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| Opportunity |
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| The business
in which users of the products communicate their quality to
other people |
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| Nu Skin has adopted Network marketing as its
sales model. Network marketing is based on “word-of-mouth
advertising” where the users of the products communicate their
quality to other people. Under this model, individual salespeople
distribute products directly to consumers by communicating
the quality of the products based on their own experiences
as end-users. The major advantage of Network marketing is
its leveraging effect. Unlike traditional sales methods which
rely on the capability of each salesperson, Network marketing
generates revenue by the total capability of the network which
consists of partnerships among salespersons. With Network
marketing, an Independent salesperson can expand his/her business
by not only his/her own efforts but also their network power.
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| “The attractiveness of
the products” * “word of mouth” |
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| In Network marketing, high-quality and “narrowly
targeted” products, which are not available at conventional
outlets, tend to attract consumers’ attention. The more narrowly
targeted the product is, the higher the effect “word-of-mouth”
advertising has to create “loyal customers” for the product.
Recommendation from reliable people and actual usage of products
generate attachments to the product, which results in a desire
to communicate it to other people. Likewise, the higher the
quality of the product, the more loyal the customers will
be. This results in expanding the market of the product. |
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| Provide opportunity to
people who desire to own their business |
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| Network marketing is far from speculative.
Since the company provides products and a business plan, an
individual can get started without a large amount of expenditure,
investment, and inventories. That means an individual can
start their businesses in a low risk and low cost environment.
Moreover, since individuals are not employed by the company,
they can run their business in their solo discretion expecting
the return in proportion to their own efforts. Therefore,
Network marketing is one of the best businesses for the people
who desire to own their business. |
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| The trends of Network
marketing |
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| In Japan, direct selling (one-on-one sales,)
including Network marketing, accounts for approximately 2.7
trillion yen annually, and the number of salespeople involved
is approximately 2 million. Cosmetics and nutritional supplements
account for 40% of all products purchased through direct selling.
Since those products, whose product turnover is high, can
be experienced and talked about casually, word-of mouth advertising
works very well for those two categories. These categories
are expected to grow beyond age and gender boundaries under
the current environment where people are more particular and
health-conscious. |
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