Query from a reader about Multi Level Marketing

Another query from Mr. Ginil George - Despite strong retail presence and conveniences of other FMCG companies, how can companies like Amway, Forever life products, etc be successful with products which are not even approved by FDA?

I don’t know whether these products are tested or certified and therefore would not like to comment on that. Having said that, there are many so called Ayurvedic/ natural products which are also sold without any kind of testing. This is more a refelction of the laws that given consumer safety and rights and how they are enforced.

Multi level marketing has always been a topic of hot debate and deep passion. A search on the net would throw up equal number of love and hate sites for such marketing organisations. How is this concept successful? It leverages 2 basic human traits –

- Hope
- Social connect/ Relationships

A dispassionate understanding of the numbers would show that not everyone in the network can hope to make it big. In fact sometimes they find it hard pressed to even sell the first set of products given. Yet, in a country like ours any kind of hope, however improbable is cherished and used as a beacon for daily life. So, it is quite understandable why the network for such organisations have managed to grow so well and swell in numbers.

Second is the famous Indian trait of knowing someone everywhere and leveraging that network. In this context would like to share a joke.

One of our ubiquitous brethrens (Lets call him Babu) was working in a company and a new boss joined. He introduced himself and boasted that the boss can ask him to get anything done as he knows almost everyone in the world. The boss wanted to cut him down to size and said, that he wanted to speak to the PM. Babu said, no problem and whipped out his mobile, dialled and handed the phone to his boss. Completely stunned, the boss said hello and realised he was indeed speaking to the PM. Now that the ante was upped, he wanted to see how far it would go and kept reeling of famous personalities and Babu and his mobile went on a calling spree. Finally the boss said, ‘OK, introduce me to the Pope”. Babu says, no problem and off they fly to Italy. Babu tells his boss to wait while he organises the meeting. The boss feels smug thinking that Babu is going to disappear. Suddenly the there is a cheer and the Pope steps out in the balcony to greet the crowds. The boss is aghast to see babu standing next to the pope waving at him. He turns to someone in crowd and says do you know who is standing there on the balcony? That guy says, “Of course. Its Babu, but who is that next to him”.

Ín such a context of social connects and quid pro quo, if multi level marketing does not work, where would it?

Lastly I really don’t know how much of a consumer penetration these products have. With such a large base of sales agents/ business associates or whatever they are called, maybe they are the prime consumers of these products! After all, a fairly large sum of money is paid by them for registration and towards the first lot of products. I say this with a fair sense of certainty as the pricing of these products are significantly higher than most FMCG equivalents.

However, have not been involved with any multi level marketing system and can comment only about the view from outside. Maybe it is better or far worse!