PROJECT ON NETWORK MARKETING

Acknowledgement

I would like to thank to supervisor of this project, Mr.

S.Prakash for the valuable guidance and advice. He inspired us
greatly to work in this project. His willingness to motivate us
contributed tremendously to our project. I also would like to
thank him for showing us some example that related to the
topic of our project. Besides, I would like to thank the
authority of Shri Ram College of Commerce for providing with
a good environment and facilities to complete this project. I
would like to express my gratitude towards my parents for
their kind co-operation and encouragement which help me in
completion of this project.
My thanks and appreciations also go to my colleague in
developing the project and people who have willingly helped me
out with their abilities.
 Contents

 Introduction
 Global Overview of the Industry
 Network marketing strategy that works
 The top 25 Network marketing companies in the
world.
 The top 10 Network marketing companies in
INDIA.
 A MLM Company – RCM
 Marketing Plan of RCM
 Change in logo
 A MLM Company – Arbonne
 Arbonne Review : The Arbonne Scam
 Arbonne success plan summary
 Problems with MLM Companies
 Comparative Studies
 Conclusion
 INTRODUCTION

Multi-level marketing (MLM) is a marketing 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. Ot
her terms used
for MLM
include pyramid
selling, network
marketing.

Companies that use MLM models for compensation have been a frequent subject of
criticism and lawsuits. Criticism has focused on their similarity to illegal pyramid
schemes, cult-like behaviour, price fixing of products, high initial entry costs (for
marketing kit and first products), emphasis on recruitment of others over actual
sales, encouraging if not requiring members to purchase and use the company's
products, exploitation of personal relationships as both sales and recruiting
targets, complex and sometimes exaggerated compensation schemes, the company
making major money off its training events and materials, and cult-like techniques
which some groups use to enhance their members' enthusiasm and devotion.
 Global overview of the industry

1. Growth of the industry in the past 10 years: in figures & in

percentage growth.
 In 1988, turnover of the MLM was just about 32 Billion U.S. $.
 It touched U.S. $ 62 Billion in 1992.
 To 100 Billion U.S. $ in 2004.
 The MLM industry has grown to 147% between 1994 and 2004.

2. Top markets of MLM

 Combined sales of all MLM companies in U.S. was just 29Billion $,
which is just about 1 month sales on Wal-Mart.
 Achievable goal is about 3% or about 100 Billion U.S. $ for U.S.A.
 World wide sale for MLM should hit U.S. $ 1 Trillion.
 Europe,15.53%Others,2.09%SouthAmerica,9.03%Asia,
40.46%U.S.A, 29.27%New Zeland,Austrelia,1.08%Canada,South
Africa,0.26%
 Total world wideturnover 2004 -05 , US $ 99.965 Bn.

3. Global retail force:

 The growth rate in MLM sales force grew from about 12.9million
to 54.23 million in 2004, having a growth rate of 321%.
 The highest number of MLM sales force is in Japan, al around 40
million.
 Network Marketing Strategy That
Works
To really succeed in this industry you need to use a network marketing
strategy that is proven to bring results. Save yourself years of trial
and error by using proven methods that have been pioneered by the
industry‟s top earners.

Most people new to network marketing don‟t even thing about a

network marketing strategy when they first open their business. After
signing on the dotted line, purchasing some product and a distributor
kit, they plunge ahead without any training, planning or goal setting.
Almost all the time, the person fails and then blames the network
marketing industry, when it is really not the fault of network
marketing.

I notice that many people do not treat network marketing like a real
business. Any real business that you would open in your own community
would have a business plan, and a marketing plan. Your network
marketing business is the same.

An effective network marketing strategy requires that you think long,

hard and seriously about what it actually takes to succeed in the
business. No matter what company you are in, your strategy will always
include these three components:

• Leverage
• Simplicity
• Duplication
 The Top 25 Network Marketing
Companies in the world

Company Time In Business GPR - AR - GT

1. Amway 1959 - 53 Years 6- 8,556 - 2.18
2. Melaleuca 1985 - 27 Years 5 - 10,797 - 0.44
3. USANA 1992 - 20 Years 6 - 12,424 - 0.44
4. Nu Skin 1984 - 28 Years 6 - 12,527 - 0.20
5. Isagenix 2002 - 10 Years 3 - 15,591 - 0.20
6. Forever Living 1978 - 34 Years 5 - 17,178 - 0.42
7. Legal Shield 1972 - 40 Years 4 - 18,855 - 0.20
8. ACN 1993 - 19 Years 6 - 27,301 - 1.12
9. Herbalife 1980 - 32 Years 5 - 29,151 - 2.24
10. 4Life 1998 - 14 Years 4 - 32,924 - 0.14
11. Advocare 1993 - 19 Years 5 - 32,943 - 0.14
12. 5LINX 2001 - 11 Years 4 - 34,372 - 0.03
13. Synergy WorldWide 1999 - 13 Years 3 - 39,323 - 0.01
14. Arbonne 1980 - 32 Years 5 - 57,636 - 0.66
15. Xango 2002 - 10 Years 4 - 57,841 - 0.38
16. Nature's Sunshine 1972 - 40 Years 4 - 62,661 - 0.01
17. Morinda 1994 - 18 Years 4 - 70,897 - 0.14
18. Mannatech 1994 - 18 Years 4 - 75,855 - 0.16
19. Shaklee 1956 - 56 Years 5 - 83,234 - 0.20
20. Nikken 1975 - 37 Years 4 - 93,145 - 0.29
21. Sunrider 1982 - 30 Years 4 - 108,784 - 0.07
22. Freelife 1995 - 17 Years 4 - 139,510 - 0.03
23. Neways 1992 - 20 Years 4 - 166,079 - 0.17
24. Juice Plus (NSA) 1970 - 42 Years 5 - 172,897 - 0.26
25. GNLD 1958 - 54 Years 4 - 213,549 - 0.07
 The Top 10 Network Marketing
Companies in INDIA

1| RMP Infotec Private Limited

Corporate office – Chennai, Tamil nadu | Establishment – 2001 |
Business – Multi level marketing and distribution | Website – www.rmp-infotec.biz |

2| Oriflame
Corporate office – Luxembourg | Establishment – 1967 |
Business – Cosmetic and MLM | Website – www. oriflame.com |

3| Amway
Corporate office – Michigan, USA | Establishment –1959 |
Business –MLM & Marketing | Website – www.amway.com |

4 | Avon
Corporate office – New York, USA | Establishment – 1886 |
Business – Multi level marketing (MLM) | Website – www.avon.com |

5 | Tapperware
Corporate office – Orlando, USA| Establishment – 1996 |
Business – MLM & Retail | Website – www. tupperwareindia.com |

6| Hindustan unilever
Corporate office – Mumbai, Maharashtra | Establishment – 1987 |
Business – Cosmetic and Personal Care| Website – www.huln.co.in |

7 | Dewsoft Overseas
Corporate office – New Delhi, India | Establishment – 2000|
Business – Software and Multi level marketing (MLM) | Website – www.dewsoftoverseas.com |

8 | AAROH Unicepts Marketing Pvt. Ltd

Corporate office – Rajkot, Gujrat | Establishment – 2010 |
Business – Multi level marketing (MLM) | Website – www.aaroh.biz |

9 | Balaji Multi Services

Corporate office – Aurangabad, Maharashtra | Establishment – 2008|
Business – Multi level marketing (MLM) | Website – www.balajimultiservices.com |

10 | HLM Retail India Limited

Corporate office – Ghaziabad, Uttar Praesh | Establishment – 2010 |
Business – Multi level marketing (MLM) | Website – www. himnad.com |
 A MLM Company -

RCM Business has been set up by Fashion Suitings Pvt. Ltd., Bhilwara
(Rajasthan) belonging to the reputed Chhabra Group, engaged in textile
business since 1977. The group has entered into it's own production in
1986 and at present it's annual capacity is 3 crore meter suitings. Thus
it stands among top five in india in suiting manufacturing.

In August 2000 RCM Business started at very small scale. Gradually it

developed from every aspect and now it stand as biggest multi level
marketing company with more than 1 Cr distributors, more than 90
depots, more than 10,000 pickup centers and more than 600 products.
Company not only expanded its product range and distribution center
but also have given priority to upgrade technology and make complete
system online. For the purpose of high quality education, company has
given emphasis on quality literature and education system.

Good quality products and best services to consumer constitute the

company's objectives. This clearly demonstrates that the group is
genuinely concerned and dedicated to the overall progress of
distributors and shall be bringing out more quality products to enhance
their business volume.
 MARKETING PLAN of RCM
(w.e.f. 1st Nov. 2012)
Calculation of Sale Incentive:-

Sales Incentive is calculated on a fixed percentage of business volume of the purchase

made by direct sellers and their groups on differential basis as follows:

Up to 32% of B.V. as Performance Bonus on difference basis

Up to 8% of B.V. as Royalty Bonus on difference basis
Up to 5% of B.V. as Technical Bonus on difference basis

Performance Bonus :-

Business Volume Percentage Business Volume Percentage

100 to 4999 10% 70000 to 114999 21.5%
5000 to 9999 12% 115000 to 169999 24%
10000 to 19999 14% 170000 to 259999 26.5%
20000 to 39999 16.5% 260000 to 349999 29%
40000 to 69999 19% Above 350000 32%

Example 1 :-

When one has business like

Purchase in main leg (group) -80,000 B.V.

Purchase in other leg /legs (group)-33,000 B.V.
Self purchase -2,000 B.V.
Total Business Volume -1,15,000 B.V.

Calculation of Performance Bonus :

1,15,000 x
Bonus of total group = 27,600/-
24%
80,000 x
Less Bonus of main leg (group) = 17,200/-
21.5%
Less Bonus of other leg/legs 33,000 x
= 5,445/-
(group) 16.5%

Net performance bonus = 4,955/-

Old LOGO

New LOGO
 A MLM Company –

The Arbonne products are a line of botanical skincare products. Within

the Arbonne products, there are several other lines such as bath &
body, hair, sun, cosmetic, and nutritional products. According
to Arbonne‟s website, they create personal care and wellness products
that preserve and enhance the skin, body and mind for an integrative
approach to beauty.

Arbonne Products: Arbonne Skincare

The Arbonne skincare products are formulated without animal products
or animal by-products. This line of Arbonne products are formulated
without the use of parabens, formaldehyde-donating preservatives
or PABA. They also don‟t have the petroleum based ingredients
petrolatum, mineral oil, benzene, phthalates or toluene

Arbonne Products: Arbonne Nutrition

Arbonne has a line of nutritional products that consists of vitamins,
minerals, protein shakes, fiber, omega 3′s, and several other
supplements. The Arbonne weight loss and nutritional products don‟t
use any artificial flavors or coloring, no artificial sweeteners, no animal
products or animal by-products, no saturated fats or cholesterol, and
no trans fats.

Arbonne Products: In Closing

Arbonne has some exceptional products, especially for people who like
high end products. The one big challenge for most people is that the
Arbonne products tend to be much higher in cost than similar products
people can buy at the regular retail stores.
 Arbonne Review: The Arbonne Scam?

When creating this Arbonne Review we needed to take a look at why

people join Arbonne in the first place. It‟s the same 2 reason‟s why the
masses are attracted to the MLM industry in general. They want to
own their own business without having all the overhead that comes
along with traditional business… and the most important reason, they
want to earn residual income.
Some will join for the Arbonne products, but the majority join for the
business. I think a lot of people have a distorted view of the term
„residual income‟. To us, residual income is LIFELONG. True residual
income is when you build a business that lasts and pays you for a
lifetime, not just a lunchtime like Arbonne. Now we‟re not just picking
on the Arbonne business, it‟s the entire MLM industry. MLM doesn‟t
work… period, over and out!
If the main reason people are attracted to Arbonne is to create
lifelong residual income, then the business model hasn‟t worked and
never will. That is why there are a lot of people running around saying
“The Arbonne Scam”. All of what we‟re sharing here is not our opinion…
just take a look at why TOP Arbonne leaders are walking away from the
company.

Source : http://www.timeandfreedom.com/arbonne-review/
 Arbonne success plan summary

Independent
Distr Area Region Nation
Consultant
ict

Preferred Client Commission 15% 1 15% 15% 15%

5
Central Group Override 4%* %8 6 3 1
% % % %
1st Generation Override *Independent 8 6 3 1
Consultant is the only % % % %
2nd Generation Override level with 2 1 2 1
no depth and does % % % %
3rd Generation Override 1 1 2 1
not pay overrides on
% % % %
4th Generation Override PRV. 4% override is 1
paid only on %
5th Generation Override personally 1
sponsored %
6th Generation Override Independent 1
%
Consultants. Once you
become District, 4%
is replaced by 8%.
Think of each of these sections as separate “profit centres” for your business. As an
Independent Consultant, you make a 15% commission on purchases by Preferred Clients
(based on SRP, excluding VAT and certain product promotions) and a 4% override on OV
for sales of Independent Consultants you personally sponsor.
Once you become a District Manager, that 4% is “erased” ... it is replaced by the 8%,
which is paid on your entire District. Remember, you are part of your District so the 8%
override is now also paid on the OV for your personal sales and purchases through your
Arbonne ID, as well as the from sales to your registered retail Clients and Preferred
Clients.
Example: To get paid at the 2nd and/or 3rd Generations (let‟s look at District), you need to
be as “wide” as you are “deep.” To get paid on a
2nd Generation District Manager (that‟s two levels deep in your organisation), you need
to have two District Managers at the 1st Generation level (two levels wide). To get paid
on a 3rd Generation District Manager (three levels deep), you need to have three
District Managers at the
1st Generation level (three levels wide).
 What are the problems with mLM ?

1) Most people are not mature enough to work the business truly looking out for
other people. Greed is a huge motivator in MLM. There is the facade of “I have
something to tell you about that will change your life”, but beneath the surface
many MLMers are really just hoping to change their own lives.

2) Most people don‟t have the skill set to do MLM. It is easy to get excited about
world-changing product and incremental revenue graphically displayed on the white
board. It‟s another to actually get out there and DO IT. People skils. Sales skills.
Marketing skills. There is much more to MLM than meets the eye.

3) I have a business. If I can dabble in something on the side and make a few $$$,
I‟m all for it. But so many MLMers make MLM their lives. Suddenly, all their
friends are in the same business. If you aren‟t in the business, you simply aren‟t
with the “in” crowd.

4) There is usually an enticement to build inventory. In order to succeed with an

MLM, you have to sell product. Most MLMers will encourage you to BUY an
inventory of product when you first sign up. The reason? It will help you get to a
higher commission level faster. This is true, but it is also indicative that the MLM
wants you to promote to higher levels because it promotes the people above you to
higher levels. Thus, the focus is taken away from retailing product to interetested
parties to moving product for the sake of moving product. Again, good product will
move itself anyhow, but even in Arbonne, the new recruit it encouraged to spend
money to “fast track” their business.
 COMPARATIVE STUDY - 1

AMWAY MELALUCA

Country of Origin UNITED STATES UNITED STATES

Company Revenue $113 million $1.04 billion

Countries Served WORLDWIDE Specific countries like ASIA,

HONGKONG, JAPAN
Startup Kit Price $168 $29

MLM Commissions Volume bonuses paid on top of profit Upto 20% for everyone in
from 3%-25% your downline to the 7th
generation.
E-Commerce Follows. Does not follows.

Website www.amway.com www.melaluca.com

Average User 4.2 5

Ratings
 COMPARATIVE STUDY - 2

Wild Tree Herbs, Inc. Wonderful, LLC

Country of UNITED STATES UNITED STATES

Origin
Year 1996 2005
Founded
Sales Seasonal Favourite food items and their Wine and wine accessories, and
Information recipes. speciality food items.
Startup Kit $99 $250
Price
Base 20% 25%
Commissions
or potential
profit
percent
E-Commerce Follows. Follows.

Website www.wildtree.com www.wonderfulllc.com

Average 4.5 5.1

User Ratings
 Conclusion

The “easy money” appeal of MLM is often couched in terms such as

“time freedom” (to do what you want), perpetual or “residual income”
(like author‟s royalties or annuities), and “unlimited income
possibilities,” with the success of recruits limited only by their
efforts. MLM programs (MLMs) typically sell “pills, potions, or lotions”
or other products that are consumable, that have unique appeal, and
that can be claimed to deliver benefits not available elsewhere. One
sees a strong sense of belonging, or an “us versus them” cultish
mentality.
Worldwide feedback suggests that MLMs are also extremely viral and
predatory. MLMs quickly spread from state to state and often to
vulnerable foreign markets. Most of the commissions are paid to those
at or near the top levels in the hierarchy of participants(TOPPs). It is
this extreme concentration of commissions paid to TOPPs that
motivates them to work tirelessly to expand and maintain their
downlines, thereby assuring the MLM‟s survival and growth.