Case Study: Amway – Developing Competitive Marketing strategies

Introduction

All organizations face an external business environment that constantly changes. Sometimes these changes are slight e.g. minor amendments to regulations or a new firm entering the market as a 'small player'. At other times, however, changes in the environment may have important consequences for an organization, e.g. new technologies, changing consumer tastes or a merger between two large competitors. Changes in the business environment create both opportunities and threats to an organization’s strategic development, and the organization cannot risk remaining static. It must monitor its environment continually in order to:

build the business

develop strategic capabilities that move the organization forward

improve the ways in which it creates products and develops new and existing markets with a view to offering its customers better service.

Marketing Strategies and organizational constraints

Amway is an interesting example of a company that reviews its strategic capabilities and uses this review to develop its products and markets. More than 450 products carry the Amway name in the areas of nutrition, health, beauty and home. Amway also has a range of products that

include other well known branded goods. The company also offers a variety of third party services.

The process of strategic analysis helps an organization to understand more about its strategic position and to construct answers to questions such as:

What is happening to our business environment?

What do we need to know about our markets and customers?

What new options should we consider?

How can we develop our competences to meet all of the changes in the business environment?

By asking these questions of itself, a business looks to match its own objectives for growth and development with the reality of the business environment. Businesses need to be realistic. They must base decisions not upon wishful thinking or blind optimism but upon close and careful analysis of products and markets.

Amway and Marketing mix

Amway is different from the more traditional distribution channels in that the business has developed through direct selling. Amway has over three million Independent Business Owners (IBOs) worldwide. One way in which Amway has diversified its activities is through creating an on-line business opportunity called 'AMIVO' to support and enhance its traditional business.

One of the most important lessons to learn about successful marketing is that consumers do not buy products, they buy benefits. And Amway has taken care of that. Product development is a particularly appropriate strategy where an organization is strong in research and development. Product development is highly important for products that have comparatively short life-cycles. Within Amway there are approximately 500 active research and development projects in progress at any one time. With around 575 staff involved in research processes, and with strong links to many universities, Amway formulates, designs and develops new products to meet customer needs and expectations within the global marketplace.

Amway and stakeholders

Amway uses different ways to communicate with its various groups of stakeholders. The method chosen depends on the message and the person receiving the message. Consumers affect how Amway develops and promotes products. They do this by indicating their preferences and requirements through feedback. Amway can then make more of particular products or change the format of others. Consumer demand also influences how much stock Amway needs to carry. Consumers can show where Amway needs to address issues or concerns to improve the business.

Amway's business plays a key role in the communities in which it operates. Amway has a global strategy for producing, distributing and marketing its products worldwide. It also has a strategy for promoting corporate social responsibility (CSR) in a global way. Amway operates in many different markets worldwide and has a range of affiliates and ABOs. It therefore has to devise and communicate its plans for corporate social responsibility activities carefully to take account of different priorities and interests.

Conclusion

In today's highly competitive environment, an organization has to develop a business strategy that provides a strategic fit between its resources and the changing business environment. Amway has continued to develop by using a range of strategies which have enabled Amway to build its business by continuing to broaden its customer base and enhance the service it offers to Independent Business Owners, Members and Clients.

Read the above case study and answer the following questions:

1. Investigate how the micro environment and the macro environment have an effect on its marketing and business.

2. Analyze the STP (Segmentation, Targeting and Positioning) strategies of the organization. Evaluate its marketing mix which leads to achievement of consumer satisfaction and organizational goals.

3. Develop strategies that could result in the organization taking better marketing decisions.