This seminar report discusses network marketing, with a focus on lessons that can be learned from Amway's operations in India. It provides an overview of network marketing and defines it. It then describes some of Amway's best practices in India, including conducting market research, improving products and training, and developing a strong distribution network. Finally, it discusses benefits of network marketing like leverage and low costs, and lessons like the importance of market research, compensation plans, and building relationships.

1. Seminar Report
On
Network Marketing–A Boon in Indian Market
Some Lessons from Amway
Submitted by
Rickson Jakesh Carl
Nanaiah O U
Havish P D
Under the Guidance of
Dr. Sudhir Raj K
Professor
JKSHIM, Nitte
Submitted in partial fulfilment of MBA Course to
Justice K.S.Hegde Institute of Management
(An Autonomous Institute under Visvesvaraya Technological University, Belagavi)
Department of Business Administration
Justices K.S. Hegde Institute of Management
NMAMIT, Nitte
20-02-2017

2. Introduction
People in these days have lot of different views one or the other about the Network marketing.
The term network marketing is also called as multi-level marketing. Some of the people may
think that the can be one of the best opportunity for the budding entrepreneurs to own or handle
their business with very limited investment. And for some this will not be the best means to
follow. The reality is that the network marketing is confirming to the law or to the rules of the
business model that has been used successfully by some of the biggest and most successful
companies around the world including India. Example: Hindustan Unilever Limited, Amway.
In simple words Network marketing is a type of business opportunity that is very popular with
people looking for part-time, flexible businesses.
What is Network Marketing?
The Network marketing is another term for Pyramid Selling.
Direct selling method in which independent agents serve as distributors of goods and service
and are encouraged to build and manage their own sales force by recruiting and training other
independent agents.
Network marketing is a direct-selling approach similar to home sales which is also gaining
prevalence in markets worldwide Encyclopaedia of Britannica. In the model used by
companies such as Amway and Shaklee, distributors are rewarded not only for their direct sales
but also for the sales of those they have recruited to become distributors.
There are also major players of Network Marketing they are as follows:
• Avon
• Amway
• Tupperware
• Oriflame
• Herbalife
• Modicare
• Hindustan Unilever Limited

3. There are still many companies who follow the concept of Network Marketing in their
company. The Network marketing is one of the best way to make money. As per the research
made by the Global Revenue, Avon products, Inc ranks first followed by Amway these are the
top most companies that follow the Network Marketing method. Even in the case of Hindustan
Uniliver Limited they were following this Network marketing concept but actually they dint
knew that they were following this concept in their company.
These days there are lots of problems in the Network Marketing companies and the big problem
is that there is no long term trusted network marketing companies in the market. Most of the
companies come with investment types of plans where you will get paid without doing
anything. These days it is very difficult to find a good company with a good product and correct
commission structure. As most of the time network marketing works in the commission basis.
Some Best Practices-Amway
American way, popularly known as Amway the giant in network marketing was incorporated
in the year 1959. At present Amway is operating in more than 180 countries with more than 3
million distributors worldwide. Amway has its manufacturing plants at Hungary, China, Korea
and India. About 450 products of Amway are sold through network marketing i.e.
In the year 1994 Amway received permission from Foreign Investment Promotion Board
(FIPB) to make an investment of $15 million to start operation in India. After they entered at
first Amway started identifying small and medium-scale companies with a idea that they can
source their product. Anyways, Amway started its commercial operation in the year 1998 with
a 21 network across the country this was running under the partnership arrangement. Before
they entered into India they made a market research about customer preference and attitude
through agencies such as Pathfinders and ORG-MARK, through this research they came to
know that the people are more price conscious. This forced them to few percentages of their
margins, even though there was reduction in the price, still the price of Amway was 20% more
than the other FMCG products. Amway started selling with the policy that quality comes with
price.
Initially the network marketing was implemented by using the concept ‘NRI SPONSORED’.
How they did was, Amway started contacting the NRI’s and influenced their friends and
relatives in India to be the distributors and this how their step towards creating the network

4. market started, these friends and relatives became the distributors. The distributors were
distributed products from Amway Distribution Centres (ADCs). As it was entry to Indian
market they started using media advertisements to create brand awareness. At the beginning
things did not work well for them for the reason that Indians always had a negative attitude
towards direct sales, Indians always left their privacy is being disturbed. Direct sales were
unwelcomed across the country. Sales people of Amway found it difficult to sell because the
products were of poor quality and important reason for not succeeding was because the sales
people were not properly trained and motivated.
However, by taking into consideration about these factors significant changes were made in
the field of training and quality of the product were also improved. Things started working well
for Amway and they were successful in breaking down the traditional distribution set-up of
manufacturer-distributor-retailer-consumer. Amway also started more incentives to its sales
person for every sales made. The motivation method and the improvement in product helped
them to become largest direct selling company within 11 months just after 2 years of
commercial launch. Their distribution channel were also getting stronger with time, they
successfully crossed the 2, 00,000 distributors across country.
The newly introduced policy ‘Money Back’ and a strong distribution channel network of 26
cities which served 306 locations made Amway stronger. All these are the reason how Amway
earned the sales of 100 in 1999. After this success, CEO made a statement saying that direct
selling is not a new concept for India but the new was structure which specially made for India
and of course customers do not rush to buy Amway products but the way our distributors are
working made to achieve the success.
Amway has become the market leader in network marketing, but few deficiencies were causing
problem to them those were problems of not being able to deliver the goods when needed and
customer dissatisfaction all this weakness were converted as strength by companies like Avon
and Modicare and started entering Indian market.
Picking up the pieces
As the competitors started entering, Amway woke up to reality and started working out to put
its networks in the right track. To bring it back on track they at first started finding what exactly
have gone wrong. They found that the distributors in India did not know the value of product
that they are selling to customer. So, the first step was to give knowledge to customers relating
to the value of the product. One of the best corrective measured that Amway took was, they

5. started to put stickers on the product that they sell, and these stickers contained information
about how the product must be used. For example, in the car wash solution it was clearly
mention the number of car wash that they can make per bottle.
Amway after making research on Indian market they started concentrating on the smaller
towns. They found this as the untapped segment and this can be used as the major tool to
increase its market share. The main plan of Amway was to reach the customer directly to home
by making the current distribution strategy more effective and making the whole system of
network decentralized. Apart from having a distributor in 160cities they also started building
warehouses located close to manufacturing locations. This was very useful in supplying the
goods to metro and nearby branch offices. In the traditional process of distributing the
inventory, distributors were held responsible to take the goods to their store. But here in
Amway the company is taking responsible to deliver goods to specific distribution centre. In
addition to this they also started appointing Carry and Forward agents (C&FAs) by giving
incentives who delivered the goods within 48 hours if the distributor in the same city.
Amway also started adopting localized strategies for its global products to make its product
more affordable for the customers to buy. Amway in 1999 started introducing small packs,
saying value for money pack. The major advantage of this pack was that they were easily
grabbing the interest of low income level customer. A part form all the above the most
important part is Amway’s Indian initiative by naming Indianisation where in they started
printing Hindi slogans ‘Hamara Apna Business’ to get emotional attachment of the customers
and make them feel homely product. In addition to this the also started few campaign ‘operation
gaadi’ and ‘operation ghaar’. Operation gaadi was launched in Uttar Pradesh, where they built
up store in the truck and made trip to different region on different places this helped them to
popularize their brand name and this being a success they started moving to West Bengal.
With this huge network of distributors Amway by 2004 planned to become 1000 crore
company with a physical presence in 198 centres in India. In India Amway is establishing its
roots strong but in abroad they are facing troubles. The concept of network market is being
affected by growing popularity of e-commerce and internet. Every person goes for buying
online in the present days; direct sales are getting restricted to sales of Insurance policies and
technical products.

6. Benefits of Network Marketing
1. Leverage
Through the network marketing, distributors can make money with less time of the work.
This is because in network marketing distributors are paid for the sales which is done by
the other distributors who is in his down line. Thus he can make money without increasing
his work load and work time. Distributors by increasing the number of distributors can
decrease their work hours but see their income going up.
2. Low costs
Network advertising and marketing industry can also be started and not using a money or
with little money. It is genuine that capital is required for the start- up however the earning
potential could be very high when examine to different trade. In network advertising
industry, money requires just to maintain the overhead. Even though it requires money to
handle marketing activity, companies we join not require us to pay anything to start up.
3. Personal development
There is a ample opportunity for a personal development in case of network marketing.
There is a scope to develop a skill of public contacting, mentoring, coaching etc. Network
marketers can grow irrespective of their region.
4. Training
In network marketing, one does not require prior selling experience or knowledge of
selling techniques. Training may be provided by up line distributors. Some network
marketing companies allow their top distributors to develop and promote motivational
courses and spread it to new recruiters. These are called as Business Support Materials. It
will be usually in the form of motivational talk.
5. Your own schedule
There is no particular work schedule in case of network marketing. Getting t the work as
per our own schedule is more convenient. It is one of the attractive reasons to get into
network marketing.
6. Security
Usually many people will be having a fear of losing their job. But this fear cannot be found
in network marketing business. When a person has his own network marketing business he
will not have the fear of losing the job. Every day many network marketing companies
may come or go, but network marketers will always be having a asset of their networks.

7. Scope of Network Marketing
 Good Employment Opportunity
Network marketing works as a network which includes not only selling but also involving
people to their business. So, it gives a good opportunity of employment to many people.
Example: Amway which has more than 3 Million distributers across the world.
 Easy to Sell
The faith or trust towards a particular product comes when many people tell good about it,
as network marketing involves a huge number of people, many people tell about it , so it is
easy to sell. Amway a company which has experienced a 91% growth in the last 10 years
with annual sale of 30$ billion in USA and 100$ billion worldwide.
 Additional Revenue
In network marketing a person will get his income. In addition to it he will get some
percentage of revenue of this juniors or networks. So network marketing gives additional
revenue.
 Build Network Across Different Locations
Network marketing helps people to visit different places and involve people into their
network. So network marketing helps to expand business to different locations very easily.
Amway present over 80 country and located its manufacturing centre in US, Hungary,
Korea, China and India.
 Good Future for Business
As network marketing involves many people doing good business and involving many
people into their network, the sales will keep on increasing. So, this business has a good
future. It also offers a low start-up cost and monthly overhead and entrepreneur can start
part time job while still employed.

8. Lessons from the Case Study
Brings New Opportunity
Network marketing is looked upon as an opportunity to earn extra income alongside there is an
opportunity for a personal development. There is a scope to develop a skill at public contacting
mentoring coaching etc. Amway build a business opportunity it offers every person the chance
to build their own business and succeed on their individual ambition. It supports through a fair
compensation plan and a strong family of high quality product lines. The Amway offers a
personal training and E-learning courses. In 2010 it distributed more than 3000 certificate
across Europe.
Market Research
Besides its extensive internal research efforts before entering India, Amway also conducted
market research through agencies such as Pathfinders and ORG-MARG. Though prior to its
entry into India, Amway did recognize the need for a special India-specific pricing strategy and
eventually there were just a few marginal cuts in the prices, which were still almost 20% higher
than those of the competing FMCG products.
Uni-degree Plans /Sunflower Model
The uni-degree plans are followed by means of the companies who've large merchandise line.
One major factor with this Network Marketing Uni degree Plan is its simplicity so that the
multilevel marketing networker or organization can give an explanation for Amway plan quite
simply to their new comers who willing to join Multi-Level Marketing business. Uni-level Plan
permits the associates to introduce new comers in its entrance line. There is not any limit for
width i.e. A contributor can sponsor unlimited in width beneath his/her frontline and
compensation disbursed up to the restricted depth. Extra all frontline also efforts to do the
identical for earn bonuses or compensation.
Contribute to the Communities
Amway maintains family values as it grew out of a family business. The IBOs of the company
are inspired to contribute in the communities in order to make difference in other people’s lives.
This organization strives to practice environment aspects and improves the existing products.
Challenges are there such as frauds in the society, but this international brand continues to rise
on the economic curve.

9. They have shown other corporations how to manage the work force and direct positive force.
This has brought forth their new brand name, Amway Global. There are equal amount of
opportunities and threats for the company in recent global market, but it will successfully grab
the opportunities in order to fight the threats.
Matrix Compensation Plans
A matrix compensation plan, operates much like a uni level plan does, but with one main
difference. Each distributor can only sponsor a certain number of frontline distributors. Any
additional distributors must be placed further down in their organization such as their second
level and placed under another distributor.
Builds Relationships
Network marketers emphasize building relationships. Amway’s business and operations are
built upon relationship and partnership to grow and improve the initiatives of Amway’s global
archives. The relationship that exist among employees, business owners and funding families
are at the core of company and it is the one of the key to Amway business model. This will
profound product knowledge and appreciation of consumer needs allow them to personally
address any queries customer may have.
References
https://www.britannica.com/topic/marketing/Direct-selling#ref394069
https://www.entrepreneur.com/encyclopedia/network-marketing
https://en.wikipedia.org/wiki/Multi-level_marketing
http://www.businessdictionary.com/definition/network-marketing.html