Marketing Guru » Opinions

Multi Level Marketing

Marketing Guru — Tue, 16 Feb 2010 06:39:15 +0000

Have you ever been in a situation when one of your friend, neighbor, or a relative elaborate about imported shampoos, cosmetics or any product and pushed you to buy? Also, he or she hard-pressed you to join in a group to make huge amount of money in short duration by paying a token amount. If so, you are a victim of Multi Level Marketing.

Multi Level Marketing is a method of selling products or services by joining persons in a chain method systematically by building in a pyramid or hierarchical manner.

All your desire to join the group of multi level marketing starts simply “to get rich by making easy money in a short time”. MLM appeals even lucrative to those who are greedy. Typically, MLM marketers reach to the people who are jobless, undereducated, and poor. Or who wants to become rich quickly “in any which way”, and the victim is doomed if they have a wide network of friends.

How it starts?
Mainly two types of people join multi level marketing schemes. First type wants to pursue it as full time job, taking it as their full time activity. Others enroll to the scheme to do in their free time as a part time activity.

People who are in the first type are generally poor, unemployed, and undereducated. They are mostly from villages, small towns without any proper exposure, as MLM companies also deliberately target this segments, as they are easy bait. They initially boost themselves that multi level marketing is a self-employment/ entrepreneurial opportunity to make easy money. However they don’t understand that Multi level marketing is a complex hierarchical system on which they have no control.

The other type people are working segment looking for other ways of income. They are deceived in different ways, by advertisements, by watching videos, by reading tutorials, by colorful catalogs, and even with interactive website with operational branches globally. Soon after the second type of people join MLM, they start looking every person they know as a potential prospect. Every moment is a potential selling opportunity. Capitalizing on some free time becomes full time investment on MLM. As a result, they start thinking about to take as a full time activity, leaving the current job and taking MLM full time desperately as the job is effected when they become poor performers by overly focusing on MLM activities. People get deeply involved counting on to exploit their relationships as the story continues.

Why it is a scam?
Businesses exist to provide value to customers, distributors, employees, and to economy. Most of the multi level marketing companies does not make any significant contribution and starts with a sole purpose of making money. However, very less than 1% of all Multi level marketing distributors hardly ever make profits, mostly except the founder and a very few people who joined at the time of founding!

MLM marketers motivate with slick videotapes and pumping sessions periodically. They make to fully focus on making more people to join in your group. In addition, they will entertain you showing different people on videotape who got benefited by joining X Multi level marketing company. They dazzle you and say, they were like YOU at one point of time and they became rich and living luxury life after being part of MLM. Some times even you may meet a person whom the person over you worships, coming in a fancy car to give tips on how to do MLM. With all the sessions and drama, one will be pulled neck-deep into the Multi level marketing.

Almost in all pyramid schemes of multi level marketing the millions of top-level distributors, money is raised from new joinees at the bottom level. More than 90% of the money raised as sign-up fee for new joinees, training materials in form of CDs, cassettes, events and tutorials. Also, on aggregate models like shampoos and cosmetics free volunteers consuming add up to 50% of the total volume is generated.

Multi level marketing is identified as illegal in many countries as exploiting human relationships. Still many multi level marketing organizations exist without making any contribution to the society.

One of the rules mentioned by FTC on multi level marketing is that sales made by MLM firms from non-distributors should be more that 70%. However, most MLM firms said they get only 18% business from non-distributors, which implies that all MLM firms are illegal.

How people are exploited?
In most cases, they buy the material provide by the MLM firms with a hope that they can make money in the near future. Soon they get to know that the sales they make becomes less than 5% of what they spend as an investment to do better sales.

With multi level marketing, many people are exploited, lost valuable time, deceived in order to create a long-term career. Multi level marketing created deep wounds and many people are exploited. Most of the people soon or later realize that it is not a career choice. When people eventually get out of multi level marketing they fully keep quiet. Even people around that person also keep quiet, as they know that he/she is a loser. This continues with thousands of people while the multi level marketers sell one success at the top since thousands of failures unseen.

Multi level marketing is a disease that reinforces the wrong beliefs about business. It is exploiting vulnerabilities in different socio-economic segments and creates deep wounds for people that take long while to recover from.

Avoid getting into Multi level marketing schemes. They are everywhere Amway, many insurance companies, health, and almost into every kind of category. If you are already involved, the sooner you realize the truth, the quicker you can reconcile in your life.

The Evolution of Marketing

Marketing Guru — Sat, 14 Nov 2009 05:04:49 +0000

The Marketing concept underwent many changes before it transformed into the current ‘Customer Centric Marketing’ avatar. Sales driven organizations were the initial models of doing business driven by their production and product capabilities. Later, improvement in the situation was inevitable as the market dynamics changed according to the priorities of the customers.

The following is a brief on the evolution of marketing from primitive techniques to modern/sophisticated techniques-

Level 0 – Sales organisation
The existence of sales organizations can be aptly compared to civilization in the barbaric ages. Sales organizations exist primarily in premature or primitive markets where there is no need of marketing. They exist in two types of market situations – 1. Monopolistic markets and 2. When there is huge demand–supply imbalance. This could also cover government projects awarded by politicians for their cronies. This can be seen in the socialistic economies where a handful of companies attain the business licenses from the government. In these situations, the seller or provider has great advantage, as people do not know the difference between marketing and sales.

The companies do not show interest in reaching out the customers, as they largely focus on making a sale rather than adding value to the customers. As a result, the customers are at the companies’ mercy for the service. The concept of marketing simply does not exist in a sales organisation. Moreover, innovation does not exist in socialistic structures.

A good example for this is purchasing a Bajaj Chetak or applying for a BSNL landline connection in the 70s and 80s. One was supposed to wait for years together (it is said 10 years for a Chetak) to get their application cleared and receive products or services.

Level 1 – Advertising
The goal of advertising is to leverage the latent demand and then convert it towards company’s products. Advertising in a national TV or paper conveys a sense of reliability to customer. A company that uses advertising as the only marketing tool is practicing a primitive way of marketing. Here advertising starts appearing to ‘promote’ the product. The companies resort to advertising only to make the customer aware of the product. The companies blindly push the products into the market neglecting the product improvement and the customer’s needs. They may try to show product differentiation by highlighting Unique Selling Proposition or Point popularly known as USP, which was coined in 1940s. This may not work well in today’s market, as the requirements of all the customers are not same.

Level 2 – Market Research
Market research is a slightly less primitive marketing. At this level, market research is only confined to the basic aspects of market such as market size, which product/brand is selling, who is buying and media planning g targeting right media for advertising. It could be to discover where customers are willing to pay more for a service. It is to find the size of the most attractive market. Market research will not play a role in designing the products as it is done based on the companies’ strengths. Though the companies get the signals from the customers with a specific need, they are insensitive. Market research exists in such situations where there are intentions to serve the customer.

Level 3 – Customer Relations
Customer relation is the next level of marketing where the companies resort to communicate with the customer. The communication is mostly one-way as they only try to make customer comfortable by the lip service rather than listening to the customers and their needs. At large, they pretend to respond or serve the customer just by asking for a feedback that is often scrapped. At this level, the customer ‘relationship’ will be weak and is not functionally helpful to the customer as still the product/service quality is inferior. A simple example for this is a company offers low quality products, which needs heavy maintenance and provides free annual maintenance checks just to make the customers ‘feel’ emotional comfort.

At this level Primitive Marketing ends

Level 4 – Customer centric marketing
Customer centric marketing is essential to move an organization from a primitive to a sophisticated form of marketing. In customer centric marketing, businesses strive to ensure their customers get a fair deal. The companies will be primarily customer focused and use feedback from customers to improve the product/service that functionally helpful to the customer. This means the needs and wants of customers and potential customers drive most of the firm’s strategic decisions. The companies resort to marketing research, emphasize product benefits rather than features, and have innovative marketing techniques to reach out the customers.

Customer centric marketing creates new markets and changes how businesses market their products. Best examples for the products created by Customer centric marketing are Chick shampoo sachets, Marico’s Parachute oil, Wheel detergent powder, and Thumps Up. Thumps Up appeals better to Indians who eat spicy food, as it tastes better when taken along with the spicy food. In all these examples, these companies had a clear understanding of the customers’ needs and their constraints. Based on these they created new offerings to better serve their customers.

Marketing Is Often Misunderstood As Sales

Marketing Guru — Fri, 18 Sep 2009 12:10:07 +0000

In India most of the business owners confuse among the related terms of marketing. This is due to little or no awareness of what marketing is. Sales and marketing means the same thing to most people in India. You will notice that a majority of Indian companies call their sales persons as marketing professionals. Till recently, with protected markets and an economy controlled by licenses, the Indian market was a seller’s market. Companies were not required to do marketing.

Only off late, due to increased competition, customer awareness, and changing buyer preferences, companies have started realizing that increased production does not translate into higher sales. Since sales has been called as marketing in India, when a real position has been created it causes much confusion.

Here is an approach to let you know what Marketing actually mean. Marketing and sales are two separate and distinct processes, but they are very much intertwined. Marketing exists to support sales.

Marketing is the wide range of activities involved in focusing on customer needs before developing the product, aligning all functions of the company to focus on those needs and realizing a profit by successfully satisfying customer needs over the long-term.

The marketing cycle is composed of four segments:

Market research,
Planning,
Visibility, and
Client development.

The marketing research includes knowing the marketing environment (external and internal), gathering the market information (about competitors, commodities, supply and demand situations), studying the market segments and market trends. Once the research is completed, it can be used to make a plan to determine how to market your product.

Would you start a business without a proper plan? If you are among the majority of business owners you probably answered no, similarly marketing also needs planning. The Marketing plan includes setting clear objectives and explaining how to achieve them. This will help in identifying new product areas and new or potential customers and also helps in identifying the competitors, their advantages and disadvantages to stay ahead of the competition.

After execution of the plans there must be a proper visibility/communication to the outside world is required and is called Marketing Communications. It is the actions of a firm to communicate with end-users, consumers, and external parties.

Marketing communications consists of four channels, which include:

Advertising: Advertising is getting the attention of potential and current customers towards a product (or service). It mainly focuses on attracting the customer and is done by using signs, brochures, commercials, direct mailings or e-mail messages, personal contact, etc.,

Public Relations & Publicity: Public relations include communicating the information to the investors and public to understand the company and its products/services. The higher authorities of an organization will play an important role in building public relations. It is generally done in the times of crisis. Public relations and publicity are not similar; publicity is the spreading of information to gain public awareness for a product, person, service, cause or organization. We can say that publicity is an unpaid advertisement.
Promotion: Promotion includes the ongoing activities of advertising, sales and public relations. It tries to project the image of the product in the minds of the customer and encourages demand for the product.

Sales: Sales mainly focus on product/service. It involves directly interacting with the people to persuade them to purchase the product by conveying the features, communicating the advantages and benefits of a product or service, and closing the sale. It may also involve delivering the product and collect the payment.

In most situations there are many companies offering similar products in any specific product/service category. Sales involves finding potential buyers and selling their company’s product despite the competition from other companies having similar product.

The sales goal simply is to beat the competition to get as many customers as possible the sale with little regard to customer satisfaction.

Locate many potential buyers and contact each one on a one-to-one basis through phone calls or personal visits. Understand their company’s product features, advantages, and benefits. Find the issues, problems, and challenges that can be solved by the product. Explain how that particular company’s product is a better choice for the issue or the problem. Convince the customer to buy the product explaining how it can be helpful comparing with the competitor’s product. Get the orders, deliver the product, raise the invoice, and collect the payment.

Good marketing facilitates the success of the sales. Marketing plus sales is the winning equation.

Why Marketing people are the most likely people to become CEO’s

Marketing Guru — Tue, 25 Aug 2009 06:55:57 +0000

Marketing people are the most likely people to become CEO’s because:

Holistic prospective.
Understanding LT & ST implications.
Create opportunities for others in organization to follow-up and work on the most challenging and key issues including opportunities for growth.
Asymmetric challenges rather than linear challenges that need to thank outside the box.
Prepares work on strategic issues rather than tactical / follow-up issues.
Needs appreciation, understanding of all functional areas.

Courtesy: Internet marketing India

Why is Marketing essential for any business today?

Marketing Guru — Mon, 10 Aug 2009 06:50:39 +0000

The earlier model of producing whatever you can and using strong sales push and advertising / promotion campaigns to sell is no longer working.
In today’s buyers market, it is no longer enough to stand out by promoting your products. Customer’s awareness has grown and this expects a genuinely superior value proportion from the products they buy.
With changing needs, lifestyles there is a need to start thinking afresh about marketing mix, rather than first promoting and then communicate.

In today’s competitive atmosphere, it is vital

To have a superior offering.
To monitor competitive offerings.
To identify opportunities for growth / profitability/ develop customer target.

Courtesy: Offshore internet marketing consultant