Amway - Feasibility Study for the Entry in the Vietnamese Market - Research Paper Example

The marketing strategy that is recommended below is for the AMWAY Company to focus upon its health care and self-care products and to target the young, affluent Vietnamese executives in Hi Chi Minh city. A phased marketing approach has been suggested, whereby the initial marketing thrust focuses on this segment and depending upon the degree of success, offers an opportunity for the Company to further expand its distribution base or revise its marketing strategy. Amway is a privately held Company that was founded in 1959 and is based in Ada, Michigan, where its wide range of products are manufactured.

It was founded by Richard DeVos and Jay Van Andel in a basement in Grand Rapids, Michigan (Grant, 1988). AMWAY is the short form for “American Way”. The Company started off by marketing a dietary supplement named Nutrilite and later started their own product which was called the LOC multipurpose cleaner. They developed other home care products and traveled all around the country with their products on the famous ‘showcase bus’, offering opportunities to distributors to directly market products to customers.

A fire in Amway’s aerosol factory in 1969 which gutted the premises, but this was rebuilt and the business was salvaged, with more growth following as the Company expanded into overseas markets as well. Amway headquarters in Ada, Michigan expanded to a distance over a mile long and was a self-contained unit with its own power generator, water treatment plant, and recycling facilities. Its range of products expanded into water treatment products and later into diet and health products, with the launch of e-commerce sites to utilize the facilities of the Internet to provide distributor support.

At the beginning of the new century in 2000, the Amway Company established a parent Company called Alticor with subsidiaries Amway, Quixtar and Access Business Groups which were geared towards consolidating the manufacturing and every growing distributor pyramid of the organization. Amway is now the second largest direct sales Company in the world, with a retail sales volume of almost one and a half billion dollars. There are more than 150 Amway distribution outlets outside the United States and Canada, from which its two million independent distributors worldwide receive their products.

The Company functions on the basis of multi-level marketing, i.e, distributors do not funnel the goods through retail outlets but sell directly to the customers, thereby making their money from the 25 to 30% of the markup price (Etorre, 1995). Additionally, distributors are also offered a performance incentive that ranges from 3 to 25 percent, depending upon the monthly sales volumes. Moreover, a distributor who sponsors someone else into the Amway distribution business is able to earn additional incentives depending upon the volume of sales generated by the distributor that he or she sponsors.

The company allows total independence to its distributors and allows them to set up their own sales goals and run their businesses in their own way, even to the extent of allowing them to establish their own prices. However, a former employee of Amway has written an expose on the Company which reveals that only the top 2 to 3 percent of the distributors really make money. The real source of profits in the business does not come from direct sales but from having several downline distributors working in a pyramid structure and selling the products mostly to friends and relatives.

 The Company is portrayed by Butterworth as illustrative of capitalism, propagating the get rich quick mentality and a stress on positive thinking about business and a hierarchical organization which flaunts class and status, thereby proving to be a lure and a draw for ordinary people without much capital or opportunity.