Network Marketing - Enrichment or deception?

Master's Thesis from the year 2010 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,7, University of Applied Sciences Essen, language: English, abstract: 1.1 Background and Motivation

Relationship marketing is an approach which aims at retaining customers. Throughout history, people have used relationship marketing to expand their businesses. Moreover, some producers began to sell their products without intermediary trade directly to final consumers with the help of sales representatives. In order to gain a

competitive and strategic cost advantage, the producers dispensed with traditional advertising. This procedure shows the positive aspects of relationship marketing. The original concept of NWM is based upon trust amongst people and the importance of personal recommendations. Moreover, network marketing is a marketing approach

which benefits from relationships. The objective of this approach is to create a positive image of NWM through customer satisfaction. This procedure ensures the economic success of any network marketing company. NWM, in general, is conceived of a constantly growing business. Nevertheless, an ambivalent societal perception of network marketing exists. ¿The problem, in general, is that the activity of recruiting people [¿] is socially and psychologically unacceptable to

most people in our society (Bloch, 1996, p. 18).¿ It cannot be concluded if the success of NWM is due to relationship marketing.

Within this thesis, I analyse if network marketing is enrichment for people - this means how the perception of network marketing is in the society as well as from people within NMO and further, whether NMO deceives people in order to achieve profit.

1.2 Problem

According to Bhattacharya and Mehta (2000, p. 361), ¿Network Marketing Organisations (NMO) [...] has grown in importance over the last few decades.¿ For example, Avon, a well-known network marketing company, is ranked number 67 in the Best Global Brands 2009 (Interbrand, 2009). Furthermore, over ¿70 % of direct-sales

revenues are generated by network marketing organizations (Bhattacharya and Mehta (2000, p. 361).¿ Network marketing is a huge global industry, ¿a personal selling away from fixed retail locations (Muncy, 2004, p.47),¿ where strong social networks and relationships are the basis for the success. The estimated worldwide sales resulting from network marketing approaches is $90 billion (Muncy, 2004, p.47). The focus of NWM is on people and congenial and trustful encounters. Relationships between people are one reason why network marketing is a growing business in recent years.