LV Thạc sỹ_Reputation of multi level marketing in Herbalife Vietnam

National Economics University
International School of Management
and Economics

Research project

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

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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


ACKNOWLEDGEMENT
The preparation of this research has depended on generous support, insight and
assistance of many people and institutions. It is a great pleasure to offer our special
thanks here to them.
We wish, first of all, to gratefully acknowledge our deep indebtedness to our
supervisor, Mrs … who has always been willing and enthusiastic to give us valuable
advice and instructions, as well as useful lessons, without which this study can hardly
have 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 writing
this research.
In addition, an honorable mention goes to two managers and some other members of
Herbalife. They gave us a lot of useful information and support us so much in contact
with company customers as well as members for doing survey and seeking
information. Their helps are really important for us to complete high valid and reliable
research.
Besides, it can be said that the research is a part of study we have after two year
studying in BTEC program. As a result, our group also want to express sincere
gratitude to all lecturers, tutors, manager and staff of International Schools of
Management for successful create this training program. Our knowledge in term of
business 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 their
understandings 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 difficulties
while doing this research project.

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EXECUTIVE SUMMARY
Multi-level marketing in Vietnam is nowadays very popular. This type of
business is commonly accepted by retired people and housewives those want to work
from home. Multi-level marketing in Vietnam allows the person to work nationally
and even internationally just by sitting at home. This is such type of business which
does not require the person to go to office and do work over there. He or she can sit
comfortably at home and can do this work either part time or full time and can earn
great income. Amount of commission increases as the member chin increases. As
there are no retailers or wholesalers or agents, the profit is directly distributed
between 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 in
Vietnam market, such as Amway, Avon, Oriflame, Noni or Agel and Herbalife.
However, because of collapses of Agel or others as well as the exist discussions
between multi-level marketing and pyramid scheme ( illegal ), customers lose their
trust in this type of business.
After finishing this research project, we would identify the differences
between Herbalife in Vietnam and other countries in the same area through analysing
suitable theories and previous researches. Moreover, we also can know the reputation
of Herbalife in Vietnam and how much customers believe in multi-level marketing
company by conducting survey and analysing the data. Finally, by discussing between
original idea and its objection, our group would confirm about Herbalife is a multilevel marketing company. However, in United State and India his model is considered
as a pyramid scheme model.

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INTRODUCTION
1. Rationale of study
Multi-level marketing (MLM) is a marketing strategy which just appeared for
short time in Vietnam. There are many different companies joined in Vietnam market
such as Amway, Herbalife, Oriflame or Agel. However, they do not have professional
and specific plan and management, thus, customers have wrong view and
misunderstood about this model.
In Vietnam, Herbalife is known as the most popular multi-level marketing
company. Launched in 1980 by Mark Hughes in California, Herbalife has quickly
built up a reputation and become the most familiar brand of nutrition and skin care
products in worldwide. Herbalife is appeared in 81 countries in the world and it has
certificate of Ministry of Health. Herbalife has joined in Vietnam market in 2009, it is
quite young but it also has strong influences.
Along with the development of economic, when people satisfy their selves
with basic demands such as food, drink and hygiene; they would have other demands
about 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 change
people’s lives by providing a new way to do business and the best nutrition products
and weight-management products. Herbalife or multi-level marketing are very
popular 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 wrong
awareness of people. Multi-level marketing is totally new to Vietnamese, but
Herbalife does not have a specific plan and management for developing the system in
this market. Thus, they are losing their image and reputation in here. By interviewing
people, it is recognized easily that nearly 50% of them thinking that multi-level
marketing or Herbalife is just a trick. Moreover, there are many other competitors

have 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, they
will 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.

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

Study marketing aspect from company’s point of view

3. Research objective
Multilevel marketing have penetrated in Vietnam in some recent years. There
are two most famous and typical company follow this type of business is Amway and
Herbalife. 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 the
business? Therefore, we carry out this research to find out what are the problem exist
behind this kind of business in Vietnam and find out the some advised and solution for
them not to remain but also to develop and innovate day by day in Vietnam market.
Moreover, we also do some investigation, survey and interview to know how the

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 customer
behavior



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



Giving solutions to Herbalife to improve reputation as well as gain trust of
customers in Vietnam

4. Research question
Based on the background and the research problem, there are three main
questions which we have to answer and focus in order to find out the problem and
solve it:


What are the problems of Herbalife in Vietnam nowadays and the differences
from the basic form of multilevel marketing in the beginning and other
countries?



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



How does Herbalife have to do to build the prestige and clean image to gain
the belief and loyalty from Vietnamese customers
It is hoped that this paper can provide possible answers and justifications for

above questions. This study proceed as follow:
Chapter 1- Literature review: This chapter contains review and evaluation on past
researches about multi-level marketing ( MLM ) companies and reaction of customers

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to this which this study works on. This part will review previous researches on other
countries but with the same field as communicating equipment.
Chapter 2- Methodology: This chapter introduces methodology and theories using in
research. Therein, Methodology part consists of data collection methods and data
analysis methods. There are two data collection methods applied, including
interviewing 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, this
section brings overview about customers’ awareness to Herbalife and multi-level
marketing in general.
Chapter 4 – Discuss: By giving objection to main finding above, we provide
information that Herbalife is considered as “ pyramid scheme “ and this model is
illegal. Then we would reply to protect our original.
Chapter 5- Recommendation: In the final part, based on identifying and evaluating
problem in franchise strategy of the company, some suggestions will be provided so
as to help Herbalife to solve its problems.

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CHAPTER 1 – LITERATURE REVIEW
I.

A review of theories
1. Marketing mix 4Ps:
The marketing mix is generally accepted as the use and specification of the

4ps: Product, Price, Place and Promotion describing the strategic position of a product
in market place

Figure 1: Marketing mix model
( Phillip Kotler, Principles of Marketing, 3rd edition, pg5)
Herbalife can apply this model for their decision making about customer
behavior. For example, the survey about review and trust of consumers in Vietnam
was carried out. The results revealed that more than half of the responders were
married women with average age of 32 years old, with bachelor’s degree, own private
business. The research concluded that opinions toward nutrition supplements
depended on gender and marital status. Promotion mix showed that consumers with
different age, education, occupation, and income had different health concerns.

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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 of
products and service so as to satisfy their needs and desires.
The American Marketing Association defines the term “consumer behaviors” as the
dynamic 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 in
USA, and the Hierarchy of Needs theory remains valid today for understanding
human motivation, management training, and personal development. Indeed,
Maslow's ideas surrounding the Hierarchy of Needs concerning the responsibility of
employers to provide a workplace environment that encourages and enables
employees to fulfill their own unique potential (self-actualization) are today more
relevant than ever.
In his theory, Maslow developed his hierarchy of needs based on research about what
affect to consumer behavior. He argues that until these most pressing needs are
satisfied, 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 pressing
ones.

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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 of
the 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 in
Vietnam market with different products such as weight management, targeted
nutrition, energy or personal care. Those products are multiple and meet different
requirements of customers. Herbalife applied this model successfully, for example: A
housewife in the middle age who have enough food, drink, house, a happy family, her
children grown-up, she would have much more free time than people working in
office or business owners. Therefore, she would start to have demand for beauty or
weight lost products. Then, this is the opportunity for Herbalife to attract the
customers.
2.2 Gap model - Theories service quality model
Perceived service quality can be defined as, according to the model, the
difference between consumers’ expectation and perceptions which eventually depends
on the size and the direction of the four gaps concerning the delivery of service
quality on the company’s side.

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Figure 2: The Integrated Gaps Model of Service Quality
(Berry, Parasuraman, Zeithaml, 1985)
For Herbalife situation, current competitive environment induced by
globalization and advances in information technology have forced Herbalife to focus
on managing customer relationships, and in particular customer satisfaction and
customer loyalty in order to efficiently maximize revenues. In the age of customer
delivering quality service, it is considered an essential strategy for success and
survival in today’s competitive environment. The focus of any supply chain
management system is to provide all customers with the level of service they require
and as no budget is unlimited, there is need to priorities services. The purpose of the
paper is to examine and develop a better understanding of relationship between

service quality, customer relationship management, customer satisfaction and
customer loyalty which might lead to companies’ competitiveness advantage. This
model is used for setting customer service priorities and an analytical process
approach is used for evaluation of importance of customers.

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Moreover, Herbalife focused on Customer gap in this model. Thus, unlike other
companies, they do not use usual advertisements such as TV advertisement or using
Facebook for promoting. For example: when the competitors ( Agel, Noni, etc) just
provide additional nutrition products, Herbalife understand the need of customers
more 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 very
successful and famous because of their weight management products which are
known as main products of this company. Furthermore, Herbalife recognized that
there are no promotion methods can compare with “ words of mouth”. Hence,
Herbalife has a very good customers care service, even after they purchasing
products. 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 )

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With this process, people can see more clearly with the decision making of

Herbalife’s customers. By this way, Herbalife has the overall view to do their own
strategies with products lines. The customer’s purchase decision making process
includes five stages. In the first stage, need Recognition, customers’ needs arise from
internal stimuli which is their own hunger or from external stimuli which can be
friends. 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 decision
process are information search and evaluation of alternatives. Customers normally
search information from various sources such as personal source (family, friends and
neighbors), commercial source (advertising, sales people), public source (mass media)
and experiential sources. Sales team is in the commercial source and responsible for
providing most information about product. Besides, personal source is the most
effective source of information.
Commonly, information provided by personal source is from providers’
experience. They experience through the quality of products and service provided by
the sales people. For long-term business, sales people need to provide a perfect
service to customers. Sales team – special with distributor – salesperson should
always create a comfortable environment for customers by smiling, answering
customers’ 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 is
the purchase decision. In fact, in this stage, the purchase decision of customers may be
based on several factors such as attitudes of referenced group and unexpected
situational factors. In fact, sales people should know about those influence factors in
the purchase decision stage of customers. Moreover, sales people should be trained to
handle those factors in reality. Finally, the company hopes that with the ability to
handle the real conditions and situations of sales people, the company can satisfy
customers’ needs and earn profit from them. The final stage in the buyer decision
process is post-purchase evaluation. This is the assessment stage for the next
purchase. Herbalife ensures the quality of its products which can satisfy customers’
needs. In addition, one important factor which influences customers’ evaluation is the

service of sellers. Sales team needs to please and impress customers, especially
through the serving attitudes. Understanding buyer’s decision process, the salesperson
can affect customers. For example, in the purchase of decision stage the intention will
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be translated into action. However, if there is some unforeseen circumstances
(unexpected situational) occur, it can lead to postpone or prevent the purchase of
customer. In other words, purchase intention and purchase decision can be influenced
by some factors. Purchase decision which can be influenced by attitude of others. It
means that salespersons also can affect decision of customer. The salesperson can
provide more information about the product or show opinion of self in order to
consolidate 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 Chinese

government enacted a ban on all direct selling companies, including Herbalife. After
negotiations, Herbalife continued to operate through a network of retail stores
promoted by an independent sales force.
China is a country which has many similar characteristics to Vietnam such as
culture, political, habit as well as the awareness of people. China was very strict to
foreign business especially direct selling. From 1993, the illegal pyramid model and
unethical direct-selling raised public in China and the media attempted to expose the
dangers 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 WTO
meeting, nowadays, China is still a tough market for aboard business get into and
expand 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 to
buy and use the domestic market for long time. Moreover, multi-level marketing is a
new approach for them to accept. Besides the culture of China, because of the ban of
government in period 1996 – 1998 about direct selling, Chinese have been had a
wrong and different point of view about multi-level marketing. Thus, in whole process
to expand the market in China, Herbalife did face to many difficulties to build the
trust and raise the awareness from customers. China has huge population ( 1,2 billion
people ), but the education of Chinese are not too high and it is also a limitation 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 Herbalife
helps children campaign, Herbalife internship program or Green and Organic Healthy
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run which launch in 2012. However, to raise awareness and get the royalty from
customers can not just depend on social activities. Furthermore, based on theories of
customer behavior, Herbalife also applies different market strategies to be successful.
Herbalife changed their marketing strategy in China by moving to a store front
approach instead of door to door marketing. Herbalife converted most of their
Herbalife offices into stores with employees in it so the consumer can go inside and
shop like any other store. Later on, in 2005, they further changed their strategy by
removing the pyramid structure where recruitments were not allowed anymore. Actual
uses of human resources were required. This changes the whole face of Herbalife as
the marketing within the company is now removed. Company usually uses
networking within with people to build business, but now, it operates as a normal
chain of stores. Payment schemes were altered so that pyramids could not exist
anymore, 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 moved
its global headquarters from Provo, Utah to Lehi, Utah. The company follows the
structure of a multi-level marketing two-leg commission model where the recruited
sales force is broken down into a "stronger" and "weaker" leg by which participants
receive 10% commission from their "weaker" leg of recruited sales force. Agel
markets vitamin products which it describes as "suspension gel technology", taken in
gel form rather than tablets.
Agel VN Co., Ltd. officially launched on July 2008. In just over 2 years of
multi-level sales network of Agel grew fast and is considered as one of the few multilevel marketing system the strongest in Vietnam and estimated number of members of
the system up to tens of thousands of people. However, in 2011, Agel suddenly closed
which caused by cheating of a Director – mrs Hoang Hai Yen. This leads to many
people cannot draw money or products before the company closed. Many members
purchased products but did not take the products immediately. The reason is that they
are afraid those unused products would expire. So when Agel VN closing, the
members had no time to get it out. Moreover, Agel owed lots of commissions because
the 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, the
director – mrs Hoang Hai Yen disappeard with billions VND. According to lawyer Le
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Thi Diep - Association of Hanoi, with all the details such as sudden stops working
without warning, without payment of commissions to distributors, not every debt
returned to the distributor and does not appear to deal with the consequences, have
sufficient elements to constitute fraud charges for Agel Director VN – mrs Hoang Hai
Yen. Therefore, by managing system uncarefully, Agel Enterprise did destroyed very
good reputation in Vietnam, even Agel has special and unique products.
Solution of Agel: That scandal is considered as a big trick and many members lost
their 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 the loyal
members who still believe in this company, they would re-build the agency soon with
help from Thailand’s agency. This time, they plan to get legal license from
Government and have professional managers and directors.

CHAPTER 2 – METHODOLOGY
I.

Research methodology
1. Primary data:
After collecting data from secondary data, it is crucial for us to collect primary

data by conducting a survey. To do a survey effectively, we prepared a specific plan
which includes 3 steps :


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 company

would 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 give
wrong questions. The questionaire is not too long, customers can finish in about 3

minutes.
2. Secondary data
To collect data for analysing the differences and problem of multilevel
company like Herbalife in Vietnam nowadays, secondary data is used. Secondary data
is the available data that have been already collected by other people or organization
that we can get from both internal and external sources. Such data are cheaper and
more quickly obtainable than the primary data and also may be available when

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primary data cannot be obtained at all. Secondary data is used to gain initial insight
into the research problem. However, we have to be careful because that data may be
not 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 more
internal information which is provided by Herbalife’s employees.
II.

Data collection
1. Secondary data


Internal source
This study use information on Herbalife official website (www.herbalife-

vietnam.com). This website provides all information about Herbalife, kinds of
products, customers sharing their experience and true stories as well as business
opportunities. On the websites, all information about products are provided in details:
functions, nutrition content and certification of Ministry of Health. Moreover, by
sharing the true stories and customers’ experience, Herbalife may gain more trust
from customers. Especially, athletes gymnastics Pham Phuoc Hung, it is proved that
Herbalife’s products are useful. Besides the information about products, by accessing
business opportunites, it is easy to see that business activites of Herbalife in Vietnam
are developing very well. This website also provide specific reasons for customers
that why they should start doing business as well as using Herbalife’s products. It
helps customers have good impressions about this company as well as proving that
Herbalife is legal company. Moreover, through Herbalife’s official websites,

customers may have brief views about recent achievements of company in other

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countries. In general, Herbalife have appeared in 88 countries since 1983 and very
successful. Herbalife also got many awards such as 2013 Coporate social
responsibility award, 2012 SNQ national quality certification, 2012 ISO 10002:2004
customers satisfication…


External source
Vnexpress and Forbes are trusted e-newspapers. In here, there are many

articles about Herbalife were posted and can be found easily. Experts as well as
customers review the products of Herbalife very well. Herbalife’s products are
considered as a new technique to make their health better. Besides the reviews about
products, there are articles which are written about community activities of Herbalife
such as Casa Herbalife that helps homeless children or support athletes Nguyen Tien
Nhat to go to London joining in Olympic 2012. However, there are also negative
articles about Herbalife, especially its model. Those articles provides information
which came from United State financial experts and Herbalife’s CEO – Bill Ackman
that Herbalife is pyramid scheme. Many customers lost their money after few months
joining in this company such as mrs.Lopez decided to stop the business after 11
months 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 questionnaires
designed, 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 a

deep understanding and views about the problem, we are going to carry out a group
interview with the loyalty Herbalife customers. It is a good way to save time and
money.
III.

Limitation of research
In order to do the research about Herb Life, some private information from the

internal of the company need to be accessed. A big company like Herbalife cannot
give internal information to a group of students. It can cause such a big damage for
the 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 or
pyramid scheme and the trust from customers, so if there is something in dark which
they do not want to show, they refuse immediately. Even they do not base of above

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reasons, 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 in
Vietnam, 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 any
customer’s segmentation. The products of Herbalife are multiple and may be suitable
with 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

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Figure 2: Age of Herbalife customers
From figure 1, it can be seen that there are 66% of Herbalife customers are
female. Even the number of female is bigger than male, but the gap between female
and male is not too high, thus, it lead to a result that Herbalife’s products cover
demands of both gender. Products of Herbalife meet the requirements of health aspect
as well as beauty aspect. Moreover, it proves that nowadays, people understand that
Herbalife products would support and make their health better and that nutrition are
not medicine and cannot replace medicine. It means that people have right awareness
about those products as well as company. Furthermore, most of customers are at the
age range of 41-55, this is middle age. The three other groups of age have quite equal
results. This is a good sign for this company, because it shows that the products as
well as the reputation of Herbalife cover all group of age.

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Figure 3: Occupation of Herbalife customers
After conducting survey, we recognize that there are lots of customers of
Herbalife are wife houses. However, the percentages of Business owner and Officers
are not too small. To access the information in different perspective, occupation is
considered because it is shown that people with different jobs will expect a lot of
different 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 than
people who have to work harder as business owner or work in office. They need to

add more energy as well as nutrition to keep their mind stable and have enough
strength to work. Obviously, the students who are very young and still strong would
expect and care less than the others. More importantly, the wife houses usually look
for weight management as well as products which support health for their husbands,
thus, especially for their weight management products, they want it shows results for
short 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 search
information as well as join in different seminars than other groups. Moreover, wife
houses would not only buy products for themselves but also for their husbands and
children. Thus, this is main target of Herbalife.

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Figure 4: income level per month of Herbalife customers
Surprisingly, there are only nearly 10% people who have more 30,000,000
VND per month. As usual, these people who have stable financial status like those
would spend more money for their health and their beauty. This means Herbalife does
not 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 per
month for purchasing products. It shows that the products of Herbalife are useful and
they trust in this company.
In summary, we can conclude that the customers of Herbalife are very various. They
are at different ages which are youth, middle-age and also the older. Even the female
are much more than male, but they all do different jobs and have different income. All
charts above can point out that the reputation of Herbalife is stable and it cover all
types of people. Vietnamese people have right awareness and build trust for multilevel 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 the

income per month of 7 – 15 million VND and it is also the common salary level of the
officers. Most of them have a high demand of purchasing weight management
products that is the most important of Herbalife. Through the data analysis, Herbalife

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should identify and narrow down the targeted customers to design and execute the
suitable promotion activity to fit with demand of target customers. Moreover, 65% of
Herbalife customers belong to salary level of 0 – 15 million per months. This level
approximate between low and average salary categories. As consequences, even when
they have a high demand, it is hard to maintain the purchasing power. Therefore,
Herbalife should consider proceeding the discount campaign with the one interested in
Herbalife 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 company
should do the investigation, research and dig the matter deeply before they release any
type of product in the market. They should know what attract customer, what motivate
and stimulate the purchasing power. In case of Herbalife, our group does a small
market 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 weight
management product lines such as Herbalife Tea Concentrate or Cell Activator with
32% of customers. The second rank is target nutrition products with 29% and the two
following 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 strong
relationship 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, more
than a half of Herbalife customer are housewife’s and female officers. These types of

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Herbalife targeted customers do not do the exercise usually because of the nature of
work; 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 controversy
about “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 primary
form of nutrition, it is difficult for most to transition into eating standard food without
gaining the weight back. Therefore, some people do not supposed as a permanent and
reliable 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 $44
million 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: , access: 10/1/2013). Real feedback form
customers will proves Herbalife can reverse the situation that Bill Ackman and many
customers lay the blame on the product negative effect.

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Figure 6: reason of customer for buying Herbalife products
This result is illustrated through the chart make us surprise that nowadays, people
spent more their money on taking care of their health. They want to maintain a resistance
physical strength and a good health, it is the reason why there are 36 of 100 customer choose
this 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 other
type of products and most of them is personal care products. As I know, there are many
women who are mostly housewife and officer buy the retail ticket to joy the nutrition
supplement session or diet meals every week. It can belong to the whole process lasting for
several months or they can joy whenever they want with the unlimited session. The
salespersons 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 comment
website (www.lamchame.com or www.webtretho.com ). Surprisingly, there are 15% of
customer say that they follow the doctor’s advice. It is a positive signal and market reflection
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% customer choose

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