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!