Herbalife is a company in the direct selling industry which is registered in the Direct Selling Association of Malaysia. In Malaysia, direct selling is a diversified business with substantial product categories. It is increasingly becoming a significant distribution channel within the country’s total retail enterprise system. Basically, Herbalife sells their consumer products, mostly dietary nutrition and health supplements by direct personal contact instead of waiting for customers to knock on their doors. The products of the company are marketed through independent sales representatives who are commonly known as consultants or distributors. They are independent contractors who market and sell Herbalife products in return for a commission
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For instance, e-commerce company like Amazon.com offer their own brands of nutritional shakes such as Medifast shakes at a much more reasonable price compared to Herbalife shakes. Besides, new recipes can be counterfeited easily that result in the same or even better nutritional value. Owing to this, Herbalife’s recipe patent is useless to bar potential competitors. Herbalife’s competitor, Shaklee, has over 50 patents, but does not hold the title for any top-selling shakes. (Knudsen, K. n.d.) The only potential barriers to competitors are the government regulations that are currently in place. The Food and Drug Administration (FDA) has been particularly forceful during the past several years about labels with weight management claims. However, since Herbalife is also subject to these regulations, the overall risk of entry by potential competitors is still …show more content…
These tiny companies do not have large enough share of the market to be able to influence the industry's direction. In other words, they only have little power to compete with large companies like Herbalife. (Knudsen, K. n.d.) However, the shake industry has reached the peak of its growth because majority of consumers are more interested in cost than quality. This has led to lower profit margins and greater competition as growth continues to decline. Fortunately, Herbalife has many followers that are loyal to the Herbalife brand, which other shake companies lack. Thus, the rivalry among existing competitors is relatively low since Herbalife has a stronger customer base and better brand recognition than a majority of its
For instance, e-commerce company like Amazon.com offer their own brands of nutritional shakes such as Medifast shakes at a much more reasonable price compared to Herbalife shakes. Besides, new recipes can be counterfeited easily that result in the same or even better nutritional value. Owing to this, Herbalife’s recipe patent is useless to bar potential competitors. Herbalife’s competitor, Shaklee, has over 50 patents, but does not hold the title for any top-selling shakes. (Knudsen, K. n.d.) The only potential barriers to competitors are the government regulations that are currently in place. The Food and Drug Administration (FDA) has been particularly forceful during the past several years about labels with weight management claims. However, since Herbalife is also subject to these regulations, the overall risk of entry by potential competitors is still …show more content…
These tiny companies do not have large enough share of the market to be able to influence the industry's direction. In other words, they only have little power to compete with large companies like Herbalife. (Knudsen, K. n.d.) However, the shake industry has reached the peak of its growth because majority of consumers are more interested in cost than quality. This has led to lower profit margins and greater competition as growth continues to decline. Fortunately, Herbalife has many followers that are loyal to the Herbalife brand, which other shake companies lack. Thus, the rivalry among existing competitors is relatively low since Herbalife has a stronger customer base and better brand recognition than a majority of its