From: fritz@fc.sde.hp.com (Gary Fritz)
Newsgroups: alt.business.multi-level
Subject: Re: Nuskin
Date: 2 Oct 92 19:37:50 GMT
Organization: HP SESD, Fort Collins, CO
X-Newsreader: TIN [version 1.1.4 PL6]

Bill Glazier (bglazier@buffalo.asd.sgi.com) wrote:
> One point I would like to make which I haven't clearly expressed in earlier 
> posts.  I find it unusual that very few  MLM based products ever find 
> there way eventually into retail stores.  If these products are in fact 
> so revolutionary and so superior to anything on the market, why aren't 
> major drug store chains/major food store chains/major discount warehouses
> beating down the inventor/owners doors to sell the product?  The potential
> market through these larger, lower cost, and more sophistiicated channels 
> should be incredible, if the product is in fact as revolutionary as stated.
> If the goal of the company was to maximize sales,  wouldn't it be logical 
> to sign up the distribution channels most well suited to large scale 
> distribution?  

There are several good reasons I can think of:

  - Retail store have hundreds of companies beating down *their* doors trying
    to get a product on the shelves.  Why should they take on a product 
    offered by some upstart company (as opposed to a known business partner)
    that isn't already proven and successful?  And of course, if it's already
    proven and successful, what incentive does the MLM company have to
    sell it to the store?  (A few MLMs *have* done this, and cannibalized
    their entire distributor network.)

  - Face it, there are very few truly revolutionary products out there.
    That's why personalized one-on-one selling is so effective:  it helps
    the customer see the incremental value of the product over whatever else
    is available.  Retail stores can't do that one-on-one teaching and
    so aren't interested in incrementally better products.  They're much
    more interested in flashy packaging and big advertising budgets.

  - Why doesn't Procter & Gamble sign up a direct-sales force?  Because
    they have an established distribution channel that works for them.
    Starting up a direct-sales force would be a logistical nightmare.
    And, to be frank, in any method other than MLM they'd have to pay
    their sales people too much.  (MLM pays less overall because it only
    pays people who actually perform.)  It's sort of like saying,
    "Why doesn't P&G produce all environmentally-safe products?"  They
    certainly CAN.  But they don't HAVE to.  "If it ain't broke, don't
    fix it."  Once the market *demands* it, P&G will deliver it.
    And probably not before.

  - One final reason why MLMs don't go to retail channels.  For some
    companies (and Espial is the major example I'm familiar with), the
    product quite honestly isn't the issue.  Yes, Espial has chosen a very
    good market niche (environmentally-safe products), and yes, they care
    very deeply about the environment.  But that's not what motivated
    LeRoy Cox to found Espial.  What drives him is the desire to create
    a situation where people can grow to their full potential.  Espial
    in some ways is a vehicle for him to reach as many people as possible.
    I was once asked, "Why doesn't LeRoy just go across the country on
    the lecture circuit doing personal-growth seminars?"  He could, and
    in fact he has.  He's been paid as much as $20,000 for a 2-day seminar.
    But most people go into those seminars, listen intently, take careful
    notes, and promptly forget everything the next day.  If he gives the
    same teaching in the context of a business that people are driven to
    succeed in, they will grasp onto his every word and APPLY it.  And
    he ends up making a much larger impact on more lives.

Bill, I'm glad you found our exchange interesting and educational.  You've
got many good points, and both Anthony and I agree with you in many areas.
I think the major thing that annoyed us was the "yellow journalism" style
that branded every MLM company as a rip-off scam, and all the people who
engaged in MLMs as either unprincipled crooks or deluded dupes.  I appreciate
your candor and openmindedness.

Gary
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