1. 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

4. 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

5. 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

6. 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 N°3 but the productivity of distributors decreased Opportunities: domestic market liberation measures, globalization Threats: more pressure  Innovative and flexible management approach

7. 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

8. 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 company’s success formula - good relationship between distributors and the management Constant training program

9. 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 one’s boss - enjoying discount prices - winning praises from others Study done with 4 US MLM firms: - self satifaction - accomplishment - flexible hours

10. 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.

12. 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

13. bonus program and sales network structure design  MLM need to have a structure to meet the needs of both self- use consumers and distributors.

14.  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.

16. inter-company communication Magazines Newsletters Counseling services

17. ways of handling high turnover Companies interviewed are not concerned by this issue Goals: Goals: - to offer quality products - to offer attractive packages

18. 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

19. industry image and government regulatory Negative image caused to the MLM industry Fair Trade Commission should produce guidelines of regulation

20. 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

21. 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.

22. 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

23. Suggestion for long-term → be technology-driven and market-minded → consolidated internal resources and maximize operational efficiency → create synergy