This case study explores the relationship between Amway and its stakeholders. — Edition 13
This case study describes how the work Amway does with UNICEF supports its Corporate Social Responsibility strategy. — Edition 12
This case study helps students understand strategies for meeting stakeholders' needs. — Edition 11
As a result of carefully reading the Case Study, Students should be able to: know the meaning of Corporate Social Responsibility (CSR), give examples of CSR activities, understand the importance to business of being involved with communities on a local and global scale. — Edition 10
As a result of carefully reading the Case Study, students should be able toidentify key elements involved in setting up a commercial website, explain how using electronic media helps organisations to meet customer needs, understand how the Internet can be used to support customers. — Edition 9
This case study looks at how Amway has developed a strategy for taking full advantage of the opportunities that the Internet offers for e-commerce within the UK and the rest of Europe. It also explains the relationship between Amway and Independent Business Owners and the benefits of direct selling. — Edition 8
This case study illustrates how Amway, after analysing its business operations and performance, moved its business forward by choosing an appropriate marketing strategy. — Edition 7
This case study looks at how Amway has invested in research and development to create one of its most successful lines - hair care products. — Edition 6
This case study examines this growth which has helped Amway to become one of the industry's market-leaders influenced by changing lifestyles, demographics and economic recession. — Edition 5
This case study focuses on the launch of a new cleaning product by Amway. It considers some of the processes which are essential to the successful launch of a product, such as the marketing strategy for the product, the product's positioning, the launch strategy and post-launch analysis. — Edition 4
This case study focuses on how Amway uses a range of communication methods and processes to help individual distributors develop their own business opportunities. — Edition 3
This case study focuses on Amway and the success it has achieved using the oldest form of distribution - direct selling. — Edition 2
In general marketing terms, the product decision involves deciding what goods or services should be offered for sale to a particular group of customers. An important aspect of this element of the mix is new product development. As technology and tastes change, products become out of date and inferior to those of the competition, so companies must update products with features that customers value or completely replace the product. Market leadership can change as new products are developed that give greater benefits than old ones. For example, the Sony Walkman was the market leader in portable music players. Following its launch, the Apple iPod soon outsold the Walkman as it offered the advantages of being able to download music and hold thousands of songs on a much smaller device. From the first iPod, Apple has developed a product range to cater for diverse customer needs.
Product decisions also involve choices regarding brand names, guarantees, packaging and the services that should accompany the product offering. Guarantees can be an important component of the product offering. For example, the operators of the AVE, Spain’s high-speed train, capable of travelling at 300 kmph, are so confident of its performance that they guarantee to give customers a full refund of their fare if they are more than five minutes late.
From a retail marketing perspective, the product element of the mix is very important. Retailers provide stores full of products to suit every consumer’s needs. Some retailers fill their shelves with extensive product ranges (this can be seen here in the image of an extensive range of hair care products) whilst others offer more limited choices of products (as you can see in the image of an exclusive range of jewellery products). The range of products a retailer sells is called the assortment and this defines the nature of the business and its position in the marketplace. By looking at the following two pictures, you can begin to get a feel for the difference in the type of retail operations that might be selling these products.
According to many retailers, the product is the most important element of the retail mix. Selecting what to sell, making the right purchasing decisions, organising stock management and arranging how to display product ranges is so fundamentally important to retail management. However, considered by many retailers to be of equal importance is price.
Price is a key element of the marketing mix because it represents, on a unit basis, what the company receives for the product or service that is being marketed. It is the only element of the marketing mix that creates revenue, while all of the other elements represent costs. For example, expenditure on product design (product), advertising and salespeople (promotion) and transportation and distribution (place) all cost money. Marketers therefore need to be very clear about pricing objectives, methods and the factors that influence price setting. They must also take into account the necessity of discounting and giving allowances in some transactions. These requirements can influence the level of list price chosen, perhaps with an element of negotiation margin built in. Payment periods and credit terms also affect the real price received in any transaction. These kinds of decisions can affect the perceived value of a product.
Because price affects the value that customers perceive they get from buying a product, it can be an important element in their purchase decision. Some companies attempt to position themselves as offering lower prices than their rivals. For example, supermarkets such as Asda (Walmart) in the UK, Aldi in Germany, Netto in Denmark and Super de Boer in the Netherlands employ a low-price positioning strategy.
Another strategy is to launch a low-price version of an existing product targeted at price-sensitive consumers. For example, Apple launched the Mac mini, a basic version of the Macintosh computer. With this low-priced machine Apple believes it can tempt people who have bought an iPod (and become fans of the company) to ditch their Windows-based PCs and switch to the Mac mini.
Many factors affect retail pricing policies. Choosing products and setting prices is an important part of retail management and the next element of the mix, place, focuses on where to sell the product assortment.
Place considerations involve decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held. The objective is to ensure that products and services are available in the proper quantities, at the right time and place.
Distribution channels consist of organisations such as retailers or wholesalers through which goods pass on their way to customers. Producers need to manage their relationships with these organisations well because they may provide the only cost-effective access to the marketplace. They also need to be aware of new methods of distribution that can create a competitive advantage. For example, Dell revolutionised the distribution of computers by selling direct to customers rather than using traditional computer outlets.
Increasingly, music is distributed by downloading from the internet rather than being bought at music shops. Consequently, place is another important part of the mix that influences retail management decision making.
The final element of the mix we are going to consider here is promotion.
Retailers constantly communicate with their customers using a variety of methods and approaches. Retail promotions involve the management of elements of the promotional mix, which include advertising, sales promotions, digital and direct marketing, personal selling, sponsorship and public relations.
By these means the target audience is made aware of the existence of a product or service and the benefits (both economic and psychological) it confers on customers. Each element of the promotional mix has its own set of strengths and weaknesses. Advertising, for example, has the property of being able to reach wide audiences very quickly.
Procter & Gamble used advertising to reach the emerging market of 290 million Russian consumers. It ran a 12-minute commercial on Russian television as its first promotional venture in order to introduce the company and its range of products. Advertising can be a powerful tool in a recession. While its competitors cut back on advertising expenditure during the Great Depression of 1929, Procter & Gamble increased its spend. The company dominated radio advertising, bringing market leadership during the 1930s and the creation of the platform that has led to its continuing success to the present day.
Digital marketing via the internet is increasingly important as a promotional tool. A great advantage of the internet is its global reach – companies can now easily extend the reach of their communications to consumers worldwide by creating a website. The internet has also proven to be a powerful communication tool, sometimes replacing traditional media.
Many retailers now sell through the internet, either exclusively or in conjunction with a network of stores and/or paper-based catalogues. The internet brings opportunities for retailers to sell to and communicate with their customers through one highly interactive and flexible channel. In the final part of this course, you will learn about how retailers use marketing communications to engage the interest of their target customers. But before we do this have a go at the following activity.