Below, David Gass of Business Credit Services outlines some of the problems associated with the MLM Industry:
Multi level marketing, more popularly known as network marketing, has been acknowledged as a powerful marketing and lead generation tool. However, the increasing span and widespread knowledge has led to a debate wherein various segments are of the view that this aspect of marketing is overrated. These opinion holders believe that the earlier witnessed success was momentary and the effects shall soon fade away.
The inclusion of relationships and infinite expansions are soon expected to saturate the market. This so called undesired infusion of the key job responsibility with part time networking is lightening the demarcation line between the personal and professional approach.
Advocates of not relying on networking marketing as a long-term tool have presented various arguments against it. Below a few are outlined.
The structure The fundamental behind a network marketing business is selling through a network. Here, the first layer of agents or distributors add more agents and in turn motivate them to add more agents, thus creating a pyramid structure, which is tapered from the top and widens towards the base. The number of people associated continually increases and so does the commission. Therefore, in the end, the objective seems to drift from what was originally sought. The associates no longer refer to the product. The marketing concept takes a back seat to adding as many recruits as possible, who may not even be interested or aware of the product.
Undesired Overlapping Being part of a network directly or indirectly affects the professional life by deviating individuals from their core job. Many people, who become a part of these networks tend to overlap their profile as a network marketer with their business circle, thereby hurting the overall company's image. Another undesired implication of the resultant overlap is the mixing of the personal with the professional life. Various agents tend to use their personal contacts as a base for marketing, which invariably negatively affects the harmony between the closed ones in the long run.
Ethical issues Another outburst of the overlapping aspect are the associated ethical and moral issues. Network marketing among known contacts and through referrals raises an important moral issue.
The Demand Side Can network marketing actually create a demand? Various marketers are of the view that if the product is good and desirable, then other means to market the item should come first.
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