WELCOME TO THE PRESENTATION

WRONG with MLM

PREPARED BY Md. Mosarraf Hossain Department of Finance University of Dhaka

 The roots of multilevel marketing are interrelated with those of the Amway Corporation and its Nutrilite product line  The Nutrilite concept originated during the early 1930s in the mind of Carl Rehnborg, an American businessman who lived in China from 1917 to 1927  He became familiar with the nutritional literature of his day

 He began to imagine a dietary supplement which could provide people with important nutrients regardless of their eating habits  After seven years of "experimentation," Rehnborg produced food supplements which he gave to his friends to try  The friends, having paid for the product, ate it, liked it, and further, wanted their friends to have it also

Carl Rehnborg's food supplement business, which thus began as the California Vitamin Corporation, changed its name to Nutrilite Products in 1939 In 1945 a company operated by Lee S. Mytinger and William S. Casselberry became exclusive national distributor

 In 1951, the Court issued a permanent embargo forbidding anyone who sold Nutrilite products  The court decree also contains a long list of forbidden and acceptable claims about nutrition and Nutrilite products Reference Notices of judgment under the Federal Food, Drug, and Cosmetic Act. D.D.N.J., F.D.C Notices of judgment under the Federal Food, Drug, and Cosmetic Act. D.D.N.J., F.D.C , issued Aug 1951.

John Taylor, MBA, PhD.

MLM is far more risky than either the stock market or the job market. Very few recruits will sell enough to generate residual income

John Taylor, MBA, PhD. Fair? Most MLM compensation plans are weighted heavily towards those who got in early or who frantically scrambled to the top of a pyramid of participants

John Taylor, MBA, PhD. Consumer protection officials are reactive, not proactive. Since victims rarely file complaints, law enforcement seldom acts against even the worst schemes. Victims don't complain because they blame themselves, and they fear self-incrimination or consequences from or to their upline or downline

John Taylor, MBA, PhD. MLM'rs have been saying this for twenty years, but MLM still accounts for less than 1/2 of 1% of consumer purchases—even though MLM companies have numbered in the thousands. MLM's come and go, as do new recruits, 99.9% of whom drop out. Long-term MLM growth is a myth

John Taylor, MBA, PhD. The sale of products is distributor-driven, not market driven. Most products are sold to new participants to get in on this “ground floor opportunity

John Taylor, MBA, PhD. You will be a slave to the phone, to meeting the qualifications for commissions and bonuses, and to continual pressure to recruit new participants to replace dropouts. You will also be caught in a money trap of hyper-consumption.

John Taylor, MBA, PhD. MLM’s typically urge new recruits to buy products on a subscription basis, invest in sales materials, and pay for ongoing training until they run out of money or give up

John Taylor, MBA, PhD. MLM products are typically potions and lotions. Their purported uniqueness is an attempt to conceal the fact that they are priced too high to compete in standard markets

John Taylor, MBA, PhD. MLM creates thousands of middlemen, with few real customers outside a bloated network of distributors, agents, consultants, and demonstrators, The products are typically expensive and not priced competitively

John Taylor, MBA, PhD. Commissions from initial and ongoing purchases by new distributors (in hopes of profiting) is the life blood of their business. The promised rewards never come, except to those who recruit their way to the top of a pyramid of participants. Take away inducements for participant purchases and these companies would collapse like a house of cards

John Taylor, MBA, PhD. In at least one major MLM, the tools business is a pyramid within a pyramid. Hardly anyone makes money selling products, so a lucrative source of income for those at the top is the sale of success tools to supposedly assure the success of their downline – who are in fact only further victimized when they buy these motivational items

John Taylor, MBA, PhD. The mafia supported local charities. If a bank robber donates some of his take to charity, does that excuse the robbery?

John Taylor, MBA, PhD. For potential personal gain, you would be exploiting those you care about the most. In other words you would be squandering your social capital

Big Lies of Multilevel Marketing Robert L. Fitzpatrick Robert L. Fitzpatrick Mr. FitzPatrick consults and writes about trends in manufacturer/distri butor relationships He writings include False Profits (a book about MLM deception) and "Pyramid Nation" (a booklet that laments the growth and "legalization" of pyramid schemes.) False Profits

Company LOGO REVEALED FACTS

Lie #1: MLM offers better opportunities than all other conventional business and professional models for making large amounts of money Fewer than 1% of all MLM distributors ever earn a profit The MLM business structure can support only a small number of financial winners If a 1,000-person downline is needed to earn a sustainable income, those 1,000 will need one million more to duplicate the success How many people can realistically be enrolled? The money for the rare winners comes from the constant enrollment of armies of losers

Lie #2: Eventually all products will be sold by MLM. Retail stores, shopping malls, catalogs and most forms of advertising will soon be rendered obsolete by MLM Fewer than 1% of all retail sales are made through MLM, and much of this is consists of purchases by hopeful new distributors who are actually paying the price of admission to a business they will soon abandon. People are buying products in order to secure positions on the sales pyramid It does not legitimately compete with other marketing approaches at all

Lie #3: MLM is a new way of life that offers happiness and fulfillment. It provides a way to attain all the good things in life The most prominent motivational themes of the MLM industry Companies would blush at the excess of promises of wealth, luxury, and personal fulfillment put forth by MLM solicitorsute the crassest form of materialism These appeals actually conflicts with most people's true desire for meaningful and fulfilling work at something in which they have special talent or interest

Lie #4: You can do MLM in your spare time. As a business, it offers the greatest flexibility and personal freedom of time. A few hours a week can earn a significant supplemental income and may grow to a very large income, making other work unnecessary Making money in MLM requires extraordinary time commitment as well as considerable personal skill and persistence The system comes to dominate people's entire life The system requires rigid conformity to the program. This is why so many people who become deeply involved end up relying upon MLM desperately. They alienate or abandon other sustaining relationships.

Lie #5. MLM is the best option for owning your own business and attaining real economic independence "Owning" an MLM distributorship is an illusion MLM distributors are not entrepreneurs but joiners in a complex hierarchical system over which they have little control

The group is focused on a living leader to whom members seem to display excessively zealous, unquestioning commitment. The group is preoccupied with bringing in new members. The group is preoccupied with making money.

The group is elitist, claiming a special, exalted status for itself, its leader(s), and members (it's much easier to manage life on a steady JOB income than on a nonexistent or even negative MLM income.) The group has a polarized us- versus-them mentality, which causes conflict with the wider society.

MLMers dislike well-educated critical thinkers who can see through their smoke and mirrors Members' subservience to the group causes them to cut ties with family and friends, and to give up personal goals and activities that were of interest before joining the group.

Stay Away from MLM In MLMs, You ---- The company holds all the strings— product supply, computer tracking, commissions, collections, customer service, publicity, order fulfillment, compliance, public relations, comp plan, everything. do not own your own business, do not own the product, you are not in control of your destiny.

Stay away from them! They're dream stealers!

FAQ This document is at This new MLM has a really great new approach... I am told that it is not an MLM at all, but a Network Discombobulation Matrix Downline (or somesuch)...

FAQ This document is at I want to start a business and see MLM as a low-risk way to do it. Don't you agree that MLM is a great opportunity for small- business start-ups?

FAQ This document is at Why are you so NEGATIVE? Can't you say ANYTHING good about MLM?

FAQ This document is at If you have not lost money in an MLM yourself, why should anyone listen to YOU?

FAQ This document is at All people need is good training and determination to make MLM work. Success is up to each individual....

FAQ This document is at Why can you not see the OPPORTUNITY of MLM for the unemployed? What is the difference between MLM and any small business?

FAQ This document is at Aren't "real world" organization charts shaped like a pyramid?

1) A hearty laugh 2) A general dread and feeling of shame 3) Total rejection In general, over the years I have noticed three fairly distinct categories of response by practicing MLMers when exposed to ideas such as in my article. Interestingly, these three responses are similar to ANY detected mistake or sin, are they not?

Thank you