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LIBA TRAINING PPT APPROVAL PAGE • Reviewed by： • Approved by： • Date： Notice: This training PPT is used for Longrich internal training only, it is prohibited to be modified without authorization. If you want to modify it accordingly, please get the permission from Longrich Direct Selling International Training Department in advance, otherwise, any consequences and responsibilities caused by modifying must be borne by the modifier, instead of by Longrich reserves the rights for any further explanation. 1

THE TRUTH OF DIRECT SELLING Presented by LIBA Feb, 2017 V 2. 0 2

THE HISTORY OF MLM 1. 1855 – South Western Publishing House was set up to peddle the Bible by knocking on doors. 2. 1886 – Avon was set up in New Hamshire to peddle perfumes – the birth & the growing popularity of Avon Ladies. 3. 1930 – Stanley Homes Products started the Home Party Plan method. 4. 1910 – Agents Credit Association was formed in Binghamton New York which later became U. S Direct Selling Association. 3

THE HISTORY OF MLM 1. 1945 California Vitamins – Lee Mytinger + William Casselberry – out of Marketing fund – get friends + relatives to sell their vitamins. 2. 1954 - Company became Nutrilite. 3. 1951 – Tupperware - Home Party Plan method to sell their products. 4. U. S economy was rebuilding after the 2 nd World War It became a very effective + popular Marketing channel 5. 1959 – 2 Nutrilite distributors Rich De Vos + Jay Van Andel founded Amway – better Comp Plan then bought Nutrilite through reverse acquisition. 4

THE HISTORY OF MLM 6. Direct Selling companies mushroomed during the 60’s – Pyramid schemes like Holiday Magic, Cascar started in the mid + late 60’s. 7. 1963 – Mary Kay Cosmetics – Single Level Marketing to sell their products. 8. 1975 – Amway was taken to Court by U. S Trade Federation for Pyramid Scheme – won the case in 1979 – Direct Selling has since been recognized and accepted as genuine Channel of Marketing + product distribution. 5

THE HISTORY OF MLM 9. 1979 – U. S legislated Direct Selling Act to regulate and control the industry. 10. 1978 -World Federation Of Direct Selling Association was formed with DSA members from other countries joining to ensure the proper development of the Direct Selling industry. 11. That paved the way for the Direct Selling explosion in the 70’s + 80’s not only in U. S but through out the World. 6

WHAT EXACTLY IS DIRECT SELLING • Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. • Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales. • A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs. 7

IT IS A RECOGNISED INDUSTRY 1. According to the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. In contrast to franchising, the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin. 2. Most direct selling associations around the world require their members to abide by a code of conduct towards a fair partnership both with customers and salesmen. ssociations are represented in the World Federation of Direct Selling Associations (WFDSA). 8

. WORLD FEDERATION OF DIRECT SELLING ASSOCIATION STATISTICS 2015 Rank Company Name 2014 Revenue 1 Amway US$ 10. 80 B 2 Avon Products US$ 8. 90 B 3 Herbalife US$ 5. 00 B 4 Mary Kay US$ 4. 00 B 5 Vorwerk US$ 3. 90 B 6 Natura US$ 3. 20 B 7 Infinitus US$ 2. 64 B 8 Tupperware US$ 2. 60 B 9 Nu Skin Enterprises US$ 2. 57 B 10 Joy. Main US$ 2. 0 B 9

CONVENTIONAL MARKETING CONVENTIONACONVENTION AL CHANNEL MARKETING CHANNEL L MARKETING NATIONAL DISTRIBUTOR CHANNEL REGIONAL DISTRIBUTOR AREA DISTRIBUTOR NETWORK MARKETING CHANNEL MANUFACTURER NETWORK MARKETING COMPANY CONSUMERS WHOLESALER RETAILER 80% CUT CONSUMERS 10

SINGLE LEVEL AND MULTI LEVEL MARKETING Direct selling consists of two main business models: Single-level marketing, in which a direct seller makes money by buying products from a parent organization and selling them directly to customers, and multi-level marketing (also known as network marketing or personto-person marketing), in which the direct seller makes money from both direct sales to customers and by sponsoring new direct sellers and earning a commission from their efforts. One emphasizes more on personal retailing whereas the other more on building network. 11

SINGLE LEVEL AND MULTI LEVEL MARKETING 1. The Single Level Comp Plan pays no more than 3 levels – e. g. Insurance – Manager, Supervisor, Agent. 2. The Multi Level Comp Plan pays beyond 3 levels and have different structures such as Stair step Breakaway, Unilevel, Forced Matrix, Binary, Hybrid Combination. 12

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