Structural Barrier of Entry: Amway

1143 WordsSep 20, 20115 Pages
Qns 6 Entry and Exit will determine the extent of competition in an industry. Apply to the airline, pharmaceutical or supermarket businesses. Using the industry of your choice, how can this company deter entry? Entry is the beginning of production and sales by a new firm in a market, and exit occurs when a firm ceases to produce in a firms. The existence of high start-up costs or other obstacles that prevent new competitors from easily enter an industry or area of business. Barriers to entry benefit existing companies already operating in an industry because they protect an established company's revenues and profits from being whittled away by new competitors. Structural barriers to entry exist; when the incumbent has cost…show more content…
3. Marketing Advantage of Incumbency The brand umbrella makes the incumbent’s sunk cost of introducing a new product less than that of a new entrant because the entrant must spend additional amounts of money on advertising and product promotion to develop credibility in the eyes of consumers, retailers, and distributors. Amway’s own product lines include home care products, personal care products, Beauty product (Artistry) jewelry, electronics, Nutrilite dietary supplements, water purifiers (eSpring), air purifiers (Atmosphere), insurance and cosmetics. Amway’s product, eSpring, was introduce in 2000, was the first home water treatment system to incorporate a carbon block filter and Ultraviolet disinfection unit. eSpring had did very well that competitor, Diamond water as it is the first home system to achieve certification for ANSI/NSF Standards 42, 53 and 55 As Amway is a very established direct selling company, not only can it sell it own line products, it can help other company to sell their product as well. However, the company cannot market, distribute and advertise the products in the territorial where Amway’s distributors help to sell. Products that are not from Amway, for example, Sharp Steamwave Oven (AX-1100), this product market in Amway Singapore, you will not find it in any departmental store like Best Denki, Harvey Norman and Carrefour in Singapore and Sharp could only distribute this product through Amway. Sharp

More about Structural Barrier of Entry: Amway

Open Document