Does Packaging Matter?
Q: My business career has been spent mostly in retail store sales. While I have recently done well in direct selling and network marketing, it seems odd that these type of companies don't give the attention to their product packaging that we did in the traditional retail world. Wouldn't these companies have better success if they developed great packaging for the products?
A: Preparing and promoting a product via packaging is critical to retail competition. While important, packaging isn't quite as critical in network marketing. Why? Most sales are created by word of mouth promotion.
The passionate testimonials of independent representatives create enthusiasm, and their personal passion is contagious. This enthusiasm causes otherwise skeptical people who probably wouldn't buy, no matter how appealing the package may be, to make an emotional buy-in to the product. If the product performs as promised, the company and the independent distributor can count on reorders from yet another satisfied customer.
You see, in the retail market, a great label, a unique bottle design or dynamic box may well prompt the first purchase of the product. But if that product fails to satisfy the customer's need, there won't be a reorder. Enough unhappy customers and the product dies. The same goes for network marketing.
In the past, most network marketing packaging was average to poor. But loyal distributors and their personal customers drove sales home. Their efforts created some of today's largest network marketing companies.
Today, more and more network marketing companies are paying closer attention to product image and packaging. One reason for this change is the significant number of entrepreneurs entering the network marketing corporate management world from the traditional business world. Trained in conventional corporate marketing concepts, they can easily fall short if they focus more on perception than they do on quality and performance. It is always important to consider how attractive, fancy packaging can drive up costs, which, of course, are passed on to the customer.
One of the many great things about marketing products using network marketing distribution is the elimination of competition with the myriad of similar products on the store shelf. In fact, you're not even competing with other network marketing companies!
When a prospective customer checks out your product, that's all they're checking out.
Because the customer isn't comparing product brands, but is motivated by the product story, its benefits and the enthusiasm of the independent distributor, the network marketing company isn't under pressure to invest in elaborate and expensive packaging. They can invest more on the quality of the contents and make sure the product delivers its promise while keeping the product cost-effective. At least that's what they ought to do.
Quality is critical. A company endeavoring to build a legitimate long-term business must have products that perform-products that people want to buy again and again.
For all their similarities, network marketing and retail marketing are different on this point. Retail marketing relies heavily on traditional advertising to build brand awareness or on unique packaging to stimulate impulse buying.
Example: Because of shelf space competition, a retail product may need a full-color label or a decorative outer box to stand out from the pack. Because a network marketing product is presented by the enthusiastic distributor, it already stands out. Hence, you may get away with a two-color label.
In network marketing, buying decisions are usually based on the customer's response to a live demonstration or verbal explanation of the product. It's a one-on-one presentation, with the individual attention of a friend selling to a friend. Consequently, that customer makes a more informed buying decision. And while still important, the actual package of a network marketing product isn't as critical as its retail store counterpart. It's just a different issue.
Again, I'm not suggesting that network marketing product packaging doesn't matter. It does. The product needs to have a professional image. Distributors deserve a sense of pride in their product. Their customers need to feel confidence in the product. The package says a lot about the competence of your company. All I'm saying is that, in most cases, the package just doesn't have to be inordinately fancy to get the job done.
Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service direct sales and multilevel marketing (MLM) consulting firm. He is also the co-founder and chairman of the Multi Level Marketing International Association (MLMIA). He can be contacted through http://www.sheffieldnet.com.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.