Business Model - Direct Sales

Having looked at the underlying concept of Bait and Hook Model we shall now explore a bit of the pretty common direct sales method that is adopted.

We would definitely have heard about consumer product companies like Amway or Tupper-wear and also seen a lot of insurance agents from companies like LIC, HDFC Life, Bajaj Allianz etc. What is common between the two? - They both have people getting to explain their product to you in person or at a common demonstration. This is how most of these companies make new customers and consumers for themselves and thereby make money for the firm through them.

This business model is generally done when you need to explain in detail about the product to the customer - there is an evident need for educating the consumer about the product. This concept is not new and the first use as per my information dates back to 1886 by Avon Products, Inc in the United States and its success as a business is indicated by the fact that its revenues in 2008 were 10.9 billion!

This model derives its strength from the ability to influence a decision - I would generally like to know and interact with a person for business, if that person is pretty close to me say a friend or a family member I would rely more on him and hence there is a high probability that there would be a purchase.

Minor modifications to this personal contact based Direct Sales method leads so some interesting Marketing models like Multi-Level Marketing, Networking Marketing etc. We shall look at these marketing innovations as we progress into understanding the various business functions at a later date.

Next Business Model: Freemium

Read in kannada: http://somanagement.blogspot.com/2011/03/blog-post.html