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
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


  • 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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • 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


  • Challenge: media joined effort to change the image of MLM 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


  • Network Marketing Magazine survey media joined effort to change the image of MLM (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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

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


  • commission: media joined effort to change the image of MLM

    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 media joined effort to change the image of MLM

  • Magazines

  • Newsletters

  • Counseling services


Ways of handling high turnover
ways of handling high turnover media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • Negative image caused to the MLM industry

  • Fair Trade Commission should produce guidelines of regulation


Future trends development
future trends development media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

  • 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 media joined effort to change the image of MLM

→ be technology-driven and market-minded

→ consolidated internal resources and maximize operational efficiency

→ create synergy


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