Distribution of private retirement plans in Mexico through multilevel marketing : the case study of Expertos Patrimoniales, consulting firm
Gordillo Kontio , Ulla Rosalina (2011)
Gordillo Kontio , Ulla Rosalina
Turun ammattikorkeakoulu
2011
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2011101113697
https://urn.fi/URN:NBN:fi:amk-2011101113697
Tiivistelmä
This study is an in-depth research of the implementation of multilevel marketing for the distribution of private retirement plans in Mexico. The study focuses on the case of a Mexican consulting firm Expertos Patrimoniales. More specifically, the objective of the study is to understand the reason for which companies in Mexico involved in selling financial products would be interested in implementing a multilevel marketing scheme, and to understand the process of the implementation of multilevel marketing.
Multilevel marketing is a scheme used to promote and distribute products and services by using independent sales representatives who work on commission. Successful corporations such as Tupperware and Mary Kay were the pioneers using this scheme, the same scheme that has helped them grow across the borders through the years. Regardless of the high number of law suits that most multilevel marketing companies have had to deal with, upcoming firms are still eager to implement this scheme.
Multilevel marketing is now being implemented in the distribution of financial services in Mexico, including private retirement plans, which is the product Expertos Patrimoniales is distributing through the scheme. The pension system in Mexico is going through adjustments which will significantly decrease the amount of retirement pension Mexican workers will get for their retirement years. The old systems are being replaced by a system of individual retirement accounts called AFORE. This new system will give each individual 20% of their last salary, an amount that allows the pensioners to barely survive. For this reason, the role of private retirement plans in Mexico is very important. However, not every Mexican is aware of the issues related to the new pension system AFORE, and they are unaware of their need to get a private retirement plan.
This study attempts to find the answers to the research questions by performing three interviews, and by analyzing the marketing and promotional material used by Expertos Patrimoniales. Two of the interviewees are former sales representatives of multilevel marketing firms in Mexico. They explain the role of multilevel marketing in their lives, and their personal experience during their participation in such schemes. The third interviewee is the founder and General Director of Expertos Patrimoniales, who explains the reasons for which he is implementing multilevel marketing and provides an insight to the process of implementation. However, in order to understand the process of implementation, the study also analyses the marketing and promotional material used by the firm.
The findings reveal three main reasons for the implementation of multilevel marketing. The first reason is the low financial costs as the scheme cuts administrative costs, promotional costs and distribution costs, because all the activities are performed by the sales representatives who work on commission. The second reason is the exponential growth of the network, and the third is the potential to reach new markets that are not being served by the big corporations.
The findings also reveal that the main challenge of the implementation process of multilevel marketing is the initial recruitment process, in other words, the recruitment of the first sales representatives. Furthermore, they also reveal that the key of multilevel marketing is the selling process, and thus the scheme requires people with good selling skills in order to successfully be implemented. In addition, there should only be one simple product or service which anyone is able to understand and sell.
As the final recommendations, this study suggests that Expertos Patrimoniales as well as any other firm seeking to implement multilevel marketing, should create a very specific profile of the people they initially wish to recruit, and they should focus on creating a recruitment strategy. The next step is to create a training model for the development of selling skills for when the network grows and strategic recruitment is no longer relevant. This according to the General Director of Expertos Patrimoniales is the key to success for the sales representatives.
Multilevel marketing is a scheme used to promote and distribute products and services by using independent sales representatives who work on commission. Successful corporations such as Tupperware and Mary Kay were the pioneers using this scheme, the same scheme that has helped them grow across the borders through the years. Regardless of the high number of law suits that most multilevel marketing companies have had to deal with, upcoming firms are still eager to implement this scheme.
Multilevel marketing is now being implemented in the distribution of financial services in Mexico, including private retirement plans, which is the product Expertos Patrimoniales is distributing through the scheme. The pension system in Mexico is going through adjustments which will significantly decrease the amount of retirement pension Mexican workers will get for their retirement years. The old systems are being replaced by a system of individual retirement accounts called AFORE. This new system will give each individual 20% of their last salary, an amount that allows the pensioners to barely survive. For this reason, the role of private retirement plans in Mexico is very important. However, not every Mexican is aware of the issues related to the new pension system AFORE, and they are unaware of their need to get a private retirement plan.
This study attempts to find the answers to the research questions by performing three interviews, and by analyzing the marketing and promotional material used by Expertos Patrimoniales. Two of the interviewees are former sales representatives of multilevel marketing firms in Mexico. They explain the role of multilevel marketing in their lives, and their personal experience during their participation in such schemes. The third interviewee is the founder and General Director of Expertos Patrimoniales, who explains the reasons for which he is implementing multilevel marketing and provides an insight to the process of implementation. However, in order to understand the process of implementation, the study also analyses the marketing and promotional material used by the firm.
The findings reveal three main reasons for the implementation of multilevel marketing. The first reason is the low financial costs as the scheme cuts administrative costs, promotional costs and distribution costs, because all the activities are performed by the sales representatives who work on commission. The second reason is the exponential growth of the network, and the third is the potential to reach new markets that are not being served by the big corporations.
The findings also reveal that the main challenge of the implementation process of multilevel marketing is the initial recruitment process, in other words, the recruitment of the first sales representatives. Furthermore, they also reveal that the key of multilevel marketing is the selling process, and thus the scheme requires people with good selling skills in order to successfully be implemented. In addition, there should only be one simple product or service which anyone is able to understand and sell.
As the final recommendations, this study suggests that Expertos Patrimoniales as well as any other firm seeking to implement multilevel marketing, should create a very specific profile of the people they initially wish to recruit, and they should focus on creating a recruitment strategy. The next step is to create a training model for the development of selling skills for when the network grows and strategic recruitment is no longer relevant. This according to the General Director of Expertos Patrimoniales is the key to success for the sales representatives.