Alexey Serikov November 2005.
To understand that an egg is rotten, you do not need to eat it to the end.
(c) Mark Twain
Preface.
On this page, I tried to express my opinion regarding such a strange social phenomenon as network marketing, aka multi level marketing, aka MLM (Multi Level Marketing), aka structural marketing.
Everything that is written here is my personal opinion.
I didnot set out to convince anyone of my rightness.
I hoped to awaken the reader's desire to think a little with his own head.
I do not hide my negative attitude to this phenomenon.
Warning!
If you are an NPA (an Independent Entrepreneur of Amway) or a distributor of any other network company and you think that your business in network marketing is successful, or will be so in the near future, I sincerely do not recommend you to read further.
Reading it can cause you moral suffering.
You may feel that you and your colleagues have been insulted.
In this regard, I inform you: 1. This page is my private resource.
2. I honestly warned you that you might not like the content of the page.
3. My personal opinion is expressed here, and no one forces you to share this opinion.
4. I didnot want to offend or offend anyone.
Nevertheless, this article uses expressions that may seem offensive or offensive to someone.
Well, sorry...
I have the right.
5. If you have something to say, you can always write me an email.
My email address is listed at the bottom right of each page.
I will definitely respond to a meaningful letter.
I will not respond to flood, chatter, insults.
Content Lyrics Terminology Memories Internet Arithmetic Psychology Economics The legality of MLM in general and the Legality of MLM in the USA The legal status of NPAs Common Sense About pyramids, semi pyramids and network marketing.
About the "Product" About concentration Testing of Amway products About tricks with zlenka My testing of products for ovens.
About prices and pricing Mythology of network Marketing Regional Office of the Amway Megacorporation.
Arguments in favor of network marketing the chapter was deleted by me due to its initial bias
Pearls and jokes.
Other annealing MLM developers can be read here Quotes from books on network marketing. (He began to spread it out little by little)
Literature and links on the topic of the Discussion are here!
About fraud on the Internet: MMM 2011.
How many idiots are there in the world?
MMM 2012.
The end or the continuation of the farce?
New!
MMM 2012.
The financial apocalypse is in the pockets and heads.
New!
MMM 2011/2012.
How to return the money.
Examples of court decisions.
New!
Lessons MMM.
New!
The NewPro computer program.
The arithmetic of Internet begging.
Development of the topic of Internet begging the Money Train project.
Another pyramid is Mybinar.
Continuation - the layout of income and expenses.
Canadian Diamond Traders Inc.
(CDT).
A financial pyramid with diamonds.
Absolutely fantastic in terms of arrogance and savagery, the STEP BRAFING project.
Continuation of the topic STEP BRAFING the elitsoft/elitslub project.
Autosurfing, website promotion, or how to bring something to the point of absurdity that did not make sense initially.
Sometimes we have a concern... temporary.
Lyricist Jeff Peters was ready to argue with me endlessly, as soon as we were talking about whether his profession could be considered honest... (c)
O. Henry
This long article was born out of a simple but sharp discussion, in which my interlocutor told me: "You've never made hasty statements...
Why do you, without understanding the issue, make statements that defame many people!?".
So I decided to look into the issue and formulate my conclusions.
This question is called "MLM", aka multi level marketing, aka network marketing.
The discussion was, in fact, about whether network marketing is deception and fraud by definition, regardless of what is being sold (air, dietary supplements, insurance, cosmetics, washing powder), or in some cases it is a completely normal (honest) business aimed at distributing high quality products.
The products meant cosmetics and household chemicals of the Amway company.
Brief information: The Amway company was created in 1959 by two young American entrepreneurs Rich DeVos and Jay Van Andel.
The first trademark of the company was the cleaning agent L. O. C.
In 1978, the partners bought the Pantlind Hotel and began to engage in the hotel business.
Currently, there is a network of four star hotels The Amway Grand Plaza.
This business became known as Alticor in 2000.
In 1999, the Van Andel and DeVos families founded the Internet site Quixtar, which offered assistance in organizing a business to everyone.
In 2000, changes were made again, and now there is the main company Alticor and its branches Access Business Group, Amway, Amway Grand Plaza Hotel and Quixtar.
Trademarks: Nutrilite Vitamins, Artistry Skin Care, eSpring System, Magna Bloc, Therapeutic
Magnets and SA8 Laundry System.
The company owns The ARTISTRY Beauty Institute (Michigan, USA), where it produces cosmetics for salons and spas.
I will immediately warn you that there is neither time nor effort to consider all such companies, so I will try to link all the illustrations to the Amway company.
I will also make a reservation that I will not discuss the quality of the products of Amway and other similar companies.
I am ready to admit that this company produces absolutely wonderful products that surpass similar products of the world's leading manufacturers in their qualities.
During the discussions on the forums, I had to remember school chemistry.
Some results show that Amway products are made of quite standard components.
Detergents from other manufacturers also consist of exactly the same components.
Of course, specialists should understand this, but there are very few independent tests of the products of this and similar companies.
May 2006.
Terminology Man is a creature without feathers, bipedal, with flat nails... (c)
Plato
An Earthman is an intelligent being who knows the password.
An alien is an intelligent being who does not know the password. (c)
R. Sheckley
Direct sales (direct marketing) is a type of product promotion on the market.
It consists in establishing and supporting long term direct two way communications between the manufacturer or wholesaler and the consumer.
Examples include the following forms: a store on the couch (TV Shop), an online store (Shop On Line), mailing (spam), services of a traveling salesman (advertising, commercial agent).
The product is pre selected from the catalog and, subsequently, ordered by phone, mail or via the Internet.
That is, the buyer buys the goods directly from the manufacturer or the wholesaler.
From me.
I do not know why, the concept of "direct sales" was monopolized by network operators.
In my opinion, direct sales are the sale of almost all services - car services, plumbing, hairdressers, cafes and restaurants.
We also receive telephone communication and the Internet directly from the operator.
Electricity in our homes comes directly from GorEnergo.
Public transport also carries us without intermediaries... but when MTS or Beeline sells its corporate cards to resellers, and they already distribute them by MLM, for some reason this is called "direct sales".
Riddle...
Personal sales (personal marketing) is a method of influencing the buyer.
It consists in a personal oral presentation of a product or service (including a catalog) during a conversation with one or more potential buyers belonging to the target group, for the purpose of making a transaction or selling products.
In comparison with advertising, it has special features: a) live direct communication, b) the possibility of establishing informal relationships.
The personal sales method is used by agents and managers of advertising agencies, representatives of cosmetic (Oriflame, Avon, Faberlic, Mary Kay) and medical (NewWays, Vitamax) companies, as well as distributors of Amway, Herbalife DGH, Vision.
"Direct sales" does not exclude "personal sales".
Both of these methods can be applied simultaneously.
From me.
The method of personal sales is the only real method of work of system integrators.
A complex product of intellectual labor can probably be sold only in this way.
At least, I am not aware of any cases of selling a complex automation system of the production process "in a box".
This sales method can only be used when selling a complex and expensive product.
Its undoubted advantage is that the seller, being a specialist,
it can answer a lot of specific questions of a potential buyer, guarantee the completion of the product according to the requirements of the buyer, specify special terms of the transaction.
Network sales (Multilevel Marketing MLM) is a way of promoting a product on the market, when a distributor has an interest not just to sell as many goods as possible, but to attract new distributors to this business, for whom he will be the "top link", and, accordingly, receive remuneration depending on the volume of sales (in fact, purchases) of his "bottom line" and the entire structure or part of it that is below himself.
Network marketing, in my opinion, cannot be considered a "sales method".
This is a method of distributing remuneration for marketing services within a network of distributors.
Pyramid structures are a way of doing business when each participant is interested in increasing the number of new participants in this business.
It is not necessary that the business participant himself should attract other participants.
As a rule, such a business has a pronounced multi level structure.
The increase in the income of business participants at the upper levels is provided by an increase in the number of participants at the lower levels.
The definition is mine.
It differs from the classical definition of a"prohibited financial pyramid".
Prohibited financial pyramids are a business that consists in the fact that each new member makes a certain material contribution for participation in this "business".
The contribution is distributed in some way among the higher level links.
In order for the person who made the contribution to be able to return it, he must attract (two or more) new members to this organization in order to compensate for their costs from their entrance fees.
Newly attracted participants, in turn, are also forced to attract (two or more) new participants to cover their costs.
Obviously, this is the simplest fraud.
The creation of such a "business" is criminally punishable.
However, there are very few precedents of criminal prosecution of such structures.
Usually, only the organizers of this fraud are subject to criminal prosecution, which is extremely difficult to find.
I am not aware of cases of criminal prosecution of "members" of such organizations.
A typical example is MMM .
Only S. Mavrodi is convicted and is sitting.
And all those who helped him "build a business" are safely at large.
Distributor (in the MLM structure) - a person who has expressed a desire to distribute the goods of the specified company under the guidance of a specific "sponsor", as a rule, who has confirmed this desire with a certain material contribution.
Its main functions are the sale of goods, in fact, to customers.
The distributor can himself, acting on behalf of the company, attract new distributors to the system, becoming their sponsor (recruitment).
As a rule, a distributor cannot change his sponsor.
Leader / sponsor (of any level) - a person who has brought a certain number of active distributors into this business, has built his own 1/2/3 / more level distribution network and receives income from its growth and functioning.
Points are the conditional equivalent of the cost of the product when the distributor buys it from the company.
Each product has, in addition to the monetary value, a value in points.
Group points - the total cost in points of all goods purchased by a specific participant of the scheme and its entire subordinate structure.
At the same time, the product can be purchased both for resale and for personal consumption.
The points are used to accrue remuneration to the group.
At the same time, the cost of the point when calculating the remuneration is not equal to the cost of the point when buying.
For example, for Amway, this difference is the amount of VAT (currently 18%).
That is, a product worth 1 point when purchased will cost 47.2 rubles, and when calculating the reward - 1 point= 40 rubles.
Everything that is written about the points above applies to products sold under their own brand.
The products of third party companies that Amway resells have a completely different price in points.
In this case, the prices of the goods in points are 10-20 times lower, that is, they are within the wholesale discount of the manufacturer.
Bonuses - a monetary amount expressed in discounts, or in the form of money, which is credited to the group (branch) based on the results of purchases (in points) for a specific period.
The distribution of these amounts of money is carried out in accordance with the company's marketing plan.
A marketing plan is a document describing the rules for distributing rewards for marketing services within a "branch".
It is more correct to call it a "reward distribution scheme", since it has nothing to do with either marketing or planning.
Allows a specific participant of the scheme, knowing their own volume of purchases and the volume of purchases of their lower branches, to calculate their own remuneration.
You canot get any other information from it.
There are several types of marketing plans: With a limited number of lower branches (legs).
The degenerate case is the so - called "binar".
With a limit on the number of up/down levels for which the reward is distributed.
Without limiting both.
Qualification is a certain "title" assigned by the company to the distributor for the volume of purchases made by his group during a certain period.
It has nothing to do with either the title or the position.
It has an indirect relation to the amount of remuneration.
Memories
-- You're a freeloader, Lenka!
-- I'm not a freeloader!
I am a Partner! (c)
Advertising MMM
I remember the books I read as a child by the excellent popularizer of knowledge Ya.
I. Perelman, such as" Entertaining Physics"," Entertaining Mathematics " and many others.
I remember that in one of them, to illustrate the geometric progression, several interesting examples were given, such as, for example, the legend about the inventor of chess.
Example 1 When an Indian raja got acquainted with a great game of chess and was shocked by the variety of combinations in this game, he called the inventor of the game and asked what he wanted a reward for his invention.
Gold?
Diamonds?
Something else?
And the inventor asked to put one rice grain on the first square of the chessboard, two rice grains on the second, four on the third, and so on.
The Raja got angry.
He ordered his vizier to pour this half wit his pathetic handful of rice and drive him with sticks.
The vizier counted for a week how many grains to pour out to the inventor (we remember that there were no Arabic numerals and multiplication rules yet), and then told the raja that he did not have so much grain, moreover, even if the raja lived 1000 times for 1000 years, and the gods grant a bountiful harvest every year, it would still not be possible to collect so much rice for this million years.
Every computer owner now has a calculator.
Everyone can raise 2 to the 64th power, subtract one and get the required number of grains equal to 18,446,744,073,709,551,615, and then divide it by about 10 and get the number of grams, and then divide it by another million and get the number of tons, approximately 1 844 674 407 371 - almost two trillion tons.
If we assume that the car includes 50 tons, then this will be 36,893,488,147 cars.
Let the length of the car be 25 meters, then the length of the train will be almost one and a half billion kilometers, that is, about ten distances from the earth to the sun.
Example 2 At one time, such a "game" called "bicycle for 10 rubles"was popular.
Its essence is as follows.
We believe that a bicycle costs 50 rubles (this is approximately in the prices of the 60s of the last century).
You pay 10 rubles and get four tickets, worth 10 rubles each.
You sell these tickets to your friends for 10 rubles, and you have another 40 rubles in your hands, having handed them over to the organizer, you honestly get a bike.
Each of your friends, in turn, after presenting your ticket, receives 4 more, sells them to his friends, and buys a bicycle with the proceeds.
And so on... does this scheme resemble anything?
And here is the modern implementation of this idea.
Only instead of a bicycle - a top end mobile phone.
You pay $19 and get in line, for example, for a SonyEricsson k750i (the price is about $350).
When there are 19 more suckers like you, there are 19 more people ($19*20=$380), you get the coveted mobile phone, and the remaining 19 people are waiting for the next 19*20=380 suckers.
And on the next layer there will already be 380*20=77600 people.
And on the next one one and a half million.
Canadian Diamond Traders is another implementation of this idea.
Instead of a bicycle - a diamond.
Pay 1/5 of the cost for a diamond, attract other participants (in accordance with the "marketing plan"), and then continue as usual... we are waiting for this sucker truck to close together with the money of "customers".
Example 3 I donot know if the current Russians of the middle generation remember that the first business in the Soviet (then still) There was something very similar in the Union.
Even before the thimblers and scammers on the streets, there were "firms" that" as if for fun "organized games under different names such as "shareholder", "businessman", and so on, who had enough imagination for what.
The first such structures appeared under the auspices of the district and city committees of the Komsomol.
The idea was as simple as a felt boot.
For 100 rubles, I buy 10 "shares", then "distribute" these "shares" to my friends.
A friend with this share goes to the office, hands it over, pays 100 rubles and receives 10 shares of the next level.
Of the 100 rubles paid by him, half (50 rubles) goes to me, and the second half goes to higher levels.
So, in the first step, I earn 10*100/2-100=400 rubles.
And my friends distribute their 10 "shares".
If they are successful, 100 shares of 100 rubles each will be distributed.
Half of the amount will remain at the lower level for distributors, and the second half will go higher.
Of this second half, I get half, this is 100*100/4=2500 rubles.
When the "third layer" is implemented, the amount will be absolutely fantastic.
We are counting... there will already be shares on the third level 10*10*10=1,000, 1000*100=100,000 rubles will be earned for them, the" distributors " will have half, that is, 50,000 rubles, half of the remaining amount will go to the second level, this is 25,000 rubles, and the remaining 25,000 rubles are divided equally between me and the higher "sponsors".
Thus, on the third iteration, I earn 25,000 / 2=12,500 rubles.
Those who wish can continue the calculations and estimate what rich people they will become, for example, after the distribution of the 5th issue of "shares".
It is clear that ideally, with each new issue of "shares", your income will grow 5 times, and the number of" shareholders " - 10 times.
Well, what is not a marketing plan, even if it is the simplest?
It was held under the mottos "You can become a leader!"
, " Prove that you can earn a million!"
, "For the young and enterprising" and other similar oak pathetics.
The most amazing thing is that I knew at least several people who claimed that they had already "earned" very decent sums, and most importantly, the money was just about to pour like a waterfall.
Simplicity is fascinating, isnot it?
After all, all that is required of you is to sell only 10 (at the maximum)once (!) you can even sell only three or four shares.
And that's it, you donot need to do anything else!
Smoke bamboo, cut cabbage.
You donot even need to have a secondary special education to understand that in the "sixth iteration" there will not be enough residents of our city to continue this game.
Funny?
Yes, indeed!
Only I perfectly remember the huge queues for these "shares" in the late 80's.
And they also say that the notorious "White Tower" cut down the initial capital just like that.
Well, as in the previous example - a modern implementation of this idea.
Donot you believe it?
Read it!
Example 4 Cepteromania.
There is such a company Zepter, which produces (or has produced) very decent kitchen utensils.
Only now she chose a strange way to promote her products to the masses.
These dishes were not sold in stores, but were sold only through friends.
It cost absolutely fantastic money.
An ordinary saucepan cost about $300, and a normal kitchen set went through the roof for $ 1,500.
Sales took place at "presentations" arranged by "distributors".
Presentations took place, as a rule, at home.
I visited one of them.
What can I say?
Tableware
I liked it, even very much.
If I didnot buy it, it's expensive.
Now this idea has quietly faded, but it's a pity.
The dishes are really good and I would love to buy it for reasonable money.
The marketing mistake was an incorrect assessment of the financial capabilities of the Russian market.
A very interesting product, of good quality, good design, which at that time did not have any serious analogues.
But at the same time, the price of the product is raised so much that it is simply not affordable not only for an ordinary buyer, but also for a very well off layer.
The involvement of new distributors in this business was not so aggressive.
Or maybe I just fell for decent people.
Friends, after all.
But the price of the product was clearly "network".
It seems that the company died, was exchanged for dietary supplements, shamanic medical devices, textiles, something else there.
The latest news on the site from 16.02.2003.
That is, the site has not been updated for three years.
Example 5 Once, about 8-10 years ago, my friend's wife lured me to an "event"with friends.
I didnot write this word in quotation marks for nothing.
She said that there we would be offered the opportunity to earn good money.
The "event" took place in the assembly hall of the regional Council of the prof.
Well dressed young men and women met a very diverse audience and escorted them to the hall.
We cheekily took the first row and began to study the diagrams hanging in front of the stage.
After a minute, it became clear that it would be about "network marketing".
With that, binary network marketing.
One thing remained unclear - what do they sell?
At first, there were some clowns, strange people who told how well they earn in this office (the name of the office has long been out of my head), how well they live, having secured their freedom and material well being.
They were all different, but they smiled the same way and said the same memorized phrases.
The subject of sales became clear about forty minutes later, when the company's manager began to speak.
In short, the office sells insurance services.
I have to insure myself and my family for a year or more.
After that, I myself become a representative of this company and can conclude insurance contracts on its behalf and receive a bonus from this.
Moreover, I can attract two (no more) people insured by me to this business and receive a bonus already from contracts concluded by these people.
In general, this was the first and last time I heard the name of this office.
Example 6 The last time I encountered a similar office was about a year ago.
These acted much more subtly.
I didnot notice any obvious signs of "network marketing", although it was still something... the situation is about this.
A girl calls me at work and informs me that she got information about me from a questionnaire that I filled out at the Informatics exhibition and I should have a spine from this questionnaire somewhere.
This spine was really lying around at my house.
The girl informed me that I had won a prize, which I would receive anyway.
I will receive one of three prizes - a trip to Spain, a car, a 42 inch plasma TV.
And so that I have no doubts, I can not take a penny of money with me and I will still leave with the prize.
The only thing that is required of me is to devote 2 hours of my precious time to listen to information about the company.
And one more condition - you must come with your wife.
We were given a personal manager a girl Yulia, who tried very hard to promote us for a frank conversation.
I had a digital voice recorder with me, so if I searched, I could find a recording of all these conversations.
The eldest of the organizers is a guy of about 30 years old, very quickly realized that the girl Yulia is not so charming that we completely switched to her, and that clearly, we are now
let's start asking "uncomfortable questions", the main one of which is " guys, where are the promised TVs and cars?!".
He invited us to his nook and said that he really appreciates my precious time and does not dare to detain us any longer.
However, since we were promised a prize, he will give it to me now.
And I issued a certificate for two round trip plane tickets to Spain, provided that I buy a ticket from their company within a year.
That was the end of it.
I donot remember the name of the company, I donot know if it still exists.
I think it doesnot exist.
However, I am 100% sure that that young man with attentive cold eyes and a great flair will safely organize a new business somewhere for hanging noodles on the ears of gullible suckers "clients".
A little remark.
When we left, I was already in the locker room, took out a dictaphone from my pocket and turned off the recording.
You should have seen the eyes of the guard who saw us off!
The guy was clearly torn between rushing at me and trying to take away the recorder and the desire to run to the authorities and ask for help.
PS.
And the rest were bred to buy a share of real estate in the "best resort places in the world".
PPS.
I have given this example solely to illustrate a transaction in which"there is, as it were, a commodity".
In fact, there is no product there.
Example 7 And this is ordinary SPAM, coming to my mailbox in kilotons and megabytes.
I hope that no one, including inveterate networkers, will have any doubts that this letter is designed for complete idiots, that this is a blatant scam, and that a person who gets involved in this needs to have his head amputated for preventive purposes!
However, most network companies repeat such posts almost word for word.
That's what kills.
I highly recommend that you carefully read (once) the vocabulary of networkers and the vocabulary of this letter.
To evaluate the turns of speech, and most importantly the argumentation and algorithm of the described enrichment mechanism.
I took the liberty to comment on this letter with quotes from the vocabulary of MLM network developers.
In order to avoid suspicion of fraud, I will try to give quotes from network operators as detailed as possible, indicating the URL from where it was taken.
The text of the original letter is given in black font, the texts of quotes from networkers are in brown.
The work went...
About all sorts of MMM, RDS, "Lords" and "Hopper investments" and I donot want to remember.
Millions of suckers, including my parents, took their money to them.
This is probably the end of the memories.
They are all sad ... an addition.
March 2006.
I found a link to a website where wonderful math textbooks and popular books are published.
With nostalgia and great pleasure, I reread the books of Ya.
I. Perelman.
Since they are in the Deja Vu format and it will seem too time consuming for someone to download the plugin to the ekplorer, then read these books, I ran a few pages through FineReader, converted several stories from the book "Living Mathematics"to html.
All the stories, one way or another, relate to MLM.
Please note that the first edition of this book was in 1927 (!).
This is so that there are no misconceptions about the "business of the 21st century".
This "business" existed back in the 19th century.
The theory of the spread of rumors.
A complete analogy with the "advertising pyramid", which is another name for MLM.
An avalanche of cheap bicycles.
I have already described this example from memory earlier.
Here is an amazing quote written 80 years ago: Let's sum up what the company actually achieves with the avalanche device.
It forces 4/5 of the population to pay for the goods purchased by the remaining 1/5 part
in other words, it forces four citizens to benefit the fifth.
Completely free of charge, the company acquires, in addition, a large staff of diligent distributors of its goods.
One of our writers (I. I. Yasinsky)correctly described this scam as an "avalanche of mutual allegory".
The numerical giant, invisibly hiding behind this venture, punishes those who do not know how to use arithmetic calculation to protect their own interests from the encroachment of scammers.
A great offer.
An illustration of the growth rate of a binary network.
Further
To the beginning of Marksman
