompany’sfinancial structure. Wide product rangeAmway in Australia provide a wide range of products that are : Healthproductssuchassupplements,vitamins (Nutriway) and mineral products that are essential in supporting the lifestyle of human beings. BeautyandBodycosmeticsthatareessentialto maintain the skin care such as Artistry largest selling skincare, Santinique the bets salon hair care, Glister that rinses, refreshers and toothbrushes and keep the mouth clean and healthy, LaundryproductssuchasSA8anddishwashing solutions. The wide range of products offers the company a good marketing ability since they are available in every aspect of consumer’s daily life thus increase the chances of consumer purchasing intentions as well as acts as a marketing tool through creating popularity
AMWAY COMPANY MARKETING AND MANGEMENT10 (Harland, Uddin, & Laudien, 2018). Widerangeof consumers Amway products have a wide range of consumers ranging from babies to adults and women to men. The wide range of consumers thus offers the company a strongercompetitiveadvantagesince,indaily purchased of an individual, there must be a product fromtheAmwayindustries,thusincreasingthe revenue collection of the company even in areas that are perceived to be strongholds of the competitors (Chun, 2015). Diverserevenue model Amwaycompanyhasdiverserevenuecollection ranging from the production, direct sales and referral salesacrossnumerouscountriesthatenablethe company to collect more revenue. Strong brand nameThe direct sales model creates a strong brand image and recognition among consumers across the world, thus increasing the revenue collection. Consequently, strongbrandrecognitionenablesthecompanyto offer products at low prices than the competitors thus acquire a better competitive advantage. WeaknessFalling salesThefallingrevenueoftheAmway’sproductsis attributed to the stiff competition from the rivals companies such as Mary Kay and P&G resulting in a
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AMWAY COMPANY MARKETING AND MANGEMENT11 dropinthesalesby7%in2016.Therival competitors tend to reduce the market capture of the Amway thus reducing their impact on the Homecare industry. Highemployee turnover Amway experience high employee turnover since the companydoesnothavedirectcontroloverthe employees. OpportunitiesGrowing technological advancement In the current world technological advancement has reducedthedistancebetweencompaniesandthe customers through the various social media platform. Amway company thus has a great opportunity to enhance multi-level marketing strategy through the application of the social media platform at such as Facebookthatcontainsmorethan2.38billion. Through this Amway has the greatest opportunity to capture and sell to more customers than any other decade. Emerging marketsEmerging markets such as China, Africa and India are the largest emerging markets in the world due to thestrongeconomic,populationandpurchasing power growth (Csontó, 2014). These provide a good business environment for the company’s products,
AMWAY COMPANY MARKETING AND MANGEMENT12 thus encourage the company to take the opportunities in capturing such markets. ThreatsCompetitorsLike any other business, competitions are a common aspect; thus Amway is no exemption. Amway faces stiffcompetitionfromvariousbusinessoperators such as Mary Kay, P&G, VLCC, HUL, P7G and Loreal that have different products and marketing plan (Jimmie, 2012). Mary Kay company is the biggest rival to Amway andfocusesontheprovisionofskinproducts, makeups, and fragrances. The company has about 5,000 employees across Australia and accumulates about $4 billion per year. Procter & Gamble Company is the second rival to Amway in Australia and aims in offering consumers with wrapped products clients across the globe. P&G productsaresegmentedintovariousPrettiness, Grooming, Health Care, Textile & Home Care, and Infant and Children Care, Women Care and Family Care. The company has more than 92,000 employees and attract about $ 66.9 Billion per annum.
AMWAY COMPANY MARKETING AND MANGEMENT13 5.0 Segmentation, Targeting &Positioning 5.1 Segmentation Market segmentation means the procedure of separating the marked group of customers into clusters of potential customers based on different characteristics such as behaviour, psychographic and geographic among others.Femina & Sudheep, (2017) states that for successful market segmentation, three aspects must be sequentially taken into account: segmentation, targeting, and positioning. The STP has numerous benefits to the organisation such as enhancing an organisation’s competitive position by offering a flawless course and attention on the promotion strategies. Amway’s market segmentation is based on three major categories: behavioural, psychological and demographic. Figure 2: Shows marketing segmentation process, obtained from, (Femina & Sudheep,2017) 5.1.1Behavioural segmentation Behavioural Segmentation denotes to the procedure of segmenting the total market into a smaller cluster of potential customers based on the customer’s purchasing behaviours such as usage frequency, brand loyalty, and benefits needed by the customer. Various home care products such as dishwashing detergent are used daily by customers across Australia and the
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AMWAY COMPANY MARKETING AND MANGEMENT14 entire world thus developing such products that give high experience to consumer’s results into the high frequency of purchasing and usage, a data that is obtainable from the product’s sales data (Awan, 2014). When the product’s stock is stagnant at various warehouses, then the marketing team generally realises that the product does not conform to the needs of the customers since they do not buy it. Thus the marketing team advises the production team accordingly to adjust the product to suit the needs of the customers or recommend its elimination from the shopping shelves. The behavioural segmentation enables Amway to identify different customers that have the same behaviour of product purchasing, and usage thus makes it easy for the company to know their number, likes, product attributes thus enhancing product production and services. Secondly, through the behavioural segmentation, Amway Company has succeeded in building satisfying and providing good experience thus building strong customer loyalty resulting in a stronger competitive advantage over the competitors such as P&G. However, Amway Company’s behavioural segmentation process comes with some weakness such as the inability to withstand the ever-changing customers’ behaviour and likes over a given period, forcing some product to become obsolete over a short period. 5.1.2Demographic segmentation Demographic Segmentation refersto the partition of the entire identified customers into a reduced cluster of potential customers based on the demographic aspects such as age, gender, family size, income, and education ( Fjelstul, 2014). Amway’s company’s products are all inclusive from the babies to adults, and women to men thus cover large customer’s base than any other competitor in Australia. Age is one of the strongest marketing tools for Amway since the company realised that children are fond of confectionary product food and toys, this has
AMWAY COMPANY MARKETING AND MANGEMENT15 enabled to produce products such as Nutrilite that are essential for the children. Secondly, gender is the second demographic segmentation that focuses on separating the needs of women from men. For example, women are fond of beauty care products; thus; Amway has diverse products such as Artistry aims at enhancing beauty among women and at the same time Dynamite powders essential for men. Consequently, Amway succeeded in creating various products that are based on more than one demographic factor (age and gender) such as Nutrilite that serves both children and adult women. The large customer base contributes to the large revenue collection. The third demographic factor is income that has always determined various product produced by the company. The company has always focused on the products that can be afforded by high-income earners such as beauty products. 5.1.3 Psychological segmentation Psychological segmentation denotes to the division of the total market into a smaller cluster of potential customers based on the traits values, personality, interest, and lifestyles (Mangyou, 2018). Amway Company has majored on the psychographic segmentation factors such as Social Class thus enabled the company to provide a wide range of products that can be afforded by different by specific classes such as middle and upper class. The nutrition and beauty products are quite expensive thus targets only those that can afford high-quality products.
AMWAY COMPANY MARKETING AND MANGEMENT16 Figure 3: Shows Market Segmentation obtained from(Femina & Sudheep, (2017) 5.2 Targeting Targeting refers to the marketing concept of concentrating on a particular market segment rather than the general market (Doan & Reeves, 2017). Doan and Reeves identify different factors that are needed to evaluate a potential targeting: the size of the market, a difference of the segments, cost of the marketing and accessibility of the market. Amway targeting is more focused on the female gender than male gender since more of its products are based on beauties that are associated with women. The company’s products are more of skin care, cosmetics and laundry products that are utilised by housewives and other accommodation facilities. Moreover, Amway products target customers with the high social class such as water Treatment System.
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AMWAY COMPANY MARKETING AND MANGEMENT17 5.3 Positioning Positioning refers to the concept of placing the product in the right place in the prospective customer's minds (Wang, 2015). Amway's products are a little bit expensive with high quality, high brand and high price since the company has a vision of enhancing the living standard of people; thus the products are found at the up-market than the competitor's products. Amway’s placing strategy is based on “more for more” to provide products that have more value than the competitors thus resulting in inexpensive products. The positioning of the products focuses on the customers that have the capability of paying more for high-quality products such as washing machines and water purifiers. Figure 4 shows Amway’s product positioning, obtained from (Wang, 2015). 6.0 MarketingMix Organisations marketers employ different tools to obtain desired information from the targeted customers since the application of one tool is insufficient to enhance business sales. The
AMWAY COMPANY MARKETING AND MANGEMENT18 application of numerous tools refers to the Marketing Mix that can influence the trade channels as well as the perception of the final user. Pulido (2018) classifies the marketing tools into four major broad categories that are referred to as Ps of the marketing: product, promotion, and place, price 6.1 Product Product refers to the specific item offered to the customer to fulfil the needs. Amway Company provides a wide range of products that are of high quality. The products are about 450 types which are categorised as beauty, bath, laundry, home maintenance products, home tech, home-based appliance, and jewellery and style accessories among many others (Scorchie, 2015). The major Amway’s product is nutrition, supplement, fortified and antioxidant that has different deep packaging such as 450 g per bottle, 30 stick packs. The bath product such as body care, men skin, and Allon care among others are packed in smaller packages such as 150ml and other into larger packs such as 400ml. The homecare products such as kitchen care have wide packing pattern such as 500ml, one litter, 1 kg even smaller quantities such as 250grams. The homecare products usages are inconsistent; thus the packaging targets a wide range of customers. 6.2 Price Price refers to the monetary value targeted on the product that a company needs the customer to pay in exchange for the product. Unlike another marketing mix that focuses on creating value, pricing focuses on harvesting the value of the products through marketing thus makes the most instrumental factor in the marketing mix. Amway Company employs different pricing strategies that are: promotional pricing, grant pricing, list pricing, discount pricing, credit terms pricing, cost-based pricing, competition-based pricing, demand-based pricing and section
AMWAY COMPANY MARKETING AND MANGEMENT19 pricing. 6.2.1 Section Pricing Section pricing refers to the pricing of the product depending on the market segmentation (Schulze, 2018). Amway determines the prices of the products depending on the customer segmentation thus can sell the same product to different customers at different prices depending on the customer’s ranks, class and profile. Customer ranking is determined by the number of purchases made by various customers. Thus those with high rank tends to make frequent purchased are charged more than those with low rank. For example, a customer with 12500 points and above can get 21% on rebate while those with low points such as 250 points get a rebate of 3% on the product purchase. 6.2.2 Allowance Pricing Allowance pricing refers to the reducing of one products’ pricing when a customer buys an alternative product (Tuttier, 2011). Amway allowance pricing of the Nutrilite will be applied when a customer buys a new item; the price of the old item is reduced to encourage customers to buy old items even during the introduction of the new products. 6.2.3 Promotional Pricing The promotional pricing refers to the product pricing based on special events organized by the company to increase sales. Amway applies promotional pricing the organising special monthly events. During these monthly special events, Amway reduces the prices of particular products that might have registered low purchasing rate, to encourage customers to buy it. Consequently, the company can as well encourage customers to buy such products by awarding other products alongside the products.
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AMWAY COMPANY MARKETING AND MANGEMENT20 6.2.4 Competition-Based Pricing Competition based pricing tends to fix the prices of the products near the price of competing products. Amway products experience competition from different companies such as Mary Kay and P&G. the competitive pricing strategy will help Amway’s marketers not to worry about demand and cost as well as the effect of the changes brought about by competitors. 6.2.5 Demand-Based Pricing The demand-based pricing allocates products prices based on the market demand without paying attention to the cost and the prices of the competitors. Amway’s products tend to be high quality and expensive thus will only be demanded by the high-class consumers, through the little demand, Amway is able to determine their prices by taking the advantage of market demand. 6.3 Place Placing refers to a marketing concept that identifies the specific location of the products and services to various target customers. Amway Company’s placing strategy lies on the availability of various distributors and sub-distributors that ensure that each client obtains the accurate product at the correct right time and the accurate quality. 6.4 Promotion Promotion refers to the process of increasing sales of a product. Amway employs majorly three promotional mixes to capture the attention of the targeted customers; these are advertising, direct marketing and personal selling (Ho, Ho & Tan, (2013).
AMWAY COMPANY MARKETING AND MANGEMENT21 6.4.1 Advertising Advertising refers to the non-personal communication strategy with the targeted audience through various media such as radio, televisions, newspaper, mail and internet (Divock & Leychik, 2012). Advertising is essential in creating awareness of the availability of products to targeted customers. Thus Amway uses post various products on magazines, newspapers, television and internet to capture the attention of customers. 6.4.2 Direct Marketing Direct marketing refers to the use of non-personal marketing tools such as telephone magazines among many others to communicate the organisational and product information to the targets clients. Amway employs direct marketing by posting various product information, benefits and prices into the company’s website and other media platforms that can be easily accessed by clients. Through these platforms, clients tend to learn more about the product before making the actual purchases. 6.4.3 Personal Selling Person selling that refers to the application of the human as the platform of product promotion? Amway employs different marketing personnel with good convincing power to capture the attention of the customers and encourage them to make different purchases.
AMWAY COMPANY MARKETING AND MANGEMENT22 Figure 2: Shows Marketing Mix, obtained from (Pulido, 2018) 7.0 Conclusion In conclusion, Amway has strong global market command attributed to the marketing and management strategy. From the paper it is evidential that Amway multi-level marketing has enabled the company to capture the large market with Australia inclusive, thus making it one of the great homecare companies in Australia market.Amway strengths lie in the strong global brand, a wide range of products, high quality of products, strong brand name and wide range of revenue collection. The company weakness lies on the rising stiff competitors, and the high product process, the opportunities of the company, lies on the rising technological advancement and the emerging markets such as Africa, Asia and China. Despite all the threats, the company has a better position in Australian and the entire world. However, there are still other aspects that the company need to do to ensure a continuous competitive advantage over stiff competitors such
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AMWAY COMPANY MARKETING AND MANGEMENT23 as P&G and Mary Kay. Amway should try and focus on the middle and lower class by providing products with lower prices. This will guarantee their long term market command. 8.0 References Awan, M. (2014). International Market Segmentation: Exploring Cell Phone Market of Young Adults.International Journal Of Trade, Economics And Finance,5(2), 151-154. doi: 10.7763/ijtef.2014.v5.359 Chun, Jinyong. (2015). SWOT analysis for improving the sharing economy based product design process.Journal Of Digital Design,15(3), 889-897. doi: 10.17280/jdd.2015.15.3.085 Csontó, B. (2014). Emerging market sovereign bond spreads and shifts in global market sentiment.Emerging Markets Review,20, 58-74. doi: 10.1016/j.ememar.2014.05.003 Divock, L., & Leychik, V. (2012).Strengths and weaknesses of the advertisement discourse.Modern Communication Studies,1(1), 0-0. doi: 10.12737/79 Doan, B., & Reeves, J. (2017). Targeting Market Neutrality and Volatility.SSRN Electronic Journal. doi: 10.2139/ssrn.3021477
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AMWAY COMPANY MARKETING AND MANGEMENT25 marketing management.Industrial Marketing Management,73, 1-6. doi: 10.1016/j.indmarman.2017.10.003 Mangyou Bae. (2018). A Study on the Festival Target Market on the basis of Geographical Segmentation and Psychological Segmentation: Focused on the Uljin Waterfia Festival.Tourism Research,43(3), 81-96. doi: 10.32780/ktidoi.2018.43.3.81 Palmisano, S., & Pannofino, N. (2013). It Isn’t Just about the Money: The Implicit Religion of Amway Corporation.Implicit Religion,16(1), 27-46. doi: 10.1558/imre.v16i1.27 Pulido Polo, M. (2018). Acts or events? A perspective from the marketing mix.IROCAMM- International Review Of Communication And Marketing Mix, (1), 56-66. doi: 10.12795/irocamm.2018.i1.04 Roth, M. (2014). Dreams Incorporated:Living the delayed life with Amway.The Baffler,25, 14- 15. doi: 10.1162/bflr_a_00238 Schulze, G. (2018). Carry Trade Returns and Segmented Risk Pricing.SSRN Electronic Journal. doi: 10.2139/ssrn.3123735 Scorchie, K. (2015). GPs in Australia urge pharmacists not to sell homeopathic products.The Pharmaceutical Journal. doi: 10.1211/pj.2015.20078662 Tutier, L. (2011). Hintermann, Beat. “Pricing Carbon: Allowance Price Determination in the EU ETS.” University of Maryland. Outstanding Doctoral Dissertation Honorable Mention.American Journal Of Agricultural Economics,93(2), 652-653. doi: 10.1093/ajae/aaq200
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AMWAY COMPANY MARKETING AND MANGEMENT26 Wang, H. (2015). A New Approach to Network Analysis for Brand Positioning.International Journal Of Market Research,57(5), 727-742. doi: 10.2501/ijmr-2015-060