LV Thạc sỹ_Reputation of multi level marketing in Herbalife Vietnam

National Economics UniversityInternational School of Management and Economics Research project Title: Reputation of multi-level marketing, in the case of Herbalife in Vietnam... Multi-le

National Economics University

International School of Management and Economics

Research project

Title: Reputation of multi-level marketing, in the case of Herbalife in Vietnam

TABLE OF CONTENTS

ACKNOWLEDGEMENT 1

EXECUTIVE SUMMARY 2

INTRODUCTION 3

CHAPTER 1 – LITERATURE REVIEW 6

I A review of theories 6

II Past research about customers behavior in multi-level marketing 12

CHAPTER 2 – METHODOLOGY 14

I Research methodology 14

II Data collection 15

III Limitation of research 16

CHAPTER 3 – MAIN FINDING 17

I Overall about customers of Herbalife 17

II Factor impact on Herbalife customer behavior 21

III Review of customer: 27

IV Factor impact on Herbalife reputation: 31

CHAPTER 4 – DISCUSSION 35

I Herbalife is legal and it is multi-level marketing company 35

II Herbalife is a pyramid scheme company – it is illegal 39

III Conclusion for discussion 42

CHAPTER 5 – RECOMMENDATION 43

APPENDIX 45

REFERENCES 49

The preparation of this research has depended on generous support, insight andassistance of many people and institutions It is a great pleasure to offer our specialthanks here to them

We wish, first of all, to gratefully acknowledge our deep indebtedness to oursupervisor, Mrs … who has always been willing and enthusiastic to give us valuableadvice and instructions, as well as useful lessons, without which this study can hardlyhave been well accomplished

We are grateful to Professor … of International School of Management & Economics

of National Economics University for his assistance in our period of study and writingthis research

In addition, an honorable mention goes to two managers and some other members ofHerbalife They gave us a lot of useful information and support us so much in contactwith company customers as well as members for doing survey and seekinginformation Their helps are really important for us to complete high valid and reliableresearch

Besides, it can be said that the research is a part of study we have after two yearstudying in BTEC program As a result, our group also want to express sinceregratitude to all lecturers, tutors, manager and staff of International Schools ofManagement for successful create this training program Our knowledge in term ofbusiness has been widened a lot after and apply useful to conduct the research

Lastly, we want to give our gratefulness to beloved families and friend for theirunderstandings and willing support They have been always with us and encourage us

in term of spirit

Without helps of the particular that mentioned above, we would face many difficultieswhile doing this research project

EXECUTIVE SUMMARY

Multi-level marketing in Vietnam is nowadays very popular This type ofbusiness is commonly accepted by retired people and housewives those want to workfrom home Multi-level marketing in Vietnam allows the person to work nationallyand even internationally just by sitting at home This is such type of business whichdoes not require the person to go to office and do work over there He or she can sitcomfortably at home and can do this work either part time or full time and can earngreat income Amount of commission increases as the member chin increases Asthere are no retailers or wholesalers or agents, the profit is directly distributedbetween the members Members act as owners of the company Multi-level marketing

in Vietnam is one of the best type of business opportunity those who have less capital.Because of those advantages, there are many different companies have joined inVietnam market, such as Amway, Avon, Oriflame, Noni or Agel and Herbalife.However, because of collapses of Agel or others as well as the exist discussionsbetween multi-level marketing and pyramid scheme ( illegal ), customers lose theirtrust in this type of business

After finishing this research project, we would identify the differencesbetween Herbalife in Vietnam and other countries in the same area through analysingsuitable theories and previous researches Moreover, we also can know the reputation

of Herbalife in Vietnam and how much customers believe in multi-level marketingcompany by conducting survey and analysing the data Finally, by discussing betweenoriginal idea and its objection, our group would confirm about Herbalife is a multi-level marketing company However, in United State and India his model is considered

as a pyramid scheme model

1 Rationale of study

Multi-level marketing (MLM) is a marketing strategy which just appeared forshort time in Vietnam There are many different companies joined in Vietnam marketsuch as Amway, Herbalife, Oriflame or Agel However, they do not have professionaland specific plan and management, thus, customers have wrong view andmisunderstood about this model

In Vietnam, Herbalife is known as the most popular multi-level marketingcompany Launched in 1980 by Mark Hughes in California, Herbalife has quicklybuilt up a reputation and become the most familiar brand of nutrition and skin careproducts in worldwide Herbalife is appeared in 81 countries in the world and it hascertificate of Ministry of Health Herbalife has joined in Vietnam market in 2009, it isquite young but it also has strong influences

Along with the development of economic, when people satisfy their selveswith basic demands such as food, drink and hygiene; they would have other demandsabout health or education Moreover, the rate of obesity people is getting higher, thus,Herbalife is focused on nutrition care products and especially very success with “Weight Loss “ products Herbalife has a clear vision and mission They try to changepeople’s lives by providing a new way to do business and the best nutrition productsand weight-management products Herbalife or multi-level marketing are verypopular and success in many different countries in the world However, in Vietnam,along with the fame, Herbalife also has many bad scandals as well as wrongawareness of people Multi-level marketing is totally new to Vietnamese, butHerbalife does not have a specific plan and management for developing the system inthis market Thus, they are losing their image and reputation in here By interviewingpeople, it is recognized easily that nearly 50% of them thinking that multi-levelmarketing or Herbalife is just a trick Moreover, there are many other competitorshave joined in Vietnam market which have the same products such as Noni or Agel.Hence, if Herbalife does not have any plans to fix and keep their brand’s image, theywill lose the market share

2 Research scope:

 Focus on the effective of multi-marketing in Vietnam market

 Recommend solutions to improving the reputation of the company

 Study marketing aspect from company’s point of view

3 Research objective

Multilevel marketing have penetrated in Vietnam in some recent years Thereare two most famous and typical company follow this type of business is Amway andHerbalife There are a quite large amount of people are on faith of these brands.However, other people still doubt about the quality and effects of their products such

as health and personal care products There are many controversies of the customers,media and experts about multilevel marketing Is that a trick or not to remain thebusiness? Therefore, we carry out this research to find out what are the problem existbehind this kind of business in Vietnam and find out the some advised and solutionfor them not to remain but also to develop and innovate day by day in Vietnammarket Moreover, we also do some investigation, survey and interview to know howthe customer think about Herbalife products, it also contribute to the final solution

In summary, our main objectives of this research are:

 To explore the reputation of Herbalife in Vietnam by analyzing customerbehavior

 To explore the opinions of customers about multi-level marketing system

 Giving solutions to Herbalife to improve reputation as well as gain trust ofcustomers in Vietnam

4 Research question

Based on the background and the research problem, there are three mainquestions which we have to answer and focus in order to find out the problem andsolve it:

 What are the problems of Herbalife in Vietnam nowadays and the differencesfrom the basic form of multilevel marketing in the beginning and othercountries?

 Why does Herbalife can penetrate, maintain and develop in Vietnam?

 How does Herbalife have to do to build the prestige and clean image to gainthe belief and loyalty from Vietnamese customers

It is hoped that this paper can provide possible answers and justifications forabove questions This study proceed as follow:

Chapter 1- Literature review: This chapter contains review and evaluation on pastresearches about multi-level marketing ( MLM ) companies and reaction of customers

to this which this study works on This part will review previous researches on othercountries but with the same field as communicating equipment

Chapter 2- Methodology: This chapter introduces methodology and theories using inresearch Therein, Methodology part consists of data collection methods and dataanalysis methods There are two data collection methods applied, includinginterviewing and questionnaire while data is analysed by using Excel and SPSS(Statistical Package for Social Sciences) software

Chapter 3- Main Finding & Analysis: Due to data collected from questionnaire, thissection brings overview about customers’ awareness to Herbalife and multi-levelmarketing in general

Chapter 4 – Discuss: By giving objection to main finding above, we provideinformation that Herbalife is considered as “ pyramid scheme “ and this model isillegal Then we would reply to protect our original

Chapter 5- Recommendation: In the final part, based on identifying and evaluatingproblem in franchise strategy of the company, some suggestions will be provided so

as to help Herbalife to solve its problems

CHAPTER 1 – LITERATURE REVIEW

Figure 1: Marketing mix model

( Phillip Kotler, Principles of Marketing, 3 rd edition, pg5)

Herbalife can apply this model for their decision making about customerbehavior For example, the survey about review and trust of consumers in Vietnamwas carried out The results revealed that more than half of the responders weremarried women with average age of 32 years old, with bachelor’s degree, own privatebusiness The research concluded that opinions toward nutrition supplementsdepended on gender and marital status Promotion mix showed that consumers withdifferent age, education, occupation, and income had different health concerns

2 Consumer behavior

Consumer behavior is the study of individuals, groups, or organizations and

the processes they use to select, secure, and dispose of products, services, experiences,

or ideas to satisfy needs and the impacts that these processes have on the consumer

and society ( Kuester, Sabine (2012): MKT 301: Strategic Marketing & Marketing in Specific Industry Contexts, University of Mannheim, page 110 )

Belch (1998) defined consumer behaviors as the process and activities people engage

in when searching for, selecting, purchasing, using, evaluating, and disposing ofproducts and service so as to satisfy their needs and desires

The American Marketing Association defines the term “consumer behaviors” as thedynamic interaction of affect and cognition, behavior, and environmental events by

which human beings conduct the exchange aspects of their lives (Peter & Olson,

1996, page 11)

2.1 Maslow’s hierarchy of Needs- theories consumer behavior model

Abraham Maslow developed the Hierarchy of Needs model in the 1940-50s inUSA, and the Hierarchy of Needs theory remains valid today for understandinghuman motivation, management training, and personal development Indeed,Maslow's ideas surrounding the Hierarchy of Needs concerning the responsibility ofemployers to provide a workplace environment that encourages and enablesemployees to fulfill their own unique potential (self-actualization) are today morerelevant than ever

In his theory, Maslow developed his hierarchy of needs based on research about whataffect to consumer behavior He argues that until these most pressing needs aresatisfied, other needs have little effect on an individual’s behavior In other words,people satisfied the most pre-potent needs first and then progress to the less pressingones

Figure 1: The Maslow’s hierarchy of need

(Source: BBP professional, Organization and Behavior, 2010 edition, p162 )

Nowadays, the economy of Vietnam is better, especially the living standard ofthe Vietnamese is higher Thus, when they do not have to care about basic needs such

as food, drink or house, they started to care about other aspects such as education, job

or their health or beauty By understanding this model, Herbalife has joined inVietnam market with different products such as weight management, targetednutrition, energy or personal care Those products are multiple and meet differentrequirements of customers Herbalife applied this model successfully, for example: Ahousewife in the middle age who have enough food, drink, house, a happy family, herchildren grown-up, she would have much more free time than people working inoffice or business owners Therefore, she would start to have demand for beauty orweight lost products Then, this is the opportunity for Herbalife to attract thecustomers

2.2 Gap model - Theories service quality model

Perceived service quality can be defined as, according to the model, thedifference between consumers’ expectation and perceptions which eventually depends

on the size and the direction of the four gaps concerning the delivery of servicequality on the company’s side

Figure 2: The Integrated Gaps Model of Service Quality

(Berry, Parasuraman, Zeithaml, 1985)

For Herbalife situation, current competitive environment induced byglobalization and advances in information technology have forced Herbalife to focus

on managing customer relationships, and in particular customer satisfaction andcustomer loyalty in order to efficiently maximize revenues In the age of customerdelivering quality service, it is considered an essential strategy for success andsurvival in today’s competitive environment The focus of any supply chainmanagement system is to provide all customers with the level of service they requireand as no budget is unlimited, there is need to priorities services The purpose of thepaper is to examine and develop a better understanding of relationship betweenservice quality, customer relationship management, customer satisfaction andcustomer loyalty which might lead to companies’ competitiveness advantage Thismodel is used for setting customer service priorities and an analytical processapproach is used for evaluation of importance of customers

Moreover, Herbalife focused on Customer gap in this model Thus, unlike othercompanies, they do not use usual advertisements such as TV advertisement or usingFacebook for promoting For example: when the competitors ( Agel, Noni, etc) justprovide additional nutrition products, Herbalife understand the need of customersmore deeply, so they understand that besides adding more nutrition for better health,there are lots of women want to lose weight or be more beautiful Herbalife is verysuccessful and famous because of their weight management products which areknown as main products of this company Furthermore, Herbalife recognized thatthere are no promotion methods can compare with “ words of mouth” Hence,Herbalife has a very good customers care service, even after they purchasingproducts This would attract more customers naturally

2.3 Buying decision making

The consumer passes through five stages: need recognition, information search,evaluation of alternatives, purchase decision, and post purchase behaviour

Figure 3: The stage model of Consumer Buying Decision Process

(Hardesty and Bearden, Journal of Retailing, 2003, p17 )

With this process, people can see more clearly with the decision making ofHerbalife’s customers By this way, Herbalife has the overall view to do their ownstrategies with products lines The customer’s purchase decision making processincludes five stages In the first stage, need Recognition, customers’ needs arise frominternal stimuli which is their own hunger or from external stimuli which can befriends Herbalife provides many kinds of products that different from effect to smell

to fit with every emotion of customers The second and third stages of buyer decisionprocess are information search and evaluation of alternatives Customers normallysearch information from various sources such as personal source (family, friends andneighbors), commercial source (advertising, sales people), public source (mass media)and experiential sources Sales team is in the commercial source and responsible forproviding most information about product Besides, personal source is the mosteffective source of information

Commonly, information provided by personal source is from providers’experience They experience through the quality of products and service provided bythe sales people For long-term business, sales people need to provide a perfectservice to customers Sales team – special with distributor – salesperson shouldalways create a comfortable environment for customers by smiling, answeringcustomers’ questions or intelligently handling conditions immediately It will create

an important difference between Herbalife and others competitors

After all, the fourth stage is the most important stage toward the company It isthe purchase decision In fact, in this stage, the purchase decision of customers may bebased on several factors such as attitudes of referenced group and unexpectedsituational factors In fact, sales people should know about those influence factors inthe purchase decision stage of customers Moreover, sales people should be trained tohandle those factors in reality Finally, the company hopes that with the ability tohandle the real conditions and situations of sales people, the company can satisfycustomers’ needs and earn profit from them The final stage in the buyer decisionprocess is post-purchase evaluation This is the assessment stage for the nextpurchase Herbalife ensures the quality of its products which can satisfy customers’needs In addition, one important factor which influences customers’ evaluation is theservice of sellers Sales team needs to please and impress customers, especiallythrough the serving attitudes Understanding buyer’s decision process, the salespersoncan affect customers For example, in the purchase of decision stage the intention will

be translated into action However, if there is some unforeseen circumstances(unexpected situational) occur, it can lead to postpone or prevent the purchase ofcustomer In other words, purchase intention and purchase decision can be influenced

by some factors Purchase decision which can be influenced by attitude of others Itmeans that salespersons also can affect decision of customer The salesperson canprovide more information about the product or show opinion of self in order toconsolidate customer’s decision

II Past research about customers behavior in multi-level marketing

1 Herbalife in China

In 1998, after abuses of illegal pyramid schemes led to riots, the Chinesegovernment enacted a ban on all direct selling companies, including Herbalife Afternegotiations, Herbalife continued to operate through a network of retail storespromoted by an independent sales force

China is a country which has many similar characteristics to Vietnam such asculture, political, habit as well as the awareness of people China was very strict toforeign business especially direct selling From 1993, the illegal pyramid model andunethical direct-selling raised public in China and the media attempted to expose thedangers of those business to economic of China at that time, thus, government decided

to ban direct-selling in their country Although the matter was solve in 1998 in WTOmeeting, nowadays, China is still a tough market for aboard business get into andexpand the business China has a long history with thousands years of feudal, thus, it

is very difficult to change the awareness as well as the habit of Chinese They used tobuy and use the domestic market for long time Moreover, multi-level marketing is anew approach for them to accept Besides the culture of China, because of the ban ofgovernment in period 1996 – 1998 about direct selling, Chinese have been had awrong and different point of view about multi-level marketing Thus, in wholeprocess to expand the market in China, Herbalife did face to many difficulties to buildthe trust and raise the awareness from customers China has huge population ( 1,2billion people ), but the education of Chinese are not too high and it is also alimitation for them to change the awareness

Solution of Herbalife in China: Different from traditional business such as Universal

or P&G, Herbalife did not choose to promotion by advertisement on TV or magazine.Herbalife raised awareness of customers through social activities such as Herbalifehelps children campaign, Herbalife internship program or Green and Organic Healthy

run which launch in 2012 However, to raise awareness and get the royalty fromcustomers can not just depend on social activities Furthermore, based on theories ofcustomer behavior, Herbalife also applies different market strategies to be successful.Herbalife changed their marketing strategy in China by moving to a store frontapproach instead of door to door marketing Herbalife converted most of theirHerbalife offices into stores with employees in it so the consumer can go inside andshop like any other store Later on, in 2005, they further changed their strategy byremoving the pyramid structure where recruitments were not allowed anymore Actualuses of human resources were required This changes the whole face of Herbalife asthe marketing within the company is now removed Company usually usesnetworking within with people to build business, but now, it operates as a normalchain of stores Payment schemes were altered so that pyramids could not existanymore, which was a large part of their marketing strategy.

2 Agel in Vietnam

Agel Enterprises, LLC has founded by Glen Jensen in March 2005 and movedits global headquarters from Provo, Utah to Lehi, Utah The company follows thestructure of a multi-level marketing two-leg commission model where the recruitedsales force is broken down into a "stronger" and "weaker" leg by which participantsreceive 10% commission from their "weaker" leg of recruited sales force Agelmarkets vitamin products which it describes as "suspension gel technology", taken ingel form rather than tablets

Agel VN Co., Ltd officially launched on July 2008 In just over 2 years ofmulti-level sales network of Agel grew fast and is considered as one of the few multi-level marketing system the strongest in Vietnam and estimated number of members ofthe system up to tens of thousands of people However, in 2011, Agel suddenly closedwhich caused by cheating of a Director – mrs Hoang Hai Yen This leads to manypeople cannot draw money or products before the company closed Many memberspurchased products but did not take the products immediately The reason is that theyare afraid those unused products would expire So when Agel VN closing, themembers had no time to get it out Moreover, Agel owed lots of commissions becausethe director – mrs Hoang Hai Yen said that there was delay in America system.Because this system works as “ pyramid “ model, when top line did not have money

to pay, the down line would also do not have commissions At the end of story, thedirector – mrs Hoang Hai Yen disappeard with billions VND According to lawyer Le

Thi Diep - Association of Hanoi, with all the details such as sudden stops workingwithout warning, without payment of commissions to distributors, not every debtreturned to the distributor and does not appear to deal with the consequences, havesufficient elements to constitute fraud charges for Agel Director VN – mrs Hoang HaiYen Therefore, by managing system uncarefully, Agel Enterprise did destroyed verygood reputation in Vietnam, even Agel has special and unique products

Solution of Agel: That scandal is considered as a big trick and many members losttheir money So that, it is difficult for Agel coming back and build their image as well

as gaining trust from customers However, as a member of Asia’s system and theloyal members who still believe in this company, they would re-build the agency soonwith help from Thailand’s agency This time, they plan to get legal license fromGovernment and have professional managers and directors

 Contact to a manager of Herbalife and get the customers list

 Send them a survey through e-mail or mails

 Collect the data and analyse it

By conducting questionnaire the assessment of customers about companywould be collected This method has lots of advantages such as save time and money.However, the disadvantages are that customers may ignore the questionnaires or givewrong questions The questionaire is not too long, customers can finish in about 3minutes

primary data cannot be obtained at all Secondary data is used to gain initial insightinto the research problem However, we have to be careful because that data may benot reliable or out of date In this study, we use both internal and external sources

External data source: There are several sources of existing data available from

outside of the organization that may be of value These include:

 Commercial market research organizations

 Competitors – company reports and websites are easily accessible and

contain a limited amount of information

 The general media: some specialized websites are now accessible online,

making them a useful starting point for research

 Some articles concern assessment, evaluation effectiveness of marketing style

of the company or provide information about customer’s perception,behaviours towards product of Herbalife

Internal data source

This research is lack of internal data Besides official website, there is no moreinternal information which is provided by Herbalife’s employees

II Data collection

successful Herbalife also got many awards such as 2013 Coporate socialresponsibility award, 2012 SNQ national quality certification, 2012 ISO 10002:2004customers satisfication…

 External source

Vnexpress and Forbes are trusted e-newspapers In here, there are manyarticles about Herbalife were posted and can be found easily Experts as well ascustomers review the products of Herbalife very well Herbalife’s products areconsidered as a new technique to make their health better Besides the reviews aboutproducts, there are articles which are written about community activities of Herbalifesuch as Casa Herbalife that helps homeless children or support athletes Nguyen TienNhat to go to London joining in Olympic 2012 However, there are also negativearticles about Herbalife, especially its model Those articles provides informationwhich came from United State financial experts and Herbalife’s CEO – Bill Ackmanthat Herbalife is pyramid scheme Many customers lost their money after few monthsjoining in this company such as mrs.Lopez decided to stop the business after 11months and have lost $ 10,000 investment

2 Primary data

The survey questionnaire is chosen as our primary data collection method, due

to its strength to focus directly on our research objectives With questionnairesdesigned, we decided to do survey via the Internet 180 questionnaires are sent online

or distributed to Herbalife customers and 100 answers are received In order to have adeep understanding and views about the problem, we are going to carry out a groupinterview with the loyalty Herbalife customers It is a good way to save time andmoney

III Limitation of research

In order to do the research about Herb Life, some private information from theinternal of the company need to be accessed A big company like Herbalife cannotgive internal information to a group of students It can cause such a big damage forthe company if the internal information of company is used for bad purpose.Especially, the topic is about identify the types of company: multi level company orpyramid scheme and the trust from customers, so if there is something in dark whichthey do not want to show, they refuse immediately Even they do not base of abovereasons, an enterprise at any industry always want to cover their internal information

as much as possible Moreover, Herbalife is a new entrant and a foreign company inVietnam, thus, they do not public the reports on the Internet as well

CHAPTER 3 – MAIN FINDING

I Overall about customers of Herbalife

Differ from other companies in the same filed; Herbalife does not focus on anycustomer’s segmentation The products of Herbalife are multiple and may be suitablewith different demands of customers Besides buying and using products, customers

of Herbalife also can become members of this company MLM model is considered as

a new type of business which requires less capital but gain more money Thus,customers of Herbalife are very various in ages, income, gender and occupation

Figure 1: Gender of Herbalife customers

Figure 2: Age of Herbalife customers

From figure 1, it can be seen that there are 66% of Herbalife customers arefemale Even the number of female is bigger than male, but the gap between femaleand male is not too high, thus, it lead to a result that Herbalife’s products coverdemands of both gender Products of Herbalife meet the requirements of health aspect

as well as beauty aspect Moreover, it proves that nowadays, people understand thatHerbalife products would support and make their health better and that nutrition arenot medicine and cannot replace medicine It means that people have right awarenessabout those products as well as company Furthermore, most of customers are at theage range of 41-55, this is middle age The three other groups of age have quite equalresults This is a good sign for this company, because it shows that the products aswell as the reputation of Herbalife cover all group of age

Figure 3: Occupation of Herbalife customers

After conducting survey, we recognize that there are lots of customers ofHerbalife are wife houses However, the percentages of Business owner and Officersare not too small To access the information in different perspective, occupation isconsidered because it is shown that people with different jobs will expect a lot ofdifferent things and their satisfactions are different when they use a product/service.The students and wife houses - their demand and satisfaction is more often lower thanpeople who have to work harder as business owner or work in office They need toadd more energy as well as nutrition to keep their mind stable and have enoughstrength to work Obviously, the students who are very young and still strong wouldexpect and care less than the others More importantly, the wife houses usually lookfor weight management as well as products which support health for their husbands,thus, especially for their weight management products, they want it shows results forshort time In term of the evaluation customers of Herbalife, when wife houses make

up to more than 35% of customers, it means that they have more time to searchinformation as well as join in different seminars than other groups Moreover, wifehouses would not only buy products for themselves but also for their husbands andchildren Thus, this is main target of Herbalife

Figure 4: income level per month of Herbalife customers

Surprisingly, there are only nearly 10% people who have more 30,000,000VND per month As usual, these people who have stable financial status like thosewould spend more money for their health and their beauty This means Herbalife doesnot have right and suitable strategies to approach this range of customers However,the middle-income and low-income make up more than 70% customers of Herbalife

So, the price of products are affordable and they willingly spend a part of salary permonth for purchasing products It shows that the products of Herbalife are useful andthey trust in this company

In summary, we can conclude that the customers of Herbalife are very various Theyare at different ages which are youth, middle-age and also the older Even the femaleare much more than male, but they all do different jobs and have different income Allcharts above can point out that the reputation of Herbalife is stable and it cover alltypes of people Vietnamese people have right awareness and build trust for multi-level marketing in general and for Herbalife in specific case

Conclusion: According to figure 1,2 and 3, majority of customers are

housewives and female officers who on the range of age 41 – over 55 It leads to theincome per month of 7 – 15 million VND and it is also the common salary level of theofficers Most of them have a high demand of purchasing weight managementproducts that is the most important of Herbalife Through the data analysis, Herbalife

should identify and narrow down the targeted customers to design and execute thesuitable promotion activity to fit with demand of target customers Moreover, 65% ofHerbalife customers belong to salary level of 0 – 15 million per months This levelapproximate between low and average salary categories As consequences, even whenthey have a high demand, it is hard to maintain the purchasing power Therefore,Herbalife should consider proceeding the discount campaign with the one interested inHerbalife products line or adjust the price a little bit to retain the customers

II Factor impact on Herbalife customer behavior

Customer behavior affects directly to the customer decision-making Every companyshould do the investigation, research and dig the matter deeply before they release anytype of product in the market They should know what attract customer, what motivateand stimulate the purchasing power In case of Herbalife, our group does a smallmarket survey and these following questions and answers make you clear

Figure 5: kind of Herbalife products customers usually buy

Seeing the figure 5 above, we realize that the highest position belong to weightmanagement product lines such as Herbalife Tea Concentrate or Cell Activator with32% of customers The second rank is target nutrition products with 29% and the twofollowing products line is energy and other kind of products (personal care)respectively ( 25% and 24%) The data that we collect is not so uneven

Combining with Figure 1 that we deal with before, the sex of customer has strongrelationship with the kind of products they buy It means that female and male have

different on buying products decision making According the Question 1 result, morethan a half of Herbalife customer are housewife’s and female officers These types ofHerbalife targeted customers do not do the exercise usually because of the nature ofwork; thus, weight is their main health problem It leads to 32% of customer choose

weight management product lines such as Personalized Protein Powder – Protein Herbalife F3 On the other hand, male customers often bother about their

body shade and fitness As a consequence, 25 people buy energy and fitness products

Unfortunately, there are more and more opposite comments and controversyabout “meal replacement shakes” which known as the weight management products

As with any weight loss program, users encourage those on Herbalife weight loss plan

to look at the change in eating habits as a lifestyle change The weight loss only seems

to be completely maintainable when continuing the use of the product past the point

of achieving the loss Once the body has adjusted to consuming shakes as the primaryform of nutrition, it is difficult for most to transition into eating standard food withoutgaining the weight back Therefore, some people do not supposed as a permanent andreliable products and must have a careful consideration before beginning the plan.These comment and feedback can affect on the image and reputation; as a result,Herbalife can not retain the 32% as in the results if they do not make a development.The chief operating officer of Herbalife, Richard Goudis said Herbalife spent $44million last year on research and development, technical infrastructure and other areas

to support its products ( AP (2013) Herbalife defend itself against short seller’s claim Available on: http://www.cbsnews.com/8301-34227_162-57563324/herbalife- defends-itself-against-short-sellers-claims/ , access: 10/1/2013) Real feedback form

customers will proves Herbalife can reverse the situation that Bill Ackman and manycustomers lay the blame on the product negative effect

Figure 6: reason of customer for buying Herbalife products

This result is illustrated through the chart make us surprise that nowadays, peoplespent more their money on taking care of their health They want to maintain a resistancephysical strength and a good health, it is the reason why there are 36 of 100 customer choosethis reason for buying Herbalife products This results related to Question 6, when 29%usually buy Targeted nutrition supplement products as their favorite and 24% choose othertype of products and most of them is personal care products As I know, there are manywomen who are mostly housewife and officer buy the retail ticket to joy the nutritionsupplement session or diet meals every week It can belong to the whole process lasting forseveral months or they can joy whenever they want with the unlimited session Thesalespersons or distributors will be the one guiding you the right way to balance the vitamin

by applying their own nutrition formula

Additionally, the Internet is an access that links the customer and Herbalife Hence,14% of them buy Herbalife by seeing recommendation from some famous sharing commentwebsite (www.lamchame.com or www.webtretho.com ) Surprisingly, there are 15% ofcustomer say that they follow the doctor’s advice It is a positive signal and marketreflection that day by day the doctors who have the expertise in health and nutrition believe

in the Herbalife products Besides, 11 people just buy because of objective influence from

other people like friends and family Standing at the second rank, there are 24% customerchoose others reason Among 24 people, there are 13 people were influenced by marketer’swords of mouth and 11 people said that they want get back in to perfect shape

Figure 7: How do customers buy products?

This question shows how the customers believe in the retailer system ordistributors Because this is a simple type of products so almost of customer stillchoose to purchase via Herbalife independent distributor 41% customers demonstratethat matter when they find the distributor to buy Herbalife products The product ispurchased through multi-level marketing, also known as direct sales, which means it isdistributed through independent retailers much like a home party plan Customer stillschoose the retail selling system because it is a good way to save their time and theycan ask the distributors for some tip or advises Thank to the huge distributor system,Herbalife gain a lot of profit ever year

On the contrary, it is not a good reflection when the 21% of them must go to purchasedirectly from the warehouse It means that they don’t put the belief in the independentdistributors Obviously, it is easy to understand when large amount Herbalifedistributors do not have any certificate or join professional training courses They arenot even sure about the product awareness and nutrition supplement knowledge.Surprisingly, most of them are the customers In the disclosure, Herbalife said 73% of