The management of mlm business in taiwan
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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. issues. Political, economic and social Fraudulent pyramid schemes (since 1960)

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The management of MLM business in Taiwan

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The management of mlm business in taiwan

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


Issues

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


The management of mlm business in taiwan

  • 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


Taiwan mlm industry in 1997

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


Research objective and method

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


The management of mlm business in taiwan

  • 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


The management of mlm business in taiwan

  • 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


Research findings and analysis

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.


Training and education

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 knowledges

    Sale skills training

    Sales network management


Bonus program and sales network structure design

bonus program and sales network structure design

  • MLM need to have a structure to meet the needs of both self-use consumers and distributors.


The management of mlm business in taiwan

  • 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 effect

    MLM firms want a new method to motivate distributors.


Inter company communication

inter-company communication

  • Magazines

  • Newsletters

  • Counseling services


Ways of handling high turnover

ways of handling high turnover

  • Companies interviewed are not concerned by this issue

  • Goals: - to offer quality products

    - to offer attractive packages


Use of computer system and public relation

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


Industry image and government regulatory

industry image and government regulatory

  • Negative image caused to the MLM industry

  • Fair Trade Commission should produce guidelines of regulation


Future trends development

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


Conclusion and suggestion

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.


Suggestion for short term

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


Suggestion for long term

Suggestion for long-term

→ be technology-driven and market-minded

→ consolidated internal resources and maximize operational efficiency

→ create synergy


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