Direct Selling Channels: An Appraisal of Key Strategic Issues by Ben M. Enis

1. Direct Selling Channels: An Appraisal of Key Strategic Issuesby Ben M. Enis 直銷通路管理報告 指導教授﹕陳得發教授 學生:王昭雄 學號﹕8941812 中華民國九十一年四月十七日

2. Introduction • For the Direct Selling industry, these changes can best be discussed in terms of four “players”: customers,sales representatives, companies, and society in general. • The Purpose of this article is to raise questions and provoke discussion about these issue. • The Article summarizes a study based on a careful review of relevant literature and data, as well as interviews in person and by telephone with more than thirty direct selling executives and officials of Direct Selling Association. • The Articles also examines major trends on the demand side (changing consumer demographics, lifestyle, and buying pattern) and the supply side (the role of the independent sales representative) in the industry.

3. The Demand Side : The Direct Selling Customer • Three Characteristics of demographics in the U.S. 1.People are getting older 2.Households are smaller 3.Income pattern are diverging from the middle class norm • Changing Demographics (money-poor and an affluent, but time-poor)

4. Changing Lifestyles (Base on empirical research of Stanford Research Institute ) • Survivors -- Old, intensely poor, fearful, far removed from the cultural mainstream (4%). • Sustainers--Angry, resentful, street-wise living on the edge of poverty(7%). • I-Am-Me– Very young, narcissistic, exhibitionist(5%). • SociallyConscious—Successful, influential, seeking simplicity in life(9%). • Belongers – Aging, Conventional, content, traditional Middle Americans(35%) • Emulators– Young, ambitious, flashy, try to break in the system (9%). • Achievers– Middle-aged, self-assured, the leaders and builders of the American dream(22%). • Integrated-Psychologically nature tolerant, able to see “the big picture”(2%).

5. Changing Lifestyles (Base on empirical research)

6. Changing Buying habits • For the money-poor (1). Good value (2). Trustworthy, reliable, caring service • For the time-poor Seek quality goods and hassle free service • The Challenge here for the direct seller is twofold. First, competition to serve this segment will be intense. Second, traditionally, DS sales representatives have come from the other income/lifestyle class, and therefore might not relate well to the affluent time-poor.

7. The Supply Side: The Direct Selling Representative • The Direct Sales Person Direct selling Companies should not neglect such people of housewives, students, retired person. But the emphasis, for most companies , should shift to recruiting the career oriented. • The Technology Fortunately, the technology to make the recommendation feasible is becoming available-(1).computer (2).telecommunications (3).audio/vedio tapes and disks (4).package delivery (5).integrated system

8. Capital for Sales Representatives’ Business • The business approach to direct sales representation advocate here requires significant capital. The direct selling company should be prepared to at least assist the sales representative in determining capital requirement. • Franchising is one possible answer. Franchising essentially combines the economies of scale of a large operation (quantity buying or manufacture , national advertising, centralized training, standardized accounting, records, etc) with the commitment and motivation of the on-one owner or manager. • Socially Responsible Direct selling Behavior Selling useful products to consumers who will benefit from them. This is the essence of socially responsible behavior.

9. The Direct Selling Company • Finding a Need: Market Information Direct Selling companies should develop or buy systematic, comprehensive data bases on present and potential consumers. (1).Records to collect customers’ lifestyle, buying habits, or competitor strengths and weaknesses (2).Intelligence To collect the information of new product planner, advertising, adverting copywriters, or sales trainers (3).Research Projects Three general types are focus groups, surveys and experiments. (4).Experiment Here the information given to the respondent (usually the customer) is manipulated by the researcher to highlight specific responses.

10. The Direct Selling Company • Finding a Need: Marketing Strategy Marketing strategy is generally developed in two stages: overall goals and resource commitments, and specific programs. • The standard grouping of marketing program decision categories is Product, Promotion, Place, and price. (1). Product a. “Cash cow” – a mature product b. ”question Marks” – new product c. “stars” – products still growing d. “a dog” – the product is less revenue (2). Promotion a. push-type promotion—personal selling to the consumer b. pull-type promotion—rebate coupons, both mass and direct mail

11. The Direct Selling Company (3). Place a. Distribution traditionally has been the sales representative delivering the product ordered to the customer. b. Perhaps package delivery would be more cost-effect. (4). Price From the supply side: It must not only cover the company’s cost, but also allow funding of the sales representation to cover costs. From the demand side: The price must reflect consumers’ desires as well as competitors’ activities.

12. The Direct Selling Company • Ethical and Social Considerations Direct Selling can generate considerable goodwill today by paying explicit attention to social responsibility, and of course then claiming credit for so doing. The Direct Selling Association Code has earned respect among consumer advocates.

13. Conclusions • Customers The direct selling industry must devote significant resources to continuous, systematic study of customers, including internal sales records, market intelligence, and primary research. • Sales Representatives The franchise form would appear to offer significant potential benefits to direct selling companies and independent sales representative. • Companies A comprehensive, systematic approach-termed in the marketing literature a Marketing Audit is recommended. • Society There is increasing interest in business ethics, consumer satisfaction, and community participation.