Caselet 1 Read the caselet carefully and answer the following questions:
- The Internet has not only revolutionized personal lives, but has even transformed the world of business to a great extent. Comment on the statement with reference to Amway’s Online Marketing strategy. What are the advantages and disadvantages of Online Marketing?
- What are the other forms of direct marketing in use? Briefly explain, giving examples of at least two other companies, which are using direct marketing strategy.
The emergence of direct marketing has been one of the most significant developments in recent years. The growth of direct marketing has been phenomenal, with marketers continuously adopting the latest technologies to derive maximum profits from direct marketing. Beginning with the conventional telephonic sales, direct marketing has now taken off on a global scale, as companies around the world are using web technologies to make their marketing programs more effective. The Internet has quickly become very important to businesses. It allows one computer to talk to others, linking them across the world.
What is Amway?
Amway is one of the world’s largest direct sales companies. It makes and brands its own products. It sells these to people who want to run a business, selling Amway products. These people (called Independent Business Owners or IBOs) then sell them to consumers. It allows the IBOs to build business through retailing products and sponsoring other people, who in turn, can retail products and offer the business opportunity to others. By passing sales and marketing knowledge to the developing team, IBOs not only build their own business network but also enable others to build one of their own. With operations in more than 80 countries and territories and products tailored for local regulations and preferences, Amway is one of the largest local companies in the world. Amway's business opportunity reaches people all around the globe, helping them to live better lives and realizes their hopes for themselves and their families.
Amway gives IBOs help and support when it is needed. Amway thought that the best way to do this, across the world and at any time of the day (24/7) was through websites. It carried out some market research to see if its IBOs would be keen to work this way. It found that many IBOs:
- Wanted advice and information quickly.
- Wanted to work from home.
- Were ‘go getters’ keen to use new technology.
The Amway model
Amway helps IBOs by giving them advertising and other material to help sell its products. IBOs then order products from Amway. A website allows IBOs to get the information they need and also to order products on-line. It also lets them work at any time of the day they want to and from wherever they want.
Amway’s plan
As far as it could, it grouped countries together to lower costs. Once the first sites were running, Amway could see that the direct sales model worked well on the web. Amway then took the best parts of the sites – the bits that worked the best – and used these in its new sites. The new site in the UK is called AMIVO. Over a third (and rising) of Amway’s UK sales are now made using this website.
Conclusion
Amway uses the web to link to its 3.3 million IBO customers all over the world. The web helps with sales, advice, transport, distribution and production. The use of the web has helped Amway – with its direct sales model – to compete better with other businesses that use more traditional methods.
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Marketing case study 