Multi-Level Marketing and Market Saturation
I have stumbled upon an article about multi-level marketing (MLM) that has really hit a nerve. Not because I am an Internet Marketer who believes in the marketing method, but because the reasoning behind the accusations this article makes about MLM are misguiding and lack true thought of what MLM is, especially within Internet marketing.
My purpose in this article is to show you a more optimistic and truer side to MLM, one that reveals a greater truth to MLM and the opportunity it provides. I am going to look at arguments made in the article and give further insight at why these particular statements lack true thought and substance when looking at the much bigger picture and the actual MLM business model within Internet marketing. My responses will be broken into a series of four different articles.
Note: I am not distributing the author or source of the article under examination due to possible confidentiality issues and aslo to avoid confrontational enemies. Therefore, I will use Peach to reference the article.
Article 1: Multi-level Marketing and Market Saturation
The article under scrutiny, states that MLM has an “inherent market saturation problem.” This is true, not only for MLM, but for capitalistic business world-wide. Virtually every sector of business is saturated. For example, you have the same products distributed by hundreds of competitors internationally and even more competition jumping into the saturated markets. Is there a difference in MLM and traditional capitalism? No, there is not. For example, I can go out and buy 20 different types of soap, all of which do the same thing and have the same smell, but what drives me to buy one over the other? My instincts, derived from my perception of each brand of soap.
MLM is no different than the competitive, capitalistic society we live in today. As a multi-level marketer, you have to learn how to relate to a target market in a way that no other marketer, offering the same product, does. That’s how you gain value in a market, making the fact of whether it is saturated or not, irrelevant.
Peach looks at the supply and demand effect in explaining a fault in MLM. It says a company’s production of any given product is only profitable up to a certain point, where after that point, all resources are consequently wasted due to the over production of the product and no demand (optimization point is what its called). Let’s say you have an awesome product, selling for $ 10 through a MLM program. Peach is saying once so many people enter the market, the price of $ 10 eventually becomes unattractive and no one will buy. It is unfair to use such an example to label MLM products in Internet marketing. MLM programs are mainly geared to making good money, fast. The normal laws of economics do not apply in this case. For example, there may be such demand constraints (only so many people wanting a product) for normal services and goods, but the same is not consistent with a program designed to make money (the demand for money will never be constrained – especially on the Internet). I will put things in perspective. Let’s say there is a service where a different millionaire sends you an audio sharing their experiences, giving you insight on how he or she made their millions. In addition, it is a generous paying, MLM affiliate program for only $ 7 a month (there is such thing – learn more at www.MakeMoney-ez.com). To think such a service will reach a point where people will be uninterested in a $ 7 month program due to market saturation is absurd.
The last comment I have concerning Peach’s opinion on MLM and saturation, deals with the lack of control in the program. A point is made that MLM has no control mechanism and essentially has no one or nothing to stop the “machine” when it is at full capacity. In Peach, it is compared to a normal manager saying, “We have enough sales people, let’s stop hiring now.” In MLM, especially Internet based, such statements should be considered socialistic in nature. A business model that is thriving, making financial success possible for one person after the next does not need a control, nor should any limit be in place to constrain it at any time. It is similar to saying, ok enough people have succeeded; let’s slow down this machine before too many people make too much money. MLM programs are designed to create wealth for those who are dedicated, and in a quick fashion.
In addition to the previous statement about MLM not having a control mechanism, Peach also says MLM’s have “built in failure mechanisms.” In any situation, everything is doomed to fail, just as Rome did around 500 A.D. Is there any justification in saying, “Rome did not survive, so everything that Rome stood for and contributed to human culture is pointless?” I do not think so. MLM programs are set up not for inevitable failure, but to give the one who decides to take control of their financial future the option to do so.
The main point of this article is to distinguish MLM from the laws of normal business theory and see the value MLM contributes for those who seek financial freedom. The examples used by Peach are true when looking at the majority of business models and even some MLM programs (Amway Global for example). To label each MLM program as such is unfair for there are many circumstances in which a good MLM program can thrive and create wealth and value, not only for the people who find it first, but also for the ones who find it last. Look for my next article: MLM Pyramid Schemes and Organizational Structure
Hey there, I am Shannon Murphy. A recent Virginia Tech graduate and proud internet marketer. I have experience in several areas within the Internet marketing niche. This experience, including tips and new marketing ideas, can be found through one of my company’s blogs, www.TheMarketingSpartan.com or www.MakeMoney-Ez.com.