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Defects in multi-level marketing policy in India

Updated on December 21, 2016

Introduction

The Indian economy is vastly diversifying and mixed in nature much in relevance to it's culture.History has enough evidence of the market being targeted by many outsiders because of it`s high population and thus in turn acts as the warehouse of cheaper work force.The foreign market has for long set it`s eye over the one billion goal.The first success these foreign companies found was in the luxury lifestyle industry.It was initially limited to the privileged but now even the middle class want a share of it.So be it,the pyramid scheme and multi level marketing system have all ventured that struck the right note.The much hyped direct selling technique adopted by these companies seems to have delivered as promised. But their stay to the top might not be for to long.Increased competition in the market, economic un stability of the middle class in the subcontinent and false claims regarding the prices are few among the many reasons why it might be facing the flak as it looks for now .If the problem persists,then it will leave a hole in the rising retail bandwagon.These companies prefer self employees over recruitment.Hence many needy self-employees are crowding these companies thinking it to be their one time opportunity.As they are not professional or learned marketers,they lack acumen to see beyond the stated and there are some prominent loopholes in their functioning.Some of them are listed below:

  • Unprofessional attitude of consultants
  • Cratering to the same circle repeatedly
  • Non-cooperation with fellow colleagues
  • Introduction of installments and discounts
  • Lack of knowledge about products and company's policy

Unprofessionalism of consultants

Self employees working under the company's franchise belong to the large section of educated but unskilled or insufficiently educated individuals.These consultants are the only medium of receiving the products.But still the consultants fail to provide the expected service.Customers don't find them at their disposal whenever required especially for the products they need.

Catering to the same circle repeatedly

These consultants repeatedly offer their products to the same customers.The customers are either a part of their friend's group or a family relative.This does a major harm to their business.After a few visits the customers don't find flavour in the products and the number of takers reduces drastically.This also views a consultant in poor light among her own peers.

Companies using MLM system

Companies(International)
 
Companies(National)
Amway
Avon
Jovees
Tupperware
 
Onn
Oriflam
 
Mody Care

Non-cooperation with fellowmates

The consultants must exercise more synchronized consumer attracting policy,with better expansive marketing nature.They must discuss details with their manager and arrange monthly meetings among themselves for functioning effectively.Although the company holds stipulated meetings,seminars and workshops for consultants round the year but since attendance is not an absolute compulsion,most cite the excuse of inconvenience.The consultants must fix a list of these meetings considering their household schedule, cause most among them are homemakers.This gives them a chance to negotiate common problems and acknowledge the solutions given by one another.The idea of healthy competition also sinks in.They can segregate areas among themselves and alternatively cater to them all round the year.This would not leave them with a single house being untouched.One is hence benefited with a better sales plan and shortcomings in their own selling techniques also comes to fore.

Introduction of installments and discounts

When the profit margin is negligible with least expectation of bulk sale,it comes as a surprise that these consultants offer generous amounts of installments.The company already provides free gifts and discounts,so installments and discounts offered to allure customers is quite needless.The consultants fall flat in receiving the exact price even from their most dedicated customers.What they don't realize is that they are the only retort of availing these products and the customers in the course of time will be compelled to buy at the accredited price as they will not be benefited with installments elsewhere.

Lack of knowledge about products and company's policy

There is a specified demonstration session held around the year, sometimes on quarterly or half yearly basis.But as mentioned earlier that most consultants don't have a professional background and are mainly homemakers.Many don't attend these seminars and others don't warm up to the whole idea, finding it pointless.So most are oblivious of the product's detail and find it difficult to explain to their customers.The company's policy regarding discounts and gifts is unique and most consultants don't enliighten themselves with it.This leaves a major gap in their understanding and thus in their marketing strategy as well.

Conclusion

Objection towards the use of e-commerce has also hit the multi level marketing system badly.Though it is a fault in the part of the company and not the consultants.This in turn prompted other sellers to place the acquired products online.If the companies had taken the route of letting their registered consultants sell their products online,results would have been astonishingly different.In the larger context stock clearing would become easier.More over it is impossible to keep a check on unregistered online sale since their exists no law discarding them and an online e-commerce portal is springing up every other day.

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