Why Multilevel marketing cannot be substain in Asia

Running Head : Multilevel Marketing

Multilevel Marketing

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The multilevel marketing (MLM ) system seems tailor-made for developed countries . While Multilevel marketing often are not fully developed in the smaller countries (Anderson 1996 . Access to data can be a problem So you have to decide whether to market in a larger or smaller country

MLM in Asia uses the same organizational formula as in the West : a sales force of independent distributors who sell products openly to consumers and earn commissions from the form of the difference between the

br distributor 's cost as well as the selling price , plus income from a portion of the commissions earned by other distributors they recruit However , given that MLM bypasses the retail chain , it would seem not suited for rural areas and remote suburbs

The company who tries MLM targets the same market . All have priced their products in the premium slot

Oriflame 's and Avon 's cosmetics are amongst the most expensive products in their genres , and Amway and Modi Care 's products are in the top fifth of the price range in each category . Can the market support so many players with so many similar products at the same high price points

MLM marketers in Asia are making the same supposition that has served them quite adversely in more affluent economies as the real customer for MLM is not one of the minuscule 600 ,000 wealthy consumers who is usually the target for premium-priced products . Instead , it is distributors who are the main customers of their own products

Distributors of MLM companies in the United States sell , on average only 19 percent of their products to new customers . Asian MLM marketers calculate that their percentage will decline (Cravens 1995

When Citibank decided to start on its credit card in India , its biggest problem was that its offices were confined to a few select cities - hardly enough to make a nationwide splash . Citibank did not try to set up an intricate marketing chain , but instead contracted local direct-marketing firms to sell the card . The card carved a niche for itself in a shorter span of time , at a lower cost , and with fewer headaches

Other companies - Sterling Holiday Resorts , and Hutchison Max amongst them - have also tapped specialized direct marketers to support and sell their services

Thus , the application of MLM activity to the services industry has resulted in a mushrooming of direct marketing firms - over 150 such ventures were in operation at the end of 1996 . The industry was worth Rs 20 crore 5 .71 million ) in 1995 , and its proponents project that it will multiply two to three times each year up to the year 2000

Perhaps so . But it cannot be argued that the strongest attraction of MLM is its penetration /cost-efficiency . In marketing a product in India today , a company should budget upward of Rs 75 lakh 215 ,000 ) to just set up a full-fledged marketing cell devoted to the product - and more on running it . If...