the management of mlm business in taiwan 1945: nutrilite corporation - 1997: direct selling industry...
TRANSCRIPT
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The management of MLM business in Taiwan 1945: Nutrilite Corporation
- 1997: direct selling industry = US$80.47 billion
→ 2.06% growth compared with 1996- 31 million employees → +25%
competition
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issues
Political, economic and social
Fraudulent pyramid schemes (since 1960)
April 1998: China suspended all MLM activities
bad image- europe: snow ball system
- japan: silver rat, money rat, rat club
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1997: government regulatory agencies, MLM practitioners and media joined effort to change the image of MLM
Taiwan total sale turnover: NT$40.1 billion → - 1.8% (1996)
Taiwan average sale volume: NT$167.16 million → + 5.3% (1996)
Taiwan total number of distributors: 2.72 million → 12.56% of total population → N°3 in the world
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Taiwan MLM industry in 1997 Competition from both local and foreign firms Eroded consumer loyalty Changing consumer needs
- 3.36% in the number of new DS distributors
- 4.38% and – 2.52% decrease of orders and bonuses received by DS distributors
N°3 but the productivity of distributors decreased
Opportunities: domestic market liberation measures, globalization
Threats: more pressure
Innovative and flexible management approach
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Research objective and method The aim of this research is to provide information about the
current management of DS distributors in Taiwan MLM industry.
Issues: - education and training- the incentive- communication- turnover- application of computer- public relation.
- Method used: personal interview executives from 8 foreign and local MLM
companies
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Challenge: to develop an attractive package to cater all the needs of the DS distributor
►CEO of Nutri-Metrics International view:
Strong leadership in MLM business management
Effective management needs: - reward- recognition- ability to duplicate the company’s success formula- good relationship between distributors and the management
Constant training program
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Network Marketing Magazine survey (1998): 60% of the respondents stayed less than 1 year after joining a MLM firm.
According to some studies in Britain and the US, people join MLM firm for:
- extra income- achieving short term goals- beeing one’s boss- enjoying discount prices- winning praises from others
Study done with 4 US MLM firms: - self satifaction- accomplishment - flexible hours
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Research findings and analysis
Open-ended question
7 major areas: - training and education- bonus program and sales network structure design- inter-company communication- ways of handling high turnover- use of computer system and public relation- industry image and government regulatory- emerging future trends.
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training and education
2 functions: - motivate DS distributors- educate the distributor with the product
- In 1997: Annual company conference: + 6.26%Training program: + 1.55%Opportunity meeting: +0.74%
- Interviewed firms provide: Products knowledgesSale skills trainingSales network management
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bonus program and sales network structure design MLM need to have a structure to meet the needs of both self-
use consumers and distributors.
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commission: retailing commission + leadership commission
- Retailing commission = retail discount + monetary reward paid of the group sale volume
- Leadership commission = compensation for setting up a large scale of down-lines
→ monetary reward = short term effectMLM firms want a new method to motivate distributors.
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inter-company communication
Magazines Newsletters Counseling services
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ways of handling high turnover
Companies interviewed are not concerned by this issue
Goals:Goals: - to offer quality products
- to offer attractive packages
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use of computer system and public relation Computer allows to: - assess inventory sales- monitore sales progress- manage sales force- develop customer profiles.
In the public relation: - Print advertisement - Sponsoring large scale philantropic events
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industry image and government regulatory Negative image caused to the MLM industry
Fair Trade Commission should produce guidelines of regulation
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future trends development
4 of the interviewed firms want to attract married couples to join and start a « second spring ».
Position : « non-store retailers »
→ provide superior products, carrer opportunities and « personal-touch » experience
Products of the future will be more sophisticated, leisure-oriented, environmental-friendly and educational.
Different structure of MLM firms and new management philosophy
Strategic alliances, internationalization and corporate diversification
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Conclusion and suggestion Macro-management level: MLM do efforts in: - Recruiting new members- Training with efficiency- Closer ties with distributors- Media.
Micro-management level: - High quality product- Good image- Management philosophy→ expectation of the government
To prepare to the competition of tomorow, MLM companies should adjust their offerings and change their structures.
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Suggestion for short-term
MLM should focus their effort on consolidating their current network operation and enhancing the productivity of their sales forces:
→ develop closer ties with its distributors at all levels
→ develop « Service First » marketing strategy
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Suggestion for long-term
→ be technology-driven and market-minded
→ consolidated internal resources and maximize operational efficiency
→ create synergy