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December 9, 2005
Quixtar Partnerships
By QBlog in Quixtar
Brand association is a classic marketing strategy. A company highlights the celebrities and respected organizations that it does business with hoping that such associations will be viewed as a type of endorsement. It's a very effective tactic and Quixtar is one of many corporations that have almost perfected its use.
However, the reality is that such associations often don't mean much. If Alan Greenspan eats lunch at Wendy's every week, does that mean you should buy Wendy's stock? Probably not. Yet it's not uncommon for Quixtar IBOs to characterize Quixtar's business associations as endorsements.
Scott Larsen has compiled an intriguing examination of this marketing strategy and basically shot it full of holes. Turns out Quixtar did business with Enron and MCI Worldcom, perpetrators of some of the largest corporate scandals in U.S. history. Nice.
The lesson here is simple. Businesses do business with other businesses all the time. That doesn't represent an endorsement. It just means they're doing business and the bills are getting paid. Sure, sometimes it can mean more than that but in most cases it means virtually nothing.
Comments
Here is a good question to ask: Can an IBO sell the product they buy from the partner store, or is that part of the business solely as a buying club? If they can resell it, why would they? The customer could straight to that company website and get the same product at the price the IBO pays. Where is the profit made? What is the logic on the Partner Store end with respect to clients (I know that members can use it, but what about the rest of the clients)?
Mevi hits on a good point. All the partner store lawyers do is check to see if Amway/Quixtar's paper trail for legality is present. They do not check on whether or not AmQuix enforces their own rules. It's not the partner's store responsibility. Because of this, the partner stores have a level of CYA protecting them if/when the government investigates AmQuix again.
I'm also not a fan of the term "partnered up." Does Coca-Cola "parnter up" with every grocery store, conviencance store and discount department store? Do you ever hear Wal-Mart say they "partnered up" with Coke? Of course not. Wal-Mart is just a vendor with an agreement to sell Coke products, just like Quixtar is a vendor that has agreement to sell Disney products. To say "partner up" implies the two companies are working closely together, when in reality, Quixtar partner stores agreements are nothing more then manufacturer/vendor agreements.
And as for xanadustc's question, it is an excellent one. I have no idea what the answer is, only xanadustc's question brings up this question, why would a member/client buy through Quixtar for partner store items when they can go directly do the source?
A few comments dmm,
First, I do not think that they are 'venders' per say, because you are not gettiing Disneys (etc.) products from Quixtar, you are going under the umbrella of Quixtar to get them from the source. I am not sure if 'Partner' is a good word, either, but in any case, I affirm your overall point: They are not 'partnered' in the traditional sense. The evidence is that if you check those companies outside the Quixtar site, Q is nowhere to be found.
It is just a way for these other business to get more sales...only one of many ventures they are engaged in.
Next, members get 'points' for for going to partner stores. Those points can be redeamed for crappy Quixtar SFM items like coffee pots and dish towels, etc. Clients get no benefit. IBO's of course get PV/BV...about a whopping 5 PV for a $50 order at some places.
This of course raises another question for IBO's: They want to drill us for saving 50 cents on a box cerial and saying 'no one ever saved their way to success', but they are using the same arguement on getting a 'rebate' for less than that on a large overpriced order....makes no sense at all...
Scott Larsen still da man.
The pro quixtar folks are quick to point out partnerships (some untrue) with best buy, microsoft, coca cola, etc. But fail to point out their partnerships with MCI/Worldcom.
Might I also point out that it's the quixtar
folks who make these claims. I've never seen Coke or some other company proudly mentioniong that they are partners with quixtar.
In the original article, QBlog writes:
"Scott Larsen has compiled an intriguing examination of this marketing strategy and basically shot it full of holes."
To which I add:
"Scott Larsen is good at shooting a lot of things A/Q full of holes."
Imran writes: "Scott Larsen still da man.
I'll second that.
One "partnership" claim that had always intrigued me was between AmQuix and MCI. The "story" had some variants, but included any possible permutation of the following "facts" that by partnering with Amway, MCI:
- avoided Chapter 11 bankruptcy
- became #2 long-distance provider in the country
- was able to sign up more telephone customers in a 2-month market trial in Ohio with Amway than in a previous 2-year nationwide marketing effort with American Express.
Anyone heard anything like this before? And most interestingly, has anyone been able to substantiate or overturn any of these claims?
Funny thing. The Quixtar opportunity blog's last post states something to the effect that Barnes and Noble along with Circuit City must love what Quixtar's '05 earnings were (evidently due to their close partnership with them).
Of course if you look at B&N and Circuit City's investor statements (all 60+ and 70+ pages respectively), there's not one mention of Quixtar, amway, or the like.
About the only thing you could possibly find related to Quixtar ironically, was a page on the B&N investor site that eluded to the best seller list. Of course Kiyosaki was on it.
Perhaps that IS something Quixtar's done for B&M to be happy about.
Excellent post. One of the common lines taught to IBOs to defend the business against "its a scam" is "Would Circuit city or Office Max partner itself with a scam?"
Honestly? Depends on if OfficeMax is going to get in trouble. Seeing as Quixtar isnt the scam, the Systems are - then no. The problem is, the systems and Quixtar are joined at the hip, despite the claims that quixtar is just an OCS ...
Although, maybe it is just an OCS - after all, we've seen Quixtar Lines of Sponsorship pick up shop and go to thigns like Oasis, right? ;)
Posted by: Mevi | December 9, 2005 5:21 AM