Need for Market Segmentation – Why Market Segmentation?
A set-up where two or more parties (also called buyers and sellers) are engaged in transaction of goods and services in exchange of money is called a market. At the market place the sellers sell their goods to the consumers (buyers) in exchange of money. Let us go through the following examples: Nokia offers wide […]
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 […]
PESTLE Analysis of Starbucks
Introduction The macroeconomic environment that Starbucks operates in is characterized by the ongoing global economic recession, which has dented the purchasing power of the consumers. However, market research done in the last few months has indicated that consumers have not cut down on their coffee consumption and instead, are shifting to lower priced options. This […]
Driving Value Proposition through Operations Excellence
Leadership at the market place doesn’t come by easily. Organizations have got to work towards it by innovating their product and value proposition all the time. Establishing customer relationship with a long term perspective becomes imperative. Today the customers are highly knowledgeable and demanding. The rules of the game have changed along with the change […]
Customer Relationship Measurement – Meaning, its need and importance
Customers are the most important part of business. There cannot be any business without them. Only satisfied customers will be interested in buying and they will also refer other customers to buy. By measuring customer satisfaction a supplier can maintain a quality and long term relationship with customers and secure their future business and financial […]
Network marketing or Multi Level Marketing has caught on the fancy of people across the globe and as on date there are thousands who have made their millions through being a part of Network marketing. The success stories of such millionaires from US, Australia and UK etc are being published as a part of the case study in Universities and other Educational Institutions as well as Direct selling training institutes.
Multi Level Marketing is also referred to as ‘Pyramid Selling’, ‘Network Selling ‘as well as ‘Structure Marketing’ etc. As the name implies, this direct form of selling involves people and building network of people as sales distributors.
Typically in MLM, the individuals take up distributorship from the Company in the first instance. The distributor works as a sales person too.
Selling happens through identifying and recruiting a new distributor for the network. Every distributor happens to become a buyer as well for he starts using the product for self, for family and friends. Thus the sales take place through self use as well as through the distributors who have been enrolled by the individual.
In this case the distributor focuses on increasing the network of and recruiting other distributors rather than selling the products alone. Thus with extension of distributor network and the subsequent purchases as well as recruitment done by the chain the sponsor distributors earn rebates and commissions from the Company.
The income generation happens when the distributor recruits other distributors who in turn keep recruiting further thus extending the network and each distributor turns out to become a customer and thus buys the products from the Company. With every addition of distributor to the chain and additional sales, the upstream distributors gets to earn commissions, rebates and points which amount to income.
In this set up the Company focuses on providing the Products to the Distributors as well as in providing sales training and sales kit to the distributors who are the salesmen.
The Companies spend a lot of effort in training the sales distributors and teaching them the art of communication, of building and managing relationships as well as in providing them the product training and sales training. In this effort the Companies use audio visual media, books as well as marcom materials extensively.
Team meetings, conferences, seminars and membership to various achievers’ clubs are the main stream activities that help build the spirit and participation of the individual distributors.
What attracts people to MLM is the dream of earning millions as income without having to invest anything but one’s efforts and time and without having to sacrifice one’s career or other priorities of life.
MLM sells the concept of an individual aspiring and achieving one’s goals through additional income generation opportunity of joining and working through the network. As there are no entry barriers, it attracts thousands to take up this activity and pursue it diligently. Success stories are widely publicized and is thee for all to see, for seeing is believing and this is what drives people to join the MLM networks.
Your email address will not be published. Required fields are marked *
Finding and Keeping Customers in Multi Level Marketing (MLM)
February 12, 2025
