Avon Case Study

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2.2 Multi - Level Marketing

Multilevel marketing, it refers to the direct selling enterprises allow their direct selling products into the hands of consumers, through several layers of sales activities in the specific direct marketing business they carried out. In the process of multilevel marketing, its signing independent distributors who are trying to build its own direct selling organizations, only his marketing organizations expanding constantly, he can manage the performance growth of the whole marketing organizations for more interests. Because of this, a direct salesman of daily work is faced with three contents in multilevel marketing: the first is how to look for customers constantly and how to develop customers effectively;

The second is taking care of their old customers in earnest and meticulously, doing the preventive maintenance work day after day, year after year, so as to shape a batch of customers who are loyal to own enterprise brand;

The third one is looking for excellent marketing personnel constantly, and giving them the unified method, forging their sales ability, to form own marketing team through the way of cultivation.

In multilevel marketing, there are their own orders between members in marketing team, each direct seller has his own number, sellers can form a kind of infinite development and unlimited extension of order each other, because of the structural level of standard between team members, so it is called multilevel marketing. In this, of course, must be clear, the actual process of selling products is performed by a distributor directly in multilevel marketing. It’s sales process is same with sheer level direct marketing, direct sellers collect products from company or specialty stores, and then offer products to consumers.

Multi-level marketing in the early 1990s to enter China in the country’s more than 10 years of development history, some direct selling companies have brilliant sales performance, and some will soon be in marketing enterprises have perished, but more importantly, it is worth noting that accompanied this have i large number of illegal pyramid scheme company, and seriously undermined the normal economic order, and bring great harm to society. Although the “direct Management Ordinance” and “the prohibition of pyramid schemes” in November 1,2005 and December 1 formally promulgated and implemented, the team explicitly prohibit payment for the characteristics of multi-level marketing, but the community on a multi-level marketing whether there should be a pattern there is a great controversy and controversial.

2.3 The differences of Multi-level marketing and pyramid schemes

According to the interpretation of the authorities, we can understand the difference between uni-level marketing and multilevel marketing. From the channel of goods flow, the form of commodity circulation is production enterprises - direct sellers - consumer; In multilevel marketing, the form of commodity circulation is production enterprises - direct sellers, sellers - consumers. There is a great difference between uni-level marketing and multilevel marketing because of different form of commodity circulation, it is the root of difference between two kinds of direct selling. In the process of commodity circulation, there is an illusion that multilevel marketing seems to be more several levels of direct sellers than uni-level marketing. In fact, behind this kind of illusion, is hidden huge commercial incentives. Only expose this veil of commodity circulation form, we can see clearly that the essential difference between two forms of direct selling. After all, compared with the uni - level marketing, multilevel marketing is likely to cause greater business risk.

First of all, from the transfer of ownership of goods, multilevel marketing is much more frequently than single-level direct sales, which is more easy to cause conflict between members of the channel. In multilevel marketing, the more the level of development, the greater the likelihood of conflict. As a direct seller tends to develop offline as much as possible, so the numbers of trading relationships or the growth of direct sellers have showed increasing tendency of geometric progression. Any of the levels arise crisis of ownership transfer, or supply chain breakage, it will cause trouble of the entire channel structure, and uncontrollable factors will be increased. 相比较而言，单层次直销就少有这样的麻烦。

In comparison, the uni - level marketing is a rare such trouble. direct sales personnel contact with customers directly, and make a communication face-to-face, which can lower the risk of transfer ownership. Second, under the multilevel marketing sales in this way, each direct seller finished their sales, beside they can get a commission from the company, also can recommend new business personnel to the company by themselves, develop their own multilevel marketing network, and accumulate score points and get some bonus from the company according to the size of the offline sales performance. And each new member enter into the network, they can continue to use this kind of mode that development offline and bonuses, get more well-paid through direct marketing products and developing its own selling network. Uni -level marketing is different from multilevel marketing, since there is no offline personnel, so direct seller’s income come mainly from the goods discount. On the basis of above analysis, our country’s stage open to the uni - level marketing model at present. It is fundamentally consistent with China's national conditions, which is conducive to maintaining the smooth development of direct marketing market.

2.4 Avon's solid sales system

Avon China have been tried to various channels in its transition process, the display and service of store have obvious advantages, thus it developed rapidly. But, the management and operation of retails were proven that it doesn't adapt to also conform to the product characteristics and the promotion strategy of Avon after a period of time, fakes were appeared in some part of areas, so Avon withdraw gradually from the ordinary supermarkets and retail channels since 2000. After more than 20 years of development and a few times out, Avon existing channels in China are as follows:

2.4.1 the special counter sales

There are always several large shopping malls or supermarkets in every city, they become the most popular places to consumers, and occupied the market. on the one hand, they can bring considerable economic profits to Avon, on the other hand also can bring