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 US80.47 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 NT40.1 billion
• ? - 1.8 (1996)
• Taiwan average sale volume NT167.16 million
• ? 5.3 (1996)
• Taiwan total number of distributors 2.72 million
• ? 12.56 of total population
• ? N3 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
• N3 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 companys 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 ones 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 knowledges
• Sale skills training
• Sales 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 effect
• MLM 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 - 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