Professional Documents
Culture Documents
PROJECT
REPORT
ON
RELATIONSHIP MARKETING WITH FOCUS ON
AMWAY
Submitted in partial fulfillment of the requirements
for the award of the degree of
Bachelor of Business Administration (BBA)
SUBMITTED BY:
ROLL
BBA(G) 3 RD
SEMESTER
MORNING
SHIFT
1
CERTIFICATE
I, Mr./Ms. ISHAN GULATI , Roll No. 01514901713 certify that the Minor
Project Dissertation (BBA-209) entitled RELATIONSHIP MARKETING
WITH FOCUS ON AMWAY is done by me and it is an authentic work
carried out by me. The matter embodied in this project work has not been
submitted earlier for the award of any degree or diploma to the best of my
knowledge and belief.
ACKNOWLEDGEMENT
Project work is never the accomplishment of an
individual rather it is an amalgamation of the
efforts, ideas and co-operation of a number of
entities.
(ISHAN GULATI)
TABLE OF CONTENTS
Chapter
Number
Particulars
1.
INTRODUCTION
2.
RELATIONSHIP MARKETING
3.
VARIOUS ASPECTS OF
RELATIONSHIP MARKETING
1.1 Nature
1.2 Objectives Of Study
1.3 Data Collection Methodology
2.1 Overview
2.2 Approaches to RM
2.3 Rise in Relationship Marketing
Page
Number
6
6
7
8
9
9
13
14
18
18
20
22
4.
AMWAY PROFILE
5.
6.
QUESTIONNAIRE ANALYSIS
7.
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26
27
31
32
38
38
42
44
45
54
55
55
57
1. INTRODUCTION
1.1 NATURE
Relationship marketing refers to a wide range of relationship
type strategies that have developed over the past few decades in
product as well as service markets and in consumer as well as
business to business sectors. The antecedents of RM go to
Industrial marketing and Services marketing. RM found ready
acceptance in a marketing world where it had become obvious
that strategic competitive advantage could no longer be
delivered on the basis of product characteristics alone and
where corporate profitability was beginning to become
associated with satisfying existing customers (John Egan, 2001).
Relationship marketing as contrasted to transaction marketing
involves relational exchanges that trace to previous agreements.
There are four types of buyer-seller relationships bilateral
relationships, seller-maintained relationships, buyer-maintained
relationships, discrete exchanges (Dwyer, Schurr and Oh 1987).
For a firm, relational exchanges could occur with goods
suppliers, services suppliers, business units, employees,
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1.
2.
3.
4.
5.
2. RELATIONSHIP MARKETING
2.1 OVERVIEW
Relationship marketing was first defined as a form of marketing
developed from direct response marketing campaigns which
emphasizes customer retention and satisfaction, rather than a
dominant focus on sales transactions.
As a practice, relationship marketing differs from other forms of
marketing in that it recognizes the long term value of customer
relationships and extends communication beyond intrusive advertising
and sales promotional messages.
With the growth of the internet and mobile platforms, relationship
marketing has continued to evolve and move forward as technology
opens more collaborative and social communication channels. This
includes tools for managing relationships with customers that go
beyond simple demographic and customer service data. Relationship
marketing extends to include inbound marketing efforts, (a
combination of search optimization and strategic content) PR, social
media and application development.
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DEVELOPMENT
Relationship marketing refers to an arrangement where both the buyer and seller
have an interest in providing a more satisfying exchange. This approach tries to
disambiguiously transcend the simple post purchase-exchange process with a
customer to make more truthful and richer contact by providing a more holistic,
personalised purchase, and uses the experience to create stronger ties.
From a social anthropological perspective we can interpret relationship
marketing theories and practices as commodity exchange that instrumentalise
features of gift exchange. It seems that marketersconsciously or intuitively
are recognizing the power contained in 'pre-modern' forms of exchange and have
begun to use it. This particular perspective on marketing opens up fertile ground
for future research, where marketing theory and practice can greatly benefit from
in-depth research of the principles governing gift exchange.
According to Liam Alvey, relationship marketing can be applied when there are
competitive product alternatives for customers to choose from; and when there is
an ongoing and periodic desire for the product or service.
Modern consumer marketing originated in the 1960s and 1970s as companies
found it more profitable to sell relatively low-value products to masses of
customers. Over the decades, attempts have been made to broaden the scope of
marketing, relationship marketing being one of these attempts. Arguably,
customer value has been greatly enriched by these contributions.
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In web applications, the consumer shopping profile can be built as the person
shops on the website. This information is then used to compute what can be his
or her likely preferences in other categories. These predicted offerings can then
be shown to the customer through cross-sell, email recommendation and other
channels.
Relationship marketing has also migrated back into direct mail, allowing
marketers to take advantage of the technological capabilities of digital, tonerbased printing presses to produce unique, personalized pieces for each recipient
through a technique called "variable data printing". Marketers can personalize
documents by any information contained in their databases, including name,
address, demographics, purchase history, and dozens (or even hundreds) of other
variables. The result is a printed piece
that (ideally) reflects the individual needs
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and preferences of each recipient, increasing the relevance of the piece and
increasing the response rate.
SCOPE
Relationship marketing has also been strongly influenced by reengineering.
According to (process) reengineering theory, organizations should be structured
according to complete tasks and processes rather than functions. That is, crossfunctional teams should be responsible for a whole process, from beginning to
end, rather than having the work go from one functional department to another.
Traditional marketing is said to use the functional (or 'silo') department
approach. The legacy of this can still be seen in the traditional four P's of
the marketing mix. Pricing, product management, promotion, and placement.
According to Gordon (1999), the marketing mix approach is too limited to
provide a usable framework for assessing and developing customer relationships
in many industries and should be replaced by the relationship marketing
alternative model where the focus is on customers, relationships and interaction
over time, rather than markets and products.
In contrast, relationship marketing is cross-functional marketing. It is organized
around processes that involve all aspects of the organization. In fact, some
commentators prefer to call relationship marketing "relationship management"
in recognition of the fact that it involves much more than that which is normally
included in marketing.
Martin Christopher, Adrian Payne, and David Ballantyne at the Cranfield
School of Management claim that relationship marketing has the potential to
forge a new synthesis between quality management, customer service
management, and marketing.
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13
14
15
19
TRUST
Trust is the confidence both parties in the
relationship have that the other party wont do
something harmful or risky, according to the book
Relationship Marketing and Customer
Relationship Management, by Annekie Brink and
Adele Berndt. Businesses develop trust by
standing behind their promises.
COMMITMENT
EFFECT
The results of a relationship based on
commitment and trust are cooperative behaviors
that allow both parties to fulfill their needs.
Customers not only get the product or service
theyre paying for, but they also feel valued. Your
business receives customer loyalty in return,
which is valuable, because you wont have to
waste resources acquiring new customers. In
other words, investing money in excellent
customer service actually can save you money,
because you wont have to invest in, for example,
numerous marketing campaigns to obtain new
customers.
CONSIDERATIONS
Few businesses have the resources to develop long-term
relationships with every customer. Thats why its important to
identify the customers who are most valuable to your business
and focus your efforts on them. Identifying and developing
relationships with the right customers allows you to devote
your resources to the customers who mean the most to your
businesss overall strategy, according to Brink and Berndt.
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22
ECONOMIC ENVIRONMENT
Two important economic arguments have been advanced to explain the
development of relationship marketing in the 1980s and 1990s. Firstly,
there is the familiar argument that it is more cost effective to retain
existing customers than to continually recruit new customers to replace
lapsed one. This argument was of course nothing new, but information
technology has allowed for more precise tracking of customers and the
development of personalized retention strategies.
Secondly, the quality of buyer-seller relationships emerged as a point
of sustainable competitive advantage. A previous pre-occupation with
tangible design properties in the 1960s was followed by a preoccupation with augmented services (e.g. financing, warranty and
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POLITICAL/LEGAL ENVIRONMENT
The political environment of many western economies during the
1990s emphasized a desire to dismember state monopolies and to
develop competitive markets. The outsourcing of many functions
traditionally carried out by government organizations (and by large
private sector firms) created the need for close co-operation between
autonomous units in place of previous unified command and control
structures. In Williamson's terminology, outsourcing of peripheral
functions through networks of supplier's leads to a transition from
hierarchies to markets, with hybrid organizations being the end result.
Simultaneously, governments of many western countries have sought to
outsource many services provided to consumers (e.g. many health and
pension services) and encouraged the development of ongoing
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4. AMWAY PROFILE
4.1 COMPANY HISTORY
Amway began in 1959 with two young entrepreneurs in the United
States, Rich DeVos and Jay Van Andel. Their concept for an innovative
business opportunity, centered around person-to-person marketing,
established itself as a leader among one of today's fastest-growing
industries.
Today, more than 3.6 million independent business owners distribute
Amway products in more than 80 countries and territories. Amway is
part of the Alticor family of companies whose global sales totalled $4.5
billion in its most recent fiscal year.
1950s - A Friendship Forms
Rich DeVos and Jay Van Andel's friendship actually began with a
business proposition, when Rich struck a deal with Jay for a ride to
school for 25 cents a week. After high school they entered the military,
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28
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 India Corporation is the
country's leading Direct Selling Company. It is perhaps the best
example of the contribution Direct Selling is making to India. In a little
over two years of commercial launch Amway India has emerged as the
country's largest Direct Selling Company. It closed its financial year
with a turnover close to Rs. 250 crores (the Amway Financial year
runs from Sept. to Aug.). It will reach its target of Rs. 1000 crore
turnover much before its declared target of the year 2004. Because it
focuses upon direct selling, Amway is different from more traditional
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They are also self-employed and can introduce others to the business
to form their own sales group of Independent business owners.
MULTI-LEVEL MARKETING
Multilevel marketing allows sellers to build a business through their
own sales efforts and by inviting others to become sellers.
Remuneration is based on a seller's personal sales AND on the
combined sales of those people they have sponsored, trained and
motivated. 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 markets needs. This report has been made keeping in
mind the benefits which can be derived from my research.
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, or in the context of a sales
party. Through this the customers will get a better idea about the
companys product offerings and value the advantages of:
convenience, personalized attention, and a good selection of quality
products available at their door steps.
BENEFITS TO SELLERS
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Many people have chosen direct selling because they want to build
their own business, 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, like
being their own 7 boss, and working their own hours, like the
supplemental family income or making extra money for themselves. 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 Amways unique business opportunity.
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.
4.3 THE CURRENT SCENARIO
Amway is the largest multi-level marketing (MLM) organization in the
world. It is a multi-billion dollar company based on the sale of a
variety 10 of products. Amways philosophy is defined by
commitments, trusts, enduring relationships, and the ideal of
perfection above profit. From a humble beginning in 1959, using an
old gas station, Amway the brainchild of Co founders Rich DeVos and
Jay Van Andel, is now one of the largest and most successful direct
sales companies. Amway has also worked to provide better
opportunities for people through active support of various community
projects.
Corporate Profile:
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33
Direct Selling requires expertise and special skills. Using the benefit of
Amway's leadership status in the global Direct Selling industry,
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Amway India has in the past 12 months, conducted over 8000 training
sessions with an attendance of approximately 350,000 Distributors.
Amway India was honored by the AICB Millennium Outstanding
Service Award, 2000 by the All India Confederation of the Blind in
recognition of its sterling contribution to the cause of India's blind.
The Karnataka Welfare Association awarded Amway India with the
`Rising Business Star of the Millennium' during a ceremony held at
Bangalore during October, 2000.
In the short period since its advent in the country, Amway has made
several contributions to Indias socio economic milieu. It as either
introduced unprecedented benefits, or upgraded existing facilities to
international standards.
CORPORATE RESPONSIBILITY
Through
its
presence
in
India,
Amway
continues to enhance human resource development using its experience
in entrepreneurial opportunity and self employment. Amway has
conducted several seminars on "Entrepreneurial Development and
Direct Selling" in concert with the Confederation of Indian Industries
(CII) and the All India Management Association (AIMA) to educate
popular opinion on the benefits of organized direct selling.
HOW IT WORKS
Amway is different from the more traditional distribution channels in
that the business has developed through direct selling. In Amway, one
is recruited as an "independent" distributor of Amway products by
buying a couple of hundred dollars worth of the products from the one
who recruits you, known as your "up-line." Every distributor in turn
tries to recruit more distributors. Income is generated by sales of
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TARGET AUDIENCE
Amways products appeal to a large number of buyers all over India. It
is targeting people who believe in using high quality products which
are conveniently available to them.
Amway business opportunity is attracting the middle income group to
earn extra income. Amways target audience include a lot of
professionals and young couples who are very ambitious to earn high
level of income in a short span of time.
Amways products being good in quality are also very much preferred
by the upper class segment who can easily afford the pricing but they
dont want to get involved with the business opportunity. They are
mostly associated with Amway as their customer.
Target group
Men Professionals and small business owners
Age - 23 - 50 years
Income Status Working class, Middle income, upper middle income
WomenWomen
Age- 25-50 years
professional
38
and
housewives
It is not only in India that Amway and companies doing similar kind of
businesses are targeted by law enforcement authorities. Even in the
United States, the country of origin for Amway, there are issues.
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Although the growth rate in India is on a decline in the past three fiscal
years, on a global basis Amway has grown over 8% in 2013, it
added. The North region accounted for 29% of sales the highest level
with an increase of 12.2%, followed by South region with 25%.
However, the South region saw a drop in sales.
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"Southern region, which was earlier our main base, is not doing well
due to lack of clarity on the policy for direct selling. In state
like Kerala, direct selling has stopped," said IDSA Secretary General
Chavi Hemanth.
Products related to healthcare/wellness contributed 44%, followed by
cosmetic and personal beauty with 33% and 12% respectively, the
report added.
The report further said Bengaluru was the most attractive market for
the direct sellers followed by Delhi, Ludhiana, Mumbai and
Jaipur. According to the IDSA Chairman, untoward incidents "have
severely impacted" the sentiment of industry players. Following Prime
Minister Modi's invitation to 'Make in India', Amway has targeted
reduction of its export to 10% by fiscal 2019-20 from existing
30% levels.
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Yet, Amway India is one of the companies that continues to face strong
regulatory challenges.
6. QUESTIONNAIRE ANALYSIS
My project involves the study of Amways Relationship Marketing
strategy in India.
I had planned my work on the project along the following lines:
Data Collection
Data Analysis
Data Compilation
The preparation and presentation of the report:
My first step in data collection involved meeting my guide for having a
general understanding of what my product should be like and then
some specific understanding of the company.
After deciding upon the broad frame work of my project, I proceeded
on a search for secondary sources of data. After analyzing the data I
prepared, I proceeded towards the primary sources in which direct,
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Respondents
Women
55
Men
36
*Others
Total
100
46
55%
50%
40%
30%
20%
20%
25%
10%
0%
Independent Business
Customer of Amway
products
Owner
47
30%
30%
25%
25%
18%
20%
15%
10%
5%
10%
12%
5%
0%
Below
Rs.10, 000
10,00020,000
20,00030,000
48
30,00040,000
40,00050,000
50,000 and
above
A)
40%
35%
30%
35%
30%
25%
20%
20%
15%
10%
7%
3%
5%
0%
Too
Expensive
B)
YES
NO
Expensive
Economical
Cheap
Poor
49%
51%
Yes
No
40%
35%
30%
25%
20%
15%
15%
10%
5%
0%
Excellent
Good
Average
0%
0%
Bad
Poor
Q.5 Are the required products easily available for consumption and further
selling?
Yes/No
50
40%
YES
No
60%
50%
50%
Customer Service
51
Income Opportunity
60%
50%
50%
40%
30%
20%
15%
12%
13%
10%
Weak
Low
10%
0%
Very strong
Strong
Moderate
Moderate
Low
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60%
50%
50%
40%
30%
25%
25%
20%
10%
0
High
Moderate
Low
70%
60%
60%
50%
40%
35%
30%
20%
15%
10%
0%
Yes
No
53
May be
High
Average
Low
Not at All
The truth is that the market share for Amway is as limited as the market
share for any other product. Traditional retail trade is not about to
collapse and because of the expensive price structure; the growth of that
market is restricted to the very wealthy. Calling this "an opportunity to
use world class products" is a bit like calling the purchase of a Mercedes
Benz for Rs. 25 lakhs an "opportunity", when an efficient Maruti 800 for
one-tenth of that price will do nicely.
With all these constraints, telling people of profit mechanisms tied into
several thousand people buying Rs. 1,500 worth of Amway soaps every
month seems laughable in a country where entire families lead their lives
on less money.
7.2 BIBLIOGRAPHY
This project work is based on the information collected
from various sources. To name a few, some of them have
been listed below for reference:
www.amway.co.in
www.amway.co.uk
www.thehindu.com
www.books.google.com
Amway Brochures & Pamphlets
Guide to Relationship Marketing, a book by William
Tyne and Dale Murphy
Trust, Commitment and Loyalty in Market Endeavours, a
book by Ram Shankar and Vikram Sahai
Relationship Marketing- Any Good? ,by Philip Cotler
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