A Study Of Multi-Level Marketing Business With Specific Reference To Amway India

IRJMST Vol 9 Issue 3 [Year 2018] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)
International Research Journal of Management Science & Technology
http://www.irjmst.com Page 101
A study of Multi-Level Marketing Business with Specific Reference to Amway India
Ashok Kumar1
, Dr. Akshay Kumar Satsangi2
1
Research Scholar, Department of Management, Faculty of Social Sciences, Dayalbagh Educational
Institute, Dayalbagh, Agra. kumaraks34@gmail.com
2
Associate Professor, Department of Management, Faculty of Social Sciences, Dayalbagh
Educational Institute, Dayalbagh, Agra. akshay.satsangi@gmail.com
Abstract
Multi-Level Marketing is a business model of direct selling in which consumers get products directly
through the network of consumers instead of stepping the retail stores. Since, unemployment is one
of the biggest concerns for the government, it requires a combined effort of government and
industries. Direct selling industry has shaped the career of millions of Indians especially the
unskilled ones who have not found a place in the mainstream by improving their interpersonal skills.
In India direct selling industry has existed for several years but the entry of global companies during
the last five years has accorded greater visibility to this industry which is still in a nascent stage
This paper focuses on the role of Multi-Level Marketing Business in the Indian context and its
potential for providing self employment opportunities to Indian workable human power to raise their
living standard as The Prime Minister of India has also focused on generating self employment skills
through “Skill India” Campaign.
Keywords- Multi-Level Marketing, Direct Selling, Networkers, Skill India.
Introduction
With the passage of time new concepts and ideas emerge in the field of marketing. Traditionally
marketing was considered to be the work of professional, full time marketers but there is a new
concept called “Multi-Level Marketing (MLM)” which is making marketing every body‟s cup of tea.
Many people who want to work from home or work part time take a look at it as an option. It has
percolated the growth opportunities down up to weakest section of the society and it has significantly
contributed to our economy also.
On the basis of compensation plans direct selling organisations can be divided into two distinct ways
to distribute the products namely Single-Level Marketing (SLM) Firms and Multi-Level Marketing
(MLM) Firms. Although MLMs follow complicated compensation plans in comparison of SLMs.
So Multi-Level Marketing is a form of direct selling in which products are distributed through
network of independent distributors/members instead of traditional distribution channel. So it is also
known as Network Marketing or Referral Marketing.

Functioning of Multi-Level Marketing
In Multi-Level Marketing the compensation or commission is generated by two ways. Firstly the
sales made by individual member or distributor and secondly sales done by downline team of
members. These members are recruited by individuals at each level so that a tiered structure is
developed. Here the commission or compensation is paid for total sales volume generated by
individual and his/her downline team. There is no other kind of monetary benefits for recruiting
members in their downline.
The underlying concept is cutting the unnecessary expenditure of advertising and distributing the
same among active members who actually have created customer base by becoming honorary brand
ambassador.
Evolution of Multi-Level Marketing
Network Marketing is a post-World War II phenomenon that was started by companies such as
Amway, Shaklee and Mary Kay. In 1945 Nutrilite contracted with Mytinger & Casselberry to
become the exclusive American distributor of Nutrilite products. Mytinger & Casselberry created the
first documented MLM compensation plan. In 1949, Rich DeVos and Jay Van Andel returned from
military service and became distributors for Nutrilite vitamin supplements in 1950. In 1959 they
formed their own manufacturing company called the American Way (Amway). In 1972 Amway
Corporation acquired Nutrilite. In 1979, Amway Corporation‟s Multi-Level Marketing program was
and still is now, ruled as a legitimate Multi-Level Marketing program.
MLM Companies in India
In India, some well known Multi-National corporations (MNCs) of MLM Business are registered in
IDSA. These are Amway, Avon Herbal life, Tupperware and Oriflame. Along that some national
companies also listed in IDSA namely Daehsan Trading, K-Link healthcare, Modicare Ltd., Vestige,
4life and Altos.
Review of Literature
According to (STEVEN W. KOPP, 2016) MLM and other direct sales channels facilitate
employment facilities to interested people which results in social and economic development of
Nation but there is need of strict regulations against working of these types of direct selling channels.
MEGHA SHARMA AND GURPREET KAUR (2014) explained that most people are confused with
the term Multi-Level Marketing but they clearly aware about “Networking” so there is a need of
developing more awareness among people. It is found that people use products of MLM companies
but they are not aware about that particular company. Also if an individual know about the
companies, it is more likely that he fails to understand the plan of those companies.

NARAYAN P.N. VYAS (2005) compared Multi-Level Marketing Companies with conventional
marketing organizations. He found that Multi-Level Marketing is better because it gives effective
compensation which is based on efforts and contributions made by individuals.
Muncy (2004) investigated that in Multi-Level Marketing sellers are compensated for sales made by
them and their downline. This type of direct selling is also known as Network Marketing or Referral
Marketing.
Amway‟s future plan include home tech products i.e. cookware, food storage and water filter for
boosting its market share. Amway India achieved 100% growth annually for last three years which
reflects there is huge scope for MLM (MEERA SHENOY, 2002)
PUNAM (1999) found that the business of Amway India has been increasing day by day. There are
approx 2.5 lakh distributors who promote and use products of company.
As the independent distributors continue the recruiting process it increases their network which
enhances sales and ultimately gains in commission (Coughlan & Grayson 1998).
In Network marketing sales is generated in two ways i.e. sales through own retailing as well as sales
generates by downline members recruited by independent distributors (Cheung, 1993).
According to Chonko and Caballero (1989) Multi-Level Marketing or Network Marketing is a type
of Direct Selling in which an independent distributors or networkers representing manufacturer‟s
products.
Nowland (1982) concluded that the perception of direct selling is negative in the consumer‟s mind.
Consumer also thinks that the sales people involve in direct selling are aggressive and unmotivated
Need of study
Since India is the second largest country in the world in terms of population after China, so Multi-
Level Marketing has a great potential to generate employment for workable human power in India
because of the existence of the huge middle class, highly entrepreneurial culture, massive
international connection, huge technology base.
By 2025 it will be offering self-employment opportunities to 18 million people and employment to
2.5 million people by allied activities. Therefore the present study is an attempt to explore
information regarding the role of Multi-Level Marketing and focus on the reasons that motivate
people to join MLM Business.
Objectives of Study-
1. To study the role of Multi-Level Marketing in Indian Context
2. To examine the factors for joining the Multi-Level Marketing Business
3. To analyze the effect of Multi-Level Marketing Business on employment

Hypothesis of the Study-
Table 1
Objective Hypothesis
To analyze the effect of Multi-Level Marketing
Business on employment.
There is no significant effect of MLM business
on employment opportunities.
Research Methodology-
The following research methodology has been adopted for the study:
Data Collection- The primary data were collected through a survey among 190 active networkers of
well known Multi-Level Marketing Company i.e. Amway India in Kanpur. The said company is
chosen because it is affiliated to IDSA and holds first position among Multi-Level Marketing
companies.
Also a well structured and pre-tested questionnaire which consists of demographic and research
objective related questions has been developed and distributed randomly among Networkers. The
secondary data were collected from various journals, magazines, articles, books and reports
published by authorities.
Sample size- More than 200 questionnaires were distributed in order to get 200 responses but the
shortlisted sample size is 190.
Sampling Techniques- Snowball and stratified random sampling have been applied in order to have
true representation of the population.
Statistical Tools- For making study more scientific, weighted average and chi-square test have been
applied.
Data analysis and interpretation-
Table 2: Demographic profile of the respondents
Frequency Percentage
Gender
Male 105 55.26%
Female 85 44.74%
Total 190 100%
Age
18-25 years 18 9.48%
26-30 years 37 19.48%
31-45 years 93 48.94%
Above 45 years 42 22.10%
Total 190 100%
Marital status
Married 155 81.58%
Unmarried 35 18.42%

Total 190 100%
Employment status
Unemployed 66 34.74%
Govt. or Private 48 25.26%
Business or Professional 76 40%
Total 190 100%
Duration of Association
with MLM Business
Less than 1 Year 49 25.79%
1-5 Years 73 38.42%
More Than 5 Years 68 35.79%
Total 190 100%
Interpretation
As table no.2 shows that there were 105 male and 85 female respondents which indicate approx.
equal participation of both genders in MLM business. It is also depicted that 49% of the networkers
belong to the age group of 31 to 45 years which means that this age group is more fascinated to new
system of marketing than other age groups. About 35% of the respondents were unemployed, 25 %
of the respondents were in government or private service and 40% of respondents were employed in
business or professions.
There are 26% of respondents who had experience less than 1 year, 38% of respondents had
experience 1 to 5 years and 36% of respondents had more than 5 years of experience of networking
Table 3: Factors for Joining MLM Business
S.No. Factors for Joining MLM Business SD D N A SA W.A. RANK
1 To have own business 17 33 13 76 51 3.58 IV
2 Low Investment & Low risk 26 40 8 51 65 3.46 VI
3 Persuasion 18 13 12 70 77 3.92 II
4 Monetary benefits 7 10 8 57 108 4.31 I
5 Work Flexibility 18 20 34 65 53 3.6 III
6 No special qualification required 13 27 29 83 38 3.55 V
7 Travelling 42 54 27 39 28 2.77 VIII
8 Personality development 33 17 29 70 41 3.36 VII
SD= Strongly Disagree, D= Disagree, N=Neutral, A= Agree, SA=Strongly Agree, W.A. = Weighted
Average.
Interpretation
The above table no. 3 depicts that the monetary benefits is the top most reason for joining MLM
business followed by Work Flexibility, to have own Business, No special requirement qualification
required, Low investment & Low risk and Personality Development. The factor which has least
importance for joining MLM Business is travelling.

Hypothesis Testing
H03: There is no significant effect of MLM business on employment opportunities.
Table 4: Hypothesis Testing
1. Figures in bracket denote expected frequencies.
2. Scale: H=High, M=Medium, L=Low, TOT.=Total no. of
respondents.
3. Source: Primary survey
For calculating the Chi-square value following formula has been used: X2
=∑ (fo-fe) 2
/fe
Here x2
= symbol to denote chi-square
fo =Observed Frequency
fe = Expected Frequency
χ2 = Σ (fo1 – fe1)2
/fe1 + (fo2 – fe2)2
/fe2 + (fo3 – fe3)2
/fe3 + (fo4 – fe4)2
/fe4 + (fo5- fe5)2
/fe5 + (fo6 –
fe6)2
/fe6 + (fo7 – fe7)2
/fe7+ (fo8 – fe8)2
/fe8+ (fo9 – fe9)2
/fe9.
χ2 = Σ 9.44 + 11.44 + 7.04 + 12.03 + 3.571 + 21.77 + 5.33 + 27 + 0.33
χ2 = 98.37
Interpretation
At 5% confidence level with 4 degrees of freedom, the table value for chi-square is 9.49. The
computed value of chi-square is 98.37, which is far greater than the table value. Hence, it falls in the
rejection region. Thus, the researchers strongly reject the null hypothesis and conclude that there is a
significant effect of MLM business on employment opportunities.
Employment Opportunities
Continuation
of
Multi-
Level
Marketing
Business
H M L TOTAL
H 111
(83)
4
(19)
11
(24)
126
M 11
(30)
12
(7)
23
(9)
46
L 4
(12)
12
(3)
2
(3)
18
TOTAL 126 28 36 190

Conclusion & Suggestions
 The study shows that Multi-Level marketing is prominent business model of direct selling
which is helpful in the economic and social development of country. Therefore, it is
suggested to spread awareness among people.
 According to the study Multi-Level marketing has a lot of potential to provide employment to
workable human power in India so there is a need to motivate people for MLM business.
 The study could help the public at large to understand what actually Multi-Level Marketing is
and how one can see his/her future in this field.
 In the study it has been found that there is equal participation of both genders in MLM
business so it is extremely useful for women empowerment.
 The study reveals that 35% of people are unemployed i.e. they generate their income only
from MLM business hence it could be a substitute of full time employment.
 The study clearly throws light that the top most factor responsible for joining MLM business
is Monetary Benefits whereas travelling has least importance among active networkers. So
polices makers should also focus on those factors which have low ranking and try to cash this
scenario in Indian context.
 After analyzing the data scientifically with the help of statistical tools it is found that Multi-
Level marketing has significant effect on employment opportunities in India. So this study
would help policy makers and managers of companies as well as practitioners to formulate
strategies and programs.
References
Steven W. Kopp (2016), “tell all your friends: multilevel marketing is an organizational structure for
(economic and personal) growth”, Global Marketing Conference 2016 Global Marketing Conference
at Hong Kong, http://db.koreascholar.com/article?code= 31498
Nowland Organisation (1982) consumer Experience and Attitudes with respect to Direct Selling
Washington DC: Direct Selling Association.
Chonko, L.B. and Caballero, M.J.(1989),” The Mature Consumer”, Baylor Business Review, Vol.
7,pp.9-13.

Dr. Megha Sharma Gurpreet kaur (2014), “comparative study on Amway & Avon on the basis of
mlm” , international journal of research in commerce, it & management, volume no.4,issue
no.10,october 2014, ISSN 2231-5756,Page no-36
Muncy .J.A.,(2004) Ethical issues in Multi-Level Marketing: is it a legitimate business or just
another pyramid scheme, Marketing Education Review,14(3)
Cheung, J.P.L (1993), Multi-Level Marketing in Honking: A Unique Direct Marketing Strategy,
MBA Thesis, the University of Hong Kong.
Coughlan, A.T. & Grayson, K. (1998), “Network marketing organizations: Compensation plans,
retail
network growth, and profitability, International Journal of Research in Marketing,15, 401-426.
Vyas PN Narayana (2005, July), “Network marketing – an entrepreneurial opportunity with low
investment”, Marketing Mastermind.
Punam (Dec 13-26, 1999),”Amway find its way”, Business India.
Shenoy Meera (Feb 4-17, 2002), “Brushing up strategies”, Business India.
Kothari C.R. (2007)”Research Methodology-Methods and Techniques” New Age International Pvt.
Ltd. Publishers.
http://ficci.in/search-page.asp
http://directsellingnews.com/index.php/view/2016_dsn_global_100_list#.V9GHqhKeNtQ

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