Richa Sethi al. International Journal of Recent Research Aspects ISSN: 2349-7688, Vol. 2, Issue 1, March 2015, pp. 22-25 © 2014 IJRRA All Rights Reserved page - 22- Multi Level Marketing: - An Exploitation of Relationships Richa Sethi 1 , Dr. Shobha Khinvasara 2 1.2 Suresh GyanVihar University, India Abstract—The Multi level Marketing, first popularized by Amway, in 1950s in US is gaining pace in India. The annual growth rate of the Companies in MLM business is expected to be 25%. The India Direct Selling Association (IDSA) has projected that the MLM industry will be around Rs 8000 crores by 2014. Studies show that consumers have negative perception regarding Direct Selling organisations and MLM organisations in particular. The aggressive selling techniques, continuous persuasion by agent, exaggerations of facts in recruiting, boosting of lifestyles of upline members, pyramid scams and unethical way of exploiting relationships all together form a basis for this negative perception. The paper presents the exploitation of relationships viz. family, friends, colleagues and attitude of channel members in MLM business. Keywords—MLM(Multi Level marketing), relationships ,upline members. I. INTRODUCTION More and more companies today are selling their products and services directly to customers without intermediaries and are thus identifying new prospects through a process called direct marketing. Peterson defines direct selling as “face to face selling away from a fixed retail location”. (Peterson, Albaum& Ridgway 1989). Business organisations have long relied on direct marketing to target customers without spending a lot of money on retail distribution. However the Network (Multilevel) Marketers have taken the direct model one step further, i.e. not only they do the sales, but recruit and train new distributors i.e. independent sales persons who are members in the network marketing company. This ‘ingenious’ method was first popularised by Amway in 1950’s.The big trump card in network marketing is the commission paid not only for direct sales made by the salesperson , but also from the sales made by the recruits made by him. That is, if you get friends and relatives to join up, you get a commission not only from the products your friends and relatives purchase, but also from the sales they make to their friends (Bloch, 1996). This ‘special’ opportunity attracts prospective candidates to join network marketing companies. Studies reiterate the fact that a 100 percent annual turnover rate among sales personnel in certain network marketing company is not unusual (Peterson &Wotruba, 1996). According to the Direct Selling Association in the United States, 70% of the revenue from the direct selling industry was generated by multilevel marketing companies (Coughlan & Grayson, 1998) and most of this came from the better known companies, such as Amway, Nuskin, Oriflame, that use multilevel instead of single level compensation plans. In the case of India, network marketing momentum was conspicuous in India during mid 90’s followed by the establishment of the Indian arm of Amway Corporation. The total turnover of network marketing companies in India was estimated at Rs.40,104crores in 2014 with an annual growth rate of 25% (Tribute, 2015). Amway India, Avon, Tupperware, Oriflame and desi companies like Modicare, Hindustan Lever Network are the major network marketing players in the Indian market. Indian Direct Selling Association (IDSA) facilitates membership to genuine network marketing companies. The IDSA projection for 2010 for the network marketing industry is Rs.8000 crores. According to National Council of Applied Economic Research, the Indian middle class was projected to grow from 1.1 crore households in 2001-02 to 1.7 crore households in 2005-06 and the figure is expected to be 2.8 crore by 2009- 10. The above figures justify the rosy picture of network marketing in India. However, studies carried out by Peterson et al (1989), Raymond and Tanner (1994), and Kustin and Jones (1995), suggest that consumers often have negative perceptions of direct selling organizations and network marketing organization in particular. The aggressive selling techniques, exaggeration of facts in recruiting and pyramiding scams (Kustin& Jones, 1995) altogether formed a basis for this negative perception. Then there are others like Koehn (2001), who have claimed MLM schemes as unethical, and guilty of ‘exploiting’ relations rooted in love and affection and as such is socially and psychologically unacceptable to most people in our society (Bloch, 1996).The researchers in this study propose to explore whether such a phenomenal growth of network marketing in India is because of the exploitation of relationships with friends and relatives. II. OBJECTIVES OF THE STUDY The specific objectives of the study are: 1. To examine the exploitation of relationships in Multilevel Marketing. 2. To examine the differential effect of two types of relationships with Friends andRelatives in getting exploited in Multilevel Marketing. 3. To examine whether the downline members are having a positive attitude towards theirbusiness