Can
MLM Compete With Retail?
Are
You Getting What You Pay For?
MLM
Consultant Michael L. Sheffield Answers Questions for MLM Distributors
The Industry's Leading MLM Consultant
Question: I have been involved in several network marketing companies with great products. However, the products seem higher priced than similar products on the store shelves. Sometimes I struggle with the thought that my products are too expensive, even though my customers don't seem to complain. Are network marketing products overpriced just to create big commissions?
Answer:
The real question you need answered is, "are you and your customer getting
what you pay for?" To understand what's going on with the pricing strategy
of a reputable network marketing company, you have to understand the basics
of price vs. value.
The world's customers are becoming more value-conscious. They want to buy
clothing at the lowest price, but don't want them to shrink, fade or shred
after the first wash. They want food supplements cheap, but expect them to
boost our energy and protect our health.
The bottom line: Customers want value from their purchases. We've all tried
the lowest price alternatives. Sometimes they're good and sometimes they're
not. So the Holy Grail sought by consumers isn't price alone--it's really
value. However, value can be elusive. After all, true value is in the eye
of the beholder: your customer. Value is a perception; thus, the popular sales
term, "perceived value."
This may sound a little like Philosophy 101, but there's a considerable distinction
to be made between low prices and real value, whether you're referring to
products screaming for attention from retail store shelves or to products
being offered through network marketing.
Let's consider the difference between how products sold in traditional retail
channels come to market and how network marketing products are developed.
For every 10 products introduced in the general retail marketplace, only one
becomes profitable. Competition, positioning, price point, packaging, advertising,
timing and distribution are the primary considerations. Notice I didn't mention
anything about product excellence or quality. Are these secondary or tertiary
considerations? Of course, these products must be good. But they aren't necessarily
great. The fact is, introducing a new retail product is basically a numbers
game. It costs a few million dollars to introduce the product. If nine out
of 10 products fail, those new product launches have to make up for that investment
with huge profits. This means the quality of the product is constantly at
the mercy of the bottom line
Network marketing companies, on the other hand, are entirely product-dependent.
Sales of their products enable them to grow and flourish. If people don't
buy their products, the company dies, along with the dreams of thousands of
distributors. Besides, every reputable network marketing company offers its
customers an unconditional 30-day money back guarantee. These companies know
the products must be top quality and able to deliver on their promises. They
also know if the products do live up to and exceed expectations, it'll result
in regular reorders and unsolicited testimonials from the customers to friends
and relatives. As a result, marketing a phenomenal product is not price sensitive
like so many products competing on the retail shelf. This gives the distributing
company the latitude to emphasize quality over competitive pricing, with both
the customer and the company coming out on top.
In fact, in the network marketing world, "product" is king. Frequently
the products are a result of the personal experiences of one of the company's
founders. The motive behind the product launch might be more than financial--it
may be an altruistic mission.
Network marketing companies must strive for high-quality control standards.
If their customers aren't happy, they don't just write off the lack of performance
to a bad purchase the way they usually do with off-the-shelf products. They
send it back to the network marketing company for a full refund based on the
company's written satisfaction guarantee. Anything but the highest standards
could break even the most successful network marketing company.
One final point about price: In network marketing, the retail customer has
the option of becoming a wholesale buyer, bringing the cost of products for
personal consumption, in most cases, below the cost of even the lowest priced
retail store competitor.
Request information about starting or growing your MLM company.
Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service direct sales and multi level marketing (MLM) consulting firm. He is a Co-Founder and Chairman Emeritus of the Multi Level Marketing International Association and in 2001 he was inducted into the MLMIA Hall of Fame. As an MLM Consultant, he and the Sheffield team have assisted in hundreds of national and international MLM corporate start-ups as well as offered a full line of services for established direct sales companies. As the most noted expert on compensation plans, he has been a guest lecturer on the subject for the DSA, University of Illinois, University of Texas, Berkeley and Harvard Alumni Association. Long considered the industry's top MLM Consultant , Michael Sheffield has helped launch over 500 new companies and 200 new products marketed by direct selling companies around the globe. He can be contacted at 480-968-6199, Sheffield Resource Network, 2239 N. Hayden Road, Suite 103, Scottsdale, AZ. 85257, website address: www.sheffieldnet.com.
