What Is Direct Selling? Definition, Perspectives, and Research Agenda - Robert A. Peterson and Thomas R. Wotruba Reporter: 蔡璋賢 (M )

Before the Paper Published in Data from Paper summary. Define Direct Selling. Operational/Tactical/Strategic perspectives. Suggest Research Agenda.

A Definition of Direct Selling A form of selling without retail outlets, distributors, wholesalers or any type of middlemen. The establishment of an immediate exchange relationship with a customer in which the usual intermediaries in the distribution chain are omitted. A marketing approach that involves direct sales of goods and services to consumers through personal explanation and demonstrations, primarily in their homes. Direct selling is the technique of approaching a customer on a person-to person basis, wither with a group approach (as in in-home party plan) or individually, one-on-one, to offer products conveniently with a personal service emphasis. A sales approach characterized by personal product explanations and demonstrations, often in the consumer’s home or retail’s establishment. The marketing of consumer goods and services directly to consumers in their homes by way of explanation and/or demonstration through a salesperson. The location can also be a friend’s home, the workplace of the customer during breaks or other places away from shops. Selling without the use of a retail outlet, distributor, broker or wholesaler or any other form of middleperson. Direct selling commonly refers to such activities as telephone sales, door-to-door selling, or in-home parties. Direct Selling is face-to-face selling away from a fixed retail location.

Operational Perspective – (I) Face-to-face is what differentiates direct selling from direct marketing. Location characteristic differentiates direct selling from personal selling.

Operational Perspective – (II) Flexible – place, time. Communication senses can be utilized. – customized, demonstration, personal involvement. Relationship marketing. Generate repeat business.

Tactical Perspective – (I) Type of salesperson. o employees vs. contractors (99+%). For cost reason. Part-time or full-time selling agent? o Two jobs (50+%), part time (42%), full time (8%). Selling effort occurs in a home? o Home (73%), Workplace (12%), Others (15%). Transaction or relationship oriented? o Immediate, expensive, durable vs. Long-term, customer retention.

Party plan format? o Demonstration, entertainment-oriented. Pre-notification? o vs. cold-call. Multi-level? o Selling and recruiting. Tactical Perspective – (II)

Selling agents are customers. o Consumable products, repeat selling. Selling agents take physical possession. o Products are directly delivered to end user? Purchase are delivered and payment is obtained. o By party host, selling agent? Payment before shipment? Tactical Perspective – (III)

Tactical Perspective – (IV) Combine 10 characteristics to form a unique tactics. No guarantee for success or failure. Christmas gifts, summer vacations.

Strategic Perspective – (I) Direct selling as a distribution channel. Direct selling as a means of gaining access to a market. Direct selling as a way of doing business. What is known about direct selling? What can be sold through direct selling? Who buys from direct selling? What are the characteristics of direct sellers?

Direct selling as a distribution channel

Direct selling as a means of gaining access to a market Push marketing strategy. Vs. traditional 4P o face to face, away from fixed retail location. Low capital access in the beginning. o wholesaler, fixed retail locations, advertisement. Distribution system is attractive. o China, South Korea.

Direct selling as a way of doing business Preferred channel of distribution. o Invisible, nothing competitors can monitor. Relatively little start-up capital. o Retail outlets, large inventory, advertising. o But spend on recruiting, training, compensating.

What is known about direct selling? Lack of knowledge. o Invisibility characteristics, firms are privately and small. Direct salespeople. o 6.2m in USA, 2m in Japan, 2m in Taiwan. Most productive direct salespeople. o Switzerland: US$34,386.

What can be sold through direct selling? Successfully marketed - Distinctiveness, require demonstration, repeat sales. Albaum and Peterson, 1987

Who buys from direct selling? 57% purchase at least one in 12 months. Female, younger, higher education and higher income.

What are the characteristics of direct sellers? – (I) 95% are women in 1992 USA. Most with high school diploma. 56% have at least one other paying job. Tend to be more outgoing, aggressive, enthusiastic, venturesome. Desire to be their own boss.

What are the characteristics of direct sellers? – (II, successful) Good communicator, highly motivated. Higher levels of effort led to higher levels of performance and satisfaction. Persistence and initiative.

A Research Agenda for Direct Selling Scope of Direct Selling. Practice of Direct Selling.

Scope of Direct Selling Begin with some type of census. o How many firms, what’s the volume, magnitude….. Seller and Buyers in Direct Selling. Motivation of direct salespeople and customer. International and comparative analysis

Practice of Direct Selling Operational perspective. o Communication process – negotiation, listening, trust-building… Tactical perspective. o in the throes of change, compensation and reward design, part-time contractor vs. full-time employee…. Strategic perspective. o direct selling channel vs. alternative marketing method, what about direct selling in the future?

Conclusion Direct selling is not well understood. o Face-to-face selling away from a fixed retail location. Extend the research out of U.S. o General, large-scale programmatic, systematic, internal research.