The Role of Institutional Investors in Promoting Good Corporate Governance
We have discussed how corporate governance and the practice of ethical and normative business practices are essential for companies to stay the course and reap longer term benefits. In this article, we look at how institutional investors or the investors who are not individuals but large fund managers and investment houses play a major role […]
Difference between Market Segmentation, Targeting and Positioning
A market refers to a set up where two or more parties are involved in transaction of goods and services in exchange of money. The two parties here are known as sellers and buyers. It is the responsibility of the marketers to create awareness of their products amongst the consumers. It is essential for the […]
Efficient Consumer Response Initiatives in 1990s
When one refers to International Retail business, the comparison is mainly referring to the European and US markets. ECR or Efficient Consumer Response initiatives in the 1990s changed the face of the International Retailing business in Europe as well as US. The studies covering the entire supply chain from suppliers to the end consumer were […]
Brand Equity & Customer Equity
Brand Equity is defined as value and strength of the Brand that decides its worth whereas Customer Equity is defined in terms of lifetime values of all customers. Brand Equity and Customer Equity have two things in common- Both stress on significance of customer loyalty to the brand. Both stress upon the face that value […]
Key Metrics for Evaluating Social Media Performance
Measuring the success of social media efforts goes beyond counting likes or shares. To truly understand the impact of your strategies, it’s essential to track meaningful metrics that align with your business goals. These metrics provide valuable insights into what’s working, what’s not, and how you can adjust your approach for better results. Why Metrics […]
Network marketing has caught on the fancy of millions of people across the world. Amway, Tupperware, Avon, Nu skin, Herbal Life & Oriflamme etc have become house hold names globally and established themselves as premium products thanks to MLM sales and distribution strategy that have been adopted by these Companies.
The novel concept of MLM or Network marketing involves sales and distribution of products through distributors who buy products for self use and focus on recruiting and building network of distributors under them so that the sales happen automatically when each of the distributors buys products for self use and furthers the recruitment and building of network under them. This format of selling and distribution is also called as Pyramid Selling.
Though the concept has been highly successful and the success stories of people having made their millions through their MLM network has been publicized globally, there have been lot of criticisms, cynicism and unfair trading charges that have been leveled against the MLM system.
MLM companies have been members of Direct Selling Agents Associations and have been compliant with the Trade regulations and systems as set up by the authorities for the said system.
It is seen that those companies that have continued to invest on and focus on high quality of products have thrived in the market using MLM network for selling and distributing their products.
It is only the quality of the product that enables people to become distributors and buy the product for their self use. With the amount of training and product knowledge provided to the Distributors along with their own experience of the product helps create higher business volumes through the network.
The success of MLM network globally for selling the products through the Distributor chain has paved way for creation of several modified concepts or variations of MLM networks. There have been schemes where in networks of distributors have been established for selling not one company’s products but to provide a catalogue of products of various Companies and invite distributors to buy those products that they find useful and needful.
In many cases the catalogue is circulated like a periodical and the subscription is charged when the distributors subscribe to the same. At the same time each Distributor gets a discount on the catalogue that he orders for his network and thus earns an income here too.
As a concept such a system looks fantastic. However when it comes to the involvement and ownership of the various Companies involved in the supply of products with regard to product quality, training as well as guarantees etc are concerned, there are chances that the Companies may short fall of expectations and the entire system can go directionless.
Aping the success of MLM Networking concept, there have been several types of networks and concepts that have been making rounds in different countries at different times. One such scheme that is continuing to make rounds is the concept of Chain Letter Network, where you receive a letter asking you to send a small amount like 5$ to the five persons listed in the letter and then make as many copies of the same incorporating your name on top of the list and send it out others repeating the same instructions.
When the people read your letter, they will in turn send you the 5$ and circulate more letters adding their name to the list. Thus you will continue to receive the money with the expansion of the network. This happens to be simply a money making scheme with no product or sales happening in real terms.
Though people realize that such a scheme does not yield any real income in the long run and does not involve any trading, still quite a few get taken in and thus the scheme keeps going on. You will find different adaptations of such schemes and all of them seem to fall in line with the Trade regulations of the countries too.
Such schemes may work in theory based on multiplier effects and so on, but morally and ethically the schemes will not stand to gain from any support from the community at large. Therefore it becomes important to understand the MLM scheme in detail and then decide or choose a scheme that is genuine and most suited to you.
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Finding and Keeping Customers in Multi Level Marketing (MLM)
February 12, 2025
