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Network Marketing: a new strategy?
12th April 2007 ( Published by Sokoni magazine  July 07)

Sometimes mid 2006, I was invited to present on network marketing, live on air for a Royal Media FM Radio Station. The time was 5.30 pm and the talk was to take place at 7 pm same day. I did not have time for elaborate consultations or research. What immediately came to my mind was the experience with network marketers that I had encountered with, from such companies as GNLD, Swiss Guard, Tianshi, and most recently Forever Living Products (FLP).

A brief search though gave some very important leads.  Above all, Network Marketing is not a new concept in the world. It has been around for more than 50 years now.  The concept is a major marketing strategy adopted by several companies in America, China and many other countries in the developed world.

In America, the strategy moves a turnover of US $ 28 billion and has 10 million distributors spread throughout the union of states. This is equivalent to almost 5 times the annual budget of Kenya and employment of almost 1/3 of the entire population. The continued growth has led to network marketing, being incorporated as part of the curriculum of some Universities in America. Indeed, several professors have recently written about Network Marketing. A good example is a book titled “New Professionals” by Michael King, which is available in Kenyan bookshops.

What then is network marketing also known as multilevel marketing? Apparently, it is just one of the many strategies of promoting products or services of a company. It is not much different from advertising through the media, using distributors, manufacturers’ representatives, salesmen and retailers. Every company decides which method to adopt in moving its products depending on its business strategy. But, one of the most effective marketing strategies is that of word of mouth. It is a form of personal selling. It is based on sharing ones experiences with others who may not have had the benefit of the same. It spreads like bushfire, sometimes. Whereas world of mouth can easily build the reputation of a company’s products, it can also destroy that reputation within no time. Network Marketing companies have deliberately adopted word of mouth or personal selling as their preferred strategy.

Instead of employing the services of various agents in the marketing chain, the products are moved directly from the manufacturer through a single level or distributor, down to the consumer. These reduced levels of marketing chain end up reducing manufacturing companies’ selling costs. Nevertheless, the market share continues increasing. The savings accrued from reduced marketing chain are shared between individual distributors who now form the marketing chain amongst themselves. Each person’s earnings depend on the level of contribution or seniority in the chain. It is this chain that is referred to as multi-level or distributor network.

Interestingly, most of the Network Marketing companies that are known to us locally, deal with natural products meant for healthy living through healthcare and beauty. Other examples include soaps and detergents used in our every day lives. Indeed, the products are suitable for whole family usage. In the developed world, any company can adopt Network Marketing Strategy. It does not matter the nature of business. It could be training, IT services, Consultancy service or any other. Surprisingly, IBM adopts Network Marketing Strategy in moving its products. But, one major striking feature in common with Network Marketing is brand change.

As a consumer, you are slowly influenced into changing your spending habits. You will for example start buying your consumables from Network distribution shops as opposed to your favorite supermarket. You can even order your preferred products through the internet. But do you ever get worthwhile discounts from your favorite supermarket? Does the manufacturing company supplying to your supermarket even know that you exist?

In Network Marketing, I understand you continue earning more and more discounts as you continue buying. As you introduce more and more consumers to the chain, you continue getting cheques for discounts. You also continue rising in the hierarchy of distributorship. I am informed that the higher the level in the chain, the higher the rewards and recognition by the manufacturer too. It is further understood that you continue prospering in terms of health and wealth.

The problem with us, as put by Eddie Chai the foremost network marketer in Taiwan is that we are like chicken. Chicken will quickly feed on corn as you continue throwing the same. Should you put something else like meatballs; the chicken will not immediately feed on them despite being delicacies. They will take time perhaps asking themselves whether it is also edible; is it right? Is it the right time? That is how we lose opportunities of changing our lives for the better; opportunities of doing business; opportunities of healthy and wealthy living.

We remain in comfort zones which are far below our potentials. The question which has been foremost in my mind has been, whether this Network marketing is sustainable. Apparently, I now find that 50 years is a long time for a marketing strategy not to have died naturally or be overtaken by events. Instead, it has been growing from strength to strength. An interesting experience one evening in December 2006 was a presentation by a lady who has been a network marketer since1981.

I bounced into this meeting as I whiled away time during a tour of duty in Kisumu.  This International network practitioner had come all the way from South Africa. The lady was converted in 1981 while a housewife. She has been loyal ever since. Her commitment and performance has made her become a roving ambassador of her Network Marketing Company.

At the same time, my former colleague who I know well since early school days has also entered into this category of Globe Trotters, again in the name of encouraging brand change. In his case it has just been hard work, risk taking, commitment, persistence and perseverance and above all ability to identify and take advantage of opportunities. Incidentally, the two examples featured are from different Network Marketing companies. The latter case embraced network marketing sometimes in 1995. He changed company once early in the new millennium and has since been highly consistent and committed.

It appears that Network Marketing through brand change is workable. The more you covert others into your newly embraced brands, the more you are rewarded not only health-wise but also financially. But, like any other entrepreneurial venture, there are prices to pay. Above all you must be patient and persistent. You must be ready for rejection and other pitfalls of business sometimes.  

In common with majority of these marketers, they are ordinary people who include housewives, students, retirees, public servants, professionals and  business people amongst others, all doing ordinary things extra-ordinarily.   The next time you encounter a network marketer, be sure that he/she is a disciple of a company which has embraced personal selling as a strategy.

Newtimes Editor

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