When a mega-trend and a compelling business model collide

2008 November 17

With the Emergence of the projected 1 Trillion dollar a year Wellness Industry, I found this research report short and to the point.

Why?

Because recent studies showed that of the 96% of people whom lay awake at night, they are either thinking of Health or Financial issues. So if there was 1 simple way to impact both of them with Wellness Products that were scientifically validated, on the cutting edge and having huge effects on people’s health, I’m sure not only would they want to know about it, but so would others that they know, love and care about.

This is considered by some top financial experts like Robert Kiyosaki as the Perfect Business.

Nutritional MLMs: a rare blend of growth and value

Excerpts from The Goldman Sachs Group, Inc. Research Report
August 2007

When a mega-trend and a compelling business model collide
The mega-trend: riding the health/wellness wave

The health/wellness mega-trend is one of the most visible social developments across
the globe…It represents one of the fastest growing segments of the market, namely
the natural/personal care, functional foods and nutritional supplements arenas.

The enticing business model: direct selling’s appeal

From a business standpoint, direct selling is fairly straightforward: instead of products
being sold through a retail store or the internet, a representative sells directly to
consumers. Relative to a traditional retail setting, the sales approach, is more
targeted and the representative tends to be more informed about the product being
sold. Furthermore, direct selling provides representatives with several lifestyle
improvements such as supplemental income, the ability to work from home, a chance
to run their own business, and improved on the job morale.

…However, it is not simply the unconventional approach that attracts so many people
to this model. Rather, the primary driver is the unique compensation structure that
the majority of direct selling companies employ. In a multi-level marketing model,
representatives can not only make money selling a product, but they are also
compensated based on the revenues generated by the representatives whom they
recruit into the business. A representative’s recruits are referred to as a downline,
and as it expands, so do commissions.

Compelling marketing plans

Distributor compensation design is a key structural feature of the multi-level marketing
model. As noted earlier, representatives earn income: (1) by selling product at a
markup; and (2) on the group volume generated by one’s downline. Across the
nutritional MLM space, [public companies’] commissions as a percent of sales, has
run as low as 35% and as high as 44%. Therefore, a marketing plan that is both
lucrative up-front and realistic for growth is an important structural attribute.

Nutritional direct selling is a powerful combination

While the standalone prospects of the health and wellness and the direct selling
industries are strong, an even more powerful vehicle is created when the two are
combined…The lack of information about vitamins and other supplements is
apparent. In many retail settings, shelves are overcrowded with multiple varieties and
brands of similar product, and non-knowledgeable salespeople do not facilitate the
shopping experience…In addition, there is no better advocate for a nutritional
product than the user his/her self. Once someone’s life is changed due to the
product, strong loyalty can be created both to the product and to the business
opportunity.

To Your Health and Well Being,

Shawn King

www.Shawn-King.com

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