CHAPTER 3

Direct Selling Distributor Compensation Plans

Anne T. Coughlan

A direct selling (DS) firm is defined by the type of distribution channel it creates to take its products from point of production to point of consumption. The DS distribution channel consists of three primary types of channel members: the DS firm itself (similar to a manufacturer in a non-DS channel); a set of independent contractors called distributors1; and nondistributor consumers.2 These channel members are jointly responsible for getting the work of the DS channel done, just as is true in non-DS channels.

The design of any distribution channel, the DS channel included, requires that the work of the channel—that is, the channel’s various tasks and activities—be assigned ...

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