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Сетевой маркетинг как сетевая бизнес-модель.
Аннотация: глобальная экономическая и финансовая нестабильность вызывает безработицу, снижение доходов и проблемы с профессиональным развитием рабочей силы. Поэтому требуется другой подход к традиционным бизнес -моделям и способам обеспечения занятости. Опыт десятилетий показывает, что сетевой маркетинг является социальной моделью, позволяющей увеличить доходы, создать независимое предпринимательство и достигнуть более высокого уровня жизни.
Ключевые слова: Сетевой маркетинг, МТМ, прямая реализация промышленной продукции, социальный бизнес
Valentina Makni. Network marketing - social business model
Abstract: The global economic and financial instability provoke unemployment, income crisis and challenges with career development of the labour force. As a result a different approach to the traditional business models and employment modes is required. Over the decades network marketing has proved to be a specific social model to increase income, to create independent entrepreneurship and to achieve a higher standard of living. Key words: Network marketing, MLM, direct selling industry, social business
Network marketing is defined as an industry, profession, business. It is an industry for the companies that operate it, it is a profession for the distributors that apply it and earn income, and it is a business for the independent entrepreneurs focused on it. In any case, the key element is the human factor and therefore the quality of the human capital invested in it has the utmost importance for its image.
The purpose of this paper is to argue the social nature of network marketing. It is presented as a social business model that creates employment and income in the conditions of social insecurity, financial instability and challenges of the information age.
Summary
Network marketing, also known as multi-level marketing (MLM), is one of the most common forms of direct sales. In 2011 more than half of the direct selling companies worldwide and 95% of those companies in the USA apply a multi-level approach.[16] Today most new companies in the industry are MLM companies. A prerequisite for this are the unlimited growth opportunities of the business model itself. Network marketing is based on a "win-win" strategy. On the one hand, it is a more beneficial option for MLM companies than those in traditional direct sales organizations, because it is a more effective method of expanding the market and entering the international markets. On the other hand, it is more beneficial for the people involved in it, because it is a form of independent entrepreneurship. Each new registered partner is on an equal terms with others to start and profit. At the same time, the participants are economically interrelated. [1, pp. 61-69]
In 2011 nearly 92 million people in the world take part in the direct sales industry. [17] This is probably the only industry that during and after the global crisis of 2008 has shown growth and not drop or stagnation in sales. This trend has been in force since the beginning of the 1990s. It is significant that the growth during and after the crisis is even bigger than before, on an annual basis. (Fig. 1) The main prerequisites for the ongoing growth of direct sales are the changed demand, the different expectations of Western societies [1, p.55] and the income opportunities in the labour-intensive developing economies.
The first reason to define network marketing as a social business is the equal conditions and rights for everyone who starts and especially the lack of barriers to start. Companies offering their products and services through direct sales have no requirements regarding age, sex, education, qualification, past experience, ethnicity or social status.[15, p.27] In fact, every adult person can create employment in network marketing with minimum capital (usually 50-100 euro registration fee), so almost no risk. These conditions make the business attractive to millions of people around the world from all social groups. It is practiced by mothers with children, students, elderly, retirees, unemployed people and others. At the same time the income opportunities are differentiated - additional income in the short term and passive income in the long run.
Мекни Валентина
К.э.н., доцент Университет экономики Г. Варна, Болгария valentina.makni@ue-varna.bg
Fig. 1. Global Direct Selling Sales in USD in Billions
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Neyton, T. and J.M.Fogg, Your Plan B
Equality
Survey among 8200 independent entrepreneurs in network marketing worldwide shows that the average income of the top 500 earners in the world is 20 700 USD per month. The youngest among them is 18 years old and the oldest - 84. [13] According to the research, more than 22% of the people in the direct sales are over 55 years old.[3, p.24]
In January, 2013 we had a little survey among 64 distributors from two MLM companies operating in Bulgaria. 36 % of the respondents appear to be under 30 years old and 23 % - over 50. The results confirm the trend for the prevailed number of both young and elderly distributors.
Considering the demographic trends in the USA and Europe for population aging, network marketing is a good way for improving the incomes of the elderly people and increasing of their retired payments. The achieved macro-level effect is decrease of the social burden on governments as people involved in direct sales pay taxes on their commissions.
Employment
The second reason to define network marketing as a social business is related to its potential to reduce unemployment. In 2012 the number of unemployed worldwide is 200 million and 27 million of them are registered after 2007. Since the beginning of the crisis American economy has eliminated 12 million jobs and now there are 4.4 people competing for a new workplace. [3, p.24] According to the International Labor Organization, in order to avoid a further unemployment deepening, in the next century will be required more than 400 million new jobs. [6] A big global problem is youth unemployment, now called the phenomenon of "scarred generation".[7] No other industry is able to offer such an employment as the network marketing, due to its labor-intensive absorbability.
In 2011 the unemployment rate in Bulgaria is over 11 %, and the youth unemployment is 26.6 %.[5] In 2011 nearly 142 thousand people in the country are registered in direct sales companies, members of the Bulgarian Direct Sales Association (BDSA). According to unofficial data, the network marketing companies in Bulgaria are around 50 and only 7 of them are official members of BDSA. In our opinion, there are around 300 000 Bulgarians registered in the industry, or nearly 9 % of the labor force in the country. [12] Our study showed that 19 % of the respondents were unemployed before they joined network marketing, which confirms the statement that the industry attracts a part of the unemployed labour force. People are looking for new opportunities to improve their lives.
Globally, more than 70 000 people join the MLM business every day. [13, p.4] In Europe, in 2011, 25 % of the people that joined the direct sales were previously unemployed and 84 % - women.[4] The industry has shown a strong gender effect. According to the World Federation of Direct Sales Association (WFDSA), globally 75 % of direct sellers are women, and 25 % are men.[16] Our study showed similar results - 71 % of the total 63 respondents are women. Network marketing gives women the opportunity for financial independence and self-confidence, according to survey among 2 500 distributors in India. [11, p.4] In the USA, for example, three out of four adults living in poverty are women.[9, p.134] It is known that women have more difficulties to find employment, usually for smaller wages and don't keep the jobs for long because of other specific responsibilities they have. Therefore, network marketing is a good way for women to become independent and to increase the family income.
Relationships
The third reason to define network marketing as a social business model is because it is business of the human relations and particularly - business for people who like to help others.[8, p.36] People are the real industry assets. MLM companies consequently depend upon a sales force that continually recruits new salespeople into the company.[10, p.160] But in order to succeed in business, the person needs to help those who joined also to succeed,[2, p.3] therefore - to motivate them, to train them, to help them, to build and support the team and relationships within the team. The standard business, including direct sales, unlike network marketing, in most cases encourages competition between sellers or between staff, in order to increase productivity. In network marketing is exactly the opposite - people in an organization are economically connected in a way that benefits all who put efforts, so the good relations are encouraged and there is no competition. Often the relations between members of a network are not only friendly, but even highly personal.[2, p.4] In our study 48 % of the respondents appreciate the fact that network marketing helped them to find new friends. Conclusion
In the conditions of high unemployment, socio-economic insecurity and demographic crisis or boom in different countries, network marketing is able to give an opportunity to each person to be trained, to develop their potential, to improve their communication skills and to build a successful team of motivated and goal-oriented business partners. Many people recruited in this business opportunity drop out, but there are also many, who achieve a big success, including high income and personal development. Significant factor is the yearly growth of network marketing industry. Therefore, the success in this profession should be considered just as an option and not guarantee, because it is a function of persistence and motivation, of skills and personal qualities.
References
1. Berry, R. Direct Selling: From Door to Door to Network Marketing, Oxford, 1997, pp. 61-69
2. Biggart, N. Charismatic Capitalism: Direct Selling Organizations in America, The University of Chicago Press, 1989, p.3
3. Day, T. Of the People, for the People, by the People//: The Ultimate Social Business Model, A Special Supplement to the Wall Street Journal by Direct Selling News
4. European Direct Selling Association, Promoting the Benefits of Direct Selling, SELDIA Annual Report 2011-2012
5. Eurostat, Unemployment Rate, 2000-2011;
http://epp.eurostat.ec.europa.eu/statistics explained/index.php?title=File:Unemployment rate, 20002011 (%25).png&filetimestamp=20120502100338
6. ILO, Global Employment Trends 2012. Preventing a Deeper Jobs Crisis
http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms 171571.pdf
7. ILO, Global Employment Trends for Youth 2012; http://www.ilo.org/wcmsp5/groups/public/—dgreports/— dcomm/documents/publication/wcms 180976.pdf
8. Kiyosaki, R. Business School, for People who Like Helping People, Momentum Media, 2003
9. Kiyosaki, R. The Business of the 21st Century, Manjul Publishing House, Bhopal, 2012
10. Koehn, D. Ethical Issues Connected with Multi-Level Marketing Schemes, Journal of Business Ethics, 2001, Vol. 29 (1-2), pp. 153-160
11. Mukherjee, A. at all. Socio-Economic Impact of Direct Selling: Need for a Policy Stimulus, Indian Council for Research on International Economic Relations, 2011
12. National Statistical Institute, Labor Force and Activity Rates, 01.04.2013 r. http://www.nsi.bg/otrasal.php?otr=26&a1=735&a2=736&a3=737#cont
13. Neyten, T. and J.M. Fogg, Your Plan B, Business for Home.org, Netherlands, 2012, p. 4
14. Neyton, T. MLM Top Earners Ranks Update March 2013 www.businessforhome.org/mlm-500-top-earners /
15. Seale, B. and J. Fleming, Heart of Direct Selling: The Home, The Ultimate Business Model, pp. 27-28
16. WFDSA, Global Report on Sales Methods and Compensations Plans - 2011, www.wdfsa.org
17. WFDSA, Global Statistical Report 2011 www.wfdsa.org
