Qualitative Marketing Research - Individual Assignment

Amway's multi level marketing (MLM) as a definite solution for earning extra money

Submitted by:
YEVALKAR ANIKET ASHOK 2012PGP449

Contents
Case Background .................................................................................................................................... 3 Research Problem ................................................................................................................................... 3 Qualitative techniques for obtaining data ............................................................................................... 4 Rationale for choosing these methods .................................................................................................... 4 Profiles of the respondents for study....................................................................................................... 4 Questions in In-Depth Interview ......................................................................................................... 5 To Amway IBOs ............................................................................................................................. 5 To Diamond level IBO .................................................................................................................... 5 To Legal/Financial experts.............................................................................................................. 6 FGD Questions.................................................................................................................................... 6 Plan for carrying out analysis of data...................................................................................................... 6 Expectations from study ......................................................................................................................... 7

2 QMR: Individual Assignment

Case Background
The study is about Amways business structure and its impact on the stakeholders. Amway is $11-billion global network marketing company, also known as multi-level marketing (MLM), firm. India accounts for just 5 per cent of that. It sells a range of products from nutritional to personal care through a network of distributors. These distributors work independently but certain percentage of their sales commission goes to the distributor who is in upper level of distribution pyramid. Many people are attracted towards Amways business model and are becoming a part of it either by becoming a customer of Amways products or becoming a distributor under existing distributor. This type of distributor structure is called pyramid structure wherein higher the distributor under any particular distributor, higher is the chance of getting sales commission from their sales. Recently Indias Ministry of Corporate Affairs has started scrutinizing MLM firms on the basis of fraudulent transactions carried by some MLM firms in the finance sector. Ministry has drafted a law that will outlaw MLM firms; instead, they will need to adopt a single-level direct sale approach. Being an MLM firm, Amways business might get affected and distributors future income might be at risk. So we examine distributors perception about the business model through our qualitative research.

Research Problem
By conducting this qualitative research we try to determine whether Amways Independent Business Owner (IBO) perceive its multi level marketing (MLM) as a definite solution for earning extra money without any risk. We also seek to find the reasons if any behind their thinking.

3 QMR: Individual Assignment

Qualitative techniques for obtaining data

1. In-Depth Interview of Amway distributors (IBOs) 2. FGD involving a mix of Amway distributors (with various levels) and a few legal, financial experts

Rationale for choosing these methods

In-Depth Interview: In-Depth interview will involve various questions about the perception and depth of understanding of Amway business. This would give insights about whether distributor is really able to earn extra money with some efforts and the risk perceptions about the business. Interview would also allow us to find out any unknown feature of the business and other ways in which distributors are handling legal issues of the business. Interview can help us understand IBOs general level of awareness about new laws in India and what steps Amway has taken to help IBOs to continue growing their business.

FGD: An FGD would consist of mix of Amway distributors, financial and legal experts of business so it will give more confirming views about business. The financial and legal experts would come up with their understanding of business and issues that might lead to closure of business. Distributors in tern might give counter arguments supporting their business. This will definitely help us in finding out unknown facts.

Profiles of the respondents for study

Age 25+ 25+ 25+ 25+ 25+ 25+ 25+ 30+ 30+ Location Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Metro cities, Tier-1,2 Cities Profession Homemaker Private/Govt Job Homemaker Private/Govt Job Private/Govt Job No Job Any Legal Experts Financial Experts Amway Distributor Level Level-1 Level-1 Level-2 Level-2 Level-3 Any Level Diamond level NA NA No of Respondents 2 3 2 3 2 2 2 1 1

Homemaker/Private/Government job doing person: We need to select respondents with different levels under Amways MLM pyramid. This would ensure representation/views from all the levels. Also homemaker and other professionals should be considered differently as they have different risk perceptions.
4 QMR: Individual Assignment

No Job: There also need people whose sole source of income is Amway and they are not doing any other job. This would be helpful in understanding risk perceptions from that persons point. Diamond Level IBO: In this level of Amways MLM, the distributor has very large number of fellow distributors. This person is responsible for growing network by conducting seminars and workshops and has really larger view about the entire business. It is therefore necessary to include this person in Qualitative research study to get his view into consideration. Legal/Financial experts: These experts would be aware of recent changes in laws governing MLM company processes. They would also be aware of Amway business model, so their interview can give us insights about legality and future problems the business might face.

Detailed guide with relevant questions to facilitate data collection

The respondents should be interviewed at convenient location and time and asked with following questions. There would be different question sets for IBOs, Diamond level distributor and legal/financial experts. The interview is structured with most of the questions are standard for respondents within same group. But if at some level, probing could be done to get insights.

Questions in In-Depth Interview

To Amway IBOs 1. Demographic data related questions to identify/confirm age, profession, monthly income range and other attributes. 2. Why did you choose to become an Independent Business Owner (IBO) of Amway? 3. Are you a full time/part time marketing person of this business? How much of your time do you allocate for this business? 4. Since when are you doing this business? Are you successful in fulfilling your dreams as that promised by Amway? If you are working towards it is it paying off? 5. Have you understood Amway business fully? Probe around this question in detail. 6. Do you find any risk in Amway business? 7. What do you think will happen to business if fellow marketing IBOs stop selling Amway products? 8. Are you aware of any rules regarding Multi Level Marketing in India? If yes then do you find any problems that Amway might suffer from? 9. If government brings about new rules and regulations to monitor/control/prevent MLM activities then what will you do? To Diamond level IBO Apart from some of the previous questions which were intended for IBOs at low level some additional questions would be asked

5 QMR: Individual Assignment

1. Do you think Amways MLM business is a definite source for earning extra money without any risk? 2. What are the risks for IBOs at your level 3. If you do not increase your network now onwards would you still get perpetual income? 4. In your opinion how current MLM model of Amway is different from that of financial firms? 5. Will new law affect Amway business?

To Legal/Financial experts In-depth interview with these experts will be helpful to prepare questions for FGD. 1. 2. 3. 4. What are the risks in Amway business model to IBOs? How will new laws affect Amway business? How can Amway business model be tweaked to protect interests of IBOs? What are your views about Amway business as a source of money?

FGD Questions
An FGD would be conducted in a group of 8 persons involving 6 IBOs of Amway, 1 legal expert, 1 financial expert. The group would be presented with various cases of Amway business, some examples of similar MLM activities by other companies and some fraudulent activities. The group members then would be asked to give their individual opinion on issues. The IBOs would be asked to prove that their business is safe and they are able to fulfill their dreams through Amway business. Financial and legal experts then would be asked to find the loop holes in the system and counter argue with IBOs. The discussion would certainly reveal some concrete points regarding Amway business sustainability in Indian context with changing rules and regulations.

Plan for carrying out analysis of data

As we have used In-depth interviews and FGD for carrying research we will use coding and categorization technique for analyzing the data collected from the research. We can use deductive reasoning to reach a logically certain conclusion. So the steps involved in our research would be 1. Category formation 2. Refinement 3. Final Constellation The categories can be formed on the basis of strength of belief in Amway business as a secure business from IBOs point of view. E.g. If the answers to questions involving risks in Amway business, their counter arguments are positive and convincing then they can be added
6 QMR: Individual Assignment

in category 1. Similarly less conforming responses and instances where IBOs are somewhat skeptic about business would be categorized differently. In second stage on data analysis we would refine categories to be more realistic. E.g. responses and keywords which are sighted by IBO, legal expert and diamond level distributor would be in the same category. In the last stage we would link the reasons for which IBOs think Amways business as safe/risky for earning extra money.

Expectations from study

The study would reveal the business model understanding of low level IBOs and that of Diamond level IBO. The qualitative and quantitative data which shows number of years of association with Amway and the wealth created by it in terms of money, people network would also be useful to assess the impact of Amways business on these distributors. The study can be helpful for understanding the factors which cause Amways business to be risky or risk free from IBOs point of view. The study will also give us insights from financial and legal experts to determine the future of the business model and the way in which IBOs counter the changes made by Indian government for MLM companies in India.

7 QMR: Individual Assignment