Look for "Value" in the MLM

By Jeffrey A. Babener
1998

Regulators Look to Value.

Ask any regulatory agency about the review of MLM programs and you will be told that the first criteria of legitimacy is quality product at a competitive price. Consumer protection agencies want to know that the products or services offered by network marketing companies stand on their own in the marketplace and that distributors or customers buy those products because of the products' intrinsic value rather than the mere "buy-in" to an opportunity.

In fact, "value" should not merely be important criteria for regulatory review, but should also be one of the most important items that distributors look for when they are choosing a multilevel company. Although some companies may have brief "runs" with fad "products," basic value is the key to long-term success for both companies and distributors.

Distributors Look to Value.

Look for a company that stresses the quality of the "value" that it offers customers and distributors. Why? Because the success of any network marketing company is totally dependent upon how well it achieves "bonding" with its customers and distributors. This means repeat customers and distributors who stick with the business. And, in today's world, network marketing companies are not just competing with other sellers of the same product, they are competing with other methods of delivery, i.e., catalog sales, discount stores, infomercials, telemarketers.

...the first criteria of legitimacy is a quality product at a competitive price . . . that stands on its own in the marketplace.

And they can win in the marketplace only if they deliver "value" and only if customers perceive a higher "value" than offered by more conventional sellers. So, when you're looking for that special opportunity, look for a network marketing company that has an edge on "value." Look for one with some or all of the following features:
  1. a unique product that stands out when you show it to your friends, i.e., cans of Campbell's soup or boxes of cake mix are not unique;
  2. make sure the product is proprietary to the company. Ever notice that you can't buy Avon cosmetics in stores nor Shaklee vitamins at pharmacies. These products are only available from distributors;
  3. the products should be economically competitive with similar products, i.e., fairly priced;
  4. if possible, customer satisfaction guarantees should be offered;
  5. a product that you can demonstrate is great and commonplace for network marketing companies;
  6. post sales service or customer assistance is helpful;
  7. and, of course, you are part of what makes network marketing a higher perceived value, i.e., free delivery and personalized assistance.

The Decade of Value.

All of this will make you part of the decade of "value." The evidence is in that we are probably coming out of the era of the yuppie. The 1980's were referred to as the "me" decade. As such, emphasis was on "designer everything." People were willing to pay through the nose for any product with snob appeal. Billions of advertising dollars went into creating the perception of class for products. Premium dollars were paid for designer jeans, BMW's, and upscale hamburgers.

The trend is changed and now Americans want "value" first. It is hard to say whether network marketing companies are following the trend back to value or whether they missed the yuppie cycle altogether, and the cycle has merely returned to that which they always stressed, i.e, family-oriented value products. A few products such as network marketed designer toys and some of the upscale network marketing cosmetics companies probably took on some of the elements of the yuppie era. Generally network marketing distributors and their customers did not identify with this upscale cycle. The demographics were not there. Most people agree that the products of MLM companies are priced somewhat higher than the market, but it is generally believed the reason is in the quality and unique nature of the products, and not in snob appeal.

Trend is the "Smart Shopper."

Although Americans always seem to pay a little more for quality, convenience and service, most American households today are cautious in their spending. Many are unsure of the economy. Many are returning to buying habits that should fit like a glove with the demographics of network marketers and their customers. Today's consumer is saying that he or she wants value and quality, but will not buy for snob appeal anymore. These are good prospects for both products and part-time extra income opportunities offered by today's network marketing companies.

Surveys by ad agencies for Fortune 500 companies show consumers are less willing to shell out the bucks for prestige name brands. Ad spots are reflecting this trend. In one Subaru commercial made by the same folks that produce Nike shoes successful ads, the star of the ad says: "Don't tell me about wood paneling, about winning the respect of my neighbors. They're my neighbors. They're not my heroes ... I don't want a new car every few years. I want to save money. I want to have money. Tell me. Give me the facts ... Stop talking new. Stop talking shiny. Start talking sense. Tell me."

This is probably the trend in the "big" marketplace, and it coincides directly with the emphasis that most network marketing companies offer. The success in network marketing in recent years in discounted long distance telephone service, consumer benefits programs that offer discount shopping and coupon services, and the convergence of the term insurance industry with MLM with companies like A.L. Williams is evidence that the mindset of network marketing is in the right place. Water filter companies that save you money on bottled water and companies like Tupperware that allow consumers to get extra mileage out of their expenditures are good examples.

As a general matter, network marketing products are not necessarily name brand or prestige brand products. Both distributors and customers of these companies fit the emerging label coined by University of Oregon Ph.D., Lynn Kahle, "role-relaxed" consumer. A "role-relaxed" consumer is one that sets his or her own criteria for value and quality. This is a perfect fit for the emerging entrepreneurs of the network marketing industry.

Value is the Watchword.

So good luck. Remember, however, "value" is the watchword. "Value" in the opportunity you pick, and "value" in what you offer to the consumer.

Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
Jeffrey A. Babener, the principal attorney in the Portland, Oregon law firm of Babener & Associates, represents many of the leading direct selling companies in the United States and abroad.

www.mlmlegal.com

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