Relationship Marketing
Network Marketing: Exploitation of relationships – Myth or Reality?
Geevarghese K. Mathews* Dr. James Manalel** Siby Zacharias*** Abstract The Network Marketing, first popularized by Amway, in 1950s in USA is gaining momentum in India. The total turnover of network marketing companies in India was estimated at Rs 301,044 crores in 2005 with an annual growth rate of 25% .The India Direct Selling Association (IDSA) has projected that the network marketing industry will be around Rs 8000 crores by 2010. Studies have shown that consumers often have negative perception of direct selling organisations and network marketing organisations in particular. The aggressive selling techniques, exaggerations of facts in recruiting, pyramiding scams and unethical way of exploiting relationships all together form a basis for this negative perception. The paper presents the exploitation of Relationships viz friends, relatives and colleagues and attitude of channel members in network marketing. Keywords: network marketing, relationships Introduction Business organisations have long relied on direct marketing to target customers without spending a lot of money on retail distribution. However the Network (Multilevel) Marketers have taken the direct model one step further, i.e. not only they do the sales, but recruit and train new distributors i.e., independent sales persons who are members in the network marketing company. This ‘ingenious’ method was first popularised by Amway in 1950’s. The big draw card in network marketing is the commission paid not only for direct sales made by the salesperson , but also from the sales made by the recruits made by him. That is, if you get friends and relatives to join up, you get a commission not only from the products your friends and relatives purchase, but also from the sales they make to their friends (Bloch, 1996). This ‘wonderful’ opportunity attracts prospective candidates to join network marketing companies. Studies reiterate the fact that
Geevarghese K. Mathews* Dr. James Manalel** Siby Zacharias*** Abstract The Network Marketing, first popularized by Amway, in 1950s in USA is gaining momentum in India. The total turnover of network marketing companies in India was estimated at Rs 301,044 crores in 2005 with an annual growth rate of 25% .The India Direct Selling Association (IDSA) has projected that the network marketing industry will be around Rs 8000 crores by 2010. Studies have shown that consumers often have negative perception of direct selling organisations and network marketing organisations in particular. The aggressive selling techniques, exaggerations of facts in recruiting, pyramiding scams and unethical way of exploiting relationships all together form a basis for this negative perception. The paper presents the exploitation of Relationships viz friends, relatives and colleagues and attitude of channel members in network marketing. Keywords: network marketing, relationships Introduction Business organisations have long relied on direct marketing to target customers without spending a lot of money on retail distribution. However the Network (Multilevel) Marketers have taken the direct model one step further, i.e. not only they do the sales, but recruit and train new distributors i.e., independent sales persons who are members in the network marketing company. This ‘ingenious’ method was first popularised by Amway in 1950’s. The big draw card in network marketing is the commission paid not only for direct sales made by the salesperson , but also from the sales made by the recruits made by him. That is, if you get friends and relatives to join up, you get a commission not only from the products your friends and relatives purchase, but also from the sales they make to their friends (Bloch, 1996). This ‘wonderful’ opportunity attracts prospective candidates to join network marketing companies. Studies reiterate the fact that
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