Welingkar’s Distance Learning Division

CHAPTER-9

Multilevel Marketing &
Direct Distribution

We Learn – A Continuous Lea...
Multilevel Marketing
• Multi level or “network” marketing are a way
of selling goods or services through
”distributors”
• ...
Network/Teamwork Marketing
• If one signs up as a “distributor’ he will receive
commission on the “sale” he makes and also...
Issues in multilevel marketing
• Depends on the rate of growth of the
distributor base and also on the distributors
being ...
Good sectors for Direct Marketing
•
•
•
•
•

Nutrition
Wellness
High end personal care products
Herbal products
Specialize...
Turnover of Major Organizations in India
•
•
•
•
•
•

Amway
Rs. 580 Cr
Tupperware
Rs. 100 Cr
Medicare
Rs. 100 Cr
HLL-Netwo...
Issues in multilevel marketing
• Chain moves on the basis of networking
• Worldwide Direct Marketing is over US $ 100
bill...
Avon
•
•
•
•
•

US $ 8 billion. Turnover
Presence in over a hundred countries
4 million distributors worldwide
Operates in...
Avon
• Products are supplied to distributors through
couriers
• Main objective is to reduce the cost of the
distribution
•...
AVON
• Inventory is replenished at the beginning of
each month
• Storage at multi location is avoided
• Reduced cost in di...
Sangam Direct-HLL
• People in suburb of Mumbai like thane,
wishes to buy groceries and items of daily
necessity, can long ...
Sangam Direct-HLL
• One objective is to connect with customers
• Order after receipt is sent to the warehouse
or franchise...
Sangam Direct-HLL
• The scope of these initiative lies in its size
• The number of SKUs handled are in
thousands, and are ...
Direct Marketing Format-Key Implications
• Competes directly with the kirana stores at
one end, and the other end with val...
International Experiments
• Net Grocer
• Peapod
• These formats to integrate stores/product
brands, direct marketing skill...
E-Tailers in India
• Godrej and Amul sites provide customer net
purchase services
• Godrej has arrangements with fabmall.c...
P & G and Direct Marketing
• In the form of house demonstration cum sales
• Product demos at shops and retail outlets to i...
Common Concern In Direct Marketing
• The performance cycle between the point of
sales and the immediately preceding stocki...
Summary
• Multi level or “network” marketing are a way of
selling goods or services through ”distributors”
servicing end c...
Summary
• Nutrition , wellness etc. are good sectors for
network marketing
• Amway, Tupperware and Medicare are leading
pl...
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Multilevel Marketing & Direct Distribution

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The above presentation on Multilevel Marketing & Direct Distribution defines Multi level or “network” marketing as a way of selling goods or services through “distributors”. The presentation is an initiative by Welingkar’s Distance Learning Division.

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Multilevel Marketing & Direct Distribution

  1. 1. Welingkar’s Distance Learning Division CHAPTER-9 Multilevel Marketing & Direct Distribution We Learn – A Continuous Learning Forum
  2. 2. Multilevel Marketing • Multi level or “network” marketing are a way of selling goods or services through ”distributors” • These “distributors” are unlike distributors in the normal sense of the term or distributors one comes across the supply chitin of FMCG/Pharmaceutical Ch-09 Multilevel Marketing and Direct Distribution
  3. 3. Network/Teamwork Marketing • If one signs up as a “distributor’ he will receive commission on the “sale” he makes and also on the “sales” that are made by “distributors” appointed by him. • The recruited” distributors” are known as the “down line” • In pyramids like network commotions are based on the number of distributors recruited. • The sales are to the recruits and not to customs Ch-09 Multilevel Marketing and Direct Distribution
  4. 4. Issues in multilevel marketing • Depends on the rate of growth of the distributor base and also on the distributors being able to do business • Pyramid may break up in case of products that do not have customer base, and hence end up in dissatisfied “distributor” holding stocks they purchased as part of the “distributor” deal Ch-09 Multilevel Marketing and Direct Distribution
  5. 5. Good sectors for Direct Marketing • • • • • Nutrition Wellness High end personal care products Herbal products Specialized types of items that sell more on word of mouth and personal conviction Ch-09 Multilevel Marketing and Direct Distribution
  6. 6. Turnover of Major Organizations in India • • • • • • Amway Rs. 580 Cr Tupperware Rs. 100 Cr Medicare Rs. 100 Cr HLL-Network Rs. 100 Cr Oriflame Rs. 65 Cr Avon Rs. 65 Cr Ch-09 Multilevel Marketing and Direct Distribution
  7. 7. Issues in multilevel marketing • Chain moves on the basis of networking • Worldwide Direct Marketing is over US $ 100 billion • In India it was Rs. 2500 crores in 2003-04 • Direct Marketing sector was growing at 20% Ch-09 Multilevel Marketing and Direct Distribution
  8. 8. Avon • • • • • US $ 8 billion. Turnover Presence in over a hundred countries 4 million distributors worldwide Operates in India with a head office at Delhi Imports the formulations from US and get the skin care, beautify care manufactured at facilities in Assam and Panvel Ch-09 Multilevel Marketing and Direct Distribution
  9. 9. Avon • Products are supplied to distributors through couriers • Main objective is to reduce the cost of the distribution • Route is Avon-to-Beauty Advisor-to-Beauty Representative-to-customer • Beauty representative gets a 20% discount on buying Avon products while a beauty advisor gets a 20% discount plus a points on volume discount, based on volume of sales which progresses on a slab wise basis Ch-09 Multilevel Marketing and Direct Distribution
  10. 10. AVON • Inventory is replenished at the beginning of each month • Storage at multi location is avoided • Reduced cost in distribution is passed on to the “distributors” as high commission Ch-09 Multilevel Marketing and Direct Distribution
  11. 11. Sangam Direct-HLL • People in suburb of Mumbai like thane, wishes to buy groceries and items of daily necessity, can long on to the appropriate internet site www.snagamdirect.com and place an order, or even can place an order over the phone • Site stocks 3500 SKUs Ch-09 Multilevel Marketing and Direct Distribution
  12. 12. Sangam Direct-HLL • One objective is to connect with customers • Order after receipt is sent to the warehouse or franchisee at the back end via interconnect computer network • The franchisees are only service providers like C &FAs, the ownership of the products remaining with the company Ch-09 Multilevel Marketing and Direct Distribution
  13. 13. Sangam Direct-HLL • The scope of these initiative lies in its size • The number of SKUs handled are in thousands, and are growing ultimately with a scope of becoming a virtual hypermarket. • The sales are driven buy frequent offers. Ch-09 Multilevel Marketing and Direct Distribution
  14. 14. Direct Marketing Format-Key Implications • Competes directly with the kirana stores at one end, and the other end with value for money based store such as Big Bazaar • For retention of customers volume based and repeat purchase discounts are offered Ch-09 Multilevel Marketing and Direct Distribution
  15. 15. International Experiments • Net Grocer • Peapod • These formats to integrate stores/product brands, direct marketing skills, and the shopping habits of customers to drive profitable volumes Ch-09 Multilevel Marketing and Direct Distribution
  16. 16. E-Tailers in India • Godrej and Amul sites provide customer net purchase services • Godrej has arrangements with fabmall.com • Amul leverages its distributor network to service orders received on the net, whereby dealer is also kept happy Ch-09 Multilevel Marketing and Direct Distribution
  17. 17. P & G and Direct Marketing • In the form of house demonstration cum sales • Product demos at shops and retail outlets to induce trails among target groups • Stocks are routed to the direct marketing agency through its distributors, for demo and sale to customers Ch-09 Multilevel Marketing and Direct Distribution
  18. 18. Common Concern In Direct Marketing • The performance cycle between the point of sales and the immediately preceding stocking points has to be as short as possible • Try and involve the channel partner in inventory management, so that the stock holding spread across the chain Ch-09 Multilevel Marketing and Direct Distribution
  19. 19. Summary • Multi level or “network” marketing are a way of selling goods or services through ”distributors” servicing end customer for some commission • Pyramid may break up in case of products that do not have customer base, and hence end up in dissatisfied “distributor” holding stocks they purchased as part of the “distributor” deal Ch-09 Multilevel Marketing and Direct Distribution
  20. 20. Summary • Nutrition , wellness etc. are good sectors for network marketing • Amway, Tupperware and Medicare are leading players in India • HLL, Amul, and Godrej are other e-tailing initiatives in India • P& G, and HLL are also not left behind Ch-09 Multilevel Marketing and Direct Distribution
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