Consumer Behavior: Multi Level Marketing

Consumer Behavior Multi Level merchandisingConsumer is considered as the spirit element which decides the exiting of a vocation firm. They atomic number 18 the ones who misdirect and use ingatherings and operate (Longman Dictionary of Contemporary English). Understanding consumer appearances, consumer buying form and factors affect consumer buying behavior which may bring number of benefits is one of the most grand tasks confronting e genuinely competing worry. That is why companies spend much(prenominal) a lot of silver in understanding behaviors of their consumers.This study aims to identify perceptions and key factors affecting to consumer behavior towards multi- take merchandising companies and their products so that marketers tidy sum adapt and improve their merchandise campaigns and marketing strategies to more(prenominal) effectively reach the consumer.PROBLEM STATEMENT guide on interchange business has a register of dozens of years in the field and nearly ten years of operation in Vietnam market and more than four years from the issuance of Law on Competition (2004) and ordinance 110 on Multi- aim Marketing Management, it is still rattling difficult for distri scarcelyors of multi-level marketing companies to sell products or to invite spate to collaborate with them as an self-supporting business avoucher of the phoner because of negative perceptions of consumers on order interchange companies and their products. This obtains things to be very difficult for doing this kind of business in Vietnam.In addition, together with the entrance of many refreshfully comers into Vietnam market in recent years, the competition in the sedulousness becomes not as harsh as ever before.Being recognized as born in the advanced 1800s when traveling gross revenuemen created trained gross sales organizations with hundred of salesmen to sell various products in America, study exchange is considered as a dynamic and vibrant industry offer ing occupation to more than 62 million breakaway sales representatives. According to entropy from World Foundation of condition Selling necktie (WFDSA), worldwide retail sales by its members accounted for more than US$114 one thousand thousand in 2007.Although direct change industry has a long history and obtained very good forces with a great authorization of growth, as context of many experts, it is not easy for direct sell companies to enter a new market and gain the good perception of local consumers.In Vietnam, direct selling appe bed ten years ago (in 2000) but in that respect still ar very negative perceptions of consumers on this kind of business and its products. This makes things seem to be very difficult for doing this kind of business in Vietnam.RESEARCH OBJECTIVESPrimarily, this study aims to take a commonplace encounter of perceptions of consumer towards multi-level marketing companies and their products in relation to the factors that effect consumer s buying finis. The main problem is to get word out what the most important factors consumers attain in mind when buying or not buying products and/or agreeing or ref employ to become a distributor of a multi-level marketing company. Specific anyy, the re seem objectives include the followingsTo define the oc veritable situation of multi-level marketing business in VietnamTo identify factors that confine diverge on the consumer behavior towards multi-level marketing business in VietnamTo describe the behaviors of consumers in HCMC and Mekong Delta toward multi-level marketingTo recommend resolutenesss for increasing good perceptions of consumer for marketer working in multi-level marketing enterprises.THE SCOPE AND LIMITATION OF RESEARCH STUDYThe research in effect(p) focuses on studying the literature of the consumer behavior, and the survey is conducted scarcely in Ho Chi Minh City the economic hub of the South, and some sylvan aras in Mekong Delta locality much(pren ominal) as Tien Giang, Can Tho and Ca Mau provinces which represent rural areas in the South of the country. Consumer behaviors of such(prenominal) regions may not represent the general behaviors of consumers nationwide.Due to the lack of official data of multi-level marketing industry and barrier of getting the confidential intrinsic business data from multi-level marketing companies, the data used in this research may not be enough enough.Besides, due of the limitation of time and funds, the survey shall be carried out only(prenominal) with small sample size.THE POSITION OF THE RESEARCH COMPARED TO THE AVAILABLE KNOWLEDGE AND occasion WORKSMulti-level marketing or direct selling is till a very young industry in Vietnam. thither is no creator research or survey on this business so far. There are so many vague understandings some the industry in the perceptions of Vietnamese consumers. Hence, it is expected that this research pass on contribute a very first premise for further study for a general picture of multi-level marketing industry in Vietnam market.THE RELEVANCE OF THE RESEARCHThe author of this identify is now working as Mekong Delta Regional Sales Supervisor in Amway Vietnam Company extra, a worlds leading multi-level marketing company. Therefore, it is feasible for me to carry the survey, realize data and have enough information for making analysis.THE RESEARCH methodologyThis is a combination of quantitative and qualitative research approaches, the research entrust access all potential writers and bureau to view data and information such as sight and synthesis of secondary data, questionnaire design and pilot survey to ensure the maximum clarity and effectiveness of the questions, face-to-face interviews using questionnaire, online survey using questionnaire and accepting with some experts or stakeholders of multi-level marketing companies.CHAPTER I LITERATURE REVIEW1.1 Definition of consumer behaviorConsumer behavior is The study of individuals, groups, or organizations and the kneades they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.The action a person takes in purchasing and using products and services, including the psychic and neighborly processes that precede and follow these actions. The behavioral sciences help answer questions such as why people choose one product or patsy over an separate how they make these choices, and how companies use this knowl contact to depict range to consumers.Belch and Belch define consumer behavior as the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires.1.2 Consumer behavior and marketing mix1.3 Types of consumer lasts1.3.1 Habitual close makingHabitual conclusiveness making involves no termination a s such. Habitual conclusions occur when there is very low involvement with the leverage and result in repeat purchasing behavior.A exclusively familiar decision does not even include consideration of the do-not-purchase preference. Noticing that the product or service is needed go away cause the consumer to purchase some of the like one in the next visit to such product or service supplier. The consumer will not even consider the possibilities of not transposition the product or service or purchasing another brand.1.3.2 Limited decision makingLimited decision making covers the middle cause amid habitual decision making and extended decision making. In its simplest form, limited decision making is very similar to habitual decision making. No other alternative may be considered, except, possibly, a very limited examination of a do-not-buy option.Limited decision making in addition occurs in response to some emotional or environmental needs. Consumers may also evaluate a purc hase in terms of the echt or anticipated behavior of others.1.3.3 encompassing decision makingExtended decision making is the response to a very high level of purchase involvement. An extensive internal and external information search is followed by a complex evaluation of multiple alternatives. After the purchase, uncertainty to the highest degree its correctness is likely and a thorough evaluation of the purchase will take place.Relatively few consumer decisions reach this extreme level of complexity. However, products such as cars, houses and personal computers are frequently purchased as a result of extended decision making.1.4 Consumer purchase decision processThe purchase decision process is the stages a buyer passes through in making choices about which products and services to buy which includes five stages which are problem recognition, information search, alternative evaluation, purchase decision and post-purchase behavior.Post-purchase behavior Value in consumption or usePurchase decision Buying valueEvaluation of alternatives Assessing valueInformation searchSeeking valueProblem recognition Perceiving a need1.4.1 Problem recognitionThe consumer decision process unhorses with the recognition that a problem exits. The recognition of a problem is the result of a variant between a desired state and an actual state which is adapted to arouse and activate the decision process. Without recognition of a problem, there is no need for a consumer decision.If the consumer resolves the problem by recalling one satisfactory solution and purchasing that product or service without an evaluation, this is termed habitual decision making. some(prenominal) consumer purchases, particularly of frequently purchased items, such as detergents, soft drink and petrol, are of this nature. Other problems may be resolved by recalling several(prenominal) potential solutions and choosing from among them, perhaps using some additional information, such as current prices. A great many consumer purchases are the results of such limited decision making. Problems that require thorough information searches, both internal and external, the evaluation of several alternatives along several dimensions, and considerable post-purchase evaluation, result in extended decision making.1.4.2 Information searchOnce the problem has been recognized, an information search is undertaken to sequestrate an effective solution. The information search may be extensive, very truncated or somewhere between.1.4.3 Evaluation of alternativesAfter the information has been gathered, which allows the consumer to determine and correspond the relevant and feasible alternatives, the decision so-and-so be made.1.4.4 Purchase decision1.4.5 Post-purchase behaviorPost-purchase behavior is a process occurs after purchase or acquisition use, evaluation, disposal and repurchase behavior. These reflect the satisfaction of the consumers relating to the usage of such product and/or service. Co nsumer satisfaction is influenced by product performance, the purchasing process and consumer expectations.1.5 Major factors influencing buying behavior1.5.1 Internal influencesPerception Perception is precise to the decision process and is also an internal phenomenon that is highly influenced by the internal influences. Perception is also influenced by external factors such as alteration of groups, situations and marketing efforts.Learning and fund The result of learning is memory and memory also has an influence on the learning process. There are cardinal kinds of memory which are short-term and long-term ones which relate memory to brand image and product positioning.Motives, personality and emotionMotives are the forces that initiate and direct consumer behavior. Motives may be either physiologically or psychologically based. In developed countries, most consumer behavior is guided by psychological motives. temporary hookup motives direct behavior towards objectives, persona lity relates to characteristic patterns of behavior personality is whackingly considered to reflect a consistent pattern of responses to a variety of situations, although the share played by the situation itself must also be recognized.Emotions are the feelings or affective responses to situations, products, advertisements and so forth. They affect information processing and preferences, and are becoming of increasing interest to marketers. sides Attitudes are formed out of the interrelatedness between personal experience and lifestyle and the factors that help shape lifestyles. Attitudes are composed of 3 functions which are cognitive, affective and behavioral.1.5.2 External influencesDemographics and lifestylesThe household write groupSocial statusCultureValues1.6 Attitude1.6.1 The three components of attitudeBeliefs cognitive component of consumer attitudeAffect emotive component of consumer attitudeIntention behavioral intention component of consumer attitudeBeliefs cogniti ve component of Consumer AttitudeA consumer tenet is a psychological connection between a product, brand, outlet, action, etcetera and an attribute or feature (and associated benefits) of suchBeliefs are cognitive (based on knowledge, experience, perception, etc.)The stronger the association of features or attributes (and association benefits) with the products, brand, outlet, action, etc., the stronger the consumers beliefBrand equity is a measure of the strength of the association in the marketplace.Strategies to change consumer beliefsPositioning by product attributes, consumer benefits, intangible attributes, price, application, brand user, renown recognition, brand personality, product category, association with competitors country or geographic area, etc.1.6.2 The Fishbein modelsAffective responses to a brand consist ofThe strength or impuissance of a consumers beliefs about the brand and its attributesThe consumers evaluation of or feelings toward those attributes.WhereA = Attitude towards a brandBi = Belief that the brand possesses attribute iEi = Evaluation or desirability of attribute iI = charge 1,2, , mThe Fishbein ModelBelief-important Model surmise of Reasoned ActionTheory of TryingTheory of Planned BehaviorCHAPTER II RESEARCH methodology2.1 Methods of studying consumer behaviorqualitative research is a method of interrogative sentence appropriated in many different academic disciplines, traditionally in the social sciences, but also in market research and further contexts.Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern such behavior. The qualitative method investigates the why and how of decision making, not just what, when, where. Hence, small but focused samples are more frequently needed, kinda than large samples.2.2 Sources of information2.2.1 Internal information2.2.2 External informationTwo problems the unremarkably arise with secondary data are they do not completel y fit the problem and they are not totally accurate.2.3 Data collection2.2.1 Primary data2.2.2 Secondary data2.4 Data analysisCHAPTER ternary INTRODUCTION OF DIRECT SELLING BUSINESSDefinition of direct sellingThe concept of direct selling is based upon person-to-person relationships. The seller goes to the consumer rather than the consumer go to a shop. In todays fast changing society, where more people work and shopping patterns have altered, this type of shopping not only provides consumers with accessibility to a wide range of products but is also convenient.2.2 Benefits of direct selling2.2.1 Benefits from distributor edgeDirect selling offers opportunity for individuals who indispensableness to earn an income and build a business of their own. It offers an alternative to traditional employment for those who desire a flexible income earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular parttime or full tim e employment.The cost for an individual to start an independent direct selling business is typically very low. This means it provides benefits for investors to repeal a significant risk of loss. This also means anyone can do it. Opportunities are offered to any ones who desire, particularly to those cannot or harshly compete for a job opportunity. There are no required levels of education, experience, financial resources or physical condition in direct selling. People of all ages and from all backgrounds have succeeded in direct selling. Usually, a modestly priced sales fit out is all that is required for one to get started, and there is little or no required armory or other cash commitments to begin.Direct selling can provide to distributors a good way to meet and socialize with people. For those who want to achieve a victory based on the level of their efforts, direct selling is a good way. Set your own goals and determine yourself how to reach them since earning is in proporti on to your own efforts. The level of success you can achieve is limited only by your willingness to work hard.Moreover, distributors can receive training and support from other distributors who works with them, and from the company they counter.2.2.2 Benefits from consumer edgeConsumers benefit from direct selling because of the convenience and service it provides, including personal deduction and ex conceptionation of products, home delivery, and generous satisfaction guarantees and serves consumers with a convenient source of quality products.2.2.3 Benefits from enterprise edgeDirect selling provides a transpose of distribution for companies with innovative or distinctive products not readily accessible in traditional retail stores, or who cannot afford to compete with the vast advertising and promotion costs associated with gaining space on retail shelves. Direct selling enhances the retail distribution infra twist of the economy.2.3 Types of direct sellings compensation plan 2.3.1 Single-level compensation planSingle level compensation plan means a representative/distributor is compensated based solely on ones own product sales.2.3.2 Multi-level compensation planIn a multilevel compensation plan, distributors are compensated based not only on ones own product sales, but on the product sales of ones down-line.multilevel marketing is an important component of the Direct Selling industry. It is also referred to as network marketing, structure marketing or multilevel direct selling, and has prove over many years to be a highly self-made and effective method of compensating direct sellers for the marketing and distribution of products and services at once to consumers.Differences between multilevel marketing and pyramid scheme2.4.1 Multilevel Marketing modelMultilevel marketing is a popular way of sell in which consumer products are sold, not in stores by sales clerks, but by independent businessmen and women (called distributors), usually in clients hom es. As a distributor you can set your own hours and earn money by selling consumer products supplied by an established company.In a multilevel structure you can also build and manage your own sales-force by recruiting, motivating, provision and training others to sell those products. Your compensation then includes a percentage of the sales of your entire sales group as well as net income on your own sales to retail customers. This opportunity has made multilevel marketing an attractive way of starting a business with relatively little money.And the most important statement should be emphasized is that multilevel marketing is a legitimate income opportunity for everybody. Anyone can do it.2.4.2 gain schemePyramid schemes are illegal scams in which large add up of people at the bottom of the pyramid pay money to a few people at the top. Each new participant pays for the destiny to advance to the top and profit from payments of others who might join later.For example, to join, you might have to pay anywhere from a small investiture to thousands of dollars. In this example, $1,000 buys a position in one of the boxes on the bottom level. $ viosterol of your money goes to the person in the box directly above you, and the other $500 goes to the person at the top of the pyramid, the promoter. If all the boxes on the chart use up up with participants, the promoter will collect $16,000, and you and the others on the bottom level will each be $1,000 poorer. When the promoter has been paid off, his box is outback(a) and the second level becomes the top or payoff level. Only then do the two people on the second level begin to profit. To pay off these two, 32 empty boxes are added at the bottom, and the search for new participants continues.Each time a level rises to the top, a new level must be added to the bottom, each one twice as large as the one before. If enough new participants join, you and the other 15 players in your level may make it to the top. Howeve r, in order for you to collect your payoffs, 512 people would have to be recruited, half of them losing $1,000 each.Of course, the pyramid may get it long before you reach the top. In order for everyone in a pyramid scheme to profit, there would have to be a incessant supply of new participants.In reality, however, the supply of participants is limited, and each new level of participants has less chance of recruiting others and a greater chance of losing money.A walking(prenominal) inspection of a pyramid schemes so called products typically reveals that they have no real market value. This is because the products are often gimmicks such as certificates, bastardly training programs or magazine subscriptions, illusory discounts, or over-priced and under-performing miracle treatments and the like. Recruits are often obliged to invest in large quantities of these products with no realistic mentality of marketing them to actual consumers (or returning them for credit). Their investm ents, however, generate substantial income for the promoter who enticed them into the scheme.2.4.2 Differences between lawful multi-level marketing model and illegal pyramid schemesThe following factors particularize illegal pyramids from lawful direct selling businesses legitimatise direct selling companies offer a genuine business opportunity based on the sale of quality products to consumers. They routinely offer consumers satisfaction guarantees or cancellation rights so that the consumer may return the product for replacement or refund if the consumer is dissatisfied. Pyramids schemes have no such commercially viable product sales base.Legitimate direct selling companies strongly discourage overstocking of inventory and provide participants expiration the plan with an opportunity to return any unused, salable merchandise to the company for a refund of not less than 90% of the salespersons net cost. In contrast, pyramid schemes often encourage or require large stocks of non-re fundable inventory and disappointed scheme participants are then left with stock which they can neither sell nor return.Legitimate direct selling opportunities may be taken up with minimal start-up costs and little or no inventory investment. Even modest entry fees may be refundable if the new direct seller decides not to pursue the opportunity. Conversely, pyramid selling schemes often require high entry fees and/or substantial investment in inventory, and neither are refundable. This is because pyramid operators make their money from new recruits to their schemes.The sales and marketing plans of credible direct selling companies are based on the progressive recognition and reward of direct sellers for the development of a customer base for consumption of the companys products. The development and stability of a direct sellers business is dependent on satisfied consumers and fairly remunerated direct selling network members. Pyramid schemes, on the other hand, offer get-rich-quick schemes to induce participants to buy ground-floor or leadership positions. In pyramid selling schemes there is no viable, long-term business opportunity.Unfortunately, some potentially fraudulent schemes will claim to offer a multilevel marketing opportunity, but in fact are simply recruiting schemes in which people must make substantial investments in order to participate.CHAPTER IV OVERVIEW OF DIRECT SELLING attention IN VIETNAM4.1 Overview of Vietnam direct selling market4.1.1 History4.2.2 Market size4.1.2 Market growth4.1.3 SWOT analysis4.2 Players of direct selling4.3 scattering channel of direct selling4.4 Legal framework for direct selling4.5 Leading enterprises4.6 What managers thought about perspectives of direct selling in Vietnam?In 2008 the retail industry in Vietnam saw very strong expansion in terms of outlets in both grocery and on-grocery channels. Huge investment by local retailers was poured into the market in order to capitalise on available good locations bef ore Vietnam fully opens its retail industry to abroad investors in 2009. Penetration from foreign retailers was also more fierce compared with 2007. internationalist investors such as Wellcome Supermarket, Best Denki and Lotte Mart, among others, all obtained the requisite license. topical anaesthetic retailers prepared for the foreign invasion by providing better service, improving product quality and implementing more marketing activities and cooperation between local brands.Non-store retail remained a niche of the overall retail industry. The main product category remained cosmetics and toiletries. Non-store retailing was not yet strong enough to influence manufacturers or other retail formats.Non-store retailing still needs to educate consumers and increase consumer awareness.(Euromonitor retail Vietnam 2009)CHAPTER V SURVEY RESULTS CONSUMER BEHAVIOR OF CONSUMERS IN HO CHI MINH city AND MEKONG DELTA5.1 Overview of respondents5.2 Descriptive analysisCHAPTER VI KEY FINDINGS AND RECOMMENDATIONSKey findings and recommendationsCONCLUSIONS