Amway’s Marketing Strategy & Diffusion
Amway, an abbreviation of “American way,” has been selling health, beauty, and home-care products around the world for over sixty years now. The company’s success over the years is undoubtedly attributable, at least in part, to its unique marketing strategy, known in the marketing world as “multi-level marketing.” Through means of “direct selling,” wherein the company’s “agents” sell products directly to people in non-retail settings, the company has been able to vastly expand their network. Here is a basic explanation of how their system works: Any person can become an Amway “agent.” These “agents” will refer Amway products to others and thereby make profits for the company. They also earn a retail margin for each product sold. The key to their system is this: if an agent A can convince any individual B to become a part of Amway’s distribution network, then that original agent A will earn a cut of any sales B is able to make. Amway’s network of distributors is now 3 million strong, and it continues to grow.
So what exactly makes Amway’s strategy so effective? Well, for one, there is a direct benefit for agents already in the network to “convert” others — the more of their customers they can convince to become agents for Amway, the better off they are (since they can earn a fraction of their customer-turned-agent’s profits). So this ensures that Amway’s network will continually grow, because once people become agents themselves, they will be encouraged to turn others into agents after them. On top of that, Amway’s strategy also gives them the potential to penetrate dense clusters. This pertains more to new agents in the network, and by “new,” I mean those who decide to become agents without the influence of others. Any individual can choose to become an agent of Amway’s, drawn in by the allure of making the retail margin and by potentially converting additional agents. For every one of these agents who picks up the business on their own, without someone “converting” them, they are starting in a new, presumably mostly untouched cluster (I’m assuming “untouched” since they haven’t been converted by anyone, which would likely have happened if individuals in their cluster were already in the Amway network). As they go about their business, then, depending on how influential they are, their cluster of neighbors may also become incorporated into the Amway network, thus “diffusing” the Amway network further.
https://www.amway.com/en_US/start-a-business