Reaching customers through direct selling An Amway case study
Page 8: Amway sales and marketing plan
The activities of each Amway distributor are determined by the Amway Sales and Marketing Plan. Amway practices direct selling which is 'A method of selling goods directly to the consumer by an independent Distributor. A Distributor can then introduce further Distributors and generate income from retail profits supplemented by bonus payments based upon the total sales of the group built by a Distributor'.
Income is generated by a distributor through:
the retailing of goods to consumers. Retail margins (mark-ups) on the basic wholesale price represent income to the selling distributor.
additional performance and leadership bonuses, paid on the volume of personal business of the distributor and the business volume of the distributors he has introduced to the business.
various levels of leadership bonuses, dependent upon the overall size and shape of the business, paid on achieving different levels of business performance.
This plan, therefore, rests upon the twin foundations of retailing and sponsoring.
Retailing - the selling of goods to consumers on which retail margins are earned and performance bonuses gained.
Sponsoring - the introduction of other individuals to establish and develop their own independent Amway distributorships.
Retailing enables distributors to provide immediate financial incentive rewards. Sponsoring enables distributors to replicate the base with other people, thus allowing the organisation to grow.
Direct selling involves sales people showing and demonstrating products to obtain orders. The objective involves matching consumer needs with the product. The better the match, the more lasting the potential for the relationship between the seller and the buyer. The selling process is aided by Amway's retail strategy to provide high quality, readily purchasable items with a good environmental positioning, offering consumers good value for money.
As with all direct selling activities, the process involves two-way communication and this can be time-consuming. Business success and the resulting financial results are a direct consequence of effort, commitment and personal group motivation.
Personal contact between distributors at one-to-one or group meetings provides the opportunity for individuals to discuss strategies, difficulties, levels of involvement and plans for the future. The income objectives and individual targets may be determined by each distributor based upon what he or she wants to earn.
Distributors who develop direct selling businesses may come from widely different backgrounds, with vastly different levels of experience and knowledge - the common factor to their success is the desire to achieve.