Thoughts on Multi-level Marketing

Is multi-level marketing a no-man’s land?

I love marketing.  Truth be told there are aspects and concepts of marketing that are I enjoy more than others.

In particular I love the product life cycle concept and how it unfolds in the market for practically every product and service (check out several past blog posts about product life cycle).

Similarly I enjoy investigating the various levels that a product can have from the core level which is the fundamental and oldest version of the product offering to the other layers that were augmented to the product over time to differentiate and add quality and value.

However there is one particular topic which I particularly bar. It is none other than the multilevel marketing.   Wikipedia defines multilevel marketing as:

“strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.” [Wikipedia: http://en.wikipedia.org/wiki/Multi-level_marketing, 4.6.2013]

In so far there is nothing really wrong, and when stated like that it feels like referral marketing which is something that has been around since the start of civilisation. It is technically very similar to word-of-mouth, with one big difference – The person making the referral (making the suggestion or praising a product) has a vested interest because every new sale will generate him/her some money!

In fact Wikipedia goes on to add that multi-level marketing can include pyramid selling.  This is where it brings forth a barrage of issues and also lights up the alert on scams (and yes years ago I did make the mistake of not realising that an offer was actually a pyramid scheme!).  Amongst the issues associated:

–       Are sales people of multi-level marketing visible as sales force or do they pose as friends, experts , colleagues and just part of community with no vested interest when in fact they do? If this is the case, then  this is exploitation of human relationships.

–       Should referrals by people who are really salespeople be called referrals or should the suggestion be presented simply as a sales pitch?

–       These sales people themselves are lured into engaging in multi-level marketing operation with the promise of easy-money-making opportunity. There is doubt about how much money can be made and how much of it is legitimate and how much is the result of contorted operations.

–       From an economic and mathematical viewpoint, multi-level marketing and pyramid schemes do not make sense. One cannot sell a product to everyone (each market is limited) and there is the risk of ending up having more sales people on the ground than there are customers!

–      Who controls multi-level marketing stances from the pinnacle of the pyramid and how?

–       The main thrust of multi-level marketing is definitely not grounded on what the customer wants but it is built on greed!

The Internet is rife with articles for and against (mostly against) multi-level marketing.  It is very vague which is the terrain on which honest multi-level marketers tread and where the foggy marshland of rogue multi-level marketers starts.

To me it has always felt like no man’s land. If you are out to sell something that is essentially good and honest there is no need for clever deceptions or undercover operations!

Multi Level Marketing - Is it a scheme?
Multi Level Marketing – Is it a pyramid scheme in disguise?

Great Idea Poor Execution

I woke up today to a multitude of ‘potatoish’ statutes on Facebook. At first I ignored them but within a minute I had stumbled on the source – a video presenting and promoting the Maltese Derby Potato.

The idea is excellent – after all the Maltese potatoes are indeed one of the best in the world and can chin up to any rival product but in my opinion, the execution of the video leaves much to be desired.

The video has a ‘potentially’ good story-line, kicking off with a typical introduction to Malta but the first problems soon emerge:

– The script is not so well researched. Even though the potato is a very important crop, one cannot really state “No tradition is more closely associated with the island than the traditional potato harvest”.

– Several of the assertions that the young farmer states are somehow grammatically incorrect, and at times seem to be the result of an effort of a ‘poor’ translation from Maltese. At times the accompanying text at the bottom of the screen does not match his words. There are also some glaring typos and mistakes.

I found no problem with the authenticity of this young farmer’s English accent. After all, one can say, it is the accent of young man whose work has so far exposed him more to the toils of a field than to words. His passion and dedication for his work and the potato crop seem genuine and is admirable.

However I strongly believe that the director behind this production should have pruned the words in a way that ‘less is more’. Some statements should have been completely omitted, statements like “you can taste the sea, church, sun…” The sack-full of English language mistakes even in the transcription at the bottom of the video could have been avoided!

As at the point of writing, the video attracted only ‘Likes’, on YouTube. This is a clear indication that it went down well with the audience who saw it, but at the same time, some of the comments I read on Facebook like “ I have a dream….it’s a potato” come across more like mockery than praise.

Personally I concur with the young farmer that he has a dream. In that dream, the Maltese potato as a successful Maltese export is taken to new heights! It is a dream to which he has a right to aspire! And if he can dream it, he has youth in his favour to fully achieve it!!

Not the same can be said for the director of the video!

Derby Potato Promo
Derby Potato Promo

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Wheeling on products onto foreign markets

For the Western world, the pushchair is just another product that few stop to question. Once a woman has a baby, it is one of the first things that is bought and it becomes added to the paraphernalia of accessories that are carried around.

The pushchair as a product and its market is a highly evolved one in the Western world. Starting out with the basic functionality as a ‘mobile chair’ for transporting little kids around, adding on safety and ergonomic aspects, today’s pushchairs boast a variety of features like toys for engaging kids and adult-friendly features like space for shopping bags, easy to open and being light to carry. Naturally nowadays there are  different types of wheels and structures to cater for different types of needs of the user. Some are standard pushchairs, others are meant to be use while jogging, others are meant to be used in rough terrain while others are simply meant for zooming around on pavements.   And then to top all this we have the element of fashion spicing up the picture with colours, patterns, branded names and cartoon characters. The customer buying a pushchair is faced with so many models and styles that many parents feel that they have to research the topic well before embarking on the selection of a new pushchair.

While this pushchair as a product is a success in the Western world, importing it into Africa can be described as difficult. I recently read an article where the author describes precisely that the pushchair as a product was not suitable and could not be adapted to the culture.

Mothers in Nairobi found the pushchair business an ‘abhorrent fad’ and looked at the gadget as a ‘cagey’ sort of thing for their babies. Sustaining this argument, African pediatricians even looked down on the product as they believed it could cause problems in the ‘mother-and-child relationship’.     In Africa mothers carry their babies on their backs and this age-old tradition is literally on the opposite end of  reasoning as to why pushchairs are bought.

The article (although a bit dated, written in 2004) states that upon opening the shop, they sold only 1 pushchair in 2 months and it was sold to a visiting U.N. worker.   In this light, one can describe this venture of selling pushchairs in Nairobi as a non-starter. This is because the product itself, in its very core functionality, is something that culturally is literally against the culture and thus will take long to become accepted.

All marketing books and gurus speak about the difficulties of entering a foreign market. This small post illustrates that before embarking on interesting foreign business opportunities, one needs to look at the product very closely because one can have a myopic view of one’s own products and fail to see if they fit the market.

Some products may take too long to be wheeled on and become mainstream enough for a good business venture.

Read the full article about the pushchair business in Africa here:

http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fc%2Fa%2F2004%2F05%2F20%2FMNG6Q6O4LI1.DTL