OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST

CENTURY

presents

BY LARRY CHONKO, PH.D.THE UNIVERSITY OF TEXAS AT ARLINGTON

There Is More to Direct Selling Than Meets the Eye

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Direct Selling: Historical Perspective

Bringing Goods and Services and Value TO the Customer

•Prehistoric trade followed naturally defined routes – geography and distances were major hindrances

•Early direct sellers developed accessible routes to barter pottery stone, weapons, agricultural products

•Early civilizations (Egypt, Syria, Babylonia) involved in direct trade with each other

•Caravans connected Greece to Asia

•Code of Hammurabi (2000 B. C.) protected the integrity and welfare of direct sellers

•Merchants in W. Europe witnessed great advances in road building

•“Colporteurs” of France sold flowers direct to customers

•Early America witnessed the “Yankee Peddler”

The Tradition Continues . . .

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Characteristics of Direct Selling

Direct Selling involves:•interpersonal communication between two individuals•an exchange of information•two or more individuals who physically interact in face-to-face communication

Direct Selling (at the basic level) does not require:•mailed catalogs, telemarketing, direct response•advertising, infomercials, and the like (although these maybe used as support for direct sellers)

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

1. Direct Selling is not an industry, as defined by traditional standards of companies that are in the business of marketing similar products and services.

2. Direct Selling is not just selling. Direct Selling companies engage in all business functions in order to successfully market products around the world.

3. Direct Selling is a channel of distribution. It is a method of delivering products and services to customers directly in their homes and workplaces.

Direct Selling Overview

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

The Visible Part of Direct Selling

What you see is not always what you get

•Whether party plan, network or one-to-one, the visible part of direct selling is best thought of as a distribution strategy, but there is much more . . .

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

The Visible Part of Direct Selling

Direct Selling Independent Contractors•Promote products to their customers•Recruit and train new independent contracts•Practice customer relationship management (CRM)•Seek to know customers’ needs and wants •Know products•Sell products to customers•Fits calls to customers•Deliver products to customers•Engage in customer service

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Benefits of Direct Selling

• flexibility - not constrained to location or by time

• occurs at places and times most convenient to buyer

• buyers can be thoroughly educated about products/services through actual demonstration

• face-to-face communication means all communication senses used

• potential buyers can explain their needs in detail

• quantity and quality of information that can be exchanged

• sales presentations can be customized

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Six Kinds of Direct Sellers

1. Ultimate users - never sells a product, signs up for wholesale or discount price

2. Short timer - has specific objective (e.g. Christmas money, specific purchase) - some do this several times per year

3. Income needed, limited time - supplemental income, 5-10 hours per week

4. Career entrepreneur - prime income source, 7 days per week

5. Socialites - enroll for recognition given for effort, not income earning opportunity

6. Socially conscious - believe so strongly in product’s value to society, they want to tell others

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Direct Selling• Is invisible - no products or store shelves that competitors can monitor• Has no specific public locations (a few have “kiosks”)• Have no expense of gaining distribution through retailers• Offer opportunities for entrepreneurial people to own business• Sets its own growth projections as it provides valued products and personalized

service• Offers the option of selling full-time or part-time• Attracts a large number of small business entrepreneurs• Offers customers the chance to touch, taste, see and judge products in a comfortable

atmosphere• Offers a unique opportunity as little capital and experience are required• Can grow faster than traditional retailing• Requires relatively little capital for start-up• Spends little on mass media• Offers diverse product lines

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

Issues for Direct Sellers• How can direct selling become contemporary but remain friendly

• How can direct sellers make their service a unique selling point when retail products are similar in quality price

• How can the benefits of buying from direct selling be most effectively communicated?

• How can the image of direct selling be improved with the public? The press? Legislators?

• How to provide added value relating to product knowledge, product benefits, and enjoyment?

• How can direct sellers use technology to improve service? Develop customer profiles? Segment markets?

• How can direct sellers use technology to improve seller/customer relationships? (E.G. Internet, intranet)

OVERVIEW OF DIRECT SELLINGDIRECT SELLING INTO THE 21ST CENTURY

There Is More to Direct Selling Than Meets the Eye

The Less Visible Activities of Direct Selling