MULTI-LEVEL MARKETING

PRESENTED BY: ROWELYN D. ENAJE

 LEARNING OBJECTIVES:
LO1: Define Multi-level Marketing.
LO2:Differentiate legitimate MLM and
illegal pyramid scheme.
LO3: Determine the variables resulting
to a negative perception of
consumers towards MLM.
LO4: Determine the reasons for
people to choose multi-level
marketing.
WHAT IS MULTI-LEVEL
MARKETING?

Multilevel marketing (MLM),

also known as network
marketing or direct selling,
refers to the practice of
distributing, selling, or
supplying products through
independent distributors
(Koehn, 2001).
According to Berry R.(1997), Direct
Selling is a method of distributing
consumer products directly to customers.
He also mentioned that
instead of selling through shops, direct sales
uses a marketing network of people called a
direct sales representatives or distributor
to find customers and move products.
Representatives are also known as
Independent Business Owners, Distributors,
Consultant or Networkers.
Independent business people who acts
as distributors for their products, who in
turn recruit and sell to distributors, who
eventually recruit others to sell their
products.

A distributors compensation includes a

percentage of sales to the entire sales
group that the distributors recruited as
well as earning on any direct sales to
retail customers (Wotruba and Pradeep,
1992)
Most Successful MLM Companies
in Philippines (not in order)
AVON
Forever Living Products Philippines, Inc.
Usana
Aim Global, Inc.
HerbaLife
DXN International Private Ltd.
Front Row Enterprise Philippines, Inc.
Etc.
 Legitimate MLM vs. illegal pyramid
scheme
A legitimate MLM company must be financially
viable. Compensation has to stop after a certain
number of levels down from you (Dunn, 2008)
A legitimate direct selling company offers a
genuine business opportunity based on consumers
where satisfaction guarantees and cancellation
rights are offered and wherein consumers may
return the product for replacement or refund if they
are dissatisfied; whereas, pyramid schemes have
no such commercially viable product sales base
(Indian Direct Selling Association).
 Legitimate MLM vs. illegal pyramid
scheme

Legitimate multi-level marketing companies

compensate their salespeople for selling
product or services to ultimate consumers and
not for simply recruiting people as in pyramid
schemes (Muncy, 2004).
Why do most people have negative
perception towards multi-level marketing?
According to Nowland (1982),consumers hold
generally negative views about the very idea of
direct selling, and many perceived that direct sales
people were overly aggressive, unmotivated and
capitalized friendships, or emphasized selling
business opportunities and premiums rather than
products and delivery.
In a study conducted by Harris and associates in
1976, consumers complained about pushy,
untrustworthy sales persons and about the
inconvenience of some direct selling companies.
 WHY CHOOSE MULTI-LEVEL
MARKETING?
Multi-level Marketing (MLM) is a good way to
meet and socialize with people.
MLM offers flexible work schedules.
MLM is a good way to earn extra income.
MLM is a good way to own a business
Earnings are in proportion to efforts.

DSA (Direct Selling Association) of USA