Multilevel Network Marketing: A Tool for Eradicating Unemployment


By

Prahlad Kumar Pandey
Research Associate
ICFAI National College
Rewa (MP)
 


Abstract

The positive aspect of our population is 'It needs commodities and services'. In Monopolistic Competitive Market product differentiation is done mainly through advertising which without any value addition leads to increase in prices. MLM system offers an opportunity to consumers to advertise, sell products and earn profits in the form of commission by buying goods and a nominal registration fee is charged.

Introduction

India is a fast developing country and is the only country in the world to have a potential of maintaining a growth rate of more than 3% for the period of next 45 to 50 years. Based on the purchasing power of parity India may become the third largest economy of the world this year. The initiatives taken by the then Prime Minister Sri Narsimha Rao in 1993 have started showing colors. Fortunately, despite the pressure of the Left Front our present Government has been able to paddle the development wheel.

Aristotle once said, "A man who does not live in a society is either a demon or a divinity." He actually meant to say that each of us is necessarily involved not only in social activities but in economic activities as well. From the viewpoint of economics the statement may be redefined as, "A man who does not consume a product or commodity is either a demon or a divinity." Thus each of us is necessarily a consumer regardless of quantity and quality of consumption.

OPPORTUNITY

Five hundred forty million people aged below twenty five make India a young country.

Four million graduates are unemployed and out of them sixty three percent are science graduates. These figures not only put a question mark in the fruitfulness of our education system but force the policy makers to think about the future of young India. Let me remind you that this young unemployed population is also consumer.

In monopolistic competition the product differentiation is done mainly through advertising. Advertising does not add any value in a product or service. As India is in the path of liberalization and globalization the monopolistic competition is expected in all manufacturing and service industries. There will be more selling cost without value addition in the products and services. More selling cost will open the doors for the growth of service sector. More and more people will get employment. But celebrities will be benefited more and according to Ernest Angel's law consumption does not increase proportionately to the increase in disposable income. There is a possibility of deflationary gap in the economy.  

Sixty eight percent of Indian population lives in villages and small towns. Every seventh person in the world is an Indian villager. There are not sufficient number of institutions and colleges in these small towns that impart technical and management education. Increasing rate of literacy will again create a problem of providing higher education to this coming generation. And even if they are able to get traditional higher education, it will only lengthen the queue in the employment registration offices.

After opening the doors for foreign direct investment in retail sector there will be 500,000 jobs by the end of the year. BPO and call center industry is already facing a shortfall of desirable manpower and the rejection rate is 80%. Government has launched the National Rural Employment Guarantee Act (NREGA). NREGA will enable poorer and weaker section of society to increase their purchasing power. Service and manufacturing sector will witness rapid growth.

Population, our greatest weakness, if managed properly can be turned into our greatest strength. 

ROLE OF MLM

Multilevel Network Marketing plans are a way of selling goods or services through consumers. Consumers registered in the concerning MLM company are known as distributor. These plans typically promise that if you sign up as a distributor, you'll receive commissions - for your sales and those of the people you recruit to become distributors. These recruits sometimes are referred to as your "downline."

Multilevel network marketing (MLM) is a business model of getting products and services sold by customers only with nominal registration fee. Since, MLM provides opportunity to become a franchisee of the concerning MLM company, all the consumers with no employment can find their employment in this field. They have nothing to lose and everything to get. They can begin their journey of employment simply by purchasing any of the product kit offered by the concerning company.

An unemployed gentleman say Mr. A is dependent on his parents. He consumes a number of items. He prefers to use the products which he thinks are good. Advertising actually makes him that a certain product is good. Advertising does not add any value to the product but results an increase in the cost which is finally born by Mr X.

One day another unemployed gentleman say Mr. B approaches him with some products and explains the merits and features of the products. In case the products are sold he will be given some incentive and opportunity to include him in a business plan.

Most of the products and services we consume come to us after intensive advertising and for publishing ads newspapers, media and celebrations and brand ambassadors are highly paid.

The question is why not a product should be advertised by consumer when he is capable of and willing to do so.

EYE KEEPING

Insurance sector faced many problems in its early times but it is accepted and now it has become a part of life. Changes are not accepted easily. There are many MLM networking companies growing like mushrooms. Many companies have run away overnight having made handsome amount. The poor employed youth and folk are being cheated.

Entry of Hindustan lever network is a sign of increasing importance of MLM. Right concept marketing (RCM) a Bhilwada based MLM Company's pick up centers (distributor center) can be seen in small towns and villages. Like insurance regulatory development authority (IRDA) there should be a body that ensures the monitoring, regulating and controlling of MLM.

CONCLUSION

Mahatma Gandhi was once traveling by train in a first class compartment. At a station some Englishman entered the compartment insulted him and threw him out of the compartment. He got angry and said, "You have thrown me out of the compartment. What. I will throw you out of my country. He turned his greatest weakness 'anger' into his greatest strength.

Can our greatest weakness 'population' not be turned into greatest strengths 'man power'?
 


Prahlad Kumar Pandey
Research Associate
ICFAI National College
Rewa (MP)
 

Source: E-mail May 2, 2006

     

Back to Articles 1-99 / Back to Articles 100-199 / 200 onwards / Faculty Column Main Page

 

Important Note :
Site Best Viewed in Internet
Explorer in 1024x768 pixels
Browser text size: Medium