An Analysis of 'Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes' Under Standard Protections Offered by Legitimate Direct Selling Firms

2020 ◽  
Author(s):  
Anne T. Coughlan
Keyword(s):  
Direct Selling ◽  
Multilevel Marketing ◽  
Pyramid Schemes

Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes

2002 ◽  
Vol 21 (1) ◽  
pp. 139-151 ◽  
Author(s):  
Peter J. Vander Nat ◽  
William W. Keep
Keyword(s):  
Mathematical Model ◽  
Distribution Channel ◽  
Specific Form ◽  
The Internet ◽  
Key Factors ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
International Growth ◽  
Pyramid Scheme ◽  
Pyramid Schemes

A specific form of direct selling, multilevel marketing (MLM), experienced significant international growth during the 1990s, facilitated in part by the development of the Internet. A corresponding increase in the investigation and prosecution of illegal pyramid schemes occurred during the same period. These parallel activities led to increased uncertainty among marketing managers who used or wished to use the MLM approach. The authors examine similarities between the multilevel approach to marketing and activities associated with illegal pyramid schemes. A mathematical model is used to differentiate between the two on the basis of previous pyramid scheme cases and current U.S. law. The results of the model suggest key factors that marketers interested in MLM will need to consider when developing this type of distribution channel.

Multilevel marketing and pyramid schemes in the United States

2014 ◽  
Vol 6 (2) ◽  
pp. 188-210 ◽  
Author(s):  
William W. Keep ◽  
Peter J. Vander Nat
Keyword(s):  
The United States ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
Content Type ◽  
Legal Decisions ◽  
Customer Base ◽  
Pyramid Scheme ◽  
The Usa ◽  
External Customer ◽  
Pyramid Schemes

Purpose – This paper aims to analyze the evolution of direct selling – a retail channel that successfully sold products ranging from cosmetics to radios to automobiles – to multilevel marketing (MLM), an industry now apparently heavily reliant on selling to itself. As the courts have found some MLM companies to be pyramid schemes, the analysis includes the overlap between the legal MLM model and an illegal pyramid scheme. Design/methodology/approach – The development of direct selling in the USA was examined, followed by the factors contributing to the design and growth of the MLM model and its non-commission-based compensation structure. Then, the key legal decisions regarding illegal pyramid schemes operating under the guise of MLM, the relative stagnation of direct selling and the state of the MLM industry were examined. Findings – As the MLM model operates on the dual premise of retailing through a network of distributors and recruiting new distributors to do the same, it was found that federal regulators and the courts consistently focus on the “retail question” – the existence and extent of sales to consumers external to the distributor network. The authors argue that without a significant external customer base, internal consumption by an ever-churning base of participants resembles neither employee purchases nor a buying club. Social implications – As the MLM model facilitated the growth of pyramid scheme fraud, creating victims rather than customers, this research highlights successful efforts to regulate this type of consumer fraud. Originality/value – Few papers have been written on MLM and pyramids schemes, and none thus far has taken an historical perspective.

scholarly journals ‘Bisnis Oriflame, Bisnis Konsultan Itu Sendiri’: Budaya Organisasi Multilevel Marketing untuk Mewujudkan Mimpi

2017 ◽  
Vol 1 (2) ◽  
pp. 37
Author(s):  
Deby Susan Kamawo
Keyword(s):  
Marketing Strategy ◽  
Distribution Channel ◽  
Organisational Culture ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
Complementary System ◽  
Organisational Values ◽  
One Step ◽  
Beauty Products

Multilevel marketing (MLM) is one of the marketing strategy which combines between distribution channel and direct selling to the consumers. One of the most popular MLM companies in Indonesia registered in the Indonesian Direct Sale Association (Assosiasi Penjualaan Langsung Indonesia, APLI) is PT. Orindo Alam Ayu, known as Oriflame, and is focused on beauty products. This article deals with Oriflame’s organisational culture by examining the organisational values and norms to achieve the company’s vision and mission, and how the norms are practiced. The study indicates that in internalizing the values (togetherness, spirit, and passion) and norms of Oriflame (operational principles, conducting a four-in-one events—Welcome Party, Step-One, Step-Two and Meet-Up Team, and success plan through TRB), from which Oriflame consultants learn how ‘to achieve their dream’ (mewujudkan mimpi). In such business, every consultant (upline as well as downline) is a working partner and they workin a complementary system, so that a consultant’s success is the success of others in the network. It is argued in this article that Oriflame is ‘an achievement dream business’ that is developed on the basis of its values and norms. How much income and in what level of success plan are intended to achieve depend on the consultant itself because Oriflame business is ‘the business of the consultant herself/himself’.

ŞEBEKE YOLUYLA PAZARLAMA SİSTEMİNDE TEŞVİK PLANLARI VE GELİR HESAPLAMA YÖNTEMLERİ COMPENSATION PLANS AND INCOME CALCULATION METHODS IN MULTILEVEL MARKETING SYSTEM

2013 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Ali Çağlar Çakmak
Keyword(s):  
The Other ◽  
Calculation Methods ◽  
Marketing System ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
Compensation Plans ◽  
Marketing Literature ◽  
Marketing Firms

The multilevel marketing system which has been mentioned frequently nowadays takes place in marketing literature at direct selling, a non-store retailing’s subsection. In the multilevel marketing system that is a type of direct selling, there are two different selling incomes promised for the direct sellers. One of them is selling income which occurs to sell products and the other is a payment income over a new member’s selling who is sponsored by an old member referred as sponsor. The multilevel marketing firms can use different compensation plans and income calculation methods when income is distributed to their members. These compensation plans and income calculation methods in multilevel marketing system have been explained in this research.

ŞEBEKE YOLUYLA PAZARLAMA SİSTEMİNDE TEŞVİK PLANLARI VE GELİR HESAPLAMA YÖNTEMLERİ

2013 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Ali Çağlar Çakmak
Keyword(s):  
The Other ◽  
Calculation Methods ◽  
Marketing System ◽  
Direct Selling ◽  
Multilevel Marketing ◽  
Compensation Plans ◽  
Marketing Literature ◽  
Marketing Firms

The multilevel marketing system which has been mentioned frequently nowadays takes place in marketing literature at direct selling, a non-store retailing’s subsection. In the multilevel marketing system that is a type of direct selling, there are two different selling incomes promised for the direct sellers. One of them is selling income which occurs to sell products and the other is a payment income over a new member’s selling who is sponsored by an old member referred as sponsor. The multilevel marketing firms can use different compensation plans and income calculation methods when income is distributed to their members. These compensation plans and income calculation methods in multilevel marketing system have been explained in this research.

PROSPEK USAHA INOVASI SPEAKER DAN PAJANGAN UNIK UPAYA PEMANFAATAN LIMBAH GULUNGAN KERTAS

2019 ◽  
Vol 2 (2) ◽  
pp. 171
Author(s):  
Saputri Rizki Ramadhanti ◽  
Joti Dina Kartikasari ◽  
Alfian Muttoqim Muttoqim ◽  
Umi Farida Farida ◽  
Amanda Oktaviani Amanda
Keyword(s):  
College Students ◽  
Social Media ◽  
Economic Value ◽  
Waste Paper ◽  
Direct Selling ◽  
Paper Waste ◽  
Entrepreneurial Spirit ◽  
Surrounding Environment ◽  
Business Opportunities ◽  
New Business

The amount of paper waste, especially paper waste of yarn rolls in the socks manufactured factory and the convection industry that has not been used to get high economic value is an opportunity to open a new business, especially in the electronic and art craft product. SEPIK PANIK (Speaker of Music and Unique Display of Waste Paper Rolls) is an innovation from processing paper waste to be a unique speaker. The purposes of this program are: 1) Utilizing paper waste to get high selling value. 2) Creating handmade products from paper waste into speakers as well as unique creative display. 3) To accommodate the desire of college students who have entrepreneurial spirit and artistic creations to open new business opportunities. The method of make this SEPIK PANIK product includes 1) Making paper tube of speaker and 2) Making a Unique Display. The Sales of this product have been carried out during May to August 2019, products that have been sold are 34 units, obtained a profit of Rp. 1.170,000. Sales and promotion methods are carried out both online through social media and offline, namely direct selling and consignment. Based on these results, this business is very profitable and can benefit the surrounding environment.

OEM Direct Selling Channel and Product Accessibility

2017 ◽  
Author(s):  
Hsiao-Hui Lee ◽  
Tingkai Chang ◽  
Kevin Jean ◽  
Chia-Wei Kuo
Keyword(s):  
Direct Selling
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