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Optimizing Rhenania’s Mail-Order Business Through Dynamic Multilevel Modeling (DMLM)

Rhenania, a German direct mail-order company, turned its catalog mailing practices around within one year and consequently moved up in market position from number 5 to number 2. A dynamic multilevel modeling (DMLM) approach uses elasticities to determine the optimal frequency of catalog mailings, a customer-segmentation approach allows for optimization of mailings, and a recency, frequency, monetary-value (RFM) segmentation in combination with a chi-square automatic interaction detection (CHAID) algorithm determines when customers should receive a reactivation package—as opposed to a catalog—to optimize mailing efficiency further. The DMLM approach was so effective that Rhenania acquired two competitors (one a subdivision of Springer Verlag).

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Non-Store Retailing in Japan: A Huge and Potentially Lucrative Market

In Japan, nonstore retailing consists mainly of 3 categories: catalog sales (mail order), door-to-door selling, and online shopping. The retail revolution is being driven by 2 forces: 1. technology, which is automating store management and opening up new marketing channels, and 2. the breakdown of the mass consumer society, which is creating new heterogeneous consumer groupings. In the financial year 1985, the total size of Japanese nonstore retail sector reached nearly Y3 trillion. Manufacturers that have been losing their influence within the distribution industry can now use nonstore retailing channels to reestablish their influence and, in some instances, bypass the retailer. Several large trucking firms have capitalized on their strengths of nationwide delivery networks and online data processing facilities to diversify into door-to-door selling and mail order. Large-store groups, such as Tokyu and Seibu, also are diversifying into nonretailing activities and developing new service channels.

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Network Marketing Organizations: Compensation Plans, Retail Network Growth, and Profitability

Network marketing organizations, or NMOs, are retail selling channels that use independent distributors not only to buy and resell product at retail, but also to recruit new distributors into a growing network over time. Commissions and markups on personal sales volumes, and net commissions on the personal sales volume of downlines are the methods of compensation commonly used to motivate NMO distributors. A decision model of the growth of a retail NMO has been developed, analyzed and calibrated. Descriptive and prescriptive insights show how compensation and other model parameters affect distribution motivation, sales and network growth and profitability.

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Network Marketing in South Africa: An Exploratory Study of Consumer Perceptions

In global terms, the Network Marketing (NWM) industry continues to experience rapid growth. In South Africa, the absence of a need for high levels of infrastructure support and the fit with elements of traditional African culture, combine to make NWM one of the most significant avenues for growth within the post-apartheid economy. A study explores consumer perceptions of this category of organization. Perceptions of current customers were found to differ from non-customers and use of the statistical technique CHAID revealed distinct groups of attitudes related to purchase behavior.

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Making the Market Work: Enhancing Consumer Sovereignty Through the Telemarketing Sales Rule and the Distance Selling Directive

This article analyzes the provisions of the Telemarketing Sales Rule, which the Federal Trade Commission promulgated in 1995 pursuant to the 1994 Telemarketing and Consumer Fraud and Abuse Prevention Act. the author proposes a framework through which the Rule may be understood as embodying a regulatory strategy of controlling abusive telemarketing by enhancing the effectiveness of market forces. In particular, the Rule works by improving the quantity of quality of information flowing to consumers, preventing the occurrence of transactions that the consumer does not truly intend, preventing telemarketers from evading the effects of market forces governing availability of payment mechanisms, and enhancing the effectiveness of the contract regime.

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Longaberger Baskets: Changing Marketing in Changing Times

“At Longaberger Baskets we have a great deal to make us proud,” indicated Tami LongabergerKaido, President of Marketing and Sales, reflecting in her office at corporate headquarters in Zanesville, Ohio, on company progress over the past ten years and the objectives for 1990. “We have an enthusiastic sales force, talented craft people working in our manufacturing operation, and a hand-crafted product of excellent quality. But right now, however, we’re having to say to our sales consultants, ‘come into direct sales and be all you want to be, recruit and grow, make the money that you want to make, you own your own business, but don’t sell too much, because we can’t fill the orders.’” The home office had just instituted another “recruiting freeze” which eliminated altogether the recruitment and acceptance of new sales consultants for an indefinite period of time.

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Linking Perceived Service Quality and Service Loyalty: A Multi-Dimensional Perspective

In recent research on service quality it has been argued that the relationship between perceived service quality and service loyalty is an issue which requires conceptual and empirical elaboration through replication and extension of current knowledge. A study focuses on the refinement of a scale for measuring service loyalty dimensions and the relationships between dimensions of service quality and these service loyalty dimensions. The results of an empirical study of a large sample of customers from four different service industries suggest that four dimensions of service loyalty can be identified: purchase intentions, word-of-mouth communication; price sensitivity; and complaining behaviour. Further analysis yields an intricate pattern of service quality-service loyalty relationships at the level of the individual dimensions with notable differences across industries.

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Identifying the Determinants of Internal Marketing Orientation

Internal marketing orientation is an area within the broader market orientation that remains relatively under-researched. Utilizing the internal marketing orientation (IMO) scale developed by Foreman and Money, this paper seeks to develop our understanding of the factors that may influence an employee’s perception of their company’s level of IMO. Based on 281 responses from a large UK-based service organisation, the paper reports  on the extent to which the Foreman and Money scale does, or does not, correlate with a range of “person” situation” and “person x situation” variables identified from both focus groups and from the literature. It was found that among the single item variables age, location, and length of tenure all impacted upon levels of IMO. In the case of the more complex “person x situation” multi-item variables, the most important determinants were found to be the perceived market orientation of local managers and direct managers/supervisors, as well as aspects of communication, socialization  and workplace satisfaction. The results provide support for earlier work that highlights the importance of these more complex variables in managing internal marketing.

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Extending the External Validity of the FITD Effect to the Industrial Marketplace

The foot-in-the-door (FITD) effect (Freedman and Fraser, 1966) involves gaining compliance with a small innocuous request as a lead-in to a larger subsequent request of interest to the requester. Telecom Canada implemented a field experiment to improve the performance of its seminar program, to see if the FITD phenomenon holds in an actual industrial sales environment, and to ascertain if FITD behavioral-influence-inducedcompliance results in differences in actual behavior and intensity of compliance behavior. A sample of 400 wholesale firms was divided into a treatment group of 200 and a control group of 200. The control group received a telephoned request to receive sales literature, and both groups were sent the direct mail package. All were contacted by phone and asked to attend the seminar. The small request treatment group had a higher rate of actual compliance than the control large request group — 14.5% versus 6.5%. Evidence found for differences in intensity of behavior was only directional but was not significant statistically.

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Ethical Issues Connected with Multi-Level Marketing Schemes

Multi-level marketing (MLM) schemes are one of the fastest growing types of business. However, little has been written about the ethics of MLMs. This oversight is somewhat surprising, especially because some prominent MLMs have been accused of being pyramid schemes. Pyramid schemes were the number one type of internet fraud in 1996, and the fourth most common form of internet fraud in 1997 (National Consumers League, 1997). This paper examines the nature of MLMs and their similarities with and differences from pyramid and endless chain schemes. The paper argues that MLMs pose some unique ethical issues, issues that are not easy to address or resolve.

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