The Entrepreneurial Experiment – Day 2
Whenever I have thought about Network Marketing or MLM (multi-level marketing) I have had conflicting emotions, mostly revolving around the whole pyramid scheme thing (I will more thoroughly define this in a later blog). There seems to be a big misconception that all 3 of these business models are the same when in fact Network Marketing and MLM are very different from what is known as a Pyramid Scheme.
The bad rap that has been given to Network Marketing/MLM seems to have come from various Pyramid Schemes trying to act and have the characteristics of the other two.
Let’s start with Network Marketing and define exactly what that means. By definition, Network Marketing/MLM is a system of selling goods or services through a network of distributors. The key is that there is a focus on selling a product as opposed to making money by selling the distributorship. Network Marketing/MLM believes in the power of creating a large amount of distributors in order to facilitate the sale of the product. The Pyramid Scheme is only interested in making money by selling the distributorship and the product is either secondary or in some cases non existent (I will examine this in more detail in later posts).
The bottom line is that in my search for the right Network Marketing company to conduct this experiment, I will be looking for a company that could stand and survive off of its product or products alone. For example, Mary Kay Cosmetics could sell its products within a retail environment and conventional advertising instead of marketing it through distributors and word of mouth.
Tomorrow I will take a closer look at the Pyramid Scheme in order to get a better understanding and provide better definition.
I was hoping to give a daily analysis of at least two Network Marketing companies but I am finding that there is so much information to be examined that I want to make sure that I understand it fully before I start explaining it.
Right at the moment I am studying 2 companies. In my opinion, you can’t do a study like this one without including the company Amway or as it is now known Quixtar (www.quixtar.com). In many ways, Amway is sort of the founder (at least in perception) of Network Marketing/MLM. It is also one of the companies that have generated some negative feelings towards this type of business model. The other company I am examining is Pre-Paid Legal. I am doing research with them through a good friend and PPL associate, Michelle (to visit her site, go to: http://www.mnanney.com).
What I have decided to do instead is compile the information from all of my prospective companies and do an overall analysis at the end of the week (or when I feel comfortable with the right company) which will explain my decision making process.
One of the issues that I am running into which is making it difficult to conduct a daily analysis of a company is that most MLM’s want you to get your information about their company through one of their distributors. Luckily with Pre-Paid Legal I have my great friend Michelle to help me out. With the remaining companies I am either doing my best with internet research or setting appointments with representatives of various Network Marketing companies.
Tomorrow I will be defining and examining the Pyramid Scheme in more detail and taking a look at two more companies; Nouveau Riche University and Send Out Cards.
Stay Tuned!!
The Entrepreneurial Experimenter
entrepreneurialexperiment@gmail.com