Developing competitive marketing strategies An Amway case study
Page 2: Strategic analysis
The process of strategic analysis helps an organisation 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 was founded in the USA in 1959. Today it is a global business that, along with its parent and sister companies, directly employs 10,000 people worldwide. The business also operates strategically at a Global, European and National level. Amway (UK) began operations in 1973 and has its own distribution and Product Selection Centres.
Amway makes good use of market research. This has helped Amway to anticipate developments within markets and to introduce new ideas that exploit opportunities and reduce any associated problems to a minimum.
Competition analysis is a key factor within market research. It helps Amway to identify the nature and extent of competition at a number of levels. For example, it helps marketers within Amway to find out how well products are meeting consumer needs and what aspects of competitors' brands appeal to consumers.
Amway has helped millions of people around the world to start their own independent business, through which they engage in person-to-person marketing. This type of direct selling involves matching a consumer's needs with the goods and services on offer. The better the match, the more lasting the relationship between the seller and the buyer.
Direct selling, therefore, is a boundary role: it is at the boundary of a supplying organisation that is also in close and direct contact with customers. Feedback from IBOs about products and services, as well as feedback from an IBOs own Clients, is an important contributor to marketing analysis.
Within Amway, regular internal meetings provide an opportunity for the company to discuss and evaluate its performance. Gap analysis helps this planning process by comparing forecast performance with achieved figures. The 'gap' is the difference between the two, as the diagram below illustrates. Of course, this 'gap' may be either positive or negative.
Whilst it is vital to seek to establish the reasons for 'worse than expected performance' it is also instructive for a company to analyse why its performance has been better than expected, as there could be lessons to learn from that too.