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Consumer Action: Multi Level Marketing

  2. RESEARCH Goals:
  4. 1. 1 Meaning of consumer action:
  5. 1. 2 Consumer patterns and marketing blend:
  6. 1. 3 Types of consumer decisions:
  7. 1. 3. 1 Habitual decision making:
  8. 1. 3. 2 Limited decision making:
  9. 1. 3. 3 Extended decision making:
  10. 1. 4 Consumer purchase decision process:
  11. 1. 4. 1 Problem acknowledgement:
  12. 1. 4. 2 Information search:
  13. 1. 4. 3 Evaluation of alternatives:
  14. 1. 4. 4 Purchase decision
  15. :
  16. 1. 4. 5 Post-purchase patterns:
  17. 1. 5 Major factors influencing buying tendencies:
  18. 1. 5. 1 Internal influences:
  19. 1. 5. 2 External influences:
  20. 1. 6 Attitude:
  21. 1. 6. 1 The three the different parts of attitude:
  22. Beliefs: Cognitive component of Consumer Attitude
  23. Strategies to improve consumer beliefs:
  24. 1. 6. 2 The Fishbein models:
  25. The Fishbein Model
  26. Belief-important Model
  27. Theory of Reasoned Action
  28. Theory of Trying
  29. Theory of Planned Behavior
  31. Definition of direct selling:
  32. 2. 2 Benefits of immediate selling:
  33. 2. 2. 1 Benefits from distributor advantage:
  34. 2. 2. 2 Benefits from consumer advantage:
  35. 2. 2. 3 Benefits from enterprise edge:
  36. 2. 3 Types of direct selling's reimbursement plan:
  37. 2. 3. 1 Single-level payment plan:
  38. 2. 3. 2 Multi-level settlement plan:
  39. Differences between multilevel marketing and pyramid system:
  40. 2. 4. 1 Multilevel Marketing model:
  41. 2. 4. 2 Pyramid structure:
  42. 2. 4. 2 Differences between lawful multi-level marketing model and against the law pyramid techniques:

Consumer is considered as the core aspect which decides the exiting of an business organization. They will be the ones who buy and use products and services (Longman Dictionary of Modern British). Understanding consumer behaviors, consumer buying process and factors affect consumer buying action which may bring volume of benefits is one of the most crucial responsibilities confronting every competing business. That's the reason companies spend such a great deal of money in understanding behaviors of the consumers.

This study seeks to recognize perceptions and key factors influencing to consumer action towards multi-level marketing companies and their products so that marketers can adjust and improve their marketing promotions and marketing ways of better reach the buyer.


Direct offering business has a brief history of a large number of years on earth and nearly a decade of procedure in Vietnam market and more than four years from the issuance of Legislations on Competition (2004) and Decree 110 on Multi-level Marketing Management, it is still very hard for marketers of multi-level marketing companies to sell products or even to invite visitors to collaborate with them as an unbiased business proprietor of the business because of negative perceptions of consumers on immediate offering companies and their products. This makes things to be very difficult for doing this type of business in Vietnam.

In addition, alongside the entrance of many new comers into Vietnam market lately, the competition on the market becomes much less harsh as ever before.

Being recognized as given birth to in the overdue 1800s when touring salesmen created trained sales organizations with hundred of salesmen to market various products in America, direct selling is recognized as a vibrant and lively industry offering occupation to more than 62 million impartial sales representatives. Regarding to data from World Base of Direct Advertising Relationship (WFDSA), worldwide retail sales by its participants accounted for more than US$114 billion in 2007.

Although direct offering industry has an extended record and obtained very good results with a great probable of development, as consideration of several experts, it isn't easy for immediate offering companies to go into a fresh market and gain the good perception of local consumers.

In Vietnam, direct selling appeared ten years before (in 2000) but there still are very negative perceptions of consumers upon this kind of business and its own products. This makes things seem to be to be very difficult for doing this kind of business in Vietnam.


Primarily, this research aims to have a basic picture of perceptions of consumer towards multi-level marketing companies and their products - in relation to the factors that result consumers buying decision. The primary problem is to discover what the most crucial factors consumers have in mind when buying or not buying products and/or agreeing or refusing to become distributor of an multi-level marketing company. Specifically, the research objectives are the followings:

To define the existing situation of multi-level marketing business in Vietnam;

To identify factors which may have influence on the buyer tendencies towards multi-level marketing business in Vietnam;

To describe the habits of consumers in HCMC and Mekong Delta toward multi-level marketing;

To recommend solutions for increasing good perceptions of consumer for marketing consultancy employed in multi-level marketing businesses.


The research just targets studying the books of the consumer patterns, and the review is conducted only in Ho Chi Minh City - the monetary hub of the South, plus some rural areas in Mekong Delta region such as: Tien Giang, Can Tho and Ca Mau provinces which stand for rural areas in the South of the united states. Consumer habits of such parts may not symbolize the general conducts of consumers countrywide.

Due to the lack of recognized data of multi-level marketing industry and difficulty to getting the confidential interior business data from multi-level marketing companies, the info used in this research may well not be sufficient enough.

Besides, anticipated of the limitation of time and money, the survey shall be carried out only with small sample size.


Multi-level marketing or immediate advertising is till a very young industry in Vietnam. There is absolutely no former research or study on this business up to now. There are so many hazy understandings about the industry in the perceptions of Vietnamese consumers. Hence, it is expected that this research will add a very first premise for further study for an over-all picture of multi-level marketing industry in Vietnam market.


The writer of this report is currently working as Mekong Delta Regional Sales Supervisor in Amway Vietnam Company Small, a world's leading multi-level marketing company. Therefore, it is feasible for me to carry the survey, collect data and also have enough information for making analysis.


This is a mixture of quantitative and qualitative research solutions, the research will access all potential resources and methods to collect data and information such as: collection and synthesis of secondary data, questionnaire design and pilot review to guarantee the maximum clarity and performance of the questions, face-to-face interviews using questionnaire, online survey using questionnaire and meeting with some experts or stakeholders of multi-level marketing companies.


1. 1 Meaning of consumer action:

Consumer behavior is "The study of individuals, categories, or organizations and the procedures they use to choose, secure, use, and dispose of products, services, activities, or suggestions to meet needs and the effects that these procedures have on the buyer and contemporary society. "

"The action a person consumes purchasing and using products and services, like the mental and public processes that precede and follow these actions". The behavioral sciences help answer questions such as: why people choose one product or brand over another; how they make these choices, and how companies use this knowledge to provide value to consumers.

Belch and Belch define consumer patterns as 'the process and activities people take part in when looking for, selecting, purchasing, using, evaluating, and disposing of products and services in order to satisfy their needs and wants'. '

1. 2 Consumer patterns and marketing blend:

1. 3 Types of consumer decisions:

1. 3. 1 Habitual decision making:

Habitual decision making will involve no decision consequently. Habitual decisions occur when you can find very low engagement with the purchase and result in repeat purchasing tendencies.

A completely habitual decision does not even include concern of the "do-not-purchase" option. Noticing that the product or service is needed will cause the consumer to purchase a few of the same one within the next visit to such service or product supplier. The consumer won't even consider the options of not exchanging the product or service or purchasing another brand.

1. 3. 2 Limited decision making:

Limited decision making covers the middle surface between habitual decision making and expanded decision making. In its simplest form, limited decision making is very similar to habitual decision making. No other alternate may be considered, except, possibly, an extremely limited examination of a "do-not-buy" option.

Limited decision making also occurs in response to some psychological or environmental needs. Consumers may also assess a purchase in terms of the genuine or anticipated action of others.

1. 3. 3 Extended decision making:

Extended decision making is the response to a very higher level of purchase involvement. An extensive internal and external information search is accompanied by a complex analysis of multiple alternatives. After the purchase, uncertainty about its correctness is likely and an intensive analysis of the purchase will take place.

Relatively few consumer decisions reach this extreme level of complexity. However, products such as cars, houses and personal computers are frequently purchased consequently of expanded decision making.

1. 4 Consumer purchase decision process:

The purchase decision process is the levels a buyer moves through to make options about which products and services to buy which includes five stages that are: problem identification, information search, different analysis, purchase decision and post-purchase action.

Post-purchase tendencies: Value in consumption or use

Purchase decision: Buying value

Evaluation of alternatives: Assessing value

Information search:

Seeking value

Problem recognition: Perceiving a need

1. 4. 1 Problem acknowledgement:

The consumer decision process begins with the acceptance a problem exits. The recognition of your problem is the consequence of a discrepancy between a desired point out and an actual state which is enough to arouse and switch on your choice process. Without popularity of an problem, you don't have for a consumer decision.

If the consumer resolves the condition by recalling one acceptable solution and purchasing that service or product without an analysis, this is termed habitual decision making. Many consumer purchases, especially of frequently purchased items, such as detergents, soda and petrol, are of this characteristics. Other problems may be resolved by recalling several potential solutions and choosing from among them, perhaps using some additional information, such as current prices. A great number of consumer purchases will be the results of such limited decision making. Issues that require extensive information queries, both inside and exterior, the analysis of several alternatives along several sizes, and sizeable post-purchase evaluation, lead to expanded decision making.

1. 4. 2 Information search:

Once the situation has been accepted, an information search is performed to isolate a highly effective solution. The info search may be comprehensive, very short or somewhere between.

1. 4. 3 Evaluation of alternatives:

After the info has been accumulated, which allows the consumer to find out and compare the relevant and possible alternatives, your choice can be produced.

1. 4. 4 Purchase decision


1. 4. 5 Post-purchase patterns:

Post-purchase action is an activity occurs after purchase or acquisition: use, evaluation, removal and repurchase tendencies. These reveal the satisfaction of the consumers associated with the use of such product and/or service. Consumer satisfaction is affected by product performance, the purchasing process and consumer targets.

1. 5 Major factors influencing buying tendencies:

1. 5. 1 Internal influences:

Perception: Perception is critical to the decision process and is also also an interior occurrence that is highly affected by the internal influences. Notion is also influenced by external factors such as variety of teams, situations and marketing efforts.

Learning and recollection: The result of learning is memory and memory also offers an impact on the training process. There are two types of memory which are short-term and long-term ones which associate memory space to brand image and product positioning.

Motives, personality and feeling:

Motives will be the forces that start and direct consumer habit. Motives may be either physiologically or psychologically established. In developed countries, most consumer action is guided by mental motives.

While motives direct behavior towards aims, personality relates to characteristic patterns of patterns: personality is generally considered to indicate a consistent structure of reactions to a variety of situations, even though the role played out by the problem itself must be known.

Emotions are the feelings or affective replies to situations, products, advertising and so forth. They influence information handling and preferences, and are becoming of increasing interest to marketers.

Attitudes: Attitudes are formed from the interrelationship between personal experience and lifestyle and the factors that help shape lifestyles. Attitudes are comprised of three components that happen to be cognitive, affective and behavioral.

1. 5. 2 External influences:

Demographics and lifestyles

The household

Reference group

Social status



1. 6 Attitude:

1. 6. 1 The three the different parts of attitude:

Beliefs: cognitive element of consumer attitude

Affect: emotive component of consumer attitude

Intention: behavioral goal component of consumer attitude

Beliefs: Cognitive component of Consumer Attitude

A consumer opinion is a internal association between a product, brand, shop, action, etc. and an feature or feature (and associated benefits) of such:

Beliefs are cognitive (predicated on knowledge, experience, understanding, etc. )

The more powerful the connection of features or features (and association benefits) with the merchandise, brand, outlet, action, etc. , the stronger the consumer's belief

Brand equity is a measure of the strength of the association available on the market.

Strategies to improve consumer beliefs:

Positioning by: product traits, consumer benefits, intangible characteristics, price, program, brand user, superstar identification, brand personality, product category, connection with opponents country or geographic area, etc.

1. 6. 2 The Fishbein models:

Affective replies to a brandname contain:

The power or weakness of a consumer's values about the brand and its own attributes;

The consumer's evaluation of or feelings toward those attributes.


A = Attitude towards a brand

Bi = Idea that the brand possesses feature i

Ei = Evaluation or desirability of feature i

I = Feature 1, 2, , m

The Fishbein Model

Belief-important Model

Theory of Reasoned Action

Theory of Trying

Theory of Planned Behavior


2. 1 Methods of studying consumer habit:

Qualitative research is a method of inquiry appropriated in a variety of academic disciplines, typically in the cultural sciences, but also in market research and additional contexts.

Qualitative researchers aim to gather an in-depth knowledge of human habit and the reason why that govern such habit. The qualitative method investigates the "why" and "how" of decision making, not only "what, when, where". Hence, smaller but centered samples are more often needed, rather than large examples.

2. 2 Options of information:

2. 2. 1 Internal information:

2. 2. 2 Exterior information:

Two problems the commonly happen with secondary data are they don't completely fit the condition and they are not totally exact.

2. 3 Data collection:

2. 2. 1 Most important data:

2. 2. 2 Secondary data:

2. 4 Data analysis:


Definition of direct selling:

The concept of direct selling is situated upon person-to-person interactions. The seller would go to the consumer rather than the consumer go to a shop. In today's fast changing culture, where more folks work and shopping patterns have altered, this type of shopping not only provides consumers with accessibility to an array of products but is also convenient.

2. 2 Benefits of immediate selling:

2. 2. 1 Benefits from distributor advantage:

Direct selling offers chance for people who want to make a living and create a business of their own. It includes an alternative to traditional employment for those who desire a flexible income earning chance to supplement their household income, or whose responsibilities or circumstances don't allow for regular part-time or full time employment.

The cost for an individual to start an independent direct selling business is normally very low. This implies it offers benefits for shareholders to avoid a substantial risk of loss. This also means anyone can do it. Opportunities can be found to any ones who desire, particularly to the people cannot or harshly remain competitive for employment opportunity. You will discover no required degrees of education, experience, money or physical condition in direct selling. People of all age ranges and from all backgrounds have been successful in direct advertising. Usually, a modestly charged sales kit is all that's needed is for you to get started, and there is little if any required inventory or other cash commitments to begin with.

Direct selling provides to distributors a sensible way to meet and socialize with people. For those who want to attain a success based on the level of their efforts, immediate selling is a good way. Set your own goals and determine yourself how to reach them since earning is in proportion to your own work. The amount of success you can perform is limited only by your determination to work hard.

Moreover, distributors can get training and support from other distributors who works with them, and from the business they counter.

2. 2. 2 Benefits from consumer advantage:

Consumers benefit from direct selling due to convenience and service it provides, including personal demonstration and reason of products, home delivery, and good satisfaction promises and assists consumers with a convenient source of quality products.

2. 2. 3 Benefits from enterprise edge:

Direct selling provides a channel of circulation for companies with impressive or distinctive products not easily available in traditional retail stores, or who cannot afford to contend with the great advertising and promotion costs associated with increasing space on retail cabinets. Direct selling increases the retail distribution infrastructure of the current economic climate.

2. 3 Types of direct selling's reimbursement plan:

2. 3. 1 Single-level payment plan:

Single level compensation plan means a consultant/distributor is paid out based entirely on one's own revenue.

2. 3. 2 Multi-level settlement plan:

In a multilevel payment plan, distributors are compensated structured not only on one's own product sales, but on the product sales of your respective down-line.

Multilevel marketing is an important component of the Direct Selling industry. Additionally it is known as network marketing, framework marketing or multilevel immediate advertising, and has proven over a long time to be a highly successful and effective approach to compensating direct sellers for the marketing and circulation of products and services directly to consumers.

Differences between multilevel marketing and pyramid system:

2. 4. 1 Multilevel Marketing model:

Multilevel marketing is a favorite way of retailing where consumer products are sold, not in stores by sales clerks, but by indie businessmen and women (called marketers), usually in customers' homes. As being a distributor you can arranged your own time and earn money by reselling consumer products given by a recognised company.

In a multilevel framework you can also build and manage your own sales-force by recruiting, motivating, supplying and training others to market those products. Your payment then carries a percentage of the sales of your entire sales group as well as income on your own sales to retail customers. This opportunity has made multi level marketing a stunning way of starting a business with comparatively little money.

And the main declaration should be emphasized is that multi level marketing is a legitimate income chance for everybody. Anyone can do it.

2. 4. 2 Pyramid structure:

Pyramid plans are illegal scams in which large numbers of people at the bottom of the pyramid pay money to a few people at the very top. Each new participant will pay for the chance to advance to the most notable and benefit from payments of other people who might join later.

For example, to join, you might have to pay anywhere from a small investment to thousands. In this particular example, $1, 000 will buy a position in one of the bins on the bottom level. $500 of your money goes to the person in the box immediately above you, and the other $500 would go to the person at the top of the pyramid, the promoter. If all the containers on the chart fill with individuals, the promoter will gather $16, 000, therefore you and the others on underneath level will each be $1, 000 poorer. If the promoter has been paid, his container is removed and the next level becomes the very best or payoff level. Only then do the two people on the second level commence to profit. To pay off both of these, 32 empty bins are added in the bottom, and the search for new participants remains.

Each time a level rises to the very best, a new level must be put into the bottom, each one twice as large as the main one before. If enough new members join, you and the other 15 players in your level may make it to the top. However, in order for you to gather your payoffs, 512 people would need to be recruited, 1 / 2 of them losing $1, 000 each.

Of course, the pyramid may collapse long before you reach the top. For everyone in a pyramid plan to make money, there would have to be considered a never-ending supply of new individuals.

In reality, however, the way to obtain participants is bound, and each new degree of individuals has less potential for recruiting others and a larger chance of losing profits.

A closer inspection of any pyramid scheme's so called "products" typically shows that they have no real market value. This is because the products are often "gimmicks" such as certificates, spurious training programs or mag subscriptions, illusory discount rates, or over-priced and under-performing "miracle" treatments and the like. Recruits tend to be obliged to "invest" in large levels of these products without realistic potential client of marketing them to actual consumers (or going back them for credit). Their assets, however, generate significant income for the promoter who enticed them in to the scheme.

2. 4. 2 Differences between lawful multi-level marketing model and against the law pyramid techniques:

The pursuing factors differentiate unlawful pyramids from lawful direct selling businesses:

Legitimate direct advertising companies provide a genuine business opportunity predicated on the sale of quality products to consumers. They routinely offer consumers satisfaction promises or cancellation rights so that the consumer may give back the merchandise for substitute or refund if the buyer is dissatisfied. Pyramids plans haven't any such commercially practical product sales bottom.

Legitimate direct selling companies firmly discourage overstocking of inventory and provide participants leaving the program with an opportunity to gain any unused, salable items to the business for a refund of not less than 90% of the salesperson's net cost. On the other hand, pyramid plans often encourage or require large companies of non-refundable inventory and disappointed scheme individuals are then remaining with stock that they can neither sell nor gain.

Legitimate direct selling opportunities may be taken up with reduced start-up costs and little if any inventory investment. Even moderate entrance fees may be refundable if the new direct seller decides not to pursue the chance. Conversely, pyramid offering plans often require high entry fees and/or considerable "investment" in inventory, and neither are refundable. This is because pyramid operators make their money from new recruits to their schemes.

The sales and marketing ideas of credible immediate selling companies derive from the progressive popularity and reward of direct vendors for the introduction of a customer foundation for usage of the business's products. The development and stability of a primary seller's business is dependent on satisfied consumers and quite remunerated direct offering network associates. Pyramid schemes, on the other hands, offer get-rich-quick plans to induce members to buy "ground-floor" or "leadership" positions. In pyramid selling schemes there is absolutely no viable, long-term business opportunity.

Unfortunately, some probably fraudulent techniques will assert to give a multilevel marketing opportunity, but in fact are simply recruiting schemes in which people must make considerable investments in order to take part.


4. 1 Review of Vietnam immediate selling market:

4. 1. 1 History:

4. 2. 2 Market size:

4. 1. 2 Market progress:

4. 1. 3 SWOT research:

4. 2 Players of direct selling:

4. 3 Distribution channel of direct selling:

4. 4 Legal platform for direct selling:

4. 5 Leading businesses:

4. 6 What managers considered perspectives of immediate offering in Vietnam?

In 2008 the retail industry in Vietnam noticed very strong extension in terms of outlets in both food and on-grocery stations. Huge investment by local suppliers was poured in to the market in order to capitalise on available good locations before Vietnam totally starts its retail industry to international investors in '09 2009. Penetration from foreign stores was also more fierce compared with 2007. International investors such as Wellcome Supermarket, Best Denki and Lotte Mart, among others, all obtained the essential license. Local retailers well prepared for the overseas invasion by providing better service, bettering product quality and utilizing more marketing activities and cooperation between local brands.

Non-store retailing continued to be a niche of the overall retail industry. The primary product category remained beauty products and toiletries. Non-store retailing was not yet strong enough to affect manufacturers or other retail formats.

Non-store retailing still needs to educate consumers and increase consumer consciousness.

(Euromonitor - Retailing - Vietnam 2009)


5. 1 Summary of respondents:

5. 2 Descriptive evaluation:


Key studies and tips:


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