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| Details |
Case Code: CLBS003
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| Case Length: 5 pages |
| Period: -- |
| Pub Date: 2004 |
| Teaching Note: Not Available |
| Subject :Business Strategy |
| Price:Rs.50 |
| Organization :-- |
| Industry :Direct-marketing industry |
| Countries : -- |
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Multi Level Marketing (MLM)* |
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| The case examines the experiences of the global direct marketing major Amway in India. It examines a host of problems faced by Amway in the initial stages and the remedial measures taken by the company to counter these problems. |
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Issues: |
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- The basic concept of multilevel marketing and an overall understanding of the Indian MLM experience.
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- The hurdles faced by Amway soon after its launch and the company’s efforts to face them.
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| Introduction |
Multi Level Marketing (MLM) was the fastest growing sector of the direct selling industry worldwide. In 1988, the total revenue generated by MLM was $ 12 billion, which doubled to $ 24 billion by 1998. The direct-marketing industry in India was about Rs. 6 billion in 1999. This was a growth of 62% over the previous year.
In the pre-liberalization era, network marketing in India was usually in the form of various chit fund companies like Sahara India. These had a system of agents, who simultaneously mobilized deposits and appointed sub-agents for further deposit mobilization.
Companies such as Eureka Forbes and Cease-Fire pioneered the direct selling system in the country with a sales force that was trained to make direct house-to-house sales. ....
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| Questions for Discussion: |
1. Comment on the concept of network or multilevel marketing. Do you think the model would be successful in India? Also, compare and contrast the MLM model with the traditional distribution system, bringing out the merits and demerits of both.
2. Critically examine the corrective measures adopted by Amway to make the MLM model a success. What further measures can the company take in order to tackle the competition from FMCG majors like HLL and P&G? |
Keywords |
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Multi Level Marketing,pre-liberalization,Eureka Forbes,chit fund
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
$16) per copy.
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