WELCOME TO THE PRESENTATION

1. WELCOME TO THE PRESENTATION

2. Welcome to our Presentation WRONG with MLM

3. PREPARED BY Md. Mosarraf Hossain Department of Finance University of Dhaka mosarraf_du_fin@yahoo.com

4. THE ORIGIN OF MLM • The roots of multilevel marketing are interrelated with those of the Amway Corporation and its Nutrilite product line • The Nutrilite concept originated during the early 1930s in the mind of Carl Rehnborg, an American businessman who lived in China from 1917 to 1927 • He became familiar with the nutritional literature of his day

5. THE ORIGIN OF MLM • He began to imagine a dietary supplement which could provide people with important nutrients regardless of their eating habits • After seven years of "experimentation," Rehnborg produced food supplements which he gave to his friends to try • The friends, having paid for the product, ate it, liked it, and further, wanted their friends to have it also

6. TURNING INTO ORGANIZATION • Carl Rehnborg's food supplement business, which thus began as the California Vitamin Corporation, changed its name to Nutrilite Products in 1939 • In 1945 a company operated by Lee S. Mytinger and William S. Casselberry became exclusive national distributor

7. GOING AGINST LAW • In 1951, the Court issued a permanent embargo forbidding anyone who sold Nutrilite products • The court decree also contains a long list of forbidden and acceptable claims about nutrition and Nutrilite products

8. Typical MLM Misrepresentations John Taylor, MBA, PhD.

9. Typical MLM Misrepresentations John Taylor, MBA, PhD.

10. Typical MLM Misrepresentations John Taylor, MBA, PhD. A great “income opportunity,” with huge incomes reported for many Nearly all new recruits lose money. A few at the top of a pyramid of participants are enriched at the expense of the many downline participants, at least 99% of whom lose money

12. Typical MLM Misrepresentations John Taylor, MBA, PhD. Everyone can do this and earn a good income Holding up top earners as examples of what others can do is deceptive. It is unfair to sell tickets when—for nearly everyone—the ship has left the port

13. Typical MLM Misrepresentations John Taylor, MBA, PhD. Work for only an hour or two a day, and build up a "residual income" that will allow you the "time freedom" to quit your job and spend more time with your family or do whatever you want To profit in a recruiting MLM, one must work long hours and be willing to continue to recruit to replace dropouts. One must also be willing to deceive large numbers of recruits into believing it is a legitimate income opportunity. Recruits primarily fatten upline commissions

14. Typical MLM Misrepresentations John Taylor, MBA, PhD. The job market is not secure. The stock market is even shakier. MLM offers a much more secure and permanent (residual) income MLM is far more risky than either the stock market or the job market. Very few recruits will sell enough to generate residual income

15. Typical MLM Misrepresentations John Taylor, MBA, PhD. Standard jobs are not rewarded fairly. In MLM, you can set your own standard for earnings Fair? Most MLM compensation plans are weighted heavily towards those who got in early or who frantically scrambled to the top of a pyramid of participants

16. Typical MLM Misrepresentations John Taylor, MBA, PhD. If not legal, the program would have been shut down long ago. MLM's have survived legal challenges. The fact that they are still around tells you they are legitimate Consumer protection officials are reactive, not proactive. Since victims rarely file complaints, law enforcement seldom acts against even the worst schemes. Victims don't complain because they blame themselves, and they fear self-incrimination or consequences from or to their upline or downline

17. Typical MLM Misrepresentations John Taylor, MBA, PhD. MLM is the wave of the future. In fact, ours is experiencing phenomenal world-wide growth. So get in on the ground floor of this great opportunity MLM'rs have been saying this for twenty years, but MLM still accounts for less than 1/2 of 1% of consumer purchases—even though MLM companies have numbered in the thousands. MLM's come and go, as do new recruits, 99.9% of whom drop out. Long-term MLM growth is a myth

18. Typical MLM Misrepresentations John Taylor, MBA, PhD. The demand for these MLM products is growing at a rapid rate. They literally sell themselves The sale of products is distributor-driven, not market driven. Most products are sold to new participants to get in on this “ground floor opportunity

19. Typical MLM Misrepresentations John Taylor, MBA, PhD. In this new (MLM) program, you can be the master of your destiny You will be a slave to the phone, to meeting the qualifications for commissions and bonuses, and to continual pressure to recruit new participants to replace dropouts. You will also be caught in a money trap of hyper-consumption.

20. Typical MLM Misrepresentations John Taylor, MBA, PhD. Unlike franchises, business startups, or sales of existing businesses, you can start an MLM business with very little capital. MLM’s typically urge new recruits to buy products on a subscription basis, invest in sales materials, and pay for ongoing training until they run out of money or give up

21. Typical MLM Misrepresentations John Taylor, MBA, PhD. Our products are unique and consumable—perfect for repeat business MLM products are typically potions and lotions. Their purported uniqueness is an attempt to conceal the fact that they are priced too high to compete in standard markets

22. Typical MLM Misrepresentations John Taylor, MBA, PhD. Products are less expensive through MLM because you cut out the middleman MLM creates thousands of middlemen, with few real customers outside a bloated network of distributors, agents, consultants, and demonstrators, The products are typically expensive and not priced competitively

23. Typical MLM Misrepresentations John Taylor, MBA, PhD. Build your business by duplication. Buy five of these business in a box packages now, sell them to five people, and ask each to do the same, etc Commissions from initial and ongoing purchases by new distributors (in hopes of profiting) is the life blood of their business. The promised rewards never come, except to those who recruit their way to the top of a pyramid of participants. Take away inducements for participant purchases and these companies would collapse like a house of cards

24. Typical MLM Misrepresentations John Taylor, MBA, PhD. Our tools for success are unbeatable. Sign up for our seminars and conferences, and buy our books and tapes to assure your success in this business In at least one major MLM, the tools business is a pyramid within a pyramid. Hardly anyone makes money selling products, so a lucrative source of income for those at the top is the sale of success tools to supposedly assure the success of their downline – who are in fact only further victimized when they buy these motivational items

25. Typical MLM Misrepresentations John Taylor, MBA, PhD. Some MLM companies invest in very worthy (and visible) causes. The mafia supported local charities. If a bank robber donates some of his take to charity, does that excuse the robbery?

26. Typical MLM Misrepresentations John Taylor, MBA, PhD. You will be helping your friends and family by recruiting them into your downline For potential personal gain, you would be exploiting those you care about the most. In other words you would be squandering your social capital

27. Big Lies of Multilevel MarketingRobert L. Fitzpatrick

28. REVEALED FACTS

29. Here are some lies he identified during more than 20 years of observing the MLM marketplace

30. Lie #1: MLM offers better opportunities than all other conventional business and professional models for making large amounts of money

31. Lie #2: Eventually all products will be sold by MLM. Retail stores, shopping malls, catalogs and most forms of advertising will soon be rendered obsolete by MLM

32. Lie #3: MLM is a new way of life that offers happiness and fulfillment. It provides a way to attain all the good things in life

33. Lie #4: You can do MLM in your spare time. As a business, it offers the greatest flexibility and personal freedom of time. A few hours a week can earn a significant supplemental income and may grow to a very large income, making other work unnecessary

34. Lie #5. MLM is the best option for owning your own business and attaining real economic independence

35. How do MLMs manage to recruit and retain enthusiastic distributors, even when those distributors lose money year after year?

38. Stay Away from MLM In MLMs, You ---- The company holds all the strings— • product supply, • computer tracking, • commissions, • collections, • customer service, do not own your own business, do not own the product, you are not in control of your destiny. • publicity, • order fulfillment, • compliance, • public relations, • comp plan, • everything.

39. Stay away from them! They're dream stealers!

40. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html This new MLM has a really great new approach... I am told that it is not an MLM at all, but a Network Discombobulation Matrix Downline (or somesuch)... You know the old story about the donkey who wanted to be a horse. He had his act down pretty good, but there was always that embarrassing "HEE HAW" that would come out when he got excited

41. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html I want to start a business and see MLM as a low-risk way to do it. Don't you agree that MLM is a great opportunity for small-business start-ups? No, Due to the OVERWHELMING negative public opinion of MLM. If you run in the Olympics, you play to win. You would not go onto the track with a ball and chain tied to your leg. Why go into ANY business ... with the ball and chain of MLM negative perception around your leg?

42. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html Why are you so NEGATIVE? Can't you say ANYTHING good about MLM? You might have noticed the title of the article

43. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html If you have not lost money in an MLM yourself, why should anyone listen to YOU? If a doctor tells you that smoking is bad for your health, will you ignore his advice on the basis that he has never smoked himself? Such counsel must be judged on the merit of whether it is true or not.

44. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html All people need is good training and determination to make MLM work. Success is up to each individual.... If a person runs smack-dab into a brick wall, shall we encourage them to do it again with more determination, telling them "success is up to each individual" and directing their bandaged heads back to the bricks, or should we rather direct them to run in the open fields. Sure, they may trip over a rock out there, but their "chances" of success go from near zero to something rather hopeful.

45. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html Why can you not see the OPPORTUNITY of MLM for the unemployed? What is the difference between MLM and any small business? Imagine you are a teenager in the mall, looking for an "opportunity" to work. You see a clothing store with "help wanted". You go in and ask for an application and how much the "job" pays, and you are told to wait in a very long line that extends out the door and into the mall. As you are standing in line, you notice a certain smell, a sort of stink. Perhaps this is why there are very few, if any, customers walking into this store, only nervous applicants. When you get to the front, you are told that the "job" is really a "business" and will cost YOU to participate in. If you pay the nice lady sitting at a desk (there seem to be more desks here than clothing racks...), you can then sell the fine products they have on display. But you have to buy the inventory yourself on top of the fee to be "hired". And MOST IMPORTANTLY, you are told that to succeed, you must do what she is doing, recruit others to make them "successes" like her. You do the math on the clothing profits, and indeed it is not likely for you to even make minimum wage just selling product, and besides this... there are all these other people in line as well. The profit, it appears, is to find others who will pay, like you, to be "hired" into this "ground floor" opportunity.

46. FAQThis document is at http://www.vandruff.com/mlm_FAQ.html Aren't "real world" organization charts shaped like a pyramid? The shape is not the problem, but rather that in pyramid schemes the organization is set up to expand exponentially with no way to stop or control growth, as in a legitimate business. "Pyramid schemes" are thus frauds.

47. In general, over the years I have noticed three fairly distinct categories of response by practicing MLMers when exposed to ideas such as in my article. Interestingly, these three responses are similar to ANY detected mistake or sin, are they not?

48. Thank you