Amway

Executive Summary

As the leader of the Japan direct selling market and the most successful company in the Amway group, Amway Japan Limited (AJL) has seen above market success in recent years. However, in the first half of 1997, AJL has suffered a net sales decline of 11.6% from the first half of the previous year, and net income was down 27.6%. This decline is attributed to several factors: (1) In 1996, new products accounted for 47% of AJL’s sales and no major “big ticket” items were released in the first half of 1997; (2) The weakening Japanese economy and declining value of the Yen relative to the Dollar has decreased AJL’s sales volume and profit margin; and (3) New laws recently passed by the Japanese government have confused AJL’s distributors and discouraged potential consumers from buying certain product lines. In addition, Amway Japan Limited still suffers from a negative public image with over 70% of their customer base having a neutral or negative opinion of the company.

In order to rebuild growth in the second half of 1997 and achieve AJL’s long-term sales goal of ¥300 billion by FY2000, the following strategy must be implemented immediately. First, Amway Japan Limited needs to strengthen the overall Amway brand image in Japan by reverting back to its roots, promoting high quality products with a competitively fair price. In addition, AJL needs to target their advertising campaigns to specific groups by promoting individual products and product lines to build upon their brand equity. Second, AJL needs to undertake a focused and widespread distributor training program which emphasizes distributor ethics, techniques on building stringer down-line relations, and greater understanding of Japan’s door-to-door sales laws and regulations. Third, as part of the internal marketing strategy, AJL needs to extend target marketing initiatives toward specific demographic distributor groups to add upon their recent success of The Club Artistry program....