Amway to expand business in India

A middle-aged woman aspiring to look young again, a young boy wishing he were taller, a dirty toilet seat and a grimy exhaust fan in need of cleaning -- these are some of the images that make up Amway India Enterprises’ first television commercial scheduled to go on air on 19 September.

It will be the first time that Amway, a direct selling consumer goods company that has been present in India since 1998, will advertise on television.

“Through the commercial, the company is showcasing solutions to everyday problems in the areas of health and personal hygiene, homecare and beauty, in which Amway is present,” said Ajay Gahlaut, creative director, Rediffusion|DYR, the advertising agency that manages the Amway account.

The company spent Rs6 crore on advertising in 2006, and has earmarked a budget of Rs 14 crore for this year. “Over 60% of this, is likely to go to TV,” said the company’s spokesperson.

Direct selling companies rarely advertise on TV.

“The concept of direct selling is based on eliminating the middle men and promotional activities which normally take up 60-70% of the operational costs,” said Ajay Gupta, country head, sales and marketing, Sunrider India Pvt. Ltd, a direct selling company, and member of Indian Direct Selling Association (IDSA). “The only reason a company will go for mainstream advertising is when they are trying to expand their brand presence.”

That is precisely what Amway is aiming at.

The company, which says its revenues in 2006 stood at Rs 738 crore, has set itself a target of clocking in Rs 1,500 crore by 2010.

“We have invested money in mass media advertising, which is completely different from the regular operational costs of the company, which remains unaffected. The budget for our presence in television comes from the company’s profitability,” said Naveen Anand, vice president, marketing, Amway.

According to IDSA estimates, the direct selling industry in India is currently at Rs 3,100 crore growing at 20%. Some of the other players in the industry include Forever Living Products India Pvt. Ltd., ModiCare Ltd, Sunrider India, AMC Cookware India Pvt. Ltd, Hindustan Lever Network, Oriflame India Pvt. Ltd, Avon Beauty products India Pvt. Ltd and Herbalife International.

Amway has plans to double their number of offices to 300 from 120. They are also looking at adding more products to their portfolio, says Anand. With such aggressive expansion plans, the company says it needs to strengthen its bond with its end consumers. “Hence, the decision to advertise on television, a mass medium,” he noted.

So far, the company has been visible on print and outdoor mediums only. The shift to television also comes in sync with the shift in India’s economy.

“We want to reach out to a larger audience because our products are created keeping in mind the changing lifestyles of consumers today. There are more working mothers, less time for personal care and more need for nutritional supplements,” said Anand.

The company has in the past three years added India specific products to their portfolio. “We have our global skincare brand called Artistry but it competes with premium brands globally, which is sometimes too expensive for India,” said Anand. “So we launched a range for women called Attitude and for men called Dynamite, which has the same offerings but at one-third the price,” he added. The company has also introduced vitamins and protein powders thats are suitable to Indian consumers physical demands. “We have recently added iron for women and protein powders for men which have been in demand in India.”

“The new commercial aims to reach out to households and tell them that Amway has quick answers to everyday problems whether its regarding beauty or hygiene,” said Rediffusion’s Gahlaut.