Multi Level Marketing ( MLM ) / Network Marketing Exposed ( NM )
Hello friends,
This weeks article will cover the basics and the criticisms of MLM . I am not planning to do an indepth analysis because it would get too lenghty, and I'm sure Managers and future managers like yourself would love to research on your own.
So, how many of you guys are invited to a seminar and lured by a free gift ? I'm sure most if not all have got such kind of emails atleast once.
How does the whole scam work ?
Lets me tell you about the recent MLM seminar I was invited to.
Lets call the company ABC.
ABC is a company which deals with computer education products. The company sells CD's which teach you the basics of computer, programming, advanced programming etc.
Now imagine, if the company sold the products through a normal sales channel, it would have to compete with a hell lot of companies, to top that the expenses of advertising, hiring sales persons would spoil the economics.
So ABC thinks of a MLM scheme.
Heres how it goes :
1.) You have to pay Rs 7000 to become a member of their scheme. In this you receive a username and password to a website . You also get 1 CD , your own email id and some web space .
2.) Once you are a member, you have to tell your friends about it. Get them to join this scheme. For every friend / relative / referer who joins this scheme, you get paid Rs. 2000/-
3.) The friend has to refer to his friends and sell the products and he gets Rs 2000/- the same way, whenever his friend / relative / referer joins this scheme.
Preety simple ??
Now begins the magic of numbers and statistics.
Imagine you even invite 10 friends in one whole year , you make Rs 20,000/- . If you take it seriously, ofcourse 100 people wouldnt be difficult, so you get paid Rs 2 Lakhs per year.
Everytime your friend refers his friends, you get Rs 1000 from it.
Now its compulsory to make atleast 2 members at the end of the year else you are disqualified.
So if 100 friends join through you, then 200 friends will join through these 100 guys. That would add Rs 1 Lakh more to your pay cheque per year.
Imagine a 3 Lakh paypackage per annum, thats 25 thousand a month, and that too without any efforts
Impressed ??
================================================================================================
Not if you are a MANAGEMENT STUDENT , you shouldnt !?
Here's why :
1.) The CD that You are paying Rs 7000/- for, doesnt cost more than Rs 1000/- . That means a whopping Rs 6000/- for the company, just from you.
2.) Now if you dont refer any of your friends in a years span, ABC the company will enjoy Rs 6000/- profit they made from you.
3.) If you do refer someone, then you get paid Rs 2000, that means ABC still enjoys Rs 4000/- profit for a Rs 1000 CD.
4.) Whats worse, every member your friend refers, ABC reaps huge profits for selling you a product that you could've got for 1/4th price.
Practically speaking, you were fooled to buy a way over priced product and you have to fool your friends and relatives to recover your money.
The more you fool, the more you recover, the higher the profits of ABC.
So next time you are called to a MLM , you know what to do
Warm Regards,
Kartik Raichura.
Hello friends,
This weeks article will cover the basics and the criticisms of MLM . I am not planning to do an indepth analysis because it would get too lenghty, and I'm sure Managers and future managers like yourself would love to research on your own.
So, how many of you guys are invited to a seminar and lured by a free gift ? I'm sure most if not all have got such kind of emails atleast once.
How does the whole scam work ?
Lets me tell you about the recent MLM seminar I was invited to.
Lets call the company ABC.
ABC is a company which deals with computer education products. The company sells CD's which teach you the basics of computer, programming, advanced programming etc.
Now imagine, if the company sold the products through a normal sales channel, it would have to compete with a hell lot of companies, to top that the expenses of advertising, hiring sales persons would spoil the economics.
So ABC thinks of a MLM scheme.
Heres how it goes :
1.) You have to pay Rs 7000 to become a member of their scheme. In this you receive a username and password to a website . You also get 1 CD , your own email id and some web space .
2.) Once you are a member, you have to tell your friends about it. Get them to join this scheme. For every friend / relative / referer who joins this scheme, you get paid Rs. 2000/-
3.) The friend has to refer to his friends and sell the products and he gets Rs 2000/- the same way, whenever his friend / relative / referer joins this scheme.
Preety simple ??
Now begins the magic of numbers and statistics.
Imagine you even invite 10 friends in one whole year , you make Rs 20,000/- . If you take it seriously, ofcourse 100 people wouldnt be difficult, so you get paid Rs 2 Lakhs per year.
Everytime your friend refers his friends, you get Rs 1000 from it.
Now its compulsory to make atleast 2 members at the end of the year else you are disqualified.
So if 100 friends join through you, then 200 friends will join through these 100 guys. That would add Rs 1 Lakh more to your pay cheque per year.
Imagine a 3 Lakh paypackage per annum, thats 25 thousand a month, and that too without any efforts
Impressed ??
================================================================================================
Not if you are a MANAGEMENT STUDENT , you shouldnt !?
Here's why :
1.) The CD that You are paying Rs 7000/- for, doesnt cost more than Rs 1000/- . That means a whopping Rs 6000/- for the company, just from you.
2.) Now if you dont refer any of your friends in a years span, ABC the company will enjoy Rs 6000/- profit they made from you.
3.) If you do refer someone, then you get paid Rs 2000, that means ABC still enjoys Rs 4000/- profit for a Rs 1000 CD.
4.) Whats worse, every member your friend refers, ABC reaps huge profits for selling you a product that you could've got for 1/4th price.
Practically speaking, you were fooled to buy a way over priced product and you have to fool your friends and relatives to recover your money.
The more you fool, the more you recover, the higher the profits of ABC.
So next time you are called to a MLM , you know what to do
Warm Regards,
Kartik Raichura.