MLM Math

pipelineaudio

Philosopher
pipelineaudio
Joined
Feb 23, 2006
Messages
5,092
Anyone have a good link to one of those charts that shows how just a few levels deep you'd run out of people on the planet?
 
kevsta said:
I've used this page before, the url helps to frame the discussion

http://www.consumerfraudreporting.org/MLM_pyramid.php
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That chart, indeed entire page, is from the school of "MLM=Pyramid Scheme therefore MLM has the flaws of Pyramid Scheme".

It's a graph of what happens with pyramid schemes, not with legitimate multilevel marketing operations.

The fact there are MLM companies that have been in existence nearly 80+ years and their distributor networks extend literally thousands of levels deep should give you a bit of a hint that there's something flawed in the underlying thesis that they're destined to collapse within a few "levels".
 
icerat said:
It's a graph of what happens with pyramid schemes, not with legitimate multilevel marketing operations.

The fact there are MLM companies that have been in existence nearly 80+ years and their distributor networks extend literally thousands of levels deep should give you a bit of a hint that there's something flawed in the underlying thesis that they're destined to collapse within a few "levels".
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Some MLM's are pyramid schemes that have not yet been shut down.
 
icerat said:
That chart, indeed entire page, is from the school of "MLM=Pyramid Scheme therefore MLM has the flaws of Pyramid Scheme".

It's a graph of what happens with pyramid schemes, not with legitimate multilevel marketing operations.

The fact there are MLM companies that have been in existence nearly 80+ years and their distributor networks extend literally thousands of levels deep should give you a bit of a hint that there's something flawed in the underlying thesis that they're destined to collapse within a few "levels".
Click to expand...

The problem as documented in Ogunjobi, Timi (2008). SCAMS - and how to protect yourself from them is that MLM is effectively an outdated business model whose time has passed. The internet with it ability to advertise and distribute directly to consumers has rendered MLM obsolete.

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much". USAToday)

The old adage of if it look like a duck quacks like a duck then it is duck applies. The fact that the MLM lobby has squelched numerous attempts by the FTC to bring them under standard franchise rules (which would help cull all the bad apples out there) shows that the MLM industry is the modern equivalent of snake oil salesmen with the MLM itself as the snake oil.
 
maximara said:
The problem as documented in Ogunjobi, Timi (2008). SCAMS - and how to protect yourself from them is that MLM is effectively an outdated business model whose time has passed. The internet with it ability to advertise and distribute directly to consumers has rendered MLM obsolete.
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Ah yes, nothing like choosing a "Technical Writer, Web Developer and Open Source Evangelist" who writes books on Jooma and Drupal as your expert source on marketing trends in business. :boggled:

But sure, in the IT world the experience with facebook, twitter etc has indeed shown how word of mouth marketing is just so outdated .... :rolleyes:

Or then again... to inject a little reality in to Ogunjobi's "theory" -

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much". USAToday)
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A response to that -
The piece also cites Roland Whitsell, who is described a “a former business professor”. I was unable to find out much information about Mr Whitsell, he’s remarkably unremarkable on Google. He claims to have been researching multilevel marketing for 40 years , but alas he doesn’t have a single published academic paper on any topic showing in google scholar, let alone any papers on multilevel marketing. We do learn however that he is an associate professor at Volunteer State Community College. That’s some CV you have, professor.​
I can personally introduce "Professor" Whitsell to many, many people earning more than "$1.50/hr" if he feels so inclined.
The old adage of if it look like a duck quacks like a duck then it is duck applies. The fact that the MLM lobby has squelched numerous attempts by the FTC to bring them under standard franchise rules
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Should we move this to the "conspiracies" section? How big bad MLM companies have successfully managed to somehow con the FTC under numerous different political leaders for several decades, not to mention similar bodies in countries all around the world?

Anything in particularly you disagreed with in the the FTC's reasoning?

You did read it, didn't you?
 
maximara said:
The problem as documented in Ogunjobi, Timi (2008). SCAMS - and how to protect yourself from them is that MLM is effectively an outdated business model whose time has passed. The internet with it ability to advertise and distribute directly to consumers has rendered MLM obsolete.

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much". USAToday)

The old adage of if it look like a duck quacks like a duck then it is duck applies. The fact that the MLM lobby has squelched numerous attempts by the FTC to bring them under standard franchise rules (which would help cull all the bad apples out there) shows that the MLM industry is the modern equivalent of snake oil salesmen with the MLM itself as the snake oil.
Click to expand...

Spot on. MLM today is similar to door to door sales people. The only difference is the ability to place internet orders. The recruiting and product pitch is done person to person, one at a time. The grand daddy of MLM's, Amway, has restrictions on advertising, rendering their own sales force ineffective. Many groups at one time or another adopted the "buy from yourself" model of doing business. Thus recruiting was just about the only way to profit.

The real product in most MLM's, is false hope and the opportunity itself rather than products.
 
icerat said:
Ah yes, nothing like choosing a "Technical Writer, Web Developer and Open Source Evangelist" who writes books on Jooma and Drupal as your expert source on marketing trends in business. :boggled:
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Oh yes suggesting a book there a guy has a cat as a business partner and falsely claiming it was from a recognized publishing companies and was not self-published and claiming for weeks that it wasn't self published when called on the carpet is SO much better. Sheesh.



And before you go into your 'that is not what I said' BS again:

"The books I've listed are only from recognized publishing companies and not self-published. As such they are considered good sources under Wikipedia guidelines WP:RS and WP:V."

Come on, Insider201283, Icerat, IBOFightback, IBOFB, Insider, or what ever name you are using this month, your ramblings are tiring.

I should note that Financial & Tax Fraud Education Associates (cited in Forbes Best of the web 2000) has a long article on Multi-Level Marketing (MLM) that basically says the same thing as Ogunjobi does.
 
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Joecool said:
Spot on. MLM today is similar to door to door sales people. The only difference is the ability to place internet orders. The recruiting and product pitch is done person to person, one at a time. The grand daddy of MLM's, Amway, has restrictions on advertising, rendering their own sales force ineffective. Many groups at one time or another adopted the "buy from yourself" model of doing business. Thus recruiting was just about the only way to profit.

The real product in most MLM's, is false hope and the opportunity itself rather than products.
Click to expand...

Right and when you look at the majority of peer-reviewed material on the MLM individual (as opposed to MLM companies as a whole) the overwhelming majority of it is negative.

I am reminded of an old black and white documentary on organized crime that talked about the lotteries they offered. 'They were selling dreams. And that is what the people buying into them were paid off in--dreams.' These lotteries were very profitable for the mobsters and they rarely if ever paid out on a winner.

With the internet just what is the purpose of a MLM? There is a reason the door to door salesman largely disappeared.
 
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maximara said:
Oh yes suggesting a book there a guy has a cat as a business partner and falsely claiming it was from a recognized publishing companies and was not self-published and claiming for weeks that it wasn't self published when called on the carpet is SO much better. Sheesh.
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Wow, nice little tantrum there. That all you've got?

I should note that Financial & Tax Fraud Education Associates (cited in Forbes Best of the web 2000) has a long article on Multi-Level Marketing (MLM) that basically says the same thing as Ogunjobi does.
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Ahh yes, well, I guess the CMS expert on the blogger are definitely far more authoritive than anything like, well, laws, not to mention reality. :rolleyes:

Not that it matters, but I notice that claim about "best of the web" seems to have no sourcing (except, I'm guessing, you)
 
maximara said:
Right and when you look at the majority of peer-reviewed material on the MLM individual (as opposed to MLM companies as a whole) the overwhelming majority of it is negative.
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Uhuh. Please, lets see some citations.

With the internet just what is the purpose of a MLM? There is a reason the door to door salesman largely disappeared.
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It would appear that you do not understand what MLM is about. While MLM, which is a compensation plan strategy, has been used with door to door sales companies, the vast majority of companies that use MLM do not promote door-to-door selling as traditionally viewed.

As for current relevance, I'll quote peer-reviewed material -

Indeed, many of the premises and principles of multilevel marketing are found in such marketing trends as viral marketing (Rayport 1996) and buzz marketing (Hughes 2005).
Albaum & Peterson (2005). Multilevel (network) marketing: An objective view. The Marketing Review, 2011, Vol. 11, No. 4, pp. 347-361
 
icerat said:
Wow, nice little tantrum there. That all you've got?



Ahh yes, well, I guess the CMS expert on the blogger are definitely far more authoritive than anything like, well, laws, not to mention reality. :rolleyes:

Not that it matters, but I notice that claim about "best of the web" seems to have no sourcing (except, I'm guessing, you)
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Considering you have in the past claimed a peer review article wasn't and other nonsense this shouldn't surprise anyone.

"Build Your Own Soapbox". Forbes. 2000-09-11 found via Google in a minute.

The reality is MLM is more often then not a pyramid scheme using promises of great wealth to entice people.

"That has sparked a growing debate over whether Herbalife and other multi-level marketing companies are essentially pyramid schemes. That's when distributors make more money recruiting other sellers, rather than selling the products themselves, with profits flowing to the very top at the expense of those at the bottom." (For many Herbalife recruits, lost money and dashed dreams (NBC News))

Fortune Hi-Tech Marketing is yet another example and in that case the FTC has finally gotten off it duff and done something.
 
maximara said:
Considering you have in the past claimed a peer review article wasn't and other nonsense this shouldn't surprise anyone.
Click to expand...

I assume your ad hominem (and false) response means you can't backup your claim?

"Build Your Own Soapbox". Forbes. 2000-09-11 found via Google in a minute.
Click to expand...

The term "best of the web" doesn't even exist in that article. Meanwhile, that very same Forbes is interviewing the CMO of a multilevel marketing company and noting Herbalife is a buy.

The reality is MLM is more often then not a pyramid scheme using promises of great wealth to entice people.
Click to expand...

That's arguably true. Under one definition pyramid schemes might be a considered a subset of MLM, and there are an awful lot of scams out there claiming to be legitimate MLMs that are not.

"That has sparked a growing debate over whether Herbalife and other multi-level marketing companies are essentially pyramid schemes. That's when distributors make more money recruiting other sellers, rather than selling the products themselves, with profits flowing to the very top at the expense of those at the bottom."
Click to expand...

I'm not sure what your point with this quote is? It accurately describes a recent debate over Herbalife (which Herbalife is clearly winning) as well as reasonably accurately describing pyramid schemes.

Fortune Hi-Tech Marketing is yet another example and in that case the FTC has finally gotten off it duff and done something.
Click to expand...

I haven't investigated FHTM enough to comment, though I note it was not a member of the DSA, which as far as I'm concerned is usually a sign caution is warranted.
 
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maximara said:
Right and when you look at the majority of peer-reviewed material on the MLM individual (as opposed to MLM companies as a whole) the overwhelming majority of it is negative.

I am reminded of an old black and white documentary on organized crime that talked about the lotteries they offered. 'They were selling dreams. And that is what the people buying into them were paid off in--dreams.' These lotteries were very profitable for the mobsters and they rarely if ever paid out on a winner.

With the internet just what is the purpose of a MLM? There is a reason the door to door salesman largely disappeared.
Click to expand...

Once again. Spot on. MLM is an outdated business model. It currently serves as a vehicle for predators to prey on the gullible and financially needy.

Their product is opportunity and hope. Hope is a powerful commodity. It is why people often knowingly go to Las Vegas to gamble They know the odds are against them but they are willing to rick their dollars in the hopes of striking it rich. While MLM is not gambling, the strike it rich concept is similar.

The difference is that people go to Vegas knowing the odds. MLMer's tend to stretch the truth and woo people into signing up.

Icerat/IBOFIghtback/Insider/Insider201283 or whatever nickname he now has even tried to debate, on another forum, that his overpriced Amway toothpaste was actually a better value than the cheaper Colgate or Aim, because the hole on the tube was smaller. This guy will do anything to try and make amway and MLM look good, even if he must deceive or lie to do it.
 
What we need is a MLM company to sell PMMs. Both seem to rely on the same basic notion.
 
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