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Chartered Post Graduate Diploma in Marketing EMERGING THEMES Candidate Number: 14396993

EMERGING THEMES

TOPIC:

THE RISE IN HEALTH CONSCIOUSNESS:

THE COMPETITIVE CHALLENGE FOR COMPANIES IN THE HEALTH AND WELLNESS NETWORK MARKETING (MLM) INDUSTRY IN GHANA

WORD COUNT:

TASK 1: 502

TASK 2: 2732

TASK 3: 537

TOTAL: 3771

DECLARATION:

“I can confirm that in forwarding this assessment for marking, I understand and have applied the CIM policies relating to word count, plagiarism and collusion for all tasks. This assessment is the result of my own independent work except where otherwise stated. Other sources are acknowledged in the body of the text, a bibliography has been appended and Harvard referencing has been used. I have not shared my work with other candidates. I further confirm that I have submitted an electronic copy of this assessment to CIM in accordance with the regulations.”

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EXECUTIVE SUMMARY:

There is an increasing Global trend where people are becoming more health conscious, and are increasingly scrutinizing the content, composition and hygienic nature of products that they consume. People are increasingly becoming knowledgeable in health matters, as a result of awareness creation either by governments or health bodies and associations and also the advancement in technology and science, as to the consequences of consuming unhealthy products or practicing unhealthy lifestyles, which potentially lead to disease and illness.

A large section of the population is more and more geared towards adopting a healthy lifestyle and seeking to prevent disease and illness and are thus looking out for and also patronizing healthy products.

This global trend is catching up in Ghana, and this has led to the market being invaded by multinational companies in the Health and Wellness Network Marketing industry (also known as the Multilevel marketing (MLM) industry), seeking to provide solutions to consumers quest to live a healthier lifestyle in a bit to prevent disease and illness. The industry has been growing over the past few years, and we are seeing more and more multinational companies spread their wings into the Ghana market, and this is leading to keen competition in the industry.

This paper has been produced as an assignment for the CIM-UK Emerging Themes module, and seeks to examine the emerging theme of the Rise in Health Consciousness, and how it is affecting the MLM industry in Ghana, and the competitive landscape amongst the industry players.

In the preparation for this paper, research work was done using some amount of primary research, and mostly secondary research, including the writer’s own knowledge of the Health and Wellness Network marketing industry.

The paper was broken down into 3 main tasks, with Task 1 giving a summary of the sources of data used and an evaluation of their credibility, reliability and merit. Primary data was acquired using Focus group, based on executives in the industry with a lot of First Hand knowledge. Secondary data was gathered from sources such as newspaper articles, internet websites, articles, academic journals and books.

Task 2 evaluates the impact increasing Health consciousness amongst the populace is having on the Health and Wellness industry, as well how it is impacting on competition. A strategic marketing response is recommended for companies in the industry, who seek to avoid a strategic wear out, and gain competitive advantage, and finally there is a recommendation of the requisite skills, attitudes and behaviours marketing professionals need to adopt to implement the strategic choices.

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Task 3 outlines a letter to the Middle East and Africa director of the World Health and Wellness Organization, on the upcoming maiden conference on “Increasing Healthy Lifestyles trends and its consequences for the Health and Wellness Network Marketing Industry in Middle East and Africa” at the Abu Dhabi International Conference Centre on June 1st 2012; soliciting for an opportunity to present a document on the Ghana.

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TABLE OF CONTENTS

ITEM DESCRIPTION PAGE

Executive Summary -------------------------------------------------------------------- 2

Table of Contents ----------------------------------------------------------------------- 4

Task One 1.0 Summary of sources of data ----------------------------------------------- 5

Task Two 2.0 The Rise in Health Consciousness among consumers--------------- 7

2.1 The Impact of Rising Health Consciousness on the Healthand Wellness Network Marketing Industry------------------------------ 8

2.2 The Impact of Rising Health Consciousness on Competition in the Health and Wellness Network Marketing Industry------------ 10

2.3 Strategic Response Recommendation – Differentiation ---- -------- 13

2.4 Skills, Attitudes and Behaviours Marketing Professionals should adopt --------------------------------------------------------------------- 15

Task Three 3.0 Presentation Letter ------------------------------------------------------------- 17

Appendix 1 Industry profile ---------------------------------------------------------------------------- 19

Appendix 2 Excerpts from Secondary data --------------------------------------------------------- 20

Appendix 3 Primary Data Collection and Findings ------------------------------------------------ 24

Appendix 4 References ---------------------------------------------------------------------------------- 26

TASK ONE4


1.1 Summary of Sources of Data

PRIMARY RESEARCH

DATA SOURCES CREDIBILITY RELIABILITY MERITS

Focus Group One on One Interviews The sources are credible because they are individuals who are working in the industry, and they allow for a clarification of the relevant issues pertaining to the industry from a firsthand perspective of the Ghana market.

These sources are reliable due to the calibre of people involved, who are known executives of Health and Wellness Network Marketing Companies in Ghana.

It provides a lot of insight on the topic within a short timeframe.It also enhances the ability to reduce the incidence of incomplete and unanswered questions if a questionnaire was used, as well as the ability to control bias effectively as against postal questionnaire

SECONDARY RESEARCH

DATA SOURCES CREDIBILITY RELIABILITY MERITS

Books The New Wellness Revolution (2nd Edition)– Pilzer

Marketing Management (13th Edition)– Kotler and Keller

Techniques for Analyzing Industries and Competitors- Porter

Future Choices- Clouse

The books are periodically upgraded in line with current trends and the publications are accessible for research work and based on the emerging theme. The authors of the books are also respected people who are well recognized authorities in their fields of study.

The books are reliable due to efforts made to ensure the capturing of all or the most relevant aspects of the emerging theme. They have also been cited in other research work as references, and the works accepted by other reputable institutions

These books are published by renowned Publishing firms and are widely acclaimed.

Articles PublicationsJournalsResearch papers

Emerald Group Publishing Ltd, Journal of Consumer Marketing -Volume 13 issue 4

Emerald Group Publishing Ltd –Journal of Research in Interactive Marketing-Volume 5 issue 1

Moving Ahead- 2011

Reputable journals, Established institutions writing on business issues reviewed by judicious financial persons, Government news agencies, Government

The researchers have good knowledge in the emerging trends in marketing, and the source institutions have a long history of publishing relevant and

Provide knowledge in marketing practices and an in-depth coverage of relevant issues in business, marketing, finance, health,

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Health and Wellness Product Development – February 2010

The History and Growth of Network Marketing- 2012

Health and Wellness Trends for Canada and the World – October 2011

Competitive Intelligence – Encyclopaedia of Business

Ghana News Agency publications

institution publications.

verifiable material.

wellness and research work.

Internet/ websites ebscohost.com

emeraldinsight.com

marketingteacher.com

www.gnld.com

www.flpgh.com/forever/

www.herbalifeghana.com

www.tiensoffice.blogspot.com/2008/06/tiens-ghana.htmlwww.ghana.edmarker.com

www.free-press-release.com/news-gbg-brings-health-and-wealth-to-ghana-africa-1302809890.html

www.herbwisdom.comen.wikipedia.org/wiki/Enterprise_resource_planning

www.wikinvest.com/concept/Health_%26_Wellness

www.directselling411.com/forms/CompanyFormPublicMembers/search?action=find

Highly credible online databases and websites covering a wide range of subjects and submitted by Institutions and Individuals of proven credibility. Websites of health and wellness network marketing companies.

The sources can be verified and the information is accurate and timely.The information from the websites of the Health and wellness network marketing companies is official information which cannot be in doubt. The other websites contain information that has been peer reviewed and also coming from institutions with a track record of reliability.

It is relatively easy to collect information from internet websites than other sources such as newspapers and magazines; hence this method was used to gather information and facilitate the completion of the work within the time frame.

TASK ONE WORD COUNT - 502

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http://www.directselling411.com/forms/CompanyFormPublicMembers/search?action=find



http://www.wikinvest.com/concept/Health_%26_Wellness


http://www.herbwisdom.com/

http://www.free-press-release.com/news-gbg-brings-health-and-wealth-to-ghana-africa-1302809890.html



http://www.ghana.edmarker.com/

http://www.tiensoffice.blogspot.com/2008/06/tiens-ghana.html

http://www.tiensoffice.blogspot.com/2008/06/tiens-ghana.html

http://www.herbalifeghana.com/

http://www.flpgh.com/forever/

http://www.gnld.com/


TASK TWO - DISCUSSION PAPER

2.0 THE RISE IN HEATLH CONSCIOUSNESS AMONG CONSUMERS

There is a global rise in health consciousness and many factors have contributed to the increased public awareness of health and wellness. Higher rates of heart disease, increases in the incidence of cancer, record numbers of clinically obese people, and various other health scares have all drawn attention to the need for healthy lifestyle choices. (Appendix 2.0a). A 2011 survey in the United States indicates renewed consumer interest in standards like organic, and also speciality products like gluten-free and functional also continue to generate excitement, with benefits making their way into many leading brands. (Appendix2.0b).

A study by the Government of Canada in October 2011 (Appendix 2.0c), indicates parents are increasing purchasing fortified/functional food products for their children, in order to help them maintain a healthy lifestyle and Senior consumers are highly interested in maintaining a healthy lifestyle and hence spend a significant amount of money on healthier foods, exercise equipment, and supplements.

Figure A7


The quest for healthier foods is consistent with consumer food choice behaviour, which is influenced by food properties, person-related and purchasing environmental factors, as described in the Universal food choice model (Figure A),

In Ghana, along with the global trend, consumers are becoming more health conscious, leading to the increase in companies in the health and wellness industry over the past few years.

2.1 THE IMPACT OF RISING HEALTH CONSCIOUSNESS ON THE HEALTH AND WELLNESS NETWORK MARKETING INDUSTRY

2.1.1 Healthier Food Products

Manufacturers of food products are being affected by the growing health consciousness amongst consumers; hence there is therefore innovation in the food products that are being churned out, and subsequently more functional food products on the market.

In a consumer survey in America in August 2009, it was found out that consumers overwhelmingly feel that food and nutrition play the greatest role in maintaining or improving health. The “2009 Prepared Foods’ R&D Trends Survey: Functional Foods” found food product developers are most comfortable incorporating ingredients such as antioxidants, and vitamins and other fruit-based ingredients into products. (Appendix 2.1a).

In Ghana, the trend is evident with the increasing number of food products with added benefits. An example being cooking oils with low fat or no cholesterol, and wheat products being fortified with micro nutrients (Appendix 2.1b).

There is however scepticism about the efficacy of such products, their higher cost, the possible side effects of the ingredients, and concerns about genetically modified food products. (Appendix 2.0d).

2.1.2 Increase in Supplements and Vitamins intake

According to a report by the US National Center for Health Statistics, 53% of the US adults above the age of 20 took at least one dietary supplement a day in the period 2003 – 2006. In comparison, 42% took the same during the period 1988 – 1994 (Appendix 2.1c)

Currently in Ghana, there is widespread sale of nutrition supplements in pharmacies and by the MLMs, and good patronage. In 2011, there was a drive by the National Food Fortification Project (NFFP) in Ghana, the FDB and Ghana Health Services, to sensitize the public on the benefits of patronising fortified (functional) food products. (Appendix 2.1b).

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Some consumers believe they get enough vitamins and minerals from eating a varied diet, whilst others find them expensive and hence do not patronize them. (Appendix 2.0d)

2.1.3 Enforcement of Legislation on products

The FDB have stepped up efforts on enforcement of laws regulating the sales and of health related products on the market, in line with the global trend.

In March 2012, the Ghana Federation of Traditional Medicine Practitioners petitioned the health minister accusing the Food and Drugs Board of heavy handedness, saying the FDB has refused to register their products over the past 2 years because of some new tests it wants them to run. (Appendix 2.1d).

This situation however serves to prevent harmful products on the market and in December 2010 the FDB revoked the licences of 2 Chinese Health and Wellness Network Marketing companies, Tasly and Winnalite, for contravening the law on Food and Drugs. (Appendix 2.1e).

2.1.4 Increasing number of Health and Wellness Network marketing (MLM) companies

There has been a consistent increase in the number of MLM’s in the world, and Clouse, (2006) stated that “This week 175,000 people will find a new way to increase their financial security and personal freedom. They will join more than 57 million others who are earning a living, full- or part-time through Network Marketing”. Clouse, (2012) further to states the industry as growing from $13 billion in 1992 to over $132 billion in 2010, with more than 82 million people joining Network Marketing in the past 20 years. (Appendix 2.1f)

In the US alone, there has been a rapid increase in MLM’s to the current estimate of about 70 (Appendix 2.1g) and in Ghana there are currently about 6, with 2 new ones joining in 2011. (Appendix 3.5.3 and 3.5.4).

There is however a high rate of collapse or banning of some of these companies, as evidenced in Ghana (Appendix 2.1e).

2.1.5 Ethical dimension – Pyramid Scheme?

MLM companies have been a frequent subject of criticism, and the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes. Many pyramid schemes in fact, try to present themselves as legitimate MLM businesses. The United States Federal Trade Commission states “Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They’re actually illegal pyramid schemes”, warning that the practice of getting commissions from recruiting new members is outlawed in most states as “pyramiding”. (Appendix 2.1h).

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However, MLM’s indicate that they sell genuine products and do not charge for registration of new distributors but rather share the profits generated from their sales, where as in pyramid schemes no products are sold. Their operations are also licensed by government agencies.

2.2 THE IMPACT OF INCREASED HEALTH CONSCIOUSNESS ON COMPETITION IN THE HEALTH AND WELLNESS NETWORK MARKETING (MLM) INDUSTRY

The market is assessed with the help of Porter’s Five Forces Model.

2.2.1 Threat of New Entrants

Entry barriers into the industry are low, since starts up costs are low; in that the products are not manufactured locally hence the cost of establishing an office is low, and over the past 2 years at least two multinational MLM companies have entered the market, namely Herbalife and GBG (Appendix 3.5.3). Possible new legislation and regulations by government agencies, could however raise the entry barriers, and cause some MLM’s to cease operations.

2.2.2 Rivalry among competitors

Competition in the industry is fought on many fronts, with the key aspects being:

a. Distribution of products

According to Bloch, (1996) MLM firms sell their goods not through a conventional distribution system and retail outlets, but through individual people, selling to their friends, acquaintances and strangers. Some of those they sell to are then recruited to become independent distributors. These independent distributors in turn also recruit new distributors which form their downline. Commissions and compensations based on the sales generated by their downlines. He further states that there is an ethical dimension to this strategy of recruitment of friends, because “You would be making money out of them, and making money out of fiends is not, in our society or most others, acceptable behaviour”. (Appendix 2.2a)

Figure 1 - MLM Distributor network

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b. Product quality and benefits

Product quality and their proposed benefits are key criteria in determining how successful the companies are on the market. If a company selects products that are valuable to consumers, then distributors will enjoy selling them because the consumers will be enthusiastic about the products. A valuable product is the backbone of a successful company because it’s what makes a consumer’s life better. Only valuable products cause a consumer to keep purchasing them (Appendix 2.2b). Quality however goes with increased costs, making some products very expensive and unaffordable to most consumers, hence unattractive for distributors, who then look out for cheaper alternatives.

c. Product range

There are several product ranges in the industry including Drinks, Nutrition, Personal Care, Skin care and Weight management. The more categories in which a company has a product offering, enables it to attract more consumers and distributors (Reference 4.3.1 and 4.3.2). However, a wide product range calls for increased training and education of the distributors on product benefits, thereby increasing the cost of operations. This is essential to avoid the making of false claims on product uses and benefits.

d. Product prices

Almost all products are imported and prices are all subject to the foreign exchange fluctuations. Vertically integrated parent companies outside Ghana, are however able to manage the selling price of their products better than competitors, and hence stabilize their prices.

The active ingredient content of the products, and the product base, inherently determine the product quality and the cost. (Appendix 3.5.5). Product prices thus range from high to low, and this serves as a differentiation factor between the various companies.

e. Services

The services provided by the companies and their efficiency, serve as a platform on which the companies compete. Services such as trainings, opportunity meetings, availability of adequate distribution points, enough stocks of products and efficient payment of compensations are key to attracting and retaining distributors to a company.

Training is very key, in facilitating relationship marketing and service delivery, and also because it is what converts a distributor into someone who is effective in MLM, and organizations who train their people better than any other always do better than less –trained organizations. (Appendix 2.2b). Training costs could be high and unaffordable, time consuming for distributors, and also some distributors are not well educated enough to be trained.

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f. Compensation schemes and financial opportunities

The industry though focusing on H&W products is also an income generating business, which distributors do both as part-time and full-time businesses. The compensation schemes are the means by which they generate their incomes. Hence depending on what a company has to offer in terms of rewards, they gain a competitive advantage over their competitors, by attracting more distributors to themselves and thereby generating more product sales. However if a company has a commission plan that pays out too much money to distributors, the company can go bankrupt (Appendix 2.2b). Compensation payments for most distributors though, tend to be low.

2.2.3 Buyer Power

The distributors are independent, and are able to quit the organization and invest their money elsewhere, or with another competitor. Also there is a weak brand loyalty by consumers, and consumers easily switch from one brand to another. Design and enforcement of distributor agreements will however facilitate distributor retention. Also switching costs for distributors may be high depending on their depth of activities with the company.

2.2.4 Supplier Power

The MLM’s in Ghana do not manufacture their products locally; hence they do not need local suppliers for the manufacturing of products, but for minor office operations. Parent companies thus control supplies to the Ghanaian subsidiaries. The banking institutions however may have an impact on their operations, e.g. business loans.

2.2.5 Substitute products

MLM’s sell nutritional supplements, natural and herbal products; which may be substituted by locally made herbal and traditional medicine products. The MLM products however meet international scientific quality standards and may be preferable. Fruits and vegetables, also serve as a substitute for vitamins and nutrients. (Appendix 2.0.d) Pharmaceutical products are also preferred for curing ailments.

As an income generating business concept, a lot of distributors who are not very successful in building their downlines to an appreciable level, do not find the businesses lucrative, hence abandon the business and focus on more traditional sources of income, though successful distributors earn high incomes.

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FIGURE 2 - Porter’s Five Forces Model

2. 3 STRATEGIC RESPONSE RECOMMENDATION – DIFFERENTIATION

Porter (Appendix 4.1.3) developed a framework outlining 3 generic strategies that a company could adopt in creating a competitive advantage, which are Overall Cost Leadership, Differentiation and Focus (Cost Focus or Differentiation Focus) (Figure 2).

Differentiated goods and services allow the companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. (Appendix 2.3a)

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Threat of new entrants

Favourable investment climate; Low start up costs;Quality world class products; Government regulations

Rivalry among existing competitors

Competition is high due to similarity of product offerings, similarity of compensation schemes, use of same marketing strategies

Forever Living, Tianshi, Edmark, GNLD, Herbalife, GBG

Threat of substitute products

Fruits and Vegetables, Pharmaceutical products, Traditional medicine, Herbs, SMEs

Bargaining power of buyers

Independent Distributors have the ability to switch to competitors; Consumers are not that loyal to one brand

Bargaining power of suppliers

Cost of special Ingredients for production may go up; Some companies are vertically integrated hence can be flexible on price


FIGURE 3 - Porter’s Generic Strategies

Based on the analysis in (2.2.2) above on the key drivers of competition in the industry as well as on the level competition, and considering the broad market scope, the Ghanaian companies need to adopt a Differentiation strategy as a strategic response in order to overcome the competition.

The companies thus need to differentiate along these lines:

2.3.1 Product offerings:

The companies need to highlight the quality, efficacy, and composition of the products they offer (Section 2.2.2b). Key plants and herbs which are renowned for their curative or health benefits should be used in developing a wide range of product forms like powders, capsules, creams, drinks etc., and also multifunctional products. Examples of such plants are Aloe vera, Ginseng, Garlic (Reference 4.3.7).

2.3.2 Services:

The companies need to ensure that they provide excellent services to their distributors, by establishing efficient supply chains to prevent product stock outs. Also adequate points of sales

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should be provided to facilitate the replenishment of products to their distributors (Section 2.2.2e)

The system of training and support also helps the distributors to be knowledgeable about the product benefits, and learn strategies for winning new distributors and consumers.

2.3.3 Compensation plans:

The companies need to differentiate themselves by providing lucrative compensation schemes to win over a lot of distributors, and also motivate them to work hard to sell the products.

They should offer more benefit than their competitors in terms of the sales bonuses for distributors, percentage of commission of the distributor’s downlines sales, and extra benefits like car plans, housing plans, travel, profit sharing etc. (Section 2.2.2f).

MLM companies however need to make their schemes more understandable and transparent to solidify the legitimacy and sustainability as the employer of choice (Appendix 2.3b).

2.4 SKILLS, ATTITUDES AND BEHAVIOURS MARKETING PROFESSIONALS SHOULD ADOPT

In implementing a differentiation strategy, key skills, attitudes and behaviours for marketers to adopt are:

2.4.1 Information and Communication Technology (ICT)

ICT skills are essential in a modern day organization, and global companies are adopting the use of the internet and technology like Enterprise Resource Planning Software (Reference 4.3.8), to enable them coordinate their operations around the globe efficiently and offer excellent services (Section 2.3.2). Marketers thus need to upgrade their skills in ICT to enable them take advantage of these technologies and relevant marketing software.

2.4.2 Competitor Intelligence Skills

“Competitive intelligence”, according to Barto, (2000) (Appendix 2.4a), “is the process and practice of gathering and disseminating information on marketplace requirements, on competitors who provide solutions for those requirements, on how well these competitors perform, and on their future strategies. And all of this information must be evaluated in the light of its implication for your company”. What this means is that marketers should adopt skills to gather and analyse competitor information to know how their competitors are faring, to enable them respond appropriately with counter actions (Section 2.2.2).

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2.4.3 Customer Relationship Management Skills

CRM has been defined by Kotler et al (2009) as “the process of carefully managing detailed information about individual customers and all customer ‘touch points’ to maximise customer loyalty”, where a touch point is defined essentially “any occasion where the customer encounters a company’s brand or product”. Marketers must ensure their staff are trained to deliver superior services to those of the competition, to both their customers and consumers. (Section 2.2.2e)

2.4.4 Communication Skills

Marketers need to develop the communication skills of their distributors, to enable them explain the benefits of the products to consumers (Section 2.3.1). Authorities are very strict about the claims MLMs can make about their products. (Appendix 2.1e).

TASK TWO WORD COUNT – 2,732

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TASK THREE

P.O. Box 9922,

Legon, Ghana.

30th April, 2012

The Middle East and African Director,

World Health and Wellness Organization,

UAE– 22112

Dear Sir,

PRESENTATION OF A DISCUSSION PAPER AT THE 1 ST MIDDLE EAST AND AFRICA CONFERENCE ON THE HEALTH AND WELLNESS NETWORK MARKETING INDUSTRY (HWNMI 2012)

I am writing in response to an advertisement I have sighted both in the dailies and on the internet, about the upcoming maiden conference on the “Increasing Healthy Lifestyles trends and its consequences for the Health and Wellness Network Marketing Industry in Middle East and Africa”, slated for June 1, 2012 at the Abu Dhabi International Conference Centre.

I am a Marketing Consultant in Ghana with a lot of insight in the Health and Wellness Network Marketing industry, having worked for many years as a Network Marketer, and I seek to share some expert knowledge and make a meaningful contribution to this upcoming conference, by sharing on the topic, “The Rise in Health Consciousness: The Competitive challenge for the Health and Wellness Network Marketing Industry in Ghana”

I have recently done a research work on this topic and found out that, the industry in Ghana is fast growing and an increasing number of multinational Health and Wellness Network Marketing companies are opening branches in Ghana to take advantage of the Ghanaian market.

As you may know, Ghana is an emerging economy in Africa, which recently in 2010 attained a middle income country status, with a large section of the population having disposable incomes. Also with the advancement in technology and the closing of the information gap, the population is becoming more health conscious, in line with the global trend.

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These factors above, amongst others have made the country a very viable market for Health and Wellness Network marketing companies, and the market is thus attracting companies from China, USA, Malaysia, South Africa etc., and there is now keen rivalry in the industry amongst the competitors.

My study was - To identify the key factors in the macro environment as pertains to the industry, of

which 5 major factors were identified;- To analyse the key drivers of the competitive challenge amongst the key players in the

industry, of which the 5 most important drivers were identified and analysed ; - To analyse the key strategic response that the companies in the industry need to adopt

to survive; as well as - To recommend the skills, attitudes and behaviours which Marketing Professionals need

to acquire and practice in order to deliver the recommended strategic response.

My findings resulting from my research are really insightful and will be very beneficial in enlightening the participants at the conference on the current industry position in Ghana.

This knowledge could be shared through a presentation that I can make during the upcoming conference, and hence I would urge that you invite me to the conference as one of your resource persons to make a presentation on how the Health and Wellness Network marketing industry in Ghana is responding the challenge of the rise in Health Consciousness of the populace.

I will forward to you my Curriculum vitae at your request and look forward to your timely response in sending me an invitation letter to the conference.

Yours faithfully,

Kofi Folson

TASK THREE WORD COUNT - 537

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APPENDIX 1 - INDUSTRY PROFILE

Over the last two decades, the political and economic situation in Ghana has been very stable, leading to the country becoming a middle income nation. The favourable investment climate, and increase in wealth of the general populace, together with the advent of the information age, has led to the growth of the Health and Wellness (and Nutrition) industry in Ghana.

Pilzer, (2007) estimated the global (Health and) Wellness Industry worldwide to be a $500 billion and defined the industry to include Vitamins, Nutritional supplements, skincare products and services, Cosmetic plastic surgery, Voluntary eye surgery, Cosmetic dermatology, Genetic engineering, Cosmetic and reconstructive dentistry, Preventative medicine, Health Savings Accounts, High deductible (wellness) health insurance, Fitness clubs (including trainers), Fitness and athletic equipment, Voluntary pharmacy, Health food products, Health food restaurants and Weight loss products, (Appendix3.2).

The Health and Wellness industry may be considered different from the traditional Health industry, in that it is mainly considered as dealing with the prevention of illness and disease, where as the traditional health industry comprises the hospitals, pharmacies, doctors and pharmaceutical companies and focuses on the treatment of symptoms of illness and curing of diseases.

Within the larger Health and Wellness industry are the Network Marketing Industry (also known as Multilevel Marketing (MLM) companies), focusing mainly on weight management products, nutritional supplements, drinks, vitamins and nutrition, personal care and skincare products, herbal products and other natural products. Clouse, (2010) estimated this industry was estimated to be $132 billion in 2010 (Appendix 2.8). They are classified as such because of the mode in which they operate, which basically employing the use of a direct selling strategy, to build a distribution network of independent distributors, through the use of a multilevel marketing system.

These companies are also unique in that, the business is usually run as part-time or home based businesses, requiring a minimum amount of capital to commence and operate. Their independent distributors are paid based on a reward system which consists of commissions, bonuses and profit sharing, dependent on the level of sales in the distributor’s network over a determined period, and also on other criteria as determined by the particular company.

In Ghana, the number of Health and Wellness Network Marketing companies have been increasing steadily over the years and there are currently about 6 main players in the industry, all being subsidiaries of multinational companies, originating from various parts of the world.

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The increasing number of these companies is partly due to their mother companies’ objective of extending their operations globally as their close-to-home markets become saturated, and also due to the income and benefits enjoyed by successful independent distributors as a result of the reward systems.

The industry thrives on the increasing health consciousness of the general populace, especially from the middle and high income earners, who have disposable income to spare and whose lifestyles are mostly sedentary as a result of their work schedules. Also consumers in general are becoming more discerning and looking for real value in their purchases and not just the perceived value.

The products marketed by these companies have also proven to be of high quality and generally efficacious in maintaining good health of the consumers, with many consumers testifying of their experiences of the healing and prevention of various illnesses. The testimonials from these consumers also serve as drivers of the industry, as they reinforce the efficacy of the products and influence more product users, as well as repeat purchases.

Globally the MLM industry is estimated to grow at 7% a year. The increase in distribution and sales volume for the companies in Ghana, as well as the increasing number of companies in the market, attests to the fact that the industry is growing steadily in Ghana leading to increased competition in the market. (Appendix 2.0).

APPENDIX 2 – EXCERPTS FROM SOURCES OF SECONDARY DATA

2.0a - Health and Wellness – Internet website www.wikinvest.com/concept/Health_%26_Wellness.....”Many factors have contributed to the increased public awareness of health and wellness. Higher rates of heart disease, increases in the incidence of cancer, record numbers of clinically obese people, and various other health scares have all drawn attention to the need for healthy lifestyle choices....”

2.0b – Moving Ahead – Article - Ebscohost Business Source Database- Jeff WellsSN: Supermarket News; Winter2011 Whole Health Supplement, p12-17, 5p....”renewed consumer interest in standards like organic, which 42% of polltakers picked as the health and wellness topic with the most consumer awareness. Specialty products like gluten-free and functional also continue to generate excitement, with benefits making their way into many leading brands....”

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2.0c – Health and Wellness Trends for Canada and the World- October 2011 – Publicationwww.ats-sea.agr.gc.ca/inter/4367-eng.htm#b- ....” Parents are increasing purchasing BFY, naturally, organic and fortified/functional

food products for their children, in order to help them maintain a healthy lifestyle.Senior consumers are highly interested in maintaining a healthy lifestyle and a certain level of vitality long into their retirement. As a result, this consumer segment spends a significant amount of money on healthier foods, exercise equipment, and supplements....”

2.0d – Consumers’ attitudes and expectations concerning Functional Food – Dissertation Germany, University of Applied Sciences of Weihenstephan. April, 2006, p23, 1p

- ……“In this sense it is not only a question of prices of Functional Food, but also concerns about novel food (e.g. in the context of the use of genetically modified ingredients), about the efficacy of Functional food and about side effects of functional ingredients that have to be counteracted by the food industry and other stakeholders.”

- ..…“They suppose to get enough vitamins and minerals from eating a varied diet.”

2.1a – Health and Wellness Product Development – Article - February 2010 – Ebscohost Business Source Corporate

Prepared Foods; Feb2010, Vol. 179 Issue 2, p19-28, 6p......”Consistent with previous surveys, consumers overwhelmingly feel that food and nutrition play the greatest role in maintaining or improving health...”......”The “2009 Prepared Foods’ R&D Trends Survey: Functional Foods” found food product developers are most comfortable incorporating ingredients such as antioxidants (67%), omega-3s (60%), proteins (53%), vitamin D (53%) and fruit-based ingredients (50%) into products....”

2.1b – Health News of Wednesday, 2 March 2011 – Ghana News Agency PublicationGhana News Agency, March 2011 Publication......”Producers of wheat flour and vegetable oil, have been asked to enrich their products with micro-nutrients to boost the health of consumers...”

....”It aimed at sensitising the participants on the benefits of patronising fortified food products and to also introduce the newly-created logo, differentiating fortified wheat flour and vegetable oil from the non-fortified. The logo is a joint initiative of the FDB, Global Alliance for the Improved Nutrition, GHS and NFFA...”

2.1c – Dietary Supplement Intake On The Rise – Article – Universal Drugstore Pharmacy Newswww.universladrugstore.com/news/general-health-news/dietart-supplement-intake-on-the-rise/

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http://www.universladrugstore.com/news/general-health-news/dietart-supplement-intake-on-the-rise/



......”According to the Center for Disease Control and Prevention (CDC), more than half of American adults use dietary supplements. According to a report by the National Center for Health Statistics, which is a part of the CDC, 53 % of US adults above the age of 20 took at least one dietary supplement a day in the period 2003-2006. In comparison, 42% took the same during the period 1988-1994.....”

2.1d – Traditional medicine practitioners petition health minister over FDB high handedness – News Itemwww.modernghana.com/new/383576/1/traditional-medicine-practitioners-petition-health.html....”The Ghana Federation of Traditional Medicine Practitioners has petitioned the health minister, accusing the Food and Drugs Board of heavy handedness. The traditional medicine practitioners say the FDB has refused to register their products over the past two years because of some new tests it wants them to run.....”

2.1e – FDB revokes licence of two Chinese companies – Ghana News Agency Publication – 16-12-2010Ghana News Agency Publication – 16th December 2010......”The Food and Drugs Board on Thursday (16th December 2010) said it had revoked the registration licences of two Chinese companies for engaging in activities that were in contravention with the Good and Drugs law. They are Tasly Ghana Limited and Winalite Ghana Limited. A statement issued in Accra by the Board said from its investigations it had become necessary to ensure the protection of the health and safety of the public.The FDB through its Post Market Surveillance activities had noted some regulatory infringements in the activities of Tasly and its distributors. The statement explained that food supplements were registered by the FDB under the condition that no therapeutic claims for treatment, prevention and mitigation and cure for disease could be made.....”......”The statement said WInalite Ghana Limited , on the other hand was engaged in clandestine sale and distribution of Love Moon Anion......for the treatment of certain chronic diseases.....for which the products were not approved...”

2.1f – The History and Growth of Network Marketing – 2012 ©Michael S. Clouse - Articlewww.nexera.com/memebers/mlm-history.htm.....” This week 175,000 people will find a new way to increase their financial security and personal freedom. They will join more than 57 million others who are earning a living, full- or part-time through Network Marketing”.

...”Indeed, if Future Choice were revised using the current 2010 global data, it would read: This week more than 144,000 people will find a new way to increase their, financial security and personal freedom. They will join more than 87 million others who are earning a living, full or

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http://www.modernghana.com/new/383576/1/traditional-medicine-practitioners-petition-health.html



part-time through the $132 billion Network Marketing industry. A massive 30 million distributors joined worldwide in the past four years!....”

2.1g – Direct Selling Organization Membership Directory Search Results (Nutritional supplements)www.directselling411.com/forms/CompanyFormPublicMembers/search?action=find.....”The following 68 DSA (Direct Selling Association) members match your search criteria....”

2.1h – Multi-level marketing – Publication en.wikipedia.org/wiki/Multi-level_marketing....”Other terms for MLM (Multi-level marketing) include pyramid selling, network marketing, and referral marketing....”

.....”MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes...”

.....”Many pyramid schemes try to present themselves as legitimate MLM businesses....”

2.2a – Multilevel Marketing: what’s the catch? – Journal publicationEmerald Group Publishing Ltd, Journal of Consumer Marketing-Volume 13 issue 4.....”MLM firms sell their goods not through a conventional distribution system and retail outlets, but through individual people, selling to their friends, acquaintances and strangers......”.....”You would be making money out of them, and making money out of friends is not, in our society or most others, acceptable behaviour.......”

2.2b – How to Evaluate MLM companies – Internet website articlewww.firstclassmlm.com/2007/12/07/how-to-evaluate-an-mlm-company/......”if a company selects products that are valuable to consumers, then distributors will enjoy selling them because the consumers will be enthusiastic about the products. It also makes it easier to recruit new people because those who consumer the product will want to become distributors. A valuable product is the backbone of a successful company because it’s what makes a consumer’s life better. Only valuable products cause a consumer to keep purchasing them....”

......”Also, if the company has a commission plan that pays out too much money to distributors, the company can go bankrupt......”

......”The MLM training is what converts a distributor into someone who is effective in MLM. This isn’t any different than any other organization in the world. Those organizations (sports teams, military, corporations) who train their people better than any other always do better than less-trained organizations.....”

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http://www.firstclassmlm.com/2007/12/07/how-to-evaluate-an-mlm-company/



2.3a – Generic Strategies – Michael Porter (1980)www.marketingteacher.com/lesson-store/lesson-generic-strategies.html#.....“Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin.....”......“The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales....”

2.3b – The influence of MLM companies and agent attributes on the willingness to undertake multilevel marketing as a career option among youth – Journal PublicationEmerald Group Publishing Ltd –Journal of Research in Interactive Marketing-Volume 5 issue 1....“MLM companies need to make their schemes more understandable and transparent to solidify the legitimacy and sustainability as the employer of choice...”

2.4a – Competitive Intelligence (CI) – Encyclopaedia of Business (2000)www.enotes.com/competitive-intelligence-ci-refence/competitive-intelligence-ci.....“is the process and practice of gathering and disseminating information on marketplace requirements, on competitors who provide solutions for those requirements, on how well these competitors perform, and on their future strategies. And all of this information must be evaluated in the light of its implication for your company......”

APPENDIX 3 – PRIMARY DATA COLLECTION AND FINDINGS

3.1 DATA COLLECTIONDue to time constraints, a convenience sampling method was used in gathering the primary data, where executives of MLM’s in Ghana were interviewed, based on a pre-prepared interview guide.

3.2 SAMPLE SIZEThere were 20 respondents selected from 4 industry players

3.3 INTERVIEW GUIDE1. How would you describe the level of Health consciousness of the Ghanaian population? 2. What challenges do you face with the government in your industry?3. How is the industry evolving in terms of competition?4. Who are your main competitors in your industry?5. What do you consider the key drivers of competition? 6. What would you say accounts for the increase/decrease in the number of competitors?7. How would you rate the loyalty of your customers/distributors8. What are some of the challenges faced with the sale of your products?9. How do you see the future of the industry?

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http://www.enotes.com/competitive-intelligence-ci-refence/competitive-intelligence-ci

http://www.marketingteacher.com/lesson-store/lesson-generic-strategies.html


3.4 DATA ANALYSISThe answers to the questions were summarized and filled out on a sheet by the interviewer, and the various answers to the questions were grouped and later analyzed.

3.5 SUMMARY OF RESEARCH FINDINGS

1. Respondents were of the general view that people are getting more Health conscious in Ghana, In line with the global trend. This was attributed to the increase in global knowledge, the availability of the internet, the increase in activities of MLMs in Ghana leading to the proliferation of nutrition supplements and herbal products, a drive by health institutions to promote healthy food products

2. Challenges within the industry centred on the difficulty of selling products without making any curative claims, even though they knew their products had the ability to cure diseases. There was also the case of some products being culturally unacceptable to the authorities, and hence they couldn’t be registered.

3. Ghana as an emerging economy in Africa, was identified as a good investment destination and hence was the target of many multinationals wanting to expand their activities into Africa, leading to the competition is growing each year. They identified Herbalife which established its office in Ghana 2011 and GBG which started some operations in the country in 2011 and is currently establishing its offices.

4. Key competitors in the industry were identified as Tianshi, Forever Living, Edmark, Herbalife, GNLD, GBG

5. Areas identified as to what was driving the competition included compensation plans, internal competitions for distributors to win prizes, extra benefits- like car plans etc, quality product packaging, product efficacy, active ingredient content in the product s, product base, training support

6. Competition was seen as increasing as a result of the consumer population becoming more and more receptive to their products in their bid to live healthy lifestyles, and also the good income being generated by some distributors, and the companies being successful in rapidly expanding the distribution of their products and making good sales of their products and profit.

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7. Customers were generally classified as being disloyal, except for those who started making good money as a result of being able to build their downlines. Most said about 50% of their customer base was dormant. Also the rate of repeat purchases by consumers is not very high, though acceptable.

8. Challenges faced with sales included, the difficulty in not being able to make specific curative claims, and also the difficulty in getting testimonials for the efficacy of the products. Price fluctuations resulting from the foreign exchange depreciation, was also key in destabilizing the prices of products at short intervals.

9. The general consensus was that the business was still in the growth phase in Ghana, and they expected more companies to enter the market in the next 3 years, and also the consumer patronage of the products to grow.

APPENDIX 4 – REFERENCES

1. Books:

Clouse, M. (2006) Future Choice: Why Network Marketing May Be Your Best Career Move. United States, Nexera

Kotler, P. and Keller, K. (2009) Marketing Management. (13th Edition). United States, Prentice Hall.

Pilzer, P. (2007) The New Wellness Revolution: How to Make a Fortune in the Next Trillion Dollar Industry. (2nd Edition). United States, John Wiley & Sons.

Porter, M. (1980) Competitive strategy: Techniques for Analyzing Industries and Competitors. United States, Free Press.

2. Articles, Publications, Journals:

Agri-Food Trade Service (2011) Health and Wellness Trends for Canada and the World- October 2011 Agrifood Trade service website[online] Available from: http://www.ats-sea.agr.gc.ca /inter/4367-eng.htm#b [Accessed 9th May 2012]

Anon (2010) FDB revokes licence of two Chinese companies. Ghana News Agency Publication Thursday 16th December 2010

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http://www.ats-sea.agr.gc.ca/


Anon (2011) Producers of wheat asked to fortify food products with nutrients. Ghana News Agency Publication Wednesday 2nd March 2011.

Anon (2012) Products GNLD International LLC [online] Available from: http://www.gnld.com.au/products.aspx?STORE_ID=8&NAV_CATEGORY_ID=3533&CATEGORY_ID=3536 [Accessed 9th May 2012]

Anon (2012) Traditional medicine practitioners petition health minister over FDB high handedness Modern Ghana website [online] Available from: http://www.modernghana.com/new/383576/1/traditional-medicine-practitioners-petition-health.html [Accessed 9th May 2012]

Bianco, D.P. (2000) Competitive Intelligence (CI) Encyclopaedia of Business ©2000 United States, Gale Group

Brian Bloch, (1996) “Multilevel marketing: what’s the catch?”, Journal of Consumer Marketing, Vol. 13 Iss: 4, pp. 18 – 26

Clouse, M. (2012) The History and Growth of Network Marketing Nexera-LLC[online] Available from: www.nexera.com/memebers/mlm-history.htm [Accessed 9th May 2012]

Direct Selling Association (2012) Direct Selling Organization Membership Directory Search Results DSA website [online] Available from: http://www.dsa.org/forms/CompanyFormPublicMembers/search?action=find

Edmark International (2010) Edmark Ghana Edmark website[online] Available from: http://ghana.edmarker.com/

Forever Living Products (2007) Forever Foreverliving website [online] Available from: http://flpgh.com/forever/ [Accessed 9th May 2012]Free-press-release (2011) GBG brings Health and Wealth to Ghana, Africa! Free Press Release website [online] Available from: http://www.free-press-release.com/news-gbg-brings-health-and-wealth-to-ghana-africa-1302809890.html [Accessed 9th May 2012]

Hallnet Ltd. (2012) Welcome to Herbwisdom. Herbwisdom website [online] Available from: http://www.herbwisdom.com/ [Accessed 9th May 2012]

Herbalife International of America (2012) Herbalife Herbalife website [online] Available from: http://www.herbalifeghana.com/ [Accessed 9th May 2012]

Jeremyc (2011) Dietary Supplement Intake On The Rise. Universal Drugstore Pharmacy News[online] Available from: www.universladrugstore.com/news/general-health-news/dietart-supplement-intake-on-the-rise/ [Accessed 9th May 2012]

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http://www.herbalifeghana.com/

http://www.herbwisdom.com/



http://ghana.edmarker.com/

http://www.dsa.org/forms/CompanyFormPublicMembers/search?action=find

http://www.nexera.com/memebers/mlm-history.htm



http://www.gnld.com.au/products.aspx?STORE_ID=8&NAV_CATEGORY_ID=3533&CATEGORY_ID=3536

http://www.gnld.com.au/products.aspx?STORE_ID=8&NAV_CATEGORY_ID=3533&CATEGORY_ID=3536


Joyce Koe Hwee Nga, Soo Wai Mun (Nadiah Soo), (2011) “The influence of MLM companies and agent attributes on the willingness to undertake multilevel marketing as a career option among youth”, Journal of Research in Interactive Marketing, Vol. 5 Iss: 1, pp.50 – 70Marketing Teacher Ltd (2012) Generic Strategies – Michael Porter (1980) Marketingteacher website[online] Available from: http:// www.marketingteacher.com/lesson-store/lesson- generic-strategies.html# [Accessed 9th May 2012]

Menrad, K. and Sparke, K. (2006) Consumers’ attitudes and expectations concerning Functional Food. Dissertation, University of Applied Sciences of Weihenstephan, Germany

Rahavi, E.B. and Kapsak W.R. (2010) Health and Wellness Product Development Ebscohost Business Source Corporate Database Available from: http://web.ebscohost.com [Accessed 9th May 2012]

Sales, T (2012)How to Evaluate MLM companies Firstclassmlm website[online] Available from: http:// www.firstclassmlm.com/2007/12/07/how-to-evaluate-an-mlm-company/ [Accessed 9th May 2012]

Tianshi Ghana (2008) Tiens office Tianshi website[online] Available from: h ttp://www.tiensoffice.blogspot.com/search/label/Tianshi%20Ghana [Accessed 9th May 2012]

Wells, J. (2011) Moving Ahead. Ebscohost Business Source Corporate Database Available from: http://web.ebscohost.com [Accessed 9th May 2012]

Wiki vest (2012) Health and Wellness Wiki vest website [online] Available from: http://www.wikinvest.com/concept/Health_%26_Wellness [Accessed 9th May 2012]

Wikipedia (2012) Enterprise resource planning Wikipedia website[online] Available from: http://en.wikipedia.org/wiki/Enterprise_resource_planning [Accessed 9th May 2012]

Wikipedia (2012) Multi-level marketing Wikipedia website[online] Available from http://en.wikipedia.org/wiki/Multi-level_marketing [Accessed 9th May 2012]

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http://en.wikipedia.org/wiki/Multi-level_marketing

http://en.wikipedia.org/wiki/Enterprise_resource_planning


http://web.ebscohost.com/

http://www.tiensoffice.blogspot.com/search/label/Tianshi%20Ghana

http://www.firstclassmlm.com/2007/12/07/how-to-evaluate-an-mlm-company/



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