operational issues in network marketing
DESCRIPTION
Discusses various Issues encountered while establishing / running a Network / Direct Marketing CompanyTRANSCRIPT
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to the Presentation of
“Operational Issues to be
Issues in NM Company Presented by Pankaj L Shah
“Operational Issues to be considered by Network Marketing
Companies”With a special focus on Rural Markets
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3. Time
HELP !
STARTING A BUSINESS INVOLVES…...
Issues in NM Company Presented by Pankaj L Shah
1. Capital3. Time
2. Risks
5. Infrastructure4. Business Skills
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Rs 100Rs 100
CONVENTIONAL MARKETINGCONVENTIONAL MARKETING
TotalTotalRs 450Rs 450
Issues in NM Company Presented by Pankaj L ShahManufacturer
ADDADDRs 300Rs 300
Retailer(Plus Ads)
ADDADDRs 50Rs 50
Wholesaler
You
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1. LittleCapital
3. Start 4. Immediate
WHY NETWORK MARKETINGWHY NETWORK MARKETING
Issues in NM Company Presented by Pankaj L Shah
2. NO Risks3. Start
Part-Time4. Immediate
Income
5. Anyone can do it6. You
Can Start at Home
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TraditionalDistributionTraditionalDistribution
Network Network Distribution
ManufacturerManufacturer
WholesaleWholesale
40
30
Manufacturer 40
Issues in NM Company Presented by Pankaj L Shah
Client: Quality Products at affordable prices & convenience of time
Consultant: Quality Products at wholesale prices and an income
opportunity for financial freedom!
RetailRetail
ConsumerConsumer
30
30
100
Consultant
Consumer
60
100
66
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Birth of Network Marketing
Network Marketing is not some fad but a scientific ,organized, proven way of doing business worldwide.
Some of the facts about network marketing:• Started in 1941 in USA and has evolved into an industry
world overNetwork Marketing is well entrenched in over 80
Issues in NM Company Presented by Pankaj L Shah
• Network Marketing is well entrenched in over 80countries
• Many NM companies exhibit rapid growth in AnnualTurnover [20% to 300%]
• Network Marketing is 80 bn. Dollar Industry Worldwide• 5000 Active Network Marketing companies in 1995• The number expected to touch 30000 in 2010.
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Why does one do Network Marketing
• Extra Income
• Lifestyle
• Time Freedom
• Meeting New People
• Personality Development
Issues in NM Company Presented by Pankaj L Shah
• Time Freedom
• Financial Freedom
• Own Business
• Social Cause
• Early Retirement
• Leaving a Legacy
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Population vis a vis MLM Ratio
Percentage of Population doing MLM
Canada
Australia3.4%
USA3.8%
India0.7%Thailand
5.0%
Issues in NM Company Presented by Pankaj L Shah
4.2%
S Korea3.55%
Japan2.0%
Taiwan12.2%
Malaysia9.0%
USA Australia Canada S Korea JapanMalaysia Taiwan Thailand India
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Indian NM Potential
• According to the chart the number of people in the industry invarious countries one will observe that roughly3% of the populationof those countries are involved in MLM.
• For India to reach 3% of its population it would mean 30 million
Issues in NM Company Presented by Pankaj L Shah
• For India to reach 3% of its population it would mean 30 millionpeople even if we take 3% of middle class which roughly 350 millionpeoples it means over 10 million people will be involved in MLMwhich is 10 times the present amount of people involved in theindustry.
• Which should also lead to a 10 times increase in the turnover whichwill be close to3 billion dollars or roughly 14,000 crs.
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Direct Marketing
• Plus Side (+):• Reaches Target audience: The
sales force on foot does end upreaching the right targetaudience either by design or
• Minus side (-):• Office time of salesman and
target customers overlap: Thisis usually a problem sinceSundaysend up becomingthe
Issues in NM Company Presented by Pankaj L Shah
audience either by design ordefault.
• Home-specific penetration: Theright homes are also usuallytargeted.
• One-to-One, demo-based salespossible.
Sundaysend up becomingtheeffective working days.
• Time consuming sales process:The process is tedious andcertainly sales consuming.
• High wage bill of sales army:The company ends upcommitting heavy financialresources on the army.
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Network Marketing
• PlusSide (+):• Reaches Target
audience
• Minus side (-):
• Vertical Product Focus
Issues in NM Company Presented by Pankaj L Shah
• Parallel Income Opportunity
• High Customer Loyalty
• No Physical Presence
• Product Pricing inflated artificially.
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Company Formation Issues
• Company Formation – Directors, availability of Signatories
Issues in NM Company Presented by Pankaj L Shah
• VAT registration ? In how many States?
• Bankers ? ICICI vs SBI
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Product Issues Product Selection• Tangible / Unique or Branded / Consumable / Positioning• Products like Insurance policies cannot be selected since firstly IRDA prohibits
sale through NM companies and secondly there is a possibility of delayedcommission distribution and last but not the least high risk of rejection due to noncompliance
Product Sales• Through physical outlets
Issues in NM Company Presented by Pankaj L Shah
• Through physical outlets• Through Website / Payment Gateway % borne by ?
Product Distribution• Kit compilation & logistic• Courier service not available in remote areas• In order to be sent by Post products need to be packaged by stitching a cloth bag
around it • Octroi, if applicable to be paid by ?
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Plan & Payment Issues• NM PlanBinary / Generation / Matrix / Hybrid• BSM - Multilingual• Commission payoutWeekly / Monthly
Issues in NM Company Presented by Pankaj L Shah
Weekly / Monthly• Cheques / Card Transfer / Smart Card• Cheque delivery Cheques of ICICI takes 15 days to clear in a Cooperative Bank • All do not have a PAN No to issues TDS Certificate?• Repurchase Coupons, if any can be used ?
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Network Development
• Plan Meeting
• Success Seminars
• Franchisee Outlets to service interiors
Issues in NM Company Presented by Pankaj L Shah
• Franchisee Outlets to service interiors
• Customer Care
• Well Developed Educational Training for further duplication
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An Ideal NM is An Ideal NM is A Synergistic AssociationA Synergistic Association
Issues in NM Company Presented by Pankaj L Shah
With Those Who Think & Dream With Those Who Think & Dream DifferentlyDifferently